Arizona Tax Research Association Opposes Proposition 204

| September 20 2012

Ballot Box Budgeting:

The State of Arizona is one of 24 states that allow its citizens to legislate through the initiative and referendum process. This powerful tool that provides the citizenry the opportunity to sidestep the Legislature has seen considerable use in recent decades. For many years, ATRA has expressed major concerns about the use of the initiative process to circumvent the state budgeting process as well as its impact on public finances in general. This form of ballot box budgeting, and the practice of earmarking revenues outside of the appropriations process, has done considerable damage to the state’s budgeting process.

Clearly, the most important and fundamental responsibility of the Legislature and Governor is to annually establish budget priorities within available revenues and economic conditions. Ballot box budgeting overrides their responsibility and handcuffs lawmakers’ ability to respond to the state’s changing demands. Furthermore, by circumventing the appropriations process, the earmarked revenues and the programs they fund escape the periodic legislative scrutiny that is so important to maintain accountability for the expenditure of taxpayer dollars.  In the past, ATRA’s forewarnings against ballot box budgeting were sometimes dismissed as esoteric or antithetical to the initiative power granted citizens in the Constitution. However, the devastating impact imposed on state finances from the Great Recession has repeatedly vindicated ATRA’s strong opposition to this practice.

Further, ATRA believes its opposition to the use of the initiative process for ballot box budgeting is entirely consistent with the current restraints on referendums by the Constitution and the Arizona Courts. While the Arizona Constitution provides citizens the power to both propose laws and refer acts of the Legislature to the voters, it specifically limits the authority of the citizenry from referring the annual budget. The framers of the Constitution, while clearly reserving the citizen’s right to both enact and reject laws, obviously did not want that power extended to laws “for the support and maintenance of the Departments of the State and of State institutions.” In addition, the Arizona Court of Appeals (Wade v. Greenlee County, 1992) interpreted this provision to also prohibit citizens from referring a tax increase that was necessary to “support” the state budget.

It is clear that both the Constitution and the courts draw a distinction between policy issues that the citizens can exercise control over through referendum versus budget and tax policy that are best developed through elected representatives at the Capitol. Rightfully so, the framers of the Constitution had specific concern about the state’s budgeting process colliding with direct democracy.

SOURCE:  Well worth checking out for the great chart explaining where the Prop 204 money actually goes.

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