Jaime Molera v. reagan/invest in Education ( 2018 )

IN THE
SUPREME COURT OF THE STATE OF ARIZONA
JAIME MOLERA, ET AL.,
Plaintiffs/Petitioners/Appellants,
v.
MICHELE REAGAN, IN HER CAPACITY AS THE SECRETARY OF STATE OF
ARIZONA,
Defendant/Respondent/Appellee,
and
INVEST IN EDUCATION COMMITTEE, A POLITICAL ACTION COMMITTEE,
Real Party in Interest/Appellee.
_____________________________
INVEST IN EDUCATION COMMITTEE, A POLITICAL ACTION COMMITTEE;
JOSHUA BUCKLEY, AN INDIVIDUAL,
Cross-Plaintiffs/Appellees.
v.
MICHELE REAGAN, IN HER CAPACITY AS THE SECRETARY OF STATE OF
ARIZONA,
Cross-Defendant/Appellant,
and
J.D. MESNARD, IN HIS OFFICIAL CAPACITY AS THE SPEAKER OF THE ARIZONA
HOUSE OF REPRESENTATIVES; AND STEVEN B. YARBROUGH, IN HIS OFFICIAL
CAPACITY AS PRESIDENT OF THE ARIZONA SENATE,
Intervenors in the Cross-Claim/Appellants.
________________
MOLERA V. REAGAN
Opinion of the Court
No. CV-18-0218-AP/EL
Filed October 26, 2018
Appeal from the Superior Court in Maricopa County
The Honorable James D. Smith, Judge
No. CV2018-010209
REVERSED
COUNSEL:
Kory Langhofer, Thomas Basile, Stewart Salwin, Statecraft, PLLC, Phoenix,
Attorneys for Jaime Molera, Jennifer Henricks, J.D. Mesnard and Steven B.
Yarbrough
Kara Karlson, Assistant Attorney General, Joseph Eugene La Rue, Assistant
Attorney General, Arizona Attorney General’s Office, Phoenix, Attorneys
for Michele Reagan
Israel G. Torres, James E. Barton, II, Saman J. Golestan, Torres Law Group,
PLLC, Tempe, Attorneys for Invest in Education Committee
Timothy A. La Sota, Timothy A. La Sota, PLC, Phoenix, Attorneys for
Amicus Curiae The Arizona Free Enterprise Club
Brett W. Johnson, Jennifer Hadley Catero, Colin P. Ahler, Andrew
Sniegowski, Brianna Long, Lindsay Short, Snell & Wilmer L.L.P., Phoenix,
Attorneys for Amicus Curiae State Representative Vince Leach
Roopali H. Desai, D. Andrew Gaona, Coopersmith Brockelman PLC,
Phoenix; Daniel J. Adelman, Arizona Center for Law in the Public Interest,
Phoenix, Attorneys for Amici Curiae Matthew G. Madonna; Sandra L. Bahr;
Animal Defense League of Arizona; Friends of ASBA, Inc.; Arizona
Advocacy Network; and Planned Parenthood Advocates of Arizona
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Opinion of the Court
Timothy Sandefur, Scharf-Norton Center for Constitutional Litigation, the
Goldwater Institute, Phoenix, Attorneys for Amicus Curiae Goldwater
Institute
Mark Brnovich, Arizona Attorney General, Dominic E. Draye, Solicitor
General, Andrew G. Pappas, Assistant Solicitor General, Phoenix,
Attorneys for Amicus Curiae State of Arizona
Robert G. Schaffer, Lewis Roca Rothgerber Christie LLP, Phoenix,
Attorneys for Amici Curiae Greater Phoenix Chamber and Home Builders
Association of Central Arizona
The Court issued a per curiam decision joined by VICE CHIEF JUSTICE
BRUTINEL and JUSTICES PELANDER, BOLICK, GOULD, and LOPEZ.
CHIEF JUSTICE BALES, joined by JUSTICE TIMMER, authored a
dissenting opinion. JUSTICE TIMMER authored a separate dissenting
opinion.
PER CURIAM:
¶1 In this opinion, we explain the reasons for our prior order
disqualifying the Invest in Education Act initiative from the November
2018 general election ballot. We greatly respect the initiative process,
including the civic activism required to collect the signatures necessary to
qualify a ballot measure, and we do not lightly disturb the fruits of such
efforts. However, we must do so, as the Court has done in various prior
circumstances, when essential requirements necessary to qualify a measure
are not adequately followed. We hold here that the initiative’s proponents
did not comply with the requirements of A.R.S. § 19-102(A) because their
description of the initiative’s principal provisions omitted material
provisions and created a significant danger of confusion or unfairness to
those who signed petitions to place the measure on the ballot.
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Opinion of the Court
I.
¶2 On April 30, 2018, the Invest in Education Committee
(“Committee”) filed with the Secretary of State a proposed initiative called
the “Invest in Education Act,” which would increase K–12 education
funding and raise certain income tax rates to support it. As required by
§ 19-102(A), the Committee prepared a 100-word initiative description for
placement on the petitions to qualify the measure for the ballot. The
description provided:
The Invest in Education Act increases the classroom site fund
by raising the income tax rate by 3.46% on individual incomes
over a quarter million dollars (or household incomes over half
a million dollars), and by 4.46% on individual incomes over
half a million dollars (or household incomes over a million
dollars); designates 60% of new funds for teacher salaries and
40% for operations; adds full day kindergarten and pay raises
for student support services personnel as permitted fund uses;
requires governing boards seek teacher and personnel input
on fund use plans; defines teacher and student support
services personnel.
¶3 The petitions also contained the following language required
by § 19-102(A):
Notice: This is only a description of the proposed measure (or
constitutional amendment) prepared by the sponsor of the
measure. It may not include every provision contained in the
measure. Before signing, make sure the title and text of the
measure are attached. You have the right to read or examine
the title and text before signing.
¶4 On July 5, the Committee submitted approximately 270,000
signatures to the Secretary of State in support of the initiative. Although
the Secretary invalidated some petition sheets, she determined that the
Committee filed a sufficient number of valid signatures to qualify the
initiative for the ballot.
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Opinion of the Court
¶5 Petitioners Jaime Molera and Jennifer Henricks
(“Petitioners”) filed a special action in Maricopa County Superior Court
seeking to invalidate the initiative because (1) the 100-word initiative
description was misleading in that it mischaracterized the size of the
proposed tax increase and omitted a change in income tax indexing; and
(2) although § 19-102(D) requires a circulator to check a box on petition
sheets to indicate whether he or she is paid, a third party pre-marked the
boxes on most petition sheets. The Committee filed a cross-complaint
challenging the constitutionality of A.R.S. § 19-102.01(A), which requires
strict compliance with constitutional and statutory requirements for
statewide initiatives. The Committee also sought to restore some of the
petition sheets invalidated by the Secretary of State.
¶6 The superior court ruled that § 19-102.01 is unconstitutional,
that both the 100-word description and the pre-checked circulator boxes
satisfied statutory requirements, and that the Secretary of State erroneously
excluded some petition sheets. The court thus concluded that the initiative
was eligible for the ballot.
¶7 Pursuant to A.R.S. § 19-122(C), Petitioners filed an expedited
appeal in this Court contesting all but the last of those rulings. Following
our review, we issued an order determining that the 100-word initiative
description created a significant danger of confusion or unfairness, thus
invalidating the petition. As a result, we do not decide the other issues
raised in the appeal. We set forth the reasoning for our conclusion below.
¶8 The only issue before us involves interpretation and
application of constitutional and statutory provisions regarding initiatives,
which we review de novo. See Pedersen v. Bennett, 230 Ariz. 556, 558 ¶ 6
(2012). We have jurisdiction over this matter pursuant to article 6, section
5(3) of the Arizona Constitution.
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Opinion of the Court
II.
¶9 The Arizona Constitution reserves to this state’s citizens the
power to propose and enact laws by initiative. Ariz. Const. art. 4, pt. 1,
§ 1(1)–(2). Under our constitutional separation of powers, the courts must
not intrude upon the people’s power to legislate, subject to constitutional
and proper statutory requirements. See Kromko v. Superior Court, 168 Ariz.
51, 57–58 (1991). This Court has observed that the citizens’ legislative
authority “is as great as the power of the Legislature to legislate.” State ex
rel. Bullard v. Osborn, 16 Ariz. 247, 250 (1914); accord Cave Creek Unified Sch.
Dist. v. Ducey, 233 Ariz. 1, 4 ¶ 8 (2013). Indeed, with the enactment through
initiative of the Voter Protection Act, legislation enacted by the voters is
even more consequential, such that the legislature cannot repeal an
initiative-enacted law and may only modify it by a three-fourths vote when
the changes further the law’s purposes. See Ariz. Const. art. 4, pt. 1,
§ 1(6)(C); see, e.g., State v. Maestas, 244 Ariz. 9, 13–14 ¶¶ 19–20 (2018)
(striking down legislation restricting the possession of marijuana on college
campuses because it did not further the purposes of the Arizona Medical
Marijuana Act); Cave Creek, 233 Ariz. at 4, 7–8 ¶¶ 9, 25 (concluding that
legislative adjustments to voter-approved funding scheme for public
education violated the Voter Protection Act).
¶10 Just as the legislature must comply with restrictions on its
lawmaking powers, see, e.g., Ariz. Const. art. 4, pt. 2, § 19 (prohibiting the
legislature from enacting local or special laws); Ariz. Const. art. 21, § 1
(requiring the legislature to refer constitutional amendments to voters
separately), so too must the people comply with appropriate regulation of
the initiative process. Article 4, part 1, section 1(14) of the Arizona
Constitution provides that the initiative power “shall not be construed to
deprive the legislature of the right to enact any measure except that the
legislature shall not have the power to adopt any measure that supersedes”
an enacted initiative. Further, article 7, section 12 directs the legislature to
enact “registration and other laws to secure the purity of elections and
guard against abuses of the elective franchise.”
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Opinion of the Court
¶11 Thus, although our decisions safeguard the voters’ legislative
power, this Court in many cases has invalidated citizen initiatives and
referenda that did not comply with applicable requirements. See, e.g.,
Transp. Infrastructure Moving Ariz.’s Econ. v. Brewer, 219 Ariz. 207, 211–14
¶¶ 17–36 (2008) (upholding dismissal of challenge to Secretary of State’s
invalidation of ballot measure signatures as time-barred by statute);
Taxpayers Prot. All. v. Arizonans Against Unfair Tax Schemes, 199 Ariz. 180,
181–82 ¶¶ 1–8 (2001) (invalidating initiative for violation of constitutional
single-subject rule); McDowell Mountain Ranch Land Coal. v. Vizcaino, 190
Ariz. 1, 3–5 (1997) (disqualifying petition signatures gathered by
referendum circulators who were not qualified electors); Perini Land & Dev.
Co. v. Pima County, 170 Ariz. 380, 382–84 (1992) (holding referendum would
not appear on ballot for failure to comply with signature requirement); W.
Devcor, Inc. v. City of Scottsdale, 168 Ariz. 426, 428–32 (1991) (determining
referendum petitions were invalid because they did not contain required
circulators’ statements); Saggio v. Connelly, 147 Ariz. 240, 241–42 (1985)
(holding initiative invalid for failing to propose a law or ordinance);
Cottonwood Dev. v. Foothills Area Coal. of Tucson, Inc., 134 Ariz. 46, 48–50
(1982) (invalidating referendum petitions that did not attach resolution);
Direct Sellers Ass’n v. McBrayer, 109 Ariz. 3, 5–6 (1972) (holding referendum
petitions invalid where amendments were not made within time limits);
Kerby v. Griffin, 48 Ariz. 434, 446–56 (1936) (holding that initiative failed to
comply with publication requirement).
¶12 Challengers are also required to conform to statutory
requirements. Two years ago, for example, in the context of an initiative
that proposed raising the state’s minimum wage, the trial court found the
measure lacked sufficient valid signatures to qualify for the ballot. We
vacated the judgment, reasoning that the opponents failed to meet the
statutory deadline to file the challenge, thus allowing the initiative to
proceed. Hitzeman v. Reagan, No. CV-16-0204-AP/EL, slip op. at 1–2 (Ariz.
Aug. 30, 2016) (decision order). We explain below how the proponents here
failed to meet the statutory requirements to qualify this measure for the
ballot.
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Opinion of the Court
III.
¶13 The statutory provision pertinent to our analysis is
§ 19-102(A), which requires an initiative’s sponsors to provide on the
petition “a description of no more than one hundred words of the principal
provisions of the proposed measure or constitutional amendment.” The
description need not be impartial. See Save Our Vote, Opposing C-03-2012 v.
Bennett, 231 Ariz. 145, 152 ¶ 28 (2013). Nor must the description detail every
provision, as the statutorily required disclaimer acknowledges.
§ 19-102(A). However, the description will require us to invalidate the
petition if “it is fraudulent or creates a significant danger of confusion or
unfairness.” Save Our Vote, 231 Ariz. at 152 ¶ 26 (citation omitted).
¶14 Petitioners assert that the description of the proposed Invest
in Education Act violates the applicable requirements in two ways. First, it
fails to mention that the measure modifies the inflation indexing of income
tax rates that was adopted in 2015, thus exposing most taxpayers to tax
increases. Currently, tax brackets and rates are set by A.R.S.
§ 43-1011(A)(5). The income dollar amounts for each tax bracket are
indexed for inflation by § 43-1011(C). In other words, the tax brackets are
adjusted by the rate of inflation so that as incomes rise, they are not subject
to higher rates of taxation simply because of inflation. The proposed
initiative replaces those brackets with new tax rates and brackets in
§ 43-1011(A)(6), restoring the pre-indexed brackets for individual taxpayers
making less than $250,000 and for married taxpayers filing jointly making
less than $500,000, and adding new brackets for taxpayers earning more
than $250,000. The proposed initiative makes subsection (A)(6) “[s]ubject
to” subsection C, the indexing provision, but that provision applies only to
the old tax brackets set forth in § 43-1011(A)(5). By restoring the old pre-
indexing tax brackets, Petitioners argue, the initiative would reverse
indexing back to 2015 and place taxpayers in higher tax brackets; and by
failing to apply the indexing provision to the new tax brackets in
§ 43-1011(A)(6), the initiative would repeal indexing going forward. This,
they assert, would lead to higher taxes for most taxpayers, not just those
earning more than $250,000 as stated in the initiative description.
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Opinion of the Court
¶15 Petitioners argue that the description’s omission is deceptive,
or confusing at best, in that petition signers were led to believe that only
very wealthy taxpayers’ rates would be increased. The Committee
responds, and the Chief Justice’s dissent asserts, that the initiative does not
affect indexing as the new proposed tax rates and brackets in § 43-
1011(A)(6) are “[s]ubject to” the indexing provision of § 43-1011(C). If the
measure does change indexing, the Committee asserts, it does so
inadvertently, not intentionally.
¶16 Second, Petitioners argue that the description of the funding
source—“raising the income tax rate by 3.46% . . . and by 4.46%” on
specified taxpayers—is misleading and confusing in that it suggests a
modest tax increase. In reality, Petitioners assert, the measure would raise
the applicable rates by seventy-six percent and ninety-eight percent,
respectively. The Committee responds that the description is accurate, and
that any confusion could be alleviated by reading the initiative text, as the
notice on the petition provides.
¶17 We address these two issues in turn.
A.
¶18 The dispute over income tax indexing did not arise in the first
instance in this lawsuit. Rather, it arose in the context of an analysis by the
Legislative Council, whose nonpartisan staff reviews proposed bills for
legislators of both parties. Although the Legislative Council opinion is not
binding, had the challengers here sought such an analysis, the question
might never have become a judicial one and the measure might well be
before the voters.
¶19 Apparently recognizing the hazards inherent in initiative
drafting, the legislature enacted A.R.S. § 19-111.01, which provides that
upon filing an application for an initiative petition and a statement of
organization, a political committee may submit a copy of the proposed text
of the measure to the Legislative Council. Within thirty days, the
Legislative Council staff must review the measure, limiting its
consideration (as relevant here) to “errors in the drafting of the measure”
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Opinion of the Court
and “confusing, conflicting or inconsistent provisions within the measure.”
§ 19-111.01(B). The initiative’s proponents may then “accept, modify or
reject any recommendations made by the legislative council staff regarding
the text of the measure solely in [their] discretion.” § 19-111.01(C). In other
words, if the proponents had requested an analysis as soon as the
application was filed, they would have received an analysis within thirty
days, well in advance of the filing deadline, and they could either have
modified the text or description or taken the risk of having it invalidated.
But the Committee failed to seek the Legislative Council’s review.
¶20 The measure’s opponents, in contrast, did avail themselves of
this process while petitions were circulating. On June 20, Legislative
Council staff issued its analysis, noting that it is “similar to the review that
our office would conduct for a legislator on any draft of proposed
legislation in that it identifies potential issues.” The analysis noted multiple
concerns, including the measure’s effect on income tax indexing.
Specifically, it explained that the measure would create new income tax
brackets in § 43-1011(A)(6) and that the paragraph is subject to § 43-1011(C).
However, the analysis concluded that the reference to subsection C is
“meaningless” because subsection C “require[s] inflation adjustments only
to the tax brackets prescribed in A.R.S. section 43-1011, subsection A,
paragraph 5.” Because subsection C “do[es] not apply to the new A.R.S.
section 43-1011, subsection A, paragraph 6 . . . the prefatory language does
nothing.” The analysis went on to observe that “[i]t might be that the
drafters of the initiative intended that the dollar amounts in the new tax
brackets be adjusted for inflation. The language of the initiative does not
accomplish this purpose, however.”
¶21 The Legislative Council staff was not alone in this analysis.
Pursuant to A.R.S. § 19-123(E), the Joint Legislative Budget Committee
(“JLBC”) staff is required to prepare a fiscal-impact summary for voter-
initiated ballot measures. The JLBC concluded the initiative “reinstates the
individual income tax brackets for incomes up to $250,000 in effect in 2014.”
In its accompanying analysis, the JLBC staff explained that as a result,
“most taxpayers would have a small portion of their income taxed in a
higher bracket, resulting in a small increase on most taxpayers.” By way of
illustration, as a result of indexing, married taxpayers filing jointly and
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Opinion of the Court
earning $108,617 in 2019 would have the same tax rates as married
taxpayers filing jointly and earning $100,000 in 2014, according to the JLBC.
But because the initiative would restore the brackets to 2014 levels, such
taxpayers would be subject to a higher tax rate on the amount earned above
$100,000. Eliminating indexing would affect tax rates at all income levels.
And because indexing would not apply at all to the new brackets in
§ 43-1011(A)(6), the relatively modest initial tax impact would expand over
time, resulting in a tax increase to most taxpayers.
¶22 We agree with Petitioners and the Legislative Council that the
initiative’s “subject to” language, even if intended to do so, does not
preserve tax indexing. Section 43-1011(C) provides indexing “for each rate
bracket prescribed by subsection A, paragraph 5.” The proposed new
subsection (A)(6) establishes new tax brackets after 2018, supplanting the
tax brackets in subsection (A)(5). In other words, the “subject to” language
circles us back to a subsection that is no longer operational. Even were we
to credit intent rather than text, the new subsection (A)(6) establishes tax
brackets “for taxable years beginning from and after December 31, 2018.”
Those brackets, on their face, erase the effects of indexing since 2015. And
because both the “subject to” and indexing provision relate only to the tax
rates in subsection (A)(5), which would no longer be active, the result is that
the new tax brackets would not be indexed going forward.
¶23 That conclusion requires us to determine whether the
indexing changes are “principal” provisions whose omission from the
initiative description must disqualify the measure from the ballot. We
conclude they are.
¶24 Because the statute does not define “principal provisions,” we
apply the term’s common meaning. In Sklar v. Town of Fountain Hills, the
court of appeals disqualified a citizen referendum because, as here, the
petition failed to adequately describe the measure’s principal provisions.
220 Ariz. 449, 453–55 ¶¶ 12–22 (App. 2008). The court consulted
dictionaries to determine the meaning of “principal” and found that the
plain meaning includes “most important, consequential, or influential,”
“chief,” and “a matter or thing of primary importance.” Id. at 453 ¶ 13
(internal quotation marks and citations omitted).
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¶25 The change in indexing is a primary, consequential provision
because it imposes tax increases on most Arizona taxpayers rather than
only the state’s wealthiest taxpayers, as the description clearly suggests.
Indeed, identifying the source of new revenue was so significant to the
initiative proponents that it is set forth in some detail in the opening part of
the description. A description indicating that other people’s taxes will be
raised, but not the taxes of most of those signing the petition, creates a
significant risk of confusion or unfairness and could certainly materially
impact whether a person would sign the petition. Thus, the failure to
disclose the measure’s impact on tax indexing constitutes the omission of a
principal provision that renders the initiative invalid.
¶26 The Chief Justice’s dissent observes that the Committee
disputes this reading of the measure’s effects on income tax indexing,
contending that we should extend the “subject to” language to the new tax
brackets in subsection (A)(6) to avoid those effects, and that the proper
place to resolve this dispute is at the ballot box rather than the courtroom.
See infra ¶ 43. Although we try to give effect to all of a statute’s words in
order to resolve ambiguity, in this instance doing so would require us not
merely to construe those words but to rewrite the proposed statute. That
invitation must be rejected on separation-of-powers grounds. Just as we
cannot rewrite statutes to smooth their rough edges, see, e.g., City of Phoenix
v. Butler, 110 Ariz. 160, 162 (1973), so may we not rewrite proposed
initiatives to arrest unintended consequences. We note that the measure’s
drafters could have corrected the errors themselves had they availed
themselves of the Legislative Council’s expertise. Their failure to do so does
not empower us to do so now. Moreover, rewriting the proposed statute to
preserve income tax indexing would necessarily substantially decrease the
amount of revenue that the measure would generate. We cannot substitute
our judgment on such a consequential matter for the plain words chosen by
the measure’s drafters.
¶27 Relatedly, Justice Timmer asserts in dissent that § 19-102(A)
only requires the petition description to describe “known” principal
provisions and not unintended consequences, so that the measure should
proceed to the ballot. See infra ¶ 51. We hold § 19-102(A) requires an
objective standard for evaluating the description of the actual provisions
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rather than crediting the drafters’ subjective intent. Section 19-102(A) does
not qualify “principal provisions” with either “known” or “intended.” The
purpose of the petition description is to inform prospective signers of the
measure’s principal provisions so they may determine whether to endorse
it for the ballot. This Court has long held that the proper remedy for failure
to satisfy statutory prerequisites is to enjoin the measure from appearing on
the ballot. See, e.g., Kerby, 48 Ariz. at 445; cf. City & County of Honolulu v.
State of Hawai’i, No. SCPW-XX-XXXXXXX, slip op. at 1–2 (Haw. Oct. 19, 2018)
(order) (removing education funding measure from the ballot because it did
not satisfy statutory requirement that the language must be “clear [and]
neither misleading nor deceptive”). Our failure to determine whether the
description omits a principal provision before the measure appears on the
ballot would reward sloppy or even deceptive drafting, and would render
the statutory transparency requirement meaningless because it would
allow a measure to proceed even if voters signing the petition were not
made aware of principal provisions.
¶28 Moreover, recourse here to the measure’s text to correct any
uncertainty is unavailing because that text is the source of the problem.
Because the omission of the principal provision violates § 19-102(A) and
creates a substantial danger of confusion or unfairness, the proper remedy
is removal from the ballot. See Sklar, 220 Ariz. at 455 ¶ 22. Indeed, were the
measure to proceed and win voter approval, the legislature’s authority to
restore income tax indexing, as the proponents insist they intended, would
be greatly circumscribed by the Voter Protection Act, so that a substantive
fix might well require a second initiative. All of that underscores the
important purposes served by the statutory requirement to describe an
initiative’s principal provisions in the petition.
B.
¶29 The petition’s description of the magnitude of the tax increase
on wealthy taxpayers also “creates a significant danger of confusion.” Save
Our Vote, 231 Ariz. at 152 ¶ 26. The petition description stated that the
measure would increase taxes on wealthy Arizonans by 3.46% and 4.46%,
which on its face seems modest. However, the affected tax rates would
actually increase by seventy-six percent and ninety-eight percent,
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respectively. This difference is so significant that it could materially affect
whether a person would sign the petition, as it is one thing to increase
someone’s taxes by between three and four percent and another to nearly
double them. Indeed, as the JLBC observed, the changes would make
Arizona’s top tax rates the fifth highest in the country.
¶30 Given the description’s required brevity, the initiative
sponsors need not have described this change in great detail, but they may
not describe it in a confusing way. Had they simply changed the wording,
saying that the rates applicable to the two high-income categories would be
increased by 3.46 and 4.46 percentage points, the description would have
been much clearer. Indeed, the Chief Justice’s dissent acknowledges that
this wording “could have resolved the ambiguity.” See infra ¶ 40. Instead,
by choosing to describe the increase in percentage terms, the initiative
proponents made it appear more likely that the magnitude of the increase
was slight rather than substantial. Applying basic mathematics principles,
“[i]f a quantity is increased by a percentage, then that percentage of the
quantity is added to the original.” Vassilis C. Mavron & Timothy N.
Phillips, Elements of Mathematics for Economics and Finance 11 (2007). Thus,
increasing the prior rate “by 3.46 percent” would change it only from 4.54%
to 4.7%, and “by 4.46 percent” from 4.54% to 4.74%—quite a difference from
the actual new rates of eight percent and nine percent in the initiative.
¶31 At best, the two possible interpretations of the “by [x]
percent” language yield a significant danger of confusion. The Chief
Justice’s dissent characterizes the wording as ambiguous rather than
confusing. See infra ¶ 40. Ambiguity is the root of confusion. Where the
description lends itself to two sharply divergent interpretations with very
different and significant ramifications, the danger of confusion is
sufficiently great that it undermines any assurance that the voters received
adequate notice of what they were signing.
¶32 The Chief Justice’s dissent further asserts that voters who
were confused could read the actual language of the text to clear up the
ambiguity. See infra ¶ 41. But the description itself must be adequate in its
description of the principal provisions to avoid confusion. The obvious
purpose of § 19-102(A) “is to ensure that the public has immediate and full
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disclosure” of the initiative’s principal provisions. Sklar, 220 Ariz. at 454
¶ 17. The description need not encompass minor provisions and may be
presented in a biased manner, but it may not create a substantial danger of
confusion or unfairness. To hold that such a confusing description is
permissible because the truth may be discovered in the many pages of the
initiative, or that the proponents actually intended something different
from what the words they chose to use indicate, is to eviscerate the
description requirement and its important purposes of transparency,
fairness, and disclosure.
IV.
¶33 The omission of the change in tax indexing paired with the
confusing language about the magnitude of tax increases makes it clear that
petition signers were not adequately informed about what they were
signing, as the requisite description failed to provide adequate notice of the
measure’s principal provisions as required by § 19-102(A).
¶34 Accordingly, we reverse the superior court’s decision.
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CHIEF JUSTICE BALES, joined by JUSTICE TIMMER, Dissenting
BALES, C.J., joined by TIMMER, J., dissenting.
¶35 I agree with the majority that better drafting of the 100-word
description and Proposition 207 itself could have avoided the issues
addressed in today’s opinion. But we have never required perfection in
drafting as a condition for the valid exercise of legislative authority, and
doing so with initiatives would infringe upon the people’s constitutional
right to enact laws independently of the legislature. Ariz. Const. art. 4,
pt. 1, § 1(1). Because I do not believe that the 100-word description presents
a substantial danger of fraud, confusion, or unfairness sufficient to
invalidate the initiative petitions, I respectfully dissent from my colleagues’
decision to strike Proposition 207 from the ballot.
¶36 The description for Proposition 207 states:
The Invest in Education Act increases the classroom site fund
by raising the income tax rate by 3.46% on individual incomes
over a quarter million dollars (or household incomes over half
a million dollars), and by 4.46% on individual incomes over
half a million dollars (or household incomes over a million
dollars); designates 60% of new funds for teacher salaries and
40% for operations; adds full day kindergarten and pay raises
for student support services personnel as permitted fund
uses; requires governing boards seek teacher and personnel
input on fund use plans; defines teacher and student support
services personnel.
¶37 As required by A.R.S. § 19-102, the description appeared on
the petition signature sheets along with this disclaimer:
Notice: This is only a description of the proposed measure (or
constitutional amendment) prepared by the sponsor of the
measure. It may not include every provision contained in the
measure. Before signing, make sure the title and text of the
measure are attached. You have the right to read or examine
the title and text before signing.
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MOLERA V. REAGAN
CHIEF JUSTICE BALES, joined by JUSTICE TIMMER, Dissenting
¶38 The majority accepts the challengers’ arguments that the
description poses a danger of confusion or unfairness by its “description of
the change in the tax rate combined with the omission of any discussion of
changes in indexing for inflation.”
¶39 If passed, Proposition 207 would have increased the tax rate
from 4.54% to 8.00% on individual incomes from $250,001 to $500,000 and
from 4.54% to 9.00% for individual incomes over $500,000 (with
corresponding increases for joint filers). Thus, two new tax brackets would
have been created. The tax rates for amounts up to $250,000 would remain
the same regardless of a person’s total income. The proposed new tax rates
are “marginal tax rates” in that they only apply to amounts of income in
excess of the first $250,000.
¶40 The issue regarding the tax rate reflects that changes in
percentage rates can refer to either absolute or relative changes. For
example, if a percentage rate increases from 6% to 8%, the difference in
absolute terms is 2%. The relative change, in contrast, is an increase of 33%
(8% minus 6%, divided by 6%). In this respect, the 100-word description is
not inaccurate but ambiguous. In terms of absolute change, the Proposition
would – as the description stated – raise the tax rates by 3.46% (8/100 –
4.54/100 = 3.46/100 = 3.46%) and 4.46%. But in terms of relative change, as
the majority correctly notes, the increase in the marginal rates would be
approximately 76% (3.46/4.54) and 98% (4.46/4.54). To avoid ambiguity in
describing changes in percentage rates, the commonly accepted convention
is to use the term “percentage points” to refer to absolute changes. For
example, here the 100-word description could have resolved the ambiguity
by saying that Proposition 207 would raise the income tax rate by 3.46
percentage points instead of “by 3.46%.” But this does not mean that the
description, as worded, created a substantial danger of confusion or
unfairness. See Save Our Vote, Opposing C-03-2012 v. Bennett, 231 Ariz. 145,
152 ¶ 27 (2013).
¶41 In assessing the adequacy of a 100-word description, this
Court considers not only the description itself, but also the fact that it is
accompanied by a notice stating it is only a description prepared by the
sponsor and alerting petition signers to their right to review the attached
17
MOLERA V. REAGAN
CHIEF JUSTICE BALES, joined by JUSTICE TIMMER, Dissenting
initiative’s title and text before signing. See id.; Wihelm v. Brewer, 219 Ariz.
45, 48–49 ¶¶ 13–15 (2008). The description clearly states that Proposition
207 would increase the tax rates on individual incomes greater than
$250,000 (or twice that amount for joint filers). If – as the majority supposes
– a prospective signer was confused about the exact quantitative change,
the accompanying text clearly reflects in section 3 that Proposition 207
would add two new income tax brackets to A.R.S. § 43-1011 that would
increase the marginal tax rates from 4.54% to 8% for individuals earning
$250,001 to $500,000 and 9% for those earning more than $500,000 (or joint
filers earning twice those amounts). Notably, even if the description had
used the phrase “percentage points” instead of saying that the rates would
be raised by 3.46% and 4.46%, a signer still would have had to refer to the
text itself to identify the resulting tax rates. Although the majority is
concerned that the description understated the proposed tax increases, the
description also arguably overstated them by not explaining they were
increases in only marginal rates rather than rates applicable to total income.
¶42 Nor is the 100-word description flawed for omitting any
discussion of changes in the indexing of taxes for inflation. The 100-word
description is not a complete description - it need only describe the
principal provisions of a measure. A.R.S. § 19-102. See also Save Our Vote,
231 Ariz. at 152 ¶ 27. Because Proposition 207 does not purport to eliminate
inflation indexing, it is not surprising that the description does not discuss
this matter. Even if the Proposition were ambiguous in its possible effects
on indexing, that would not provide grounds for striking the measure from
the ballot, but instead would properly be a subject of debate between
proponents and opponents in their seeking to persuade the voters. Cf.
Winkle v. City of Tucson, 190 Ariz. 413, 418 (1997) (“…this court should not
create an impediment to the exercise of one of our state government’s
bedrock institutions…In a democracy, the process itself is often as valuable
as the result.”). For example, had the measure appeared on the ballot, the
Secretary of State’s Publicity Pamphlet for the 2018 Election would have
included a fiscal impact summary prepared by the JLBC discussing the
effects of eliminating indexing – an effect disputed by the proponents of
Proposition 207.
18
MOLERA V. REAGAN
CHIEF JUSTICE BALES, joined by JUSTICE TIMMER, Dissenting
¶43 The proponents of Proposition 207 disclaim any intent to
affect inflation-based tax indexing. Rather than resolve the interpretative
issue now (which, after all, concerns the effect of a proposed rather than
enacted law), we should instead allow the voters to consider the competing
arguments about inflationary indexing in deciding how to cast their votes.
But if we must decide the issue, the proponents’ reading of Proposition 207
is the one better supported by the measure’s text. Currently, A.R.S. § 43-
1011(A)(5) identifies five income tax brackets for taxable years beginning
after December 1, 2006, “subject to subsections B and C” of § 43-1011.
Subsections B and C in turn provide for the indexing of the brackets
identified in subsection (A)(5). Proposition 207 would not repeal
subsections (A)(5), (B), or (C). Instead, it would add a new (A)(6) for taxable
years beginning after December 31, 2018 that restates the five (A)(5)
brackets for incomes up to $250,000 and adds two new brackets for
individual incomes exceeding $250,000 and $500,000 (or twice those
amounts for joint filers). The new (A)(6), like (A)(5), is expressly subject to
subsections (B) and (C) of § 43-1011 – the subsections that provide for
inflation-based indexing.
¶44 On its face, Proposition 207 would not repeal the indexing of
the tax brackets for incomes of $250,000 or less. The measure leaves in place
the existing brackets for those income levels and it expressly states that it is
subject to the subsections providing for indexing. While subsections (B)
and (C) refer to indexing the brackets identified in (A)(5), those same
brackets are echoed in proposed (A)(6). The only way to conclude that
(A)(6) eliminates indexing is to assume that its reference to subsections (B)
and (C) is meaningless and that it implicitly repeals rather than coexists
with (A)(5) for tax years after 2018. Our usual approach, however, is to
interpret statutes to harmonize and give effect to all their provisions. See
David C. v. Alexis S., 240 Ariz. 53, 55 ¶ 9 (2016). And even if Proposition 207
would eliminate indexing for the new brackets for incomes over $250,000
and $500,000, such a change could hardly be called a “principal provision”
of the measure that needed to be described in the description. Cf. Save Our
Vote, 231 Ariz. at 152 ¶ 27 (noting that A.R.S. § 19-102(A) “requires only a
description of the principal provisions, not a complete description”).
19
MOLERA V. REAGAN
CHIEF JUSTICE BALES, joined by JUSTICE TIMMER, Dissenting
¶45 Finally, if the majority were correct that Proposition 207
would eliminate tax indexing for all brackets, JLBC’s analysis shows that
the change would result in only a “small increase” in taxes for most
taxpayers. For instance, JLBC estimated that a married couple with a
taxable income of $101,000 would pay approximately $34 more in income
tax due to this change, and that tax filers with adjusted gross incomes
ranging from $0 to $200,000 (nearly 90% of all tax filers) would on average
pay only $12 more annually. None of the additional revenues from
eliminating indexing on the lower tax brackets would be dedicated to the
Classroom Site Fund by Proposition 207. That Proposition 207 conceivably
could result in “small increases” in taxes going to the general fund hardly
makes that prospect a “principal provision” of a ballot measure aimed at
increasing school funding by raising the marginal tax rates for higher
income earners.
¶46 At bottom, the majority concludes that Arizona’s voters
should not be allowed to consider a legislative proposal supported by
hundreds of thousands of petition-signers because the description used the
% symbol instead of the words “percentage points” and the measure did
not add “or 6” to A.R.S. § 43-1011(C). Even if one agrees with that analysis,
it should give one pause that the conclusion only comes after untold hours
of volunteer efforts over many months to place the measure on the ballot
and then accelerated litigation in the trial court and this Court. The
initiative provisions of the constitution are self-executing and do not
require legislation to be effective. Ariz. Const. art. 4, pt. 1, § 1(1).
¶47 Our state could be well served, however, by legislation
affording some pre-circulation review of ballot measures and their
summaries and a resulting safe-harbor that could avoid measures being
struck from the ballot only after their circulation and with substantial
support by qualified electors. Cf. A.R.S. § 19-111.01 (allowing for non-
binding review and recommendations on ballot measures by legislative
council). Although the majority notes that the proponents could, and the
challengers did, seek review and comment by the legislative council
regarding Proposition 207 under A.R.S. § 19-111.01, that review only came
late in the process – about two weeks before the signature filing deadline -
and it has no binding effect in terms of a measure’s validity.
20
MOLERA V. REAGAN
CHIEF JUSTICE BALES, joined by JUSTICE TIMMER, Dissenting
¶48 Because I do not think that Proposition 207’s description is
fatally flawed, and I would otherwise affirm the trial court’s judgment
leaving the measure on the ballot, I respectfully dissent.
21
MOLERA V. REAGAN
JUSTICE TIMMER, Dissenting
TIMMER, J., dissenting:
¶49 I join fully in Chief Justice Bales’ dissenting opinion. I write
separately to highlight a flaw in the majority’s view that the adequacy of
the 100-word initiative description is properly assessed only after a court
resolves any ambiguities in the initiative measure’s language.
¶50 In determining that the 100-word description omits a
principal feature of the Invest in Education Act by failing to describe the
elimination of income tax indexing, the majority first interprets ambiguous
language in the proposed statute to conclude that income tax indexing is,
in fact, eliminated. Our statutory scheme belies this approach.
¶51 First, A.R.S. § 19-102(A) logically requires initiative
proponents to describe known principal provisions of the proposed
measure. It does not require proponents to forecast unintended adverse
consequences that depend on a future interpretation of the measure’s
language. Thus, in determining whether § 19-102(A) has been satisfied, the
appropriate inquiry should be whether the proponents’ assessment of what
constitutes principal provisions is objectively reasonable based on the
measure’s language, even if that language is subject to differing
interpretations. (Contrary to the majority’s assertion, this is not a subjective
standard. See supra ¶ 27.)
¶52 Second, nothing in our statutes contemplates that the
adequacy of the 100-word description turns on judicial interpretation of
ambiguous language in the measure. Indeed, although proponents have
the option of asking the legislative council to review a measure’s text for
ambiguities, they are neither required to do so nor obligated to change the
text or the initiative description if an ambiguity is identified. See A.R.S.
§ 19-111.01. In short, just as the legislature may enact an ambiguous statute,
so too may the voters. And tellingly, although the proponents may accept
the council’s recommendations to improve the measure’s language, see § 19-
111.01(C), there is no corresponding statutory mechanism for amending the
100-word description.
22
MOLERA V. REAGAN
JUSTICE TIMMER, Dissenting
¶53 The proponents here contend they did not intend to eliminate
income tax indexing and therefore did not include this elimination in the
100-word description. As Chief Justice Bales points out, the proponents’
claim is supported by a reasonable interpretation of the measure’s
language. The majority should have ended its inquiry there and resisted
the petitioners’ call to resolve the ambiguity in the measure’s language to
decide whether the 100-word description is sufficient. Had it done so, and
the measure otherwise qualified for the ballot, voters could have considered
arguments about the measure’s impact on income tax indexing in deciding
how to vote, as the legislature contemplated. See A.R.S. § 19-123(E)
(requiring at least three public hearings on an initiative measure qualified
for the ballot to “provide an opportunity for proponents, opponents and
the general public to provide testimony and request information” and
which “shall include a fiscal impact presentation on the measure by the joint
legislative budget committee staff”).
¶54 For these reasons, and those set forth in Chief Justice Bales’
dissenting opinion, I would affirm the trial court’s judgment and allow the
voters to decide whether to pass the Invest in Education Act.
23