Biggs v. betlach/macias ( 2017 )

IN THE
SUPREME COURT OF THE STATE OF ARIZONA
ANDY BIGGS, ET AL.,
Plaintiffs/Appellants,
v.
THOMAS J. BETLACH,
Defendant/Appellee,
EDMUNDO MACIAS; GARY GORHAM; DANIEL MCCORMICK; AND TIM
FERRELL,
Intervenor-Defendants/Appellees.
No. CV-17-0130-PR
Filed November 17, 2017
Appeal from the Superior Court in Maricopa County
The Honorable Douglas Gerlach, Judge
No. CV2013-011699
AFFIRMED
Opinion of the Court of Appeals, Division One
242 Ariz. 55 (App. 2017)
VACATED
COUNSEL:
Christina Sandefur (argued), Aditya Dynar, Scharf-Norton Center for
Constitutional Litigation at the Goldwater Institute, Phoenix, Attorneys for
Andy Biggs, Andrew Tobin, Nancy Barto, Judy Burges, Chester Crandell,
Gail Griffin, Al Melvin, Kelli Ward, Steve Yarbrough, Kimberly Yee, John
Allen, Brenda Barton, Sonny Borrelli, Paul Boyer, Karen Fann, Eddie
Farnsworth, Thomas Forese, David Gowan, Rick Gray, John Kavanagh,
Adam Kwasman, Debbie Lesko, David Livingston, Phil Lovas, J. D.
Mesnard, Darin Mitchell, Steve Montenegro, Justin Olson, Warren Petersen,
Justin Pierce, Carl Seel, Steve Smith, David Stevens, Bob Thorpe, Kelly
Townsend, Michelle Ugenti, Jeanette Dubreil, Katie Miller, and Tom Jenney
Douglas C. Northup, Timothy Berg (argued), Patrick Irvine, Carrie Pixler
Ryerson, Fennemore Craig, P.C., Phoenix, Attorneys for Thomas J. Betlach
BIGGS V. BETLACH
Opinion of the Court
Timothy M. Hogan, Joy Herr-Cardillo, Arizona Center for Law in the Public
Interest, Phoenix, and Ellen Sue Katz, William E. Morris Institute for Justice,
Phoenix, Attorneys for Edmundo Macias, Gary Gorham, Daniel
McCormick, and Tim Ferrell
Roopali H. Desai, D. Andrew Gaona, Coppersmith Brockelman PLC,
Phoenix and Ann-Marie Alameddin, Arizona Hospital and Healthcare
Association, Phoenix, Attorneys for Amicus Curiae Arizona Hospital and
Healthcare Association and Amicus Curiae American Cancer Society
Cancer Action Network
James S. Burling, Pacific Legal Foundation, Sacramento, CA, Attorneys for
Amici Curiae Pacific Legal Foundation and Howard Jarvis Taxpayers
Association
Brett W. Johnson, Andrew Sniegowski, Snell and Wilmer LLP, Phoenix,
Attorneys for Amicus Curiae Health System Alliance of Arizona
CHIEF JUSTICE BALES authored the opinion of the Court, in which VICE
CHIEF JUSTICE PELANDER and JUSTICES BRUTINEL, TIMMER,
GOULD, and LOPEZ and JUDGE STARING joined. ∗
CHIEF JUSTICE BALES, opinion of the Court:
¶1 In 2013, by a simple majority vote, the legislature enacted H.B.
2010 to expand coverage under Arizona’s indigent health care program,
Arizona Health Care Cost Containment System (“AHCCCS”), with federal
monies funding most of the costs. To fund the remaining costs, the
legislature provided in A.R.S. § 36-2901.08(A) that the director of AHCCCS
“shall establish, administer and collect an assessment” from Arizona
hospitals.
¶2 We hold that the hospital assessment is not subject to article
9, section 22 of the Arizona Constitution, which generally requires that acts
∗Justice Clint Bolick has recused himself from this case. Pursuant to article
6, section 3 of the Arizona Constitution, the Honorable Christopher P.
Staring, Judge of the Arizona Court of Appeals, Division Two, was
designated to sit in this matter.
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Opinion of the Court
providing for a net increase in state revenues be approved by a two-thirds
vote in each house of the legislature. This requirement does not apply to
statutorily authorized assessments that “are not prescribed by formula,
amount or limit, and are set by a state officer or agency.” Ariz. Const. art.
9, § 22(C)(2). Because the exception applies here, we reject the constitutional
challenge to the assessment.
I.
¶3 In 2010, Congress enacted the Patient Protection and
Affordable Care Act (“ACA”), which provides federal funding to states that
choose to expand eligibility under their state Medicaid program to all
“individuals under the age of 65 with incomes below 133 percent of the
federal poverty level.” See Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519,
576 (2012). Under the ACA, the federal government pays most of the costs
for the expansion, but federal funding is contingent on a state satisfying
various conditions, including paying a share of the costs. See id. at 576, 586.
Pursuant to the ACA, Arizona enacted H.B. 2010 to expand AHCCCS
eligibility to all individuals with incomes not exceeding 133 percent of the
federal poverty level. 2013 Ariz. Sess. Laws, ch. 10, §§ 5, 44 (1st Spec. Sess.).
To pay for the expanded coverage, H.B. 2010 required the director of
AHCCCS to levy an “assessment” on Arizona hospitals. A.R.S.
§ 36-2901.08(A).
¶4 After the governor signed H.B. 2010, then-state-senator Andy
Biggs and thirty-five other legislators who had voted against the bill (the
“Opponents”) and three citizens filed this action against AHCCCS Director
Thomas Betlach and others (collectively the “Director”). The lawsuit
sought to enjoin implementation of the hospital assessment, alleging that it
violates article 9, section 22 of the Arizona Constitution because § 36-
2901.08 was not approved by a two-thirds vote. Although the superior
court initially dismissed the case for lack of standing, we reversed and
remanded for further proceedings. Biggs v. Cooper ex rel. Cty. of Maricopa,
236 Ariz. 415, 420 ¶ 21 (2014).
¶5 On remand, the parties filed cross-motions for summary
judgment. The superior court ruled that § 36-2901.08 was properly enacted
by a simple majority because the law does not impose a tax but instead falls
within an exception listed in article 9, section 22. The court of appeals
affirmed. Biggs v. Betlach, 242 Ariz. 55, 57 ¶ 2 (App. 2017).
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Opinion of the Court
¶6 We granted review because the application of article 9, section
22 to the hospital assessment presents legal issues of statewide importance.
We have jurisdiction under article 6, section 5(3) of the Arizona
Constitution and A.R.S. § 12-120.24.
II.
¶7 Under article 9, section 22 of the Arizona Constitution, “[a]n
act that provides for a net increase in state revenues, as described in
subsection B is effective on the affirmative vote of two-thirds of the
members of each house of the legislature.” Ariz. Const. art 9, § 22(A).
Subsection (B) states that this supermajority requirement applies to “[t]he
imposition of any new tax” and “[t]he imposition of any new state fee or
assessment or the authorization of any new administratively set fee.” Id.
§ 22(B)(1), (5). Subsection (C) exempts from the supermajority requirement
“[f]ees and assessments that are authorized by statute, but are not
prescribed by formula, amount or limit, and are set by a state officer or
agency.” Id. § 22(C)(2).
¶8 Opponents argue that § 36-2901.08 is unconstitutional
because it was not approved by a two-thirds majority, yet it imposes a “new
tax” or authorizes a “new administratively set fee,” and the (C)(2) exception
does not apply.
¶9 “Determining constitutionality is a question of law, which we
review de novo.” Gallardo v. State, 236 Ariz. 84, 87 ¶ 8 (2014). “When the
statute in question involves no fundamental constitutional rights or
distinctions based on suspect classifications, we presume the statute is
constitutional and will uphold it unless it clearly is not.” Cave Creek Unified
Sch. Dist. v. Ducey, 233 Ariz. 1, 5 ¶ 11 (2013); see also Hall v. Elected Officials
Ret. Plan, 241 Ariz. 33, 38 ¶ 14 (2016) (observing that the party challenging
a statute bears the burden of overcoming a presumption of
constitutionality).
¶10 “The Constitution should be construed so as to ascertain and
give effect to the intent and purpose of the framers and the people who
adopted it.” Brewer v. Burns, 222 Ariz. 234, 239 ¶ 26 (2009) (internal citation
and quotation omitted). “We give effect to the purpose indicated, by a fair
interpretation of the language used, and unless the context suggests
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Opinion of the Court
otherwise words are to be given their natural, obvious and ordinary
meaning.” Id. (internal citation and quotation omitted).
A.
¶11 We first consider whether the hospital assessment is a “tax”
for purposes of article 9, section 22. The Constitution uses the word “tax”
as distinct from “fees and assessments,” but does not itself define these
terms.
¶12 Opponents argue that if the hospital assessment constitutes a
“tax” for purposes of section 22, the two-thirds approval requirement
applies, and it is unnecessary to consider the exception under (C)(2), which
refers only to “[f]ees and assessments.” The Director, in contrast, contends
that we need not determine whether the hospital assessment is a “tax”
because the term “assessment” can, in some contexts, encompass taxes, and
therefore we should uphold the hospital assessment if it qualifies for the
(C)(2) exception. Cf. May v. McNally, 203 Ariz. 425, 431 ¶ 24 (2002) (using
term “assessment” in First Amendment context to refer to both taxes and
fees).
¶13 We agree with Opponents that we must determine whether
the hospital “assessment” - however labeled - is truly a “tax” within the
meaning of section 22. In specifying when the two-thirds vote requirement
applies, section 22 distinguishes taxes from fees and assessments.
Subsection (B) addresses taxes in subparagraphs (1), (2), (3), and (7), while
subparagraphs (4), (5), and (6) reference fees or assessments. Ariz. Const.
art. 9, § 22(B). Taxes are not mentioned in the (C)(2) exception, in contrast
to (C)(3), which excepts “[t]axes, fees or assessments that are imposed by
counties, cities, towns and other political subdivisions of this state.” Id.
§ 22(C)(3). To treat “tax” as subsumed within “assessment” for purposes of
(C)(2) would contradict the constitutional language and potentially allow
the legislature to circumvent the tax-specific limitations imposed by article
9, section 22.
¶14 Because the Constitution does not define the terms “tax,”
“fee,” or “assessment” for purposes of section 22, we look to more general
caselaw for guidance, as do the parties. In doing so, we recognize that
courts in other contexts - as May reflects - have sometimes used
“assessment” as a generic term that includes both taxes and fees. For
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Opinion of the Court
purposes of this case, however, we must distinguish “assessments” from
“taxes,” though it is not necessary here to delineate between “fees” and
“assessments,” as both are subject to the (C)(2) exception. We reject
Opponents’ suggestion, based on cases involving special assessments, that
“assessments” concern only payments collected to benefit a particular
property or the payor.
¶15 As the First Circuit has explained:
[The cases] have sketched a spectrum with a paradigmatic tax
at one end and a paradigmatic fee at the other. The classic
“tax” is imposed by a legislature upon many, or all, citizens.
It raises money, contributed to a general fund, and spent for
the benefit of the entire community. The classic “regulatory
fee” is imposed by an agency upon those subject to its
regulation.
San Juan Cellular Tel. Co. v. Pub. Serv. Comm’n, 967 F.2d 683, 685 (1st Cir.
1992); see also Jachimek v. State, 205 Ariz. 632, 636 ¶ 14 (App. 2003). The
challenge, of course, is determining how to characterize a legislative act
increasing state revenues that does not fall at either end of the spectrum.
¶16 In May, this Court used a three-factor test in determining
whether an “assessment” should be categorized as a tax or instead a fee in
the First Amendment context. See May, 203 Ariz. at 430-31 ¶ 24. This test
evaluates “(1) the entity that imposes the assessment; (2) the parties upon
whom the assessment is imposed; and (3) whether the assessment is
expended for general public purposes, or used for the regulation or benefit
of the parties upon whom the assessment is imposed.” Id. (quoting Bidart
Bros. v. Cal. Apple Comm’n, 73 F.3d 925, 931 (9th Cir. 1996)).
¶17 Opponents argue that because the May test was adopted in a
First Amendment context, it is not dispositive here. To be sure, “the
definition of tax in one context . . . has no talismanic significance.” Bidart
Bros., 73 F.3d at 930 (internal citation and quotation omitted). Nevertheless,
the May test provides a useful analytical tool for distinguishing taxes from
fees or assessments. See Jachimek, 205 Ariz. at 636-37 ¶¶ 14-22 (employing
the three-factor May test in determining whether a “fee” on pawnbroker
transactions was a tax or a fee); see also Bidart Bros., 73 F.3d at 931
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Opinion of the Court
(employing the same three-factor test in determining whether an
“assessment” was a tax or a fee in the context of the Tax Injunction Act).
¶18 Each of the May factors suggests that § 36-2901.08 does not
impose a “tax.” First, the hospital assessment, although authorized by the
statute, is imposed by the director. See Bidart Bros., 73 F.3d at 931 (“An
assessment imposed directly by the legislature is more likely to be a tax than
an assessment imposed by an administrative agency.”). Opponents
maintain that the assessment is imposed by the legislature because § 36-
2901.08(A) provides that “[t]he director shall establish, administer and
collect an assessment on hospital revenues, discharges or bed days.” This
argument conflates the authorization of the assessment with its imposition.
Under the statute, the director identifies how the assessment is determined,
the amount, and whether hospitals are exempted from paying anything.
A.R.S. § 36-2901.08(B), (C); see also Ariz. Admin. Code § R9-22-730(B), (I)
(identifying various types of hospitals excluded from assessment). The
director is responsible for establishing, collecting, and enforcing the
assessment. A.R.S. § 36-2901.08(A), (H). Thus, for purposes of the May test,
the director - not the legislature - imposes the assessment. Cf. Jachimek, 205
Ariz. at 636 ¶ 15 (concluding that a pawnshop fee was imposed by “the
governmental entity that has been delegated regulatory authority over
pawn transaction reports pursuant to the statute”).
¶19 The second May factor recognizes that “[a]n assessment
imposed upon a broad class of parties is more likely to be a tax than an
assessment imposed upon a narrow class.” Bidart Bros., 73 F.3d at 931.
Opponents argue that this factor supports characterizing § 36-2901.08 as
imposing a tax because the assessment is collected from a broad class of
hospitals regardless of any benefit they receive from the revenues collected
or their patients’ eligibility for AHCCCS.
¶20 Several aspects of the hospital assessment lead us to conclude
it is imposed on a narrow class, which weighs against treating it as a tax.
The assessment is imposed only on hospitals, which cannot pass on the
costs to patients or third-party payors. A.R.S. § 36-2901.08(G). The statute
further contemplates that the assessment will not be imposed on all
hospitals, as the director may “establish modifications or exemptions”
based on various factors, including a hospital’s size, services, and location.
Id. § 36-2901.08(C). Indeed, as implemented, the assessment does not apply
to many types of hospitals. Ariz. Admin. Code § R9-22-730(I). Finally, even
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Opinion of the Court
if the assessment did apply to all Arizona hospitals, it would still be limited
to a narrow class for purposes of determining whether it is a tax. See Bidart
Bros., 73 F.3d at 932 (assessment imposed only upon apple producers was a
narrow imposition and weighed in favor of finding that the assessment was
not a tax); Jachimek, 205 Ariz. at 948-49 ¶¶ 14-22 (“fee” imposed only on
pawnbrokers was a fee, not a tax).
¶21 As for the third May factor, Opponents argue that the hospital
assessment is collected for a general public purpose - to fund the Medicaid
expansion - and not to provide any specific benefit to hospitals. We reject
this argument insofar as it presumes that a fee or assessment necessarily
constitutes a tax if the revenues collected serve any public purpose rather
than benefitting only those who pay it. Instead, an assessment or fee can be
characterized as such rather than a tax if there is “‘some reasonable relation
to the service to be performed’ on the payor’s behalf.” Jachimek, 205 Ariz.
at 637 ¶ 21 (quoting Stewart v. Verde River Irrigation & Power Dist., 49 Ariz.
531, 548 (1937)); see also Kyrene Sch. Dist. No. 28 v. Chandler, 150 Ariz. 240,
244 (App. 1986) (finding that a school “receiv[ed] the overall benefit of [a
city’s] water and wastewater systems in exchange for . . . system
development charges”).
¶22 Although H.B. 2010 serves a public purpose by expanding
AHCCCS eligibility, the assessment was expressly intended and in fact
serves to benefit the hospitals. Hospital assessments are to “be used for the
benefit of hospitals for the purpose of providing health care for persons
eligible for coverage funded by the hospital assessment.” 2013 Ariz. Sess.
Laws, ch. 10, § 44(3) (1st Spec. Sess.). Assessment revenues are deposited
into a “hospital assessment fund,” A.R.S. § 36-2901.08(F), and cannot revert
to the state general fund to be used for another public purpose, id.
§ 36-2901.09(C)(1). “An assessment placed in a special fund and used only
for special purposes is less likely to be a tax.” Bidart Bros., 73 F.3d at 932.
¶23 The assessments also enable hospitals to be compensated for
treating patients who are unable to pay. Hospitals are required by federal
law to provide emergency room treatment for patients regardless of their
ability to pay. 42 U.S.C. § 1395dd. Because of the AHCCCS expansion,
which depends on the assessment, more than 250,000 additional persons
are now covered, and hospitals receive payments for treating them and
have lower costs for uncompensated care. Indeed, Opponents
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Opinion of the Court
acknowledged below that the assessment operates in a way that benefits
the hospitals.
¶24 Weighing the three May factors, we conclude that the hospital
assessment is not a “tax” for purposes of article 9, section 22. The
assessment is imposed by the director on hospitals, a narrow class, and
directly benefits hospitals by expanding AHCCCS coverage for uninsured
patients, thereby increasing payments to the hospitals.
B.
¶25 Because the hospital assessment is not a tax, we must consider
whether it falls within the exception under subsection (C)(2). Subsection
(A) states that “[a]n act that provides for a net increase in state revenues”
must be approved by a two-thirds vote, and subsection (B)(5) specifically
applies this requirement to “any act” that increases state revenue by “[t]he
imposition of any new state fee or assessment or the authorization of any
new administratively set fee.” Ariz. Const. art. 9, § 22(A), (B)(5).
Subsections (A) and (B), however, do not apply to “[f]ees and assessments
that are authorized by statute, but are not prescribed by formula, amount
or limit, and are set by a state officer or agency.” Id. art. 9, § 22(C)(2).
¶26 There is no dispute that the hospital assessment is set by the
director, so whether (C)(2) applies turns on whether the assessment is
“authorized by statute” and, if so, whether it is “not prescribed by formula,
amount or limit.” (For reasons noted supra ¶ 18, we conclude that by
enacting H.B. 2010, the legislature did not impose the assessment, and thus
this case does not implicate a statutory “imposition of a[] new state fee or
assessment” for purposes of (B)(5)).
¶27 Opponents argue that “authorized by statute” for purposes of
the (C)(2) exception means that a fee or assessment is authorized by a
statute that either preexisted the 1992 adoption of article 9, section 22 or has
since been approved by a two-thirds majority. This interpretation,
Opponents maintain, is necessary to give effect to all of section 22, to
implement the voters’ intent, and to avoid absurd results. We disagree.
¶28 By its terms, (C)(2) does not state that it applies only to
statutory authorizations that either preexisted the adoption of the
constitutional provision or that are later approved by a two-thirds vote.
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Interpreting (C)(2) as stating that section 22 does not apply to fees or
assessments that are authorized by a statute approved by a two-thirds vote
would not be an exception, as such a statute would satisfy subsections (A)
and (B)(5). And subsection (B)(5) by its terms does not apply to the
imposition of administratively set fees, so subsection (C)(2) is not needed to
allow agencies or state officers to increase fees under statutory
authorizations that predated section 22’s adoption.
¶29 The phrase “authorized by statute” in (C)(2) is most
reasonably construed as referring to fees and assessments that are
statutorily authorized under the usual legislative process, that is, by a
simple majority vote. This interpretation, unlike the one urged by
Opponents, gives force to the language of both subsections (C)(2) and (B)(5).
Under (B)(5), the supermajority requirement applies to “any act”
authorizing “any new administratively set fee,” except that requirement, by
the terms of (C)(2), does not apply to statutes authorizing fees and
assessments “that are not prescribed by formula, amount or limit, and are
set by a state officer or agency.” To decide otherwise would mean that an
act would have to first satisfy the supermajority requirement before it could
be exempted from it.
¶30 Interpreting subsection (C)(2) as allowing the legislature, by a
simple majority vote, to authorize the imposition of certain new fees or
assessments by state officers or agencies does not contradict the voters’
intent or lead to absurd results. In approving section 22, the voters limited
the legislature’s ability to itself increase state revenues through taxes, fees,
or assessments. This goal is reflected in both section 22’s language and
statements in the voter publicity pamphlet. But it is also clear that section
22, by its terms, does not require supermajority legislative approval for
every governmental action that might increase state revenues, inasmuch as
subsection (B) applies only to legislative acts and subsection (C) excepts
inflationary or similar effects “not caused by an affirmative act of the
legislature,” certain fees and assessments “set by a state officer or agency,”
and “[t]axes, fees or assessments” imposed by local governments and
political subdivisions. Ariz. Const. art. 9, § 22(C)(1)–(3).
¶31 The legislative council analysis in the 1992 voter pamphlet
explained that:
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Proposition 108 would amend the State Constitution to
require a two-thirds vote in each House of the Legislature to
enact a net increase in state revenue through (1) enacting any
new or increased tax or statutory fee, (2) reducing or
eliminating any exemption or credit on a tax or fee or (3)
making any change in the allocation of tax revenues among
the state, counties and cities.
Ariz. Sec’y of State, 1992 Publicity Pamphlet 45 (1992),
https://www.azsos.gov/sites/azsos.gov/files/pubpam92.pdf. The voter
pamphlet further observed that Proposition 108 would not affect
“authorized fees and assessments that are not set or limited by law, such as
university tuition.” Id. at 46. The voter pamphlet, notably, is consistent
with section 22’s focus on constraining the legislature’s actions and
excepting fees and assessments that are authorized but not set or limited by
law. Neither the voter pamphlet nor any other legislative history identified
by Opponents states that the (C)(2) exception would be limited to
administratively set fees or assessments that were either already authorized
or later authorized by a supermajority.
¶32 Our interpretation of (C)(2) is consistent with the expressed
intent of the voters in approving section 22. If the legislature seeks to enact
a statute that increases state revenues by authorizing an administratively
set fee with a prescribed “formula, amount or limit,” (B)(5) requires
approval by two-thirds of each house. But this requirement does not apply
when the legislature delegates the determination of a fee or assessment to a
state agency or officer. Distinguishing between legislatively prescribed fees
or assessments and fees or assessments that are administratively
determined comports with the voters’ desire to constrain the legislature and
does not lead to an absurd result.
¶33 Because we conclude that the hospital assessment is
“statutorily authorized,” we next consider whether it falls outside the (C)(2)
exception because it is “prescribed by formula, amount or limit.”
Opponents argue that § 36-2901.08 (1) prescribes factors for the director to
consider when determining modifications, (2) requires legislative
preapproval of the assessment and any alteration in the method of its
calculation, (3) forbids assessments entirely in specified circumstances, and
(4) requires the director to administer the tax in accordance with federal
law.
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¶34 In assessing Opponents’ arguments, we note initially that the
phrase “prescribed by formula, amount or limit” refers to prescriptions
conferred by state statutes, because this phrase follows “authorized by
statute,” and section 22 applies to state legislative acts. Cf. Adams v. Comm'n
on Appellate Court Appointments, 227 Ariz. 128, 135 ¶ 34 (2011) (recognizing
that words in constitution must be interpreted in context). Moreover,
because “limit” follows the words “formula” and “amount,” we construe it
as similarly referring to the quantitative aspects of administratively
imposed fees or assessments. See id.; see also Estate of Braden ex rel. Gabaldon
v. State, 228 Ariz. 323, 326 ¶ 13 (2011) (noting that “a statutory term is
interpreted in context of the accompanying words”). Reading “limit” as
referring broadly to any constraints whatsoever on administrative action
would render (C)(2) ineffective, as the non-delegation doctrine prevents the
legislature from granting unlimited discretion to an officer or agency to
impose fees or assessments. See, e.g., State v. Marana Plantations, Inc., 75
Ariz. 111, 114 (1953) (noting that a statute granting regulatory power “with
no prescribed restraints nor criterion nor guide to its action offends the
Constitution as a delegation of legislative power”).
¶35 With these points in mind, we turn to the statutory provisions
for the assessment. Section 36-2901.08(B) instructs the AHCCCS director to
adopt rules regarding the method for determining the assessment and
modifications or exemptions from the assessment. In doing so, “the
director may consider factors including the size of the hospital, the specialty
services available to patients and the geographic location of the hospital.”
A.R.S. § 36-2901.08(C) (emphasis added). The director is required to
“present the methodology to the joint legislative budget committee for
review,” id. § 36-2901.08(D), but this subsection does not require legislative
preapproval of the assessment or modifications. These provisions do not
prescribe a “formula, amount or limit” for the assessment.
¶36 Nor do the statutory terms incorporate formulas, amounts, or
limits by referencing federal law. Section 36-2901.08(B) provides that “[t]he
assessment is subject to approval by the federal government to ensure that
the assessment is not established or administered in a manner that causes a
reduction in federal financial participation.” Section 36-2901.08(E) instructs
the AHCCCS administration not to collect an assessment if the federal
medical assistance percentage applicable to Arizona is reduced to less than
eighty percent. These provisions do not prescribe formulas, amounts, or
limits for the hospital assessment. Instead, they condition the collection of
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the assessment on the continuation of the federal support for the AHCCCS
expansion that the assessment is intended to secure.
¶37 To summarize, we hold that the hospital assessment
authorized in A.R.S. § 36-2901.08 is not a “tax” for purposes of article 9,
section 22 of the Arizona Constitution and it is excepted from the
supermajority vote requirement under subsection 22(C)(2) because it is “not
prescribed by formula, amount or limit” and is set by the AHCCCS director.
III.
¶38 We affirm the judgment of the trial court, vacate the opinion
of the court of appeals, and deny Opponents’ application for attorney fees.
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