Court: Tax initiative will be called 'increase' on ballot

PHOENIX -- Arizona voters will see Proposition 204 described on their ballots as a "tax increase' despite protests from proponents that it really is not.

In a brief order, the Arizona Supreme Court rejected complaints by sponsors of the Quality Education/Quality Jobs initiative that such a description is misleading.

They pointed out that the levy, if approved, would begin the day after the current one-cent temporary hike approved by voters in 2010 expires. The result, they argued, is that the current 6.6 percent state sales tax rate would remain the same.

But Justice Scott Bales, writing for the court, said Secretary of State Ken Bennett "satisfied his duty' to prepare a fair analysis.

The ruling comes less than two weeks after the same court rebuffed a bid by a Republican-controlled legislative committee to label the effect of the initiative as a tax increase. In that case, a trial judge ruled -- and the high court agreed -- that the Legislative Council failed to prepare an impartial analysis of Proposition 204 for the brochure that is mailed to the homes of all registered voters.

The new ruling mystified initiative organizer Ann-Eve Pedersen, citing the earlier decision.

"I'm not sure what the logic is there,' she said. "It seems that they should both be held to the same standard, that neither the publicity pamphlet language nor the ballot language can be biased or misleading.'

But the court, in its brief order, did not explain how it reached its conclusion.

The fight surrounds a legal requirement that the secretary of state prepare a 50-word description of the effect of what voting "yes' and voting "no' would mean. That language appears on the actual ballot.

Bennett wrote that the initiative "permanently increases the state sales tax by 1 cent per dollar.'

Attorney James Barton, who represents initiative organizers, said Bennett should be forced instead to say that Proposition 204 "establishes a 1 percent transaction privilege tax,' pointing out that there would be no change in the existing tax rate if the measure is approved.

But Assistant Attorney General Michele Forney argued -- apparently successfully -- that Bennett's language "accurately states the essential change in the existing law and summarizes the principal provisions of the measure."

In the publicity pamphlet case, the trial judge said there was nothing necessarily wrong with describing the initiative as a tax increase. But Maricopa County Superior Court Judge John Rea said if lawmakers want to use that word, they also need to point out that the effective date of June 1, 2013, is the day after the existing temporary levy expires.

If approved, Proposition 204 is anticipated to raise about $1 billion a year initially. A majority of the cash would go to K-12 education, with additional funding for universities, health care for needy children and road construction.

State Treasurer Doug Ducey has organized a campaign to fight the measure. He said while the state may have needed the temporary boost to get through the recession, there is no need to permanently set the tax rate at 6.6 percent.