Biggs v. Betlatch

Voters demand supermajority approval for tax increases

Cases > Economic Liberty > Biggs v. Betlatch
Lost: The court narrowly defined "tax" to permit the imposition of an assessment on hospitals to pay for state Medicaid expansion without receiving the 2/3 vote required by the Arizona Constitution.
Case Court: Arizona Supreme Court

A bare majority of the Arizona state legislature passed a law requiring the director of the state Health Care Cost Containment System – which governs the state Medicaid program – to levy an “assessment” on hospitals to pay for Medicaid expansion. Legislators who opposed the law sued to invalidate it on the grounds that the bill created a tax that required a supermajority vote in the Legislature. Lower courts upheld the law. PLF filed an amicus brief urging the Arizona Supreme Court to grant review and protect the interests of taxpayers and the integrity of government by enforcing constitutional, statutory, and regulatory restraints on taxing and spending.

In 1992, Arizona residents faced some of the highest tax rates in the nation. In response, they passed Proposition 108 to limit the legislature’s power to raise taxes and amended the state constitution. That initiative added Article IX, Section 22, to the Arizona Constitution, which requires a two-thirds vote before the state legislature can impose any new taxes. The voters meant this new supermajority provision to ensure that tax increases occur only when there is a clear consensus supporting the proposed increase.

Under the Medicaid expansion “assessment,” Green Valley Hospital, in southern Arizona, must pay hundreds of thousands of dollars to the state while receiving nothing in exchange for the payment. That fact indicates that the charge is a tax, rather than an assessment or a fee. Legislators who had voted against the Medicaid assessment recognized this and challenged the law as violating Article IX, Section 22’s supermajority vote requirement. The lower courts, however, narrowly defined the word “tax” and held that the hospital charge was an assessment that is not subject to the supermajority requirement. This constrained reading of Article IX, Section 22, is contrary to the voters’ intent in adopting the provision. PLF’s amicus brief to the Arizona Supreme Court on behalf of Green Valley Hospital and the Howard Jarvis Taxpayers Association urges the court to resist creating numerous exceptions to the taxing limitations in the Arizona Constitution, and instead respect the will of the voters by requiring a supermajority vote for a broad range of taxes.

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What’s at stake?

  • Without clear guidance on how to interpret the constitutional provisions, lower courts may continue to narrow the definition of tax and subvert the will of the public.
  • California’s repeated “tax-revolts” serve as an example of what happens when government officials and courts ignore the will of the voters.

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