July 8, 2014

Standing up for constitutional limits on taxation

By Standing up for constitutional limits on taxation

Several states have constitutional limits on tax-increases, and particularly super-majority requirements that force legislatures to get a 2/3 vote to raise taxes. California’s Proposition 13 is the most famous, but Arizona, Nevada, and other states have similar requirements. Sadly, state officials often try to find ways around these limits—and the most recent such case is in Arizona.

Two years ago, Governor Jan Brewer was one of the boldest opponents of Obamacare. It was the federal government’s threat to deprive Arizona of its Medicaid funding that helped persuade the Supreme Court that Obamacare’s Medicaid expansion program violated the Constitution. Since then, Brewer has bizarrely reversed herself and become not only an advocate of Medicaid expansion, but so devoted to it that she was willing to violate the state Constitution’s limit on tax increases. The Medicaid expansion program she approved allows a government official to impose an exaction on hospitals, which is used to fund the program. During deliberations, several legislators objected that this was a tax that required a 2/3 vote, but the legislative majority declared that it was not, and passed the bill. Our friends at the Goldwater Institute filed suit on behalf of several legislators (and a taxpayer) to challenge its constitutionality.

The trial court threw out the case, holding that the legislators lacked the constitutionally required “standing” to sue. Legislators can only rarely sue the government for violating the Constitution, and the trial court held that these lawmakers could not prove that they had suffered the kind of injury that allows them to do so. But the Court of Appeals overruled that decision, and held that because these officials had been deprived of their right to vote in the legislature, they had grounds to sue. The case is now headed for the Arizona Supreme Court, and this afternoon, we filed this brief urging that court to reach the same conclusion.

One bizarre argument that the Governor’s lawyers make is that the legislative majority has the right to decide whether or not a bill is a tax subject to the 2/3 requirement—and that for courts to address that question would be judicial overreaching. That cannot be so. If the majority can decide, without any checks or balances, whether a bill is subject to the 2/3 requirement, then the 2/3 requirement will have no effect; the majority will always say that its votes are enough. What’s more, when it complains about super-majority requirements in general, the majority will always be able to point to a majority of people who are opposed to such requirements! Obviously any constitutional limit that protects the minority against the majority is going to be opposed by the majority, whose power is thereby decreased. But that hardly makes super-majority requirements undemocratic. On the contrary, the people put such requirements into the Constitution for the express purpose of limiting what majorities can do. Undermining them in the name of majority rule would run contrary to the will of the people—and endanger the minorities who are the intended beneficiaries of 2/3 requirements.

You can read our brief here.

(Disclosure: my wife, Christina Sandefur, is lead counsel for the plaintiffs.)

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Biggs v. Betlatch

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.

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