Pima County and an Ajo man have filed a lawsuit against the state over tax changes that requires the county to subsidize TUSD.
Clarence Klinefelter and the county say provisions of the state budget passed in March illegally raised state revenue without the required two-thirds majority of the Legislature and violate equal protection and private property rights.
“Funding public education is the state’s responsibility,” said Joseph Kanefield, a Phoenix-based attorney with the law firm Ballard Spahr, who represents Klinefelter.
The suit filed in Maricopa County Superior Court on Monday challenges changes the Legislature made to how it funds school districts when the collective primary property tax rate in a jurisdiction exceeds $10 per $100 of assessed value.
Under state law, if combined primary residential property tax rates of all taxing governments in a county exceed $10, a cap is set to prevent the property owner from paying more than 1 percent of the full cash value of the property.
In Pima County, the combined rates for the county, TUSD, Tucson and Pima Community College exceed $12.60 per $100 of assessed value.
In the past, the state has funded the overage amounts to ensure school districts receive equal funding.
But the changes in the law would now force Pima County to divert a portion of its primary property tax collections to the Tucson Unified School District to make up the difference.
“What they cannot do is commandeer the revenue of a county to fund the state’s obligation to school funding,” Kanefield said.
In doing so, he argues, his client is being taxed for the benefit of a jurisdiction in which he doesn’t live and against which he has no recourse.
“He does not live in Tucson Unified School District, he does not vote for the TUSD school board, and he has no say in how it’s run,” he said.
Pima County Administrator Chuck Huckelberry said the changes the Legislature made sidestepped the state constitution.
He said state lawmakers effectively raised revenues without the mandated two-thirds majority.
“Twenty-two million dollars are at stake,” he said, noting the amount of cost shifts the state pushed onto Pima County in this year’s budget.
The changes to the one-percent property tax issue at in the lawsuit make up about $17 million of that amount.
State law does not impose a spending cap, which local governments might more easily manage, but instead limits tax rates.
“It’s a rate cap; it has nothing to do with taxable value or the costs of operating government,” Huckelberry said, noting the county has raised tax rates in recent years but that tax receipts have increased at a slower pace.
The county initially filed the case in the state Supreme Court, but it declined to hear the case last month.
The court did not rule on the merits of the plaintiffs’ arguments, but did order them to pay the state’s legal fees.
In its legal filings in Supreme Court, attorneys for the state did not dispute whether the Legislature transferred costs to the jurisdictions, saying the state acted within its right in doing so.
Gov. Doug Ducey’s office did not return calls for comment on the new lawsuit.
