In the closing hours of the 2018 legislative session, Arizona Republican lawmakers passed a bill that changed the words in a statute from “primary” to “secondary.” That minor change resulted in millions of dollars pushed onto local homeowners within the Tucson Unified School District.
The law deemed desegregation funding as a secondary property tax, instead of a primary property tax. The difference is that primary property taxes are capped at one percent of a home’s cash value. Any amount of taxes that exceeds that cap has historically been provided to the school districts by the state, under a program known as additional state aid for education.
There is no cap on secondary taxes. So that means the local homeowners within Tucson Unified School District would be responsible for paying the desegregation funding, which is about $8.3 million this year, instead of the state, which has been providing that money for decades.
This law put Pima County government between a rock and a hard place. Their two options: impose a tax they believed was illegal and risk being sued by homeowners, or don’t impose the tax and let TUSD lose out on critical funding.
The county went with the “lesser of two evils,” as County Administrator Chuck Huckelberry puts it, and decided not to impose the tax. This left TUSD underfunded, so they sued the state.
“We had no choice but to sue the state,” said TUSD Superintendent Gabriel Trujillo, who added that such a large tax increase would agitate the community and make them less likely to support future overrides or bond measures.
Secondary taxes are defined specifically in the Arizona constitution as costs related to debt payments, special districts (such as the library or flood control districts) and specific expenses approved by voters in an election. It says nothing about desegregation funding.
“We looked at that and felt that it was probably unconstitutional, went to our attorneys and our attorneys said basically it was, in their opinion, unconstitutional,” Huckelberry said. “So if we followed what the legislature wanted us to do, we would have levied an illegal tax.”
In his ruling, Arizona Tax Court Judge Christopher Whitten wrote that desegregation expenses must be included in the primary tax category, because the state’s definition of a secondary property tax “does not include those taxes used to pay expenses of complying with desegregation orders.”
Huckelberry said that as a result of this law, Maricopa and Pinal counties also had to levy an extra amount onto their taxpayers, albeit not as high an amount as Pima County was facing.
Arizona Rep. John Kavanagh, a Republican from Fountain Hills who introduced the legislation, believes that desegregation is a local issue, not a state issue.
“Tucson’s taxes are so high that by law, the state has to pick up the additional cost,” Kavanagh said. “So I didn’t think it was proper that people in Scottsdale, Fountain Hills, Payson, Yuma and elsewhere should be paying for a local expense.”
Huckelberry said the way that Kavanagh and other legislators went about this was “outrageously orchestrated.”
“I think what the state legislature needs to do, if they truly want to change that, they need to do it correctly and that means changing the constitution and that is a referral to the voters of Arizona,” Huckelberry said. “So if they want to do it, let’s do it the right way.”
But Kavanagh said TUSD shouldn’t even be under a federal desegregation order.
“Tucson is not a Jim Crow segregated school that needs funding to correct that evil,” Kavanagh said. “Tucson’s school district is no longer segregated, so this money shouldn’t be collected at all.”
TUSD has used the money to comply with an active federal desegregation court order, which was imposed in 1977 after two families sued the district to address racial disparities. Trujillo said the funding is used to provide access and opportunities for African-American and Mexican-American students that would not exist otherwise.
Desegregation funding provides support to magnet schools, which are public schools that provide specialized curriculum and draw in students from across the normal neighborhood boundaries. It also pays for transportation so that students can participate in special programs.
“Transportation is a big expenditure for desegregation,” Trujillo said. “Magnet programs and dual-language programs are meant to attract diverse students from around the city, for the purpose of integrating schools. A lot of the money is used to attract students from around the district, in order to provide a diverse atmosphere in all of our schools so we can make sure to the extent possible that there is no school that remains racially concentrated.”
Kavanagh said it’s time to wait and see whether Arizona Attorney General Mark Brnovich will appeal the tax court’s decision. If he doesn’t, then the state will owe TUSD the $8.3 million.
This isn’t the first time Pima County has successfully stopped the state legislature from moving state funding responsibilities onto the local taxpayers.
In 2015, the state passed a budget declaring that they would no longer pay more than $1 million per county in taxes that exceed the 1 percent cap. Instead, the county would be forced to get the money from their homeowners. This would have resulted in an extra $18 million levied in property taxes.
Pima County sued the state in Maricopa County Superior Court and won, with Judge Whitten ruling that the state’s move was unconstitutional. With a similar outcome this time around, the county and TUSD hope state lawmakers will stop trying to transfer state expenses to them.
“The judge ruled that the decision of the legislature to move this desegregation levy into the secondary rate was not in line with or in the spirit of the Arizona constitution and I think that speaks volumes,” Trujillo said. “Hopefully, it will be the last time that we have to deal with this issue.”