A Maricopa County judge is being asked to block efforts which could delay or even nullify Arizona’s new flat-rate income tax legislation.
The Arizona Free Enterprise Club (AFEC) filed a lawsuit Wednesday which seeks to bar Arizona Secretary of State Katie Hobbs from accepting any petition signatures obtained by Invest In Arizona, a political committee trying to undo three tax revenue-related bills signed by Gov. Doug Ducey as part of his long-desired overhaul of the state’s tax system.
Invest in Arizona is sponsored by Arizona Education Association and Stand for Children – Arizona. The group has initiated the process to collect enough petition signatures to get the new tax legislation on a referendum, which would keep the tax changes on hold until state voters can decide the issue.
But AFEC and two individual plaintiffs contend that the referendum effort violates the Arizona Constitution, which prohibits referendums involving the “support and maintenance of the departments of state government and state institutions,” according to the lawsuit, which argues that referendums for issues related to state revenues and appropriations is unconstitutional.
One of the bills Invest in Arizona supporters want to overturn is SB1828 which is slated to amend the state’s current multiple-income tax brackets and tax rates, replacing them with a single tax rate. Another is SB1827 which ensures an individual’s taxable income does not get subjected to more than 4.5 percent after the Prop 208 Invest in Ed tax surcharge is applied.
The third bill under attack from Invest In Arizona is an alternative small business income tax passed by the legislature earlier this year. All thee bills are set to become effective this fall after a 90-day wait but the group believes they can stop implementation of the new laws until voters can weigh in.
Earlier this month the Invest in Arizona supporters applied with Arizona Secretary of State Katie Hobbs to begin the process of getting voters a say-so on whether the new tax structure should go into effect.
And therein lies the problem, according to AFEC’s lawsuit.
The lawsuit contends SB1783, 1827, and 1828 are directly involved with raising state general fund revenue used to pay for Arizona’s state government and state institutions. And as such, none of the three bills is eligible for referendum.
A Maricopa County judge will decide in the coming weeks whether to stop Invest in Arizona’s efforts to collect tens of thousands of signature in the referendum process or to issue an order prohibiting Hobbs from accepting any referendum petition sheets.
Hobbs is named as a defendant in her official capacity as Arizona’s top officer responsible for overseeing statewide referendum efforts. Invest in Arizona is named as a real party in interest.
No court date had been announced as of press time.