When legislative bills are introduced, there are rules that must be followed as those bills move through the process. We do have provisions for the suspension of the rules, and that is exactly what happened with House bill, HB2039, which expands the K-12 aggregate expenditure limit by a not-so-small $1.1 billion.
But those suspensions of the rules should occur only under the most extreme of emergency circumstances. Expanding the aggregate expenditure limit does not come anywhere near being such an extreme emergency, unless it was manufactured in order to avoid citizen scrutiny. Setting aside the merit of such large limit increase for the moment, the way in which it was done is definitely not in the best interest of AZ citizens.
Both HCR2039 and the identical senate version, SCR1050 were introduced at the very last minute, barely under the deadline. Why was that? Did school officials not know months ago that they were going to exceed the limit?
In the House, HCR2039 was railroaded through without a single committee hearing and without any time or opportunity for citizen input. This is just not acceptable when we have in play 1.1 billion dollars of taxpayer money. Furthermore, there are two reasons why the limit should never be exceeded.
First The Limit, as imposed by the AZ constitution, has three built-in safeguards. It allows the limit to increase as enrollment increases. It has a built-in inflation adjustment. It allows a 10% additional expansion, which ought to be enough for adding pet projects and taking care of waste. Here is the language as it appears in the AZ constitution, Article 9, Section 21:
“(2) The economic estimates commission shall determine and publish prior to May 1 of each year the aggregate expenditure limitation for all school districts for the following fiscal year. The aggregate expenditure limitation shall be determined by adjusting the total amount of expenditures of local revenues for all school districts for fiscal year 1979-1980 to reflect the changes in student population in the school districts and the cost of living, and multiplying the result by 1.10. The aggregate expenditures of local revenues for all school districts shall not exceed the limitation prescribed in this section, except as provided in subsection (3) of this section.
(3) Expenditures in excess of the limitation determined pursuant to subsection (2) of this section may be authorized by the legislature for a single fiscal year, by concurrent resolution, upon affirmative vote of two-thirds of the membership of each house of the legislature.”
But not all expenditures are subject to the limit. In fact, the list of exemptions is rather extensive. Here is the list of expenditures that the AZ constitution exempts from the limit:
“(i) Any amounts or property received from the issuance or incurrence of bonds, or other lawful long-term obligations issued or incurred for a specific purpose, or any amounts or property collected or segregated to make payments or deposits required by a contract concerning such bonds or obligations. For the purpose of this subdivision long-term obligations shall not include warrants issued in the ordinary course of operation or registered for payment by a political subdivision.
(ii) Any amounts or property received as payment of dividends and interest, or any gain on the sale or redemption of investment securities, the purchase of which is authorized by law.
(iii) Any amounts or property received by a school district or community college district in the capacity of trustee, custodian or agent.
(iv) Any amounts received as grants and aid of any type received from the federal government or any of its agencies except school assistance in federally affected areas.
(v) Any amounts or property received as grants, gifts, aid or contributions of any type except amounts received directly or indirectly in lieu of taxes received directly or indirectly from any private agency or organization, or any individual.
(vi) Any amounts received from the state for the purpose of purchasing land, buildings or improvements or constructing buildings or improvements.
(vii) Any amounts received pursuant to a transfer during a fiscal year from another agency, department, office, board, commission, authority, council or institution of the same community college district or school district which were included as local revenues for such fiscal year or which are excluded from local revenue under other provisions of this subsection.
(viii) Any amounts or property accumulated by a community college district for the purpose of purchasing land, buildings or improvements or constructing buildings or improvements.
(ix) Any amounts received in return for goods or services pursuant to a contract with another political subdivision, school district, community college district or the state and expended by the other political subdivision, school district, community college district or the state pursuant to the expenditure limitation in effect when the amounts are expended by the other political subdivision, school district, community college district or the state.
(x) Any amounts received as tuition or fees directly or indirectly from any public or private agency or organization or any individual.
(xi) Any ad valorem taxes received pursuant to an election to exceed the limitation prescribed by section 19 of this article or for the purposes of funding expenditures in excess of the expenditure limitations prescribed by subsection (7) of this section.
(xii) Any amounts received during a fiscal year as refunds, reimbursements or other recoveries of amounts expended which were applied against the expenditure limitation for such fiscal year or which were excluded from local revenues under other provisions of this subsection.
(d) For the purpose of subsection (2) of this section, the following items are also excluded from local revenues of school districts:
(i) Any amounts received as the proceeds from the sale, lease or rental of school property as authorized by law.
(ii) Any amounts received from the capital levy as authorized by law.
(iii) Any amounts received from the acquisition, operation, or maintenance of school services of a commercial nature which are entirely or predominantly self-supporting.
(iv) Any amounts received for the purpose of funding expenditures authorized in the event of destruction of or damage to the facilities of a school district as authorized by law.
(v) Any revenues derived from an additional state transaction privilege tax rate increment for educational purposes that was authorized by the voters before January 1, 2001.
(vi) Any amounts received pursuant to article XI, section 8, Constitution of Arizona, that are approved by the majority of qualified voters at a statewide general election held after November 1, 2002, and before January 1, 2003.”
As anyone reading this list can see, a huge portion of school expenditures is exempt from the limit. This leads serious observers to question why we need to exceed the limit in the first place. There are only two logical answers to this. One is plain and simple incompetence. The other is spending money on pet projects that should have never been done. Perhaps it is a combination of both.
It is unfortunate that so many representatives fell for this scheme, but at least we can take comfort in the fact that 14 Republican representatives did not buy it.
Now HCR2039 is in the senate and hopefully cooler heads will prevail and this scheme will be defeated.
We at the Arizona People’s Lobbyist encourage citizens to contact senators and express their opposition to HCR2039, and its senate counterpart, SCR1050. One easy way to accomplish this is to go to https://azpeopleslobbyist.com/