AZ EARLY CHILDHOOD v BREWER/MARTIN/PARTRIDGE

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SUPREME COURT OF ARIZONA En Banc ARIZONA EARLY CHILDHOOD DEVELOPMENT & HEALTH BOARD, a public body, ) ) ) ) Petitioner, ) ) v. ) ) JANICE K. BREWER, in her ) official capacity as Governor; ) DEAN MARTIN, in his official ) capacity as State Treasurer; and ) D. CLARK PARTRIDGE, in his ) official capacity as State ) Comptroller, ) ) Respondents. ) ) _________________________________ ) Arizona Supreme Court No. CV-09-0078-SA O P I N I O N JURISDICTION ACCEPTED; RELIEF GRANTED ________________________________________________________________ PERKINS COIE BROWN & BAIN, P.A. Phoenix By Paul F. Eckstein Charles A. Blanchard Rhonda L. Barnes Steven J. Monde Attorneys for Arizona Early Childhood Development & Health Board TERRY GODDARD, ARIZONA ATTORNEY GENERAL Phoenix By Mary R. O Grady, Solicitor General Christopher Munns, Assistant Attorney General Attorneys for Janice K. Brewer, Dean Martin, and D. Clark Partridge ARIZONA HOUSE OF REPRESENTATIVES By Peter A. Gentala Attorney for Statutory Participant Kirk D. Adams 1 Phoenix ARIZONA STATE SENATE Phoenix By Gregory G. Jernigan Attorney for Statutory Participant Robert L. Burns ________________________________________________________________ R Y A N, Justice ¶1 This special action requires us to decide whether the legislature acted within its authority when it transferred $7 million in income earned on revenue from the Early Childhood Development and Health Fund into the state s general fund. We hold that it did not. I A ¶2 Our special discretionary. action jurisdiction is highly League of Ariz. Cities & Towns v. Martin, 219 Ariz. 556, 558, ¶ 4, 201 P.3d 517, 519 (2009); Ariz. R.P. Spec. Act. 3, State Bar Committee Note. because this importance special that are action likely We accepted jurisdiction raises to issues recur. of See statewide Forty-Seventh Legislature v. Napolitano, 213 Ariz. 482, 485-86, ¶ 11, 143 P.3d 1023, issues 1026-27 of (2006). first Additionally, impression. See it raises purely legal Piner v. Superior Court (Jones), 192 Ariz. 182, 185, ¶ 10, 962 P.2d 909, 912 (1998). Finally, it relates to the state s budget and thus requires prompt resolution. 519. League, 219 Ariz. at 558, ¶ 4, 201 P.3d at We have jurisdiction under Article 6, Section 5(1), (4), 2 of the Arizona Constitution and Arizona Rule of Procedure for Special Actions 4(a). B ¶3 In addressing the deficit in the state s 2009 fiscal year budget, the legislature ordered that $7 million in interest income be transferred from the Early Childhood Development and Health Fund ( the Fund ) to the general fund. Sess. Laws, ch. 1, § 11 (1st Spec. Sess.). See 2009 Ariz. Lawmakers enacted this provision, along with the broader budget measure, by a simple majority vote of each house. ¶4 the the The Fund s Board brought this special action naming Governor, Treasurer, State ), and contending State that Comptroller the Fund (collectively transfer was unconstitutional.1 II ¶5 The issue presented in this case concerns the interaction of two measures passed by voters: a constitutional amendment known as the Voter Protection Act, and a statutory amendment known as the Arizona Early Childhood Development and Health Initiative ( Early Childhood Initiative ). 1 The two chambers of the legislature filed a brief as permitted by Arizona Revised Statute ( A.R.S. ) § 12-1841 (Supp. 2008). 3 A ¶6 The Constitution Voter by Protection voters in Act, 1998, added limits to the the Arizona legislature s authority to amend measures approved by voters in initiative elections and to divert or appropriate funds allocated to a specific purpose by such measures. art. 4, pt. 1, § 1(6)(C)-(D). created or Ariz. Const. The legislature may take such action only with a three-fourths vote of each house and, even then, its action must further the purpose of the initiative. Id. ¶7 between The Voter Protection Act altered the balance of power the electorate and the legislature, which lawmaking power under Arizona s system of government. share See Ariz. Const. art. 4, pt. 1, § 1(1) ( The legislative authority of the State shall be vested in the Legislature, consisting of a Senate and a House of Representatives, but the people reserve the power to propose laws and amendments to the Constitution and to enact or reject such laws and amendments at the polls, independently of the Legislature . . . . ). Before the measure s passage, legislators could by a majority vote . . . amend or repeal any ballot measure . . . approved by the voters, [unless] that ballot measure was approved by a majority of the people . . . registered to vote in this state, rather than by a majority of people who voted on the ballot measure. 4 Ariz. Sec y of State 1998 Publicity Pamphlet at 47 (Statement of Legislative Council), available at http://www.azsos.gov/election/1998/Info/ PubPamphlet/prop105.pdf; see also Adams v. Bolin, 74 Ariz. 269, 276, 247 P.2d 617, 622 (1952). Backers of the measure were concerned that the legislature was abusing its power to amend and repeal voter-endorsed measures. Publicity Pamphlet campaign chairman). prohibit such at 47-48 The legislative Ariz. Sec y of State 1998 (statement measure, action of Richard proponents with a minor Mahoney, wrote, would exception for [t]echnical amendments, which would themselves be permitted only with a supermajority vote and in furtherance of the purpose of the measure. Id. B ¶8 The Early Childhood Initiative, approved by voters in 2006, established a new tax on tobacco products to support early childhood development and health programs and created the Board to manage the programs. See A.R.S. §§ 8-1151 to -1152 (2007); id. § 42-3371 (Supp. 2008). The central provision for purposes of this special action is A.R.S. § 8-1181 (2007), which details the control and distribution of income from the tobacco tax.2 2 Section 8-1181 provides: A. The early childhood development and health fund is established consisting of funds transferred pursuant to subsection D; federal, state, local and private funds accepted by the board pursuant to 8-1182; and 5 That section empowers the Board to invest any unexpended monies in the fund as provided in title 35, chapter 2 and states that [i]nterest and other income from investments of monies in any account shall be credited to that account except as otherwise any monies legislature. appropriated to the board by The board shall administer the fund. the B. The early childhood development and health fund is divided into the following accounts: the program account, the administrative costs account, the private gifts account, the grant monies account and the legislative appropriations account. C. Monies in the program, private gifts and grant monies are not subject to legislative exempt from the provisions of lapsing of appropriations. administrative costs, accounts of the fund appropriation and are § 35-190 relating to D. Ninety percent of the monies deposited into the early childhood development and health fund pursuant to § 42-337[2] shall be deposited into the program account and ten percent of the monies shall be deposited into the administrative costs account. Administrative costs of the board, including staff compensation, may only be paid from the administrative costs account. Funds may be transferred by the board from the administrative costs account to the program account, but funds may not be transferred from the program account to the administrative costs account. Funds may be transferred by the board from the private gifts account and the grant monies account to the administrative costs account to cover the administrative costs of programs and activities undertaken using gift or grant monies. E. The board may invest any unexpended monies in the fund as provided in title 35, chapter 2. Interest and other income from investments of monies in any account shall be credited to that account except as otherwise provided by law. 6 A.R.S. § 8-1181(E) (emphasis added).3 provided by law. C ¶9 The State contends the emphasized language authorizes the legislature to reallocate investment and interest income by a simple majority enactment to the general fund. Thus, the State argues, the transfer of the $7 million to the general fund neither amends the voter-approved initiative nor diverts funds, and the supermajority provisions of Ariz. Const. art. 4, pt. 1, § 1 (6)(C) and (D) do not apply. III ¶10 Our primary objective in construing statutes adopted by initiative electorate. 873, 875 is to give effect to the intent of the State v. Gomez, 212 Ariz. 55, 57, ¶ 11, 127 P.3d (2006). Statutes that are subject to only one reasonable meaning are applied as written, but if a statute is ambiguous, subject we matter, consider and the statute s historical context; background; its its language, effects and consequences; and its spirit and purpose. Id. (quoting Hayes v. 872 Cont l Ins. Co., 178 Ariz. 264, 268, P.2d 668, 672 (1994)). 3 The parties do not dispute that the interest earnings subject to the fund sweep were, in fact, deposited in and credited to the Fund accounts. See A.R.S. § 8-1181(E) ( Interest and other income from investments of monies in any account shall be credited to that account . . . . ). 7 A ¶11 We disagree with the State s interpretation of § 8- 1181(E). The structure and purpose of the Early Childhood Initiative, and specifically A.R.S. § 8-1181, demonstrate that the phrase as otherwise provided by law in § 8-1181(E) does not provide the legislature with authority to transfer interest and income from funds generated by the tobacco tax to the 8-1181 details the general fund. 1 ¶12 As administration discussed of the above, Fund. A.R.S. Most § importantly, it seeks to ensure that the vast majority of funds generated by the Early Childhood Initiative are dedicated to programs, see A.R.S. § 81181(D) (setting distribution and preventing most transfers for administrative purposes), and shields funds needed for programs and their administration from legislative appropriation, see id. § 8-1181(C) (money in most appropriation or lapsing). accounts is not subject to The statute gives the Board primary responsibility for the Fund, see id. § 8-1181(A), but structures that authority by dedicating certain sources of money to certain accounts, see together, these id. § 8-1181(B) provisions (denoting demonstrate the accounts). Board s Taken authority over the distribution of revenues and interest and investment income. 8 ¶13 Section 8-1181(E) provides that the Board may invest any unexpended monies in the fund, and that [i]nterest and other income from investments in any account shall be credited to that account except as otherwise provided by law. the context of the other provisions of the Early Read in Childhood Initiative, the final clause is most logically read as providing the legislature only a limited power to credit interest and other income to a Fund account other than the account of origin. Once such income is credited, however, it is subject to § 81181 s comprehensive scheme. 2 ¶14 our The purpose of the Early Childhood Initiative supports interpretation. In determining the purpose of an initiative, we consider such materials as statements of findings passed with the measure as well as other materials in the Secretary of State s publicity pamphlet available to all voters before a general election. See, e.g., Gomez, 212 Ariz. at 59, ¶ 20, 127 P.3d at 877 (examining findings in publicity pamphlet to determine purpose). ¶15 Here, the declarations and proposed findings of the initiative presented to the voters demonstrate that the purpose of the initiative was to invest in early childhood health and education programs. See A.R.S. § 8-1151(A)(1)-(5). A further purpose was to create dedicated funding to improve the quality, 9 accessibility and affordability of early childhood development opportunities. Id. § 8-1151(A)(6) (emphasis added). Given these statements, allowing monies to be siphoned from the Fund to the general fund is not consistent with the purpose of the initiative. Rather, the purpose of the initiative was to ensure that revenues serve the specific program aims of the initiative. ¶16 In Initiative, materials disputing the presented reading argues State this that to allocation of interest. voters of the nothing speaks Early Childhood the supporting in specifically to the But, with regard to popularly enacted measures, we are required to give effect to the intent of the electorate. Parsing Gomez, 212 Ariz. at 57, ¶ 11, 127 P.3d at 875. the supporting materials associated with the Early Childhood Initiative as the State suggests does not square with the measure s reject the obvious State s aims and argument structure. that the Consequently, language of the we Early Childhood Initiative exempts interest and investment income from the Voter Protection Act. IV ¶17 The Board raises several challenges to the legislature s effort to obtain interest and investment income from protected Early Childhood Article 4, Part 1, Section 1(6). however. Section 1(6)(D) states that 10 Initiative sources under We need consider only one, [t]he Legislature shall not have the power to . . . divert funds . . . allocated to a specific purpose by an initiative measure approved by a majority of the votes cast thereon, . . . unless the . . . diversion of funds furthers the purposes of such measure and at least three-fourths of the members of each House of the Legislature, by a roll call of ayes and nays, vote to . . . divert such funds. ¶18 As explained above, the interest and investment income originating from the tobacco tax was credited to the program and administrative accounts. See A.R.S. § 8-1181(B), (E). Accordingly, by sweeping the interest money into the general fund, the legislature has diverted it from a specific purpose, namely programs and their administration. fourths vote of the legislature was To do so, a threerequired. supermajority voted in favor of the sweep. did not further[] Initiative. the purposes of No such Finally, the sweep the Early Childhood Consequently, the transfer violated Article 4, Part 1, Section 1(6)(D) of the Arizona Constitution. V ¶19 For the foregoing reasons we accept jurisdiction, grant relief to the Board, and order the $7 million fund sweep, along with the interest that would have been earned on this amount, be returned to the Fund.4 4 Because the brief of the two chambers of the legislature raises claims not directly at issue here, we decline to address them. 11 _______________________________________ Michael D. Ryan, Justice CONCURRING: _______________________________________ Rebecca White Berch, Chief Justice _______________________________________ Andrew D. Hurwitz, Vice Chief Justice _______________________________________ W. Scott Bales, Justice _______________________________________ Ruth V. McGregor, Justice (Retired) 12

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