SUPREME COURT OF ARIZONA
En Banc
ARIZONA EARLY CHILDHOOD ) Arizona Supreme Court
DEVELOPMENT & HEALTH BOARD, a ) No. CV-09-0078-SA
public body, )
)
Petitioner, )
)
v. )
)
JANICE K. BREWER, in her )
official capacity as Governor; ) O P I N I O N
DEAN MARTIN, in his official )
capacity as State Treasurer; and )
D. CLARK PARTRIDGE, in his )
official capacity as State )
Comptroller, )
)
Respondents. )
)
_________________________________ )
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 Phoenix
By Peter A. Gentala
Attorney for Statutory Participant Kirk D. Adams
1
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 action jurisdiction is “highly
discretionary.” 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. We accepted jurisdiction
because this special action raises issues of statewide
importance that are likely to recur. See Forty-Seventh
Legislature v. Napolitano, 213 Ariz. 482, 485-86, ¶ 11, 143 P.3d
1023, 1026-27 (2006). Additionally, it raises purely legal
issues of first impression. See 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. League, 219 Ariz. at 558, ¶ 4, 201 P.3d at
519. 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. See 2009 Ariz.
Sess. Laws, ch. 1, § 11 (1st Spec. Sess.). Lawmakers enacted
this provision, along with the broader budget measure, by a
simple majority vote of each house.
¶4 The Fund’s Board brought this special action naming
the Governor, Treasurer, and State Comptroller (collectively
“the State”), contending that the Fund 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 Voter Protection Act, added to the Arizona
Constitution by voters in 1998, limits the legislature’s
authority to amend measures approved by voters in initiative
elections and to divert or appropriate funds “created or
allocated to a specific purpose” by such measures. Ariz. Const.
art. 4, pt. 1, § 1(6)(C)-(D). 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 The Voter Protection Act altered the balance of power
between the electorate and the legislature, which share
lawmaking power under Arizona’s system of government. 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.” Ariz. Sec’y of State
4
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. Ariz. Sec’y of State 1998
Publicity Pamphlet at 47-48 (statement of Richard Mahoney,
campaign chairman). The measure, proponents wrote, would
prohibit such legislative action with a minor 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 appropriated to the board by the
legislature. The board shall administer the fund.
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, administrative costs,
private gifts and grant monies accounts of the fund
are not subject to legislative appropriation and are
exempt from the provisions of § 35-190 relating to
lapsing of appropriations.
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
provided by law.” A.R.S. § 8-1181(E) (emphasis added).3
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 is to give effect to the intent of the
electorate.” State v. Gomez, 212 Ariz. 55, 57, ¶ 11, 127 P.3d
873, 875 (2006). Statutes that are subject to only one
reasonable meaning are applied as written, but if a statute is
ambiguous, “we consider the statute’s context; its language,
subject matter, and historical background; its effects and
consequences; and its spirit and purpose.” Id. (quoting Hayes
v. Cont’l Ins. Co., 178 Ariz. 264, 268, 872 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
general fund.
1
¶12 As discussed above, A.R.S. § 8-1181 details the
administration of the Fund. 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. § 8-
1181(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 accounts is not subject to
appropriation or lapsing). 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 id. § 8-1181(B) (denoting accounts). Taken
together, these provisions demonstrate the Board’s 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.” Read in
the context of the other provisions of the Early 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 § 8-
1181’s comprehensive scheme.
2
¶14 The purpose of the Early Childhood Initiative supports
our 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 disputing this reading of the Early Childhood
Initiative, the State argues that nothing in the supporting
materials presented to voters speaks specifically to the
allocation of interest. But, with regard to popularly enacted
measures, we are required to “give effect to the intent of the
electorate.” Gomez, 212 Ariz. at 57, ¶ 11, 127 P.3d at 875.
Parsing the supporting materials associated with the Early
Childhood Initiative as the State suggests does not square with
the measure’s obvious aims and structure. Consequently, we
reject the State’s argument that the language of the 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 Initiative sources under
Article 4, Part 1, Section 1(6). We need consider only one,
however. Section 1(6)(D) states that
10
[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. To do so, a three-
fourths vote of the legislature was required. No such
supermajority voted in favor of the sweep. Finally, the sweep
did not “further[] the purposes” of the Early Childhood
Initiative. 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