Arizona Early Childhood Development & Health Board v. Brewer

                    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)




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