BISC’s Statement on Proposition 208

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Proposition 208 Decision and Republican Tax Cuts Create Dire Uncertainty for the People of Arizona  

Yesterday, the Arizona Supreme Court ruled that, contrary to what the ballot language states, the funds Prop 208 will raise do not qualify as “grants.” This is important because grants are not subject to the state’s education spending cap. Prop 208 raises taxes on high earners and designates the funds to be disbursed as grants to school districts. The court wrote that Prop 208 is a “compulsory transfer of tax revenue” and therefore not a grant.

The court goes further and determines that if Prop 208 will raise an amount that exceeds the spending cap, then the entire law is unconstitutional. The Arizona Supreme Court deviated from its previous decisions on “severability” –the act of striking down only the portions of a law that are unconstitutional–in order to make this determination.

In the past, the court abided by the principle that if the valid portions of a law can be applied in a constitutional manner, only the invalid portion will be struck down. In this case, the court decided the entire law is “unworkable” because there is “no statutory authority to spend approximately 85% of the funds raised.” This ignores the constitutional and statutory authority that the legislature and school district voters’ have to raise the education spending cap.


The case will have a full trial in Maricopa County Superior Court. Because of the supreme court’s decision, the Maricopa County judge is (1) bound to view Prop 208 as subject to the spending cap and (2) required to rule that the entire law is unconstitutional if the funds raised by Prop 208 will exceed the spending cap–the funds are projected to exceed the cap by around $600 million.


Our partners in Arizona worked tirelessly to pass Proposition 208 which created a 3.5% income tax surcharge on individuals who earn more than $250,000 per year or couples who earn at least a half million. As approved by voters, Prop 208 would have raised an estimated $827 million annually for K-12 education. 

With the court’s decision on 208, the loss of revenues to education and the General Fund will be even deeper due to the tremendous tax cuts passed by the Arizona Republicans in the final days of the legislative session earlier this summer.

The budget, signed by the Governor, phases in a $1.9 billion-dollar annual tax cut which will mainly benefit the wealthy. The cuts did two things, first they eliminated the state progressive tax system and created a near flat tax of 2.5% and 2.59% for incomes over $327,000.

Republicans used another strategy to circumvent the effect of Proposition 208 by implementing a 4.5% cap on income taxes. The provision would have had the effect of reducing the regular income tax rate for higher income earners impacted by 208’s increase to 1%, while also preserving the 3.5% tax surcharge and directing those funds to education.

Advocates have been waiting all summer for a decision from the Supreme Court with the hope that the 3.5% income tax surcharge within Proposition 208 would be preserved, thus shielding education funding from suffering the full loss of the Republican tax cuts.

Since the Court has ruled that 208 is unconstitutional, Arizona residents will now be hit by the full impact of the $1.9 billion dollar tax cut to education and their General Fund. 

Invest in Ed is now calling on Governor Ducey to act immediately to call a special legislative session to address the dire situation that now exists in the state budget. 


For more information contact:

Corrine Rivera Fowler [email protected] or Kentiya Orange [email protected]