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

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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.
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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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