Arizona Town Illegally Dumps $70 Million Debt on Residents; Goldwater Sues

When the town of Payson, Ariz., decided to take on $70 million in debt without voter approval, resident Deborah Rose wanted to do something about it. But she couldn’t because the town misapplied the law to create a loophole preventing citizens from challenging it. Now, with the Goldwater Institute’s help, Deborah is suing the town to put a stop to the spending that will put taxpayers in debt for 25 years.

“Our leaders want our money, but not our vote,” Deborah says. “They’re trying to take advantage of legal loopholes to saddle their own constituents with tens of millions of dollars of debt, systematically stripping power from the people by ignoring laws and twisting their truths.”

Under the pretext of an “emergency,” the Payson Town Council voted last month to take on $70 million in bonds without letting residents weigh in via referendum. That violates the Arizona Constitution. Goldwater filed a lawsuit this week in Gila County Superior Court seeking a temporary restraining order and a preliminary injunction to stop the measure. Goldwater is also asking the court to declare the measure unlawful and void, and to order the Town Council not to pass such a measure without giving Payson voters the opportunity to exercise their constitutional right to organize a referendum and vote on it.

When the council approved the bond measure, it slipped in an “emergency clause,” stating that the measure would go into effect immediately, without letting residents who might oppose the measure organize a referendum and put the issue to a vote. But the Arizona Constitution guarantees the right of referendum: the right of Arizonans to circulate petitions and refer bills, ordinances, and resolutions for a popular vote. It’s a cornerstone of democratic accountability in Arizona, and it means that the people—not politicians—have the last word in state and local government.

The Payson Town Council is trying to bypass that safeguard and short-circuit the democratic process using a legal loophole: a narrow exception allowing cities and towns to enact emergency measures without waiting for a referendum when such measures are “necessary for the immediate preservation of the peace, health or safety of the city or town.” The so-called “emergency” here is nothing more than town officials’ apparent belief that interest rates might rise in coming months, and that they’ll secure slightly better municipal bond terms now than they could in 30 days if they gave residents the opportunity to organize a referendum.

But government officials’ efforts to time the market, based on pure speculation about financial trends, is not an “emergency.” And it certainly doesn’t justify bypassing the democratic process and imposing $70 million of debt on Payson residents without giving them a say in the matter.

The referendum process is meant to ensure Arizonans have a voice in their government, and a say in decisions that affect them. The government can’t abuse its emergency powers to pass bond measures without democratic accountability.

You can read our complaint here and motion for a preliminary injunction here, and you can check out our case page here.

John Thorpe is a Staff Attorney at the Goldwater Institute.