Frequently Searched

Protecting Taxpayer Rights in Biggs v. Betlach

October 26, 2017

Read full details on the Biggs v. Betlach case here

The Supreme Court’s 2012 decision National Federation of Independent Business v. Sebelius held that the federal government can’t force states to expand their Medicaid rolls by threatening to withhold funding. The Court ruled 7-2 that the ACA’s provisions forcing states to transform Medicaid from “a program for the neediest among us”— the disabled, blind, elderly, and needy families with dependent children—into “an element of a comprehensive national plan to provide universal health insurance coverage,” exceeded Congress’s Spending Clause powers. Instead, states must remain free to choose whether or not to adopt Medicaid expansion.

Although 26 states battled in court to secure that ruling, many governors reversed their positions on Medicaid expansion shortly afterwards, some in ways that seriously damaged the rule of law within their states. One was Arizona Governor Jan Brewer, who promptly changed course and demanded that Arizona expand its Medicaid program. To pay for this, she insisted on a plan that included a mandatory “provider tax” on hospitals. Supporters suspended procedural rules to move the proposal through the legislature without the usual review process.

But there was a catch: in 1992, Arizona voters enacted a constitutional provision that requires a two-thirds supermajority of both houses of the legislature to approve any “act that provides for a net increase in state revenues,” including new taxes, fees, and assessments. Gov. Brewer and other proponents were unable to garner the support necessary to pass the program’s new tax as required by the state’s Constitution.

Proponents of Medicaid expansion saw an opportunity, however. Arizona’s supermajority requirement includes an exception for “assessments that are authorized by statute.” This provision was designed to allow administrative officials, once properly authorized to collect a levy, to adjust the amount without having to ask the legislature for permission again. But Gov. Brewer and her backers argued instead that it allowed the legislature to pass any statute by a bare majority that imposed a tax, so long as it was called an “assessment” instead.

On that theory, the provider tax was approved by an ordinary majority, and—over the objections of lawmakers who insisted this process was violating the constitutional rule—Gov. Brewer signed it into law.

Represented by my organization, the Goldwater Institute, thirty-six state legislators who voted “no” sued, arguing that their votes—which should have defeated the bill—had been effectively nullified by this semantic trick. After the state Supreme Court unanimously ruled that the lawmakers had standing to sue, the case went before a trial court to decide whether the tax was a “tax” or just an administrative “assessment” exempt from the 2/3 requirement.

The trial court upheld the law, and earlier this year, the Court of Appeals agreed. It held that the supermajority requirement didn’t apply because the assessment was “authorized” by the simple majority, and was therefore exempt from the 2/3 requirement. But that theory expands the exception so much that it swallows the rule. If allowed to stand, it will mean that a bare legislative majority can hand an unelected administrator virtually unlimited power to tax Arizonans—while, paradoxically, a supermajority in both houses is required whenever the legislature seeks to impose a tax in the normal way. This interpretation creates a perverse incentive that encourages less responsible and less accountable lawmaking, the opposite of what the voters intended when they created the 2/3 vote requirement in the first place.

Now the case is before the Arizona Supreme Court, which will hear arguments today. The justices must decide whether to give effect to the state constitution’s taxpayer protections, or whether to allow the judge-created loophole for certain “assessments” to stand.

Defenders of Medicaid expansion lament that the supermajority requirement would make Medicaid expansion impossible, but it’s precisely when politically and emotionally charged matters are at stake that taxpayer protections are most needed. There’s always a temptation to disregard constitutional rules in such cases, but if they don’t apply in hard cases, they will mean nothing. Voters in Arizona knew the supermajority requirement would impose serious limits: the ballot pamphlet accompanying supermajority proposition in 1992 made clear that it would “make it more difficult to raise taxes” and “restrain growth in state government,” even for programs “for the poor,” and even in “emergency situations.”

Medicaid expansion might or might not be a good idea. But finding clever excuses for evading the constitution’s rules never is.

Cross-posted from The Federalist Society

 

 

More on this issue

Donate Now

Help all Americans live freer, happier lives. Join the Goldwater Institute as we defend and strengthen freedom in all 50 states.

Donate Now

Since 1988, the Goldwater Institute has been in the liberty business — defending and promoting freedom, and achieving more than 400 victories in all 50 states. Donate today to help support our mission.

We Protect Your Rights

Our attorneys defend individual rights and protect those who cannot protect themselves.

Need Help? Submit a case.

Get Connected to Goldwater

Sign up for the latest news, event updates, and more.