A judge refused Friday to order state lawmakers to fully compensate public schools for inflation.
Maricopa County Superior Court Judge Kenneth Mangum acknowledged that voters in 2000 approved a permanent hike in state sales taxes. That same measure directed the Legislature to adjust state aid to schools annually for inflation.
But Mangum concluded that the wording of the measure legally amounted only to a request that lawmakers provide the additional cash.
Friday's ruling most immediately affects a bid by schools to get about $60 million this budget year they contend they are entitled to under the law. Legislators, taking a different view of the mandate, provided only about $5 million.
But unless overturned, it frees legislators from having to provide any year-to-year increases in state aid - ever - even though such increases were promised to voters in exchange for approving that sales tax hike.
In fact, the judge's ruling suggests that lawmakers didn't even need to fund that $5 million increase.
Attorney Tim Hogan, who is representing the districts, promised an appeal. He said the judge got it wrong.
And if the judge is right, Hogan said, voters were the victim of a "massive fraud."
That 2000 ballot measure, Proposition 301, imposed a permanent increase of six-tenths of a cent on the state sales tax. Among the provisions was language which said the Legislature shall provide automatic inflation increases in the basic state aid formula or any other components.
Since that time, lawmakers have provided a full increase.
But last year, looking to cut spending, they concluded that the wording allowed them to comply by boosting only the transportation funding and not the entire formula. The difference is about $55 million.
Schools sued, contending that's not what voters intended.
But Mangum said the issue is even simpler than that. He said a strict reading of the ballot measure convinces him there is nothing in there that forces lawmakers to do anything at all.
"While Proposition 301 states the intention of the voters of Arizona that an appropriation be made to protect the schools from the effects of inflation, the proposition by itself is not self executing," the judge wrote.
Instead, Mangum said, it directed lawmakers to adjust state aid to schools each year. But the judge said legislators cannot be ordered to do any such thing, even by voters.
He said inflation indexing could have been made automatic if the ballot measure made such funding transfers automatic from the state treasury rather than relying on a legislative appropriation.
"Failing to appropriate the statutory amount is a failure to do what the law requests, not what the law requires," Mangum wrote.
The ruling drew an angry reaction from Hogan.
He pointed out that it was the Legislature itself that crafted the wording of Proposition 301 and put it on the ballot.
"It's a directive to the Legislature, a mandatory obligation on the Legislature," Hogan said. "If not, it's a massive fraud that's been committed by the Legislature."
But House Speaker Kirk Adams, who favored not providing full inflationary adjustments, applauded the ruling.
"The constitution requires specific legal authorization for all payments from the state treasury," he said in a prepared statement. "This requirement is especially important now as we face unprecedented financial challenges."