There has been a flurry of bills this session aimed at increasing funds for transportation – all have involved increasing taxes:
- Increased the gas tax by 10 cents – HCR 2011
- Allowed counties to carve out political opposition to transportation excise tax increases– HB 2156
- Allowed counties the authority to charge a separate gas tax – SB 1147
- Allowed Maricopa County to reauthorize their transportation excise tax 5 years early and lock in funding for light rail – SB 1270
SB 1146 might be the worst of all.
The amended SB 1146, which was supported by all Democratic members and three Republicans in the Senate, gave carte blanche fee authority to the Director of the Arizona Department of Transportation (ADOT) to charge any Vehicle License Tax rate they desired. For example, if the ADOT director decided to double the VLT tax or to assess a $10,000 VLT on gas-guzzling pick-up trucks to combat climate change, it would be lawful under SB 1146.
Why would anyone support giving unelected bureaucrats the power to charge whatever tax or fee they want with no legislative oversight? The answer is that this is an attempt to circumvent Proposition 108, a constitutional taxpayer protection that requires a 2/3 affirmative vote by the legislature to raise taxes. By handing their taxing authority to the ADOT Director, the legislature can claim that this is an “administratively set fee” that is not subject to Prop 108.
This end-run on our constitutional requirement of a 2/3 vote is currently being litigated in court by the Goldwater Institute over Medicaid expansion. Under scrutiny is two parts – whether the Legislature voted to increase NEW revenues, and whether the Hospital Fee assessed by the Director of Arizona’s Medicaid system was indeed a “fee” or a “tax.”
If the courts side with allowing for this administrative tax increase loophole, lawmakers will have discovered a way to raise taxes that erodes separation of powers inherent to our system. The legislature is supposed to be the purse strings; elected to do one job – pass a budget. This means the levers to extract money from taxpayers lies at their feet.
Not only does SB1146 allow an unelected bureaucrat to unilaterally set tax rates for Arizona residents – but it allows politicians to dodge accountability for the tax hike. It is almost difficult to comprehend why our elected representatives would even consider such a dangerous proposal except as a way to avoid any accountability for supporting a tax increase.
Fortunately for taxpayers, it appears that SB 1146 is no longer moving this session. But given the uncertainty of the Medicaid lawsuit and politicians insatiable appetite to capture as much money as possible without anyone noticing, we fully expect similar efforts to appear in the future.