Pima County v. State of Arizona

IN THE

SUPREME COURT OF THE STATE OF ARIZONA
PIMA COUNTY, ET AL.
Plaintiffs/Appellees,

v.

STATE OF ARIZONA, ET AL.
Defendants/Appellants.

No. CV-21-0213-PR
Filed July 22, 2024

Appeal from the Arizona Tax Court
The Honorable Christopher T. Whitten, Judge
No. TX2018-000737
REVERSED

Opinion of the Court of Appeals, Division One
252 Ariz. 63 (App. 2021)
AFFIRMED

COUNSEL:

Laura Conover, Pima County Attorney, Bobby H. Yu, Deputy County
Attorney, Tucson, Attorneys for Pima County

P. Bruce Converse, Bennett Evan Cooper (argued), Dickinson Wright,
PLLC, Phoenix, Attorneys for Tucson Unified School District No. 1

Kristin K. Mayes, Arizona Attorney General, Drew C. Ensign (argued),
Civil Appeals Section Chief, Phoenix, Attorneys for State of Arizona

Kristin K. Mayes, Arizona Attorney General, Jerry A. Fries, Assistant
Attorney General, Phoenix, Attorneys for Arizona Department of Revenue

Kristin K. Mayes, Arizona Attorney General, Kelly Soldati, Assistant
Attorney General/Section Chief Counsel, Phoenix, Attorneys for Arizona
State Board of Education and Arizona Superintendent of Public Instruction
 PIMA COUNTY, ET AL. v. STATE OF ARIZONA, ET AL.
Opinion of the Court

JUSTICE BRUTINEL authored the Opinion of the Court, in which CHIEF
JUSTICE TIMMER, VICE CHIEF JUSTICE LOPEZ and JUSTICES BOLICK,
BEENE, MONTGOMERY and KING joined.

JUSTICE BRUTINEL, Opinion of the Court:

¶1 We are asked to determine whether, following the
legislature’s amendments to A.R.S. § 15-910, the State must reimburse Pima
County for desegregation expenses that exceed the Arizona Constitution’s
1% Limit on residential property taxes as “additional state aid for
education.” More specifically, we consider whether taxes levied to pay for
desegregation expenses—which are subject to the Arizona Constitution’s
1% Limit on residential property taxes—continue to be “primary property
taxes” as defined by A.R.S. § 15-101(20) following the 2018 amendment to
§ 15-910.

¶2 We hold that funding allocations for desegregation expenses
authorized by § 15-910(G)–(L) are not “primary property taxes” as defined
in § 15-101(20). Accordingly, desegregation expenses are not included in
the A.R.S. § 15-972(E) calculations, which only reimburse primary property
taxes. Thus, the State is not required to reimburse desegregation expenses
that otherwise would exceed the 1% Limit as additional state aid for
education. Accordingly, we affirm the opinion of the court of appeals.

BACKGROUND

¶3 In 1980, Arizona voters added article 9, section 18 to the
Arizona Constitution. Subsection (1) of section 18 (the “1% Limit”) caps the
amount of ad valorem taxes on residential property in any tax year at one
percent of the property’s full cash value. Ariz. Const. art. 9, § 18(1). That
said, three types of ad valorem taxes are excluded from the cap:

(a) Ad valorem taxes or special assessments levied to pay the
principal of and interest and redemption charges on bonded
indebtedness or other lawful long-term obligations issued or
incurred for a specific purpose.

(b) Ad valorem taxes or assessments levied by or for property
improvement assessment districts, improvement districts and

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Opinion of the Court

other special purpose districts other than counties, cities,
towns, school districts and community college districts.

(c) Ad valorem taxes levied pursuant to an election to exceed
a budget, expenditure or tax limitation.

Id. art. 9, § 18(2). Additionally, § 18(8) directs the Arizona Legislature to
“provide by law a system of property taxation consistent with the
provisions of this section.” Id. art. 9, § 18(8).

¶4 In 1981, the legislature complied with this requirement by
creating a new education code: Title 15. See 1981 Ariz. Sess. Laws ch. 1, § 2
(1st Reg. Sess.). At the time of its enactment, Title 15 did three things
relevant here.

¶5 First, Title 15 defined two tax classifications, “primary
property taxes” and “secondary property taxes,” for purposes of that code.
See id. These statutory tax classifications remain unchanged today. Compare
id., with § 15-101(20), (25).

¶6 Primary property taxes are defined as “all ad valorem taxes
except for secondary property taxes.” § 15-101(20). Secondary property
taxes are

ad valorem taxes used to pay the principal of and the interest
and redemption charges on any bonded indebtedness or
other lawful long-term obligation issued or incurred for a
specific purpose by a school district or a community college
district and amounts levied pursuant to an election to exceed
a budget, expenditure or tax limitation.

§ 15-101(25). This definition of secondary property taxes tracks the
constitutional exceptions to the 1% Limit. Compare § 15-101(25), with Ariz.
Const. art. 9, § 18(2).

¶7 Although primary property taxes are only defined by
reference to secondary taxes, they may be used for any school district
expenditure the legislature statutorily authorizes; and such expenditures in
total may exceed the amount of the 1% Limit. 1981 Ariz. Sess. Laws ch. 1,
§ 2 (1st Reg. Sess.). To comply with the 1% Limit, primary property tax
expenditures authorized by the legislature in excess of the 1% Limit are

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Opinion of the Court

reimbursed by the State; they may not be levied against residential property
owners. See id.; § 15-972(E). The reimbursement process is prescribed by
§ 15-972(E) and contains three steps: (1) the board of supervisors
determines “whether the total primary property taxes to be levied for all
taxing jurisdictions” exceeds the 1% Limit; (2) the board applies “a credit
against the primary property taxes due” for each residential parcel taxed in
excess thereof; and (3) the State pays “[s]uch excess amounts” as
“additional state aid for education for the school district or districts in
which the parcel of property is located.” At the inception of the statute, by
definition, only primary property taxes were subject to the 1% Limit and
subsequently reimbursed. 1981 Ariz. Sess. Laws ch. 1, § 2 (1st Reg. Sess.);
see § 15-972(E).

¶8 Second, to limit the amount of school district spending, Title
15 created the Revenue Control Limit, a statutory spending limit on school
districts. 1981 Ariz. Sess. Laws ch. 1, § 2 (1st Reg. Sess.); Cave Creek Unified
Sch. Dist. v. Ducey, 233 Ariz. 1, 3 ¶ 2 (2013) (noting that the Revenue Control
Limit is “a budget expenditure limit used to calculate the amount of certain
state funds provided to school districts”); see A.R.S. § 15-971(A)–(C)
(providing that certain state funding is determined, in part, by the school
district’s Revenue Control Limit).

¶9 Third, Title 15 set strict budgetary mandates: “[n]o
expenditure shall be made by any school district for a purpose not
particularly itemized and included in the budget.” 1981 Ariz. Sess. Laws
ch. 1, § 2 (1st Reg. Sess.); see A.R.S. § 15-905(N) (“Except as provided in
§ 15-916, no expenditure shall be made by any school district for a purpose
not included in the budget . . . .”).

¶10 In 1978, two years before the voters constitutionalized the 1%
Limit, the Tucson Unified School District (“TUSD”) became subject to a
federal desegregation order, which did not end until 2022. See Fisher v.
Tucson Unified Sch. Dist., 329 F. Supp. 3d 883, 887 (D. Ariz. 2018); Fisher v.
Tucson Unified Sch. Dist., No. 74-cv-00090-TUC-DCB, Order at 2:17–18,
18:3–4 (D. Ariz. July 20, 2022). Starting in 1985, the legislature began
assisting districts’ compliance with such desegregation orders by adding
A.R.S. § 15-910(F)–(H) (1985), authorizing districts that year and thereafter

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Opinion of the Court

to use primary property taxes to pay desegregation compliance expenses.1
1985 Ariz. Sess. Laws ch. 166, § 15 (1st Reg. Sess.).

¶11 This statute permitted school districts to: (1) budget for
desegregation expenses outside of the Revenue Control Limit, and (2) pay
for desegregation expenses budgeted outside the Revenue Control Limit
with primary property taxes. Id. Subsections (F)–(H) of § 15-910, which
have since been renumbered as subsections (G)–(H), also allowed school
districts to be reimbursed for desegregation expenses by the State in excess
of the 1% Limit by allowing them to include desegregation expenses in their
budget to be incorporated into the county’s primary property tax levies. Id.;
§ 15-910(G)–(H) (reflecting the 1985 subsections (F)–(H) as subsections
(G)–(H)).

¶12 The controversy here arises because, thirty-three years later,
in 2018, the legislature modified § 15-910 to limit the authority to budget for
desegregation order expenses in § 15-910(G), i.e., budget for expenses
outside the Revenue Control Limit, only if the district uses revenues from
secondary property taxes rather than primary property taxes to fund such
expenses. 2018 Ariz. Sess. Laws ch. 283, § 2 (2d Reg. Sess.). That legislation
added, among other things, subsection (L) to § 15-910, which stated:

Beginning in fiscal year 2018–2019, subsections G through K
of this section apply only if the governing board uses
revenues from secondary property taxes rather than primary
property taxes to fund expenses of complying with . . . a court
order of desegregation . . . directed toward remediating
alleged or proven racial discrimination that are specifically
exempt in whole or in part from the revenue control limit and
district additional assistance. Secondary property taxes levied
pursuant to this subsection do not require voter approval, but
shall be separately delineated on a property owner’s property
tax statement.

1 This was not the first time the legislature attempted to help school districts

comply with such orders. In 1983, the legislature enacted the first statute
aimed at helping school districts comply with such orders without violating
the statutory Revenue Control Limit. 1983 Ariz. Sess. Laws ch. 62, § 1 (1st
Reg. Sess.).
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Opinion of the Court

Id. The legislature also replaced the term “primary property taxes” with
“secondary property taxes” in various subsections pertaining to
desegregation expenses budgeted outside the Revenue Control Limit. See
id.

¶13 The 2018 amendment did not, however, change the definition
of primary or secondary property taxes in Title 15’s definition section. See
id.; see also § 15-101 (providing definitions in Title 15 “unless the context
otherwise requires” and defining primary and secondary taxes).

¶14 Importantly, the two independent revenue ceilings—the 1%
Limit and the Revenue Control Limit—remain binding on school districts
and on counties. See, e.g., A.R.S. §§ 15-947, -905. And school districts must
still comply with strict budgetary mandates. See, e.g., § 15-905 (providing
for annual budgets); see also A.R.S. § 42-17106(A)(1) (“[A] county, city or
town shall not . . . [s]pend money for a purpose that is not included in its
budget.”).

¶15 For the 2018–2019 fiscal year, under the new statutory
scheme, TUSD adopted a budget that continued to include desegregation
expenses under § 15-910; and in compliance with the new law, budgeted
for such expenses with secondary taxes. The budget, including the required
estimates for the primary and secondary property tax levies necessary to
fund that budget, was submitted to Pima County.

¶16 Adopting TUSD’s budget, Pima County sent property tax
statements to homeowners within the district, which separately delineated
property taxes levied to fund school desegregation expenses, in accordance
with § 15-910(L). Likewise, Pima County listed these taxes as secondary in
its resolution adopting the tax levy. Notably, those taxes were neither
authorized by an election under § 15-910(L) nor were they otherwise
exempt from the 1% Limit. See Ariz. Const. art. 9, § 18(2)(c).

¶17 In compliance with § 15-972(E), Pima County totaled all
2018–2019 ad valorem taxes levied within TUSD’s boundaries and
determined the taxes, both primary and the secondary taxes budgeted for
desegregation expenses, exceeded the 1% Limit on residential property
taxes by $8,113,188.62. Pima County then reduced its levy on residential
property owners by that amount, as required under § 15-972(E), and added

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Opinion of the Court

it to the county’s calculation of expected additional state aid for education
for TUSD.

¶18 The Arizona Department of Revenue determined that the
desegregation expenses—which TUSD budgeted to pay for with secondary
property taxes pursuant to § 15-910(L)—did not qualify as “additional state
aid for education” under § 15-972(E) because credit under § 15-972(E) may
be applied only “against the primary property taxes due.” (Emphasis
added.) Therefore, the state aid calculations, which the Department of
Revenue provided to the State Board of Education, did not include the
desegregation expenses that exceeded the 1% Limit, and the State declined
to reimburse the $8,113,188.62 that Pima County sought in additional state
aid for education.

¶19 Pima County and TUSD (collectively, the “County”) sued to
force the State to pay. Both parties moved for summary judgment.

¶20 The tax court granted the County’s motion and denied the
State’s. The court reasoned that § 15-910(L) “cannot trump the
constitutional limitation on ad valorem taxes found in Ariz. Const. art. 9,
§ 18.” The court found the State’s proffered interpretation of § 15-910(L) to
be “unworkable” and stated that it must be construed in accordance with
Arizona’s constitutional mandate. The State appealed.

¶21 The court of appeals reversed, concluding that § 15-910(L) did
not implicate constitutional concerns because the legislature was within its
authority to amend the statutory scheme it had created. Pima County v.
State, 252 Ariz. 63, 67–68 ¶ 14 (App. 2021). The court reasoned that,
although the meaning of § 15-910(L) would have been clearer had the
legislature also amended the statutory definition of secondary property tax
in the code’s definition section, the State still prevails because any conflict
between the general definition in the definition section and the new
secondary property tax label in § 15-910(L) should be resolved in favor of
the newer, more specific statute—i.e., § 15-910(L). Id. at ¶¶ 14–15 (“[T]he
legislature is free to alter the [purely statutory] characterization of taxes
assessed for one purpose or another as ‘primary’ or ‘secondary’ without
running afoul of the one percent constitutional mandate.”). This petition
followed.

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Opinion of the Court

¶22 We granted review to consider whether the 2018 amendments
eliminated the State’s obligation to reimburse the County for desegregation
expenses under § 15-972(E) and if so, whether those amendments violate
article 9, section 18 of the Arizona Constitution. We have jurisdiction under
article 6, section 5(3) of the Arizona Constitution.

DISCUSSION

¶23 We review the grant of summary judgment de novo. Rogers
v. Mroz, 252 Ariz. 335, 339 ¶ 11 (2022). Issues of statutory interpretation are
issues of law, which this Court also reviews de novo. Brenda D. v. Dep’t of
Child Safety, 243 Ariz. 437, 442 ¶ 15 (2018). This Court’s goal in statutory
interpretation is “to effectuate the legislature’s intent as expressed in the
statute’s text.” Silver v. Pueblo Del Sol Water Co., 244 Ariz. 553, 559 ¶ 22
(2018) (internal quotation marks omitted) (quoting Rasor v. Nw. Hosp., LLC,
243 Ariz. 160, 164 ¶ 20 (2017)). Unless there is ambiguity in a provision’s
meaning, or a provision’s plain meaning would produce absurd results, this
Court’s inquiry “begins and ends with the plain meaning of the legislature’s
chosen words, read within the ‘overall statutory context.’” Welch v. Cochise
Cnty. Bd. of Supervisors, 251 Ariz. 519, 523 ¶ 11 (2021) (quoting Rosas v. Ariz.
Dep’t of Econ. Sec., 249 Ariz. 26, 28 ¶ 13 (2020)).

¶24 At issue here is whether, under § 15-972, the State must
reimburse TUSD’s desegregation expenses “as additional state aid for
education.” We conclude that the State need not pay TUSD’s desegregation
expenses because the legislature’s 2018 amendments to § 15-910 removed
TUSD and Pima County’s authority to budget desegregation expenses
using primary property taxes, instead creating a new classification of
secondary property tax for budgetary purposes. This new classification is
not part of the § 15-972 calculations because, by its terms, § 15-972 applies
only to primary property taxes. § 15-972(E) (specifying that if the “total
primary property taxes to be levied . . . violate [the 1% Limit]” the State must
“apply a credit against the primary property taxes due” and pay that
amount as “additional state aid for education” (emphasis added)).

¶25 When it passed Title 15, the legislature created the primary
and secondary property tax classifications pursuant to the constitutional
command to create “a system of property taxation consistent” with article
9, section 18. See Ariz. Const. art. 9, § 18(8). The definitions in § 15-101(20)
and (25) distinguish between constitutionally capped primary taxes and

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Opinion of the Court

secondary taxes which are constitutionally permitted to exceed the 1%
Limit (because they track the 1% Limit’s exemptions). See § 15-972(E); see
also A.R.S. § 42-17152(A) (prohibiting county boards of supervisors from
assessing “primary property taxes . . . in any tax year against real
property . . . in excess of one per cent of the property’s limited property
value”).

¶26 But article 9, section 18 of the Arizona Constitution makes no
mention of primary or secondary property taxes. Rather, the classifications
are purely statutory and, as such may be amended or superseded at the
discretion of the legislature, so long as the amendments do not violate the
constitution by causing taxpayers to pay more than 1% of their limited
property value. We agree with the court of appeals that here they do not.

¶27 When the legislature added § 15-910(L), it created a new kind
of tax classification, which it chose to label as a “[s]econdary property tax.”
2018 Ariz. Sess. Laws ch. 283, § 2 (2d Reg. Sess.). Section 15-910(L) states
secondary property taxes “do not require voter approval” and “shall be
separately delineated on a property owner’s property tax statement.”
§ 15-910(L). The secondary property tax created by § 15-910(L) is not the
same type of secondary tax found in the definitions of secondary property
taxes in § 15-101, nor those in Title 42 (concerning taxation), nor does it fall
within any of the three exceptions in article 9, section 18. Compare
§ 15-910(L), with § 15-101(25), and A.R.S. § 42-11001(16), and Ariz. Const. art.
9, § 18(2). Like primary taxes, § 15-910(L) secondary taxes may not exceed
the 1% Limit nor be charged to property owners to the extent they exceed
the 1% Limit. Although the legislature’s choice of name may be confusing,
this difference between § 15-910(L) secondary property taxes and
§ 15-101(25) secondary property taxes is not impermissible.

¶28 Similarly, the statutory context requires us to read § 15-910(L)
to conclude that the legislature created a new classification of secondary
property tax because doing so gives meaning to the legislature’s language
and harmonizes statutes rather than creating statutory conflicts. See
§ 15-101 (qualifying its definitions by stating they control “unless the
context otherwise requires”). “[W]e seek to harmonize statutory provisions
and avoid interpretations that result in contradictory provisions.” Lagerman
v. Ariz. State Ret. Sys., 248 Ariz. 504, 511 ¶ 35 (2020) (internal quotation
marks omitted) (quoting Premier Physicians Grp., PLLC v. Navarro, 240 Ariz.
193, 195 ¶ 9 (2016)). Thus, we interpret statutes “as a whole, and give

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Opinion of the Court

meaningful operation to all of [their] provisions.” Wyatt v. Wehmueller, 167
Ariz. 281, 284 (1991). Besides labeling § 15-910(L) taxes as secondary, the
legislature also deleted references to primary property taxes in § 15-910(G),
which authorizes school districts to budget for desegregation expenses
outside the Revenue Control Limit. 2018 Ariz. Sess. Laws ch. 283, § 2 (2d
Reg. Sess.). And the legislature replaced the word “primary” with
“secondary” in § 15-910(H). Id. That subsection mandates school districts
to “[n]otify the county school superintendent” of the amount of
desegregation expenses budgeted outside the Revenue Control
Limit—pursuant to subsection (G)—needed from (now) secondary
property taxes. Id.; see also id. (replacing the word “primary” with
“secondary” in § 15-910(I) so that school boards can advise the county
school superintendent of “additional amount[s] needed” from “secondary
property tax[es]” to cover desegregation expenses budgeted-for outside of
district additional assistance, under subsection (G)).

¶29 Thus, the legislature’s 2018 amendments to § 15-910(G)–(K)
and its addition of § 15-910(L) reflected its intent to end state funding of
desegregation expenses with primary taxes. See Ariz. H.R. B. Summary,
S.B. 1529, 2d Reg. Sess. (2018),
https://www.azleg.gov/legtext/53leg/2R/summary/H.SB1529_05-07-
18_CHAPTERED.pdf (explaining that the 2018 amendment would
“[r]equire[] . . . all tax levies for desegregation to be in the form of a
secondary property tax, rather than a primary property tax”); 2018 Ariz.
Sess. Laws ch. 283, § 2 (2d Reg. Sess.); Sell v. Gama, 231 Ariz. 323, 327 ¶ 16
(2013) (“Our goal in interpreting statutes is to give effect to the intent of the
legislature.” (quoting Est. of Braden ex rel. Gabaldon v. State, 228 Ariz. 323,
325 ¶ 8 (2011))); see also State v. Mixton, 250 Ariz. 282, 302 ¶ 90 (2021) (Bolick,
J., dissenting) (“[W]hen a legislature amends a provision by making a
significant change in language, we presume it intended a different
meaning.”).

¶30 Petitioners correctly argue that the 2018 amendments to
§ 15-910 did not change the requirement in § 15-972(E) to reimburse them
for primary property taxes levied in excess of the 1% Limit. However, this
does not mean that desegregation expenses budgeted under § 15-910 are
primary taxes. There is no constitutional or statutory requirement that
taxes exceeding the 1% Limit must be primary. When the legislature
created a new kind of secondary tax in § 15-910(L), it also explicitly
removed TUSD’s statutory authority to budget for desegregation expenses

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Opinion of the Court

out of its primary tax levy. See § 15-905(N). Even if we were to read the tax
created by § 15-910 as being “primary” under the § 15-101(20) definition,
TUSD no longer has the legal authority to budget for or spend those taxes.
Such a reading would render § 15-910(G)–(L) meaningless.

¶31 Moreover, the new category of secondary property taxes
established in § 15-910(L) does not violate the Arizona Constitution. The
1% Limit remains intact; all ad valorem property taxes outside of the
exceptions in article 9, section 18 of the Arizona Constitution must still
comply with the 1% Limit.

¶32 The tax court found and Petitioners argue that the
legislature’s amendments are “unworkable.” But, after the 2018
amendments, § 15-910(L) instructs that if a district wants to use § 15-910(G)
and (H) to budget for certain court-ordered desegregation expenses in
excess of the Revenue Control Limit, it must do so with the new type of
secondary property taxes—as TUSD did. See § 15-910(L) (“Subsections G
through K of this section apply only if the governing board uses revenues
from secondary property taxes rather than primary property taxes . . . .”).

¶33 In compliance with the new statute, TUSD was able to budget
for court-ordered desegregation expenses in excess of the Revenue Control
Limit under § 15-910(G) with the new secondary property taxes. But
because those taxes were not constitutionally exempt, they could only be
paid with tax revenue that did not exceed or is not subject to the 1% Limit.2

¶34 Contrary to the tax court ruling, excluding taxes used to fund
desegregation expenses budgeted in excess of the Revenue Control Limit
from § 15-972 calculations is not unworkable. Rather, it just means school
districts and counties must do what they did before the legislature started
reimbursing them for desegregation expenses in 1985: reduce their overall
expenditures either for desegregation or in other areas so that their tax levy
complies with the 1% Limit or pay such expenses with revenue not subject
thereto. The legislature had the authority to take back what it had given,
so long as it did not violate the constitution; and here, the legislature did

2 We note that since 2022, the County is no longer subject to the
desegregation order. Fisher, No. 74-cv-00090-TUC-DCB, Order at 2:17–18,
18:3–4.

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not. Thus, the constitutional mandate that “[t]he legislature . . . provide by
law a system of property taxation consistent with the provisions of” article
9, section 18 is not violated. See Ariz. Const. art. 9, § 18(8).

CONCLUSION

¶35 The State is not obligated to reimburse the desegregation
expenses paid by Pima County. We affirm the court of appeals’ opinion
and remand this case to the tax court for the entry of judgment for the State.
In our discretion, we decline to award attorney fees to either party.

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