Arizona high court to hear arguments over Medicaid expansion levy

The Arizona Supreme Court will hear arguments over whether a fee levied to help pay for Medicaid expansion in the state is, in fact, a tax and therefore unconstitutional.


The Arizona Supreme Court will hear arguments over whether a fee levied to help pay for Medicaid expansion in the state is, in fact, a tax and therefore unconstitutional.

Two lower courts have already ruled the levy introduced under then-Gov. Jan Brewer was not a tax and therefore did not need a two-thirds majority in the Legislature for it to pass into law.

Former and current lawmakers backed by the Goldwater Institute filed the lawsuit in 2013. A Maricopa County judge ruled in favor of Brewer and other supporters, a decision upheld by Arizona Court of Appeals in March.

The Supreme Court agreed this week to hear arguments over the fee, an announcement welcomed by the Goldwater Institute.


Jennifer Tiedemann, communications manager for the institute, said the Supreme Court has "weighty responsibility of addressing one of the most important limited-government protections that the voters placed in the Arizona Constitution."

"In 1992, the voters added Prop 108 to the Arizona Constitution to constrain government’s power to collect money, whether by tax, fee, or assessment," Tiedemann told Arizona Business Daily.

There is a "narrow" exception allowing administrators, once authorized to collect a levy, to adjust the amount without having to go back to the Legislature for permission.

The appeals court ruled that the state's Medicaid director was allowed to "establish, administer and collect" such a levy on hospitals, according to a report on azcentral.com.

"The Court of Appeals decision turned that exception on its head, so that a bare majority could hand an unelected administrator virtually unlimited power to tax, even though the Legislature would need to garner a two-thirds vote to impose the tax itself," Tiedemann said.

"That doesn’t make sense," she said. "Worse, it creates a perverse incentive for lawmakers, encouraging those wishing to evade the constitutional rule to give away the tax power to bureaucrats, which encourages less responsible and less accountable lawmaking, the opposite of what the voters intended."

It further "makes no sense" to state that the Legislature must have a two-thirds majority to impose a tax, but that "a bare majority can give unelected officials the power to force Arizonans to pay 'assessments' at any amount the official chooses."

"We can be sure that the court will provide an administrable and straightforward test to encourage responsible and accountable lawmaking," Tiedemann said.

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