Successor to Prop 123 needed to preserve K-12 education funding

This column originally in The Capitol Times

Arizona voters in a 2016 special election passed Proposition 123, which increased investment in K-12 education by billions of dollars and ended a long, complicated and expensive lawsuit over previous state budgets’ K-12 funding levels.

As Proposition 123 nears the end of its 10-year lifespan, it’s time for an updated law to ensure Arizona’s investment in K-12 doesn’t diminish.

The 2016 measure was shrewdly designed by former Gov. Doug Ducey and relied on increasing the distribution from the state land trust, which at the time of the proposition’s passing had swelled to more than $5 billion. Despite the size of the trust, outdated law kept distributions too low. So, Proposition 123 boosted distributions from the trust to the tune of $3.5 billion over the course of a decade, all without raising taxes.

Ariz. Chamber of Commerce & Industry President and CEO Danny Seiden (Photo by Jennifer Stewart)

Proposition 123 had plenty of naysayers who predicted all sorts of doomsday scenarios, from a cratering trust fund to tax increases, to wild swings in K-12 funding. None of them came true. In fact, just the opposite.

The proposition’s passage kicked off a major increase in K-12 funding over successive state budgets thanks to the Legislature and governor, who successfully implemented an average 20% teacher pay raise, and restored District and Charter Additional Assistance and Career and Technical Education funding.

And just like with Proposition 123, the funding increases happened without raising taxes. In fact, individual income tax rates plunged to a nation-low 2.5% among states with an income tax, and the rainy day fund balance exceeded $1 billion.

Over the last decade Arizona has proven that we could increase state land trust distributions to schools without harming the corpus for future generations and that we could make our tax code more competitive while still increasing K-12 funding.

State Senate President Warren Petersen, R-Gilbert, deserves credit for his recent announcement that the Legislature will make a new education funding plan a priority in the 2024 legislative session. The Chamber of Commerce & Industry has made an update to Proposition 123 a priority for next year, too, and we look forward to working with him and his colleagues to craft a measure that voters will strongly support.

Unfortunately, Petersen’s plan is receiving criticism from some corners before the Legislature has even convened. That’s too bad. Proposition 123 delivered a win for schools. There’s no reason the next iteration can’t as well.

The Chamber and job creators are ready to work constructively with the Legislature on the next generation of K-12 funding. We’ll urge lawmakers to ensure the next version of Proposition 123, like its predecessor, doesn’t raise taxes. And we want to work with members of both parties to ensure the new version doesn’t create new stress on the general fund. Finally, we want whatever gets referred to voters to come with bipartisan support. When Proposition 123 was originally rolled out in 2015, leaders representing constituencies across the political spectrum stood up to support it, something worth striving for again.

Like they do every year, legislators in 2024 will have a long list of things they want to accomplish during the legislative session. Gov. Katie Hobbs will have her own agenda. A successor to Proposition 123 and the preservation of the decade’s most consequential education funding initiative should be at the top.

Danny Seiden is president and CEO of the Chamber of Commerce & Industry.

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