The Arizona Supreme Court last week struck down a provision state lawmakers passed in 2008 that would have forced local governments to pay the state nearly $30 million.
The court sided with the League of Arizona Cities and Towns, which filed the lawsuit, arguing that the legislature’s move violated the state constitution.
The payback requirement was part of the state’s FY 2009 budget bill. The court unanimously ruled that the legislature had over-stepped its authority by attempting to mandate how local governments spend money in a spending bill like the budget.
When the bill passed, the legislature had mandated that local governments pay the state based on a formula used for Highway User Revenue Funds (HURF).
HURF money comes from taxes on gasoline and vehicle license and motor vehicle registration fees.
The state then distributes the money to cities, towns and counties and to the State Highway Fund for highway repairs and construction. Oro Valley leaders estimate the requirement could have cost the town $143,000.
Pima County leaders think they might have been on the hook for more than $2 million if the provision was allowed to stand.
In a concurring opinion, Justice W. Scott Bales wrote that the state could still get the $30 million by reducing local government’s shares of Urban Revenue Sharing Funds (URSF).
The state collects the money from income taxes, then pays local governments 15 percent.