SUPREME COURT OF ARIZONA 

En Banc 

LEAGUE OF ARIZONA CITIES AND ) Arizona Supreme Court 

TOWNS, ) No. CV-08-0379-SA 

 ) 

 Petitioner, ) 

 ) 

 v. ) O P I N I O N 

 ) 

DEAN MARTIN, Arizona State ) 

Treasurer, in his official ) 

capacity and JANET NAPOLITANO, ) 

Governor of the State of Arizona, ) 

 ) 

 Respondents. ) 

_________________________________ ) 

JURISDICTION ACCEPTED; RELIEF GRANTED 

________________________________________________________________ 

PERKINS, COIE, BROWN, & BAIN, P.A. Phoenix 

 By Paul F. Eckstein 

 Charles A. Blanchard 

 Steven J. Monde 

 Aaron S. Welling 

Attorneys for League of Arizona Cities and Towns 

TERRY GODDARD, ARIZONA ATTORNEY GENERAL Phoenix 

 By Mary R. O’Grady, Solicitor General 

 Christopher Munns, Assistant Attorney General 

Attorneys for Dean Martin, State Treasurer 

LEWIS AND ROCA, L.L.P. Phoenix 

 By Robert G. Schaffer 

 Kimberly A. Demarchi 

 Emily S. Cates 

 Stefan M. Palys 

 Sarah E. Selzer 

Attorneys for Janet A. Napolitano, Governor 

________________________________________________________________ 

B E R C H, Vice Chief Justice 

¶1 We have been asked to decide whether a statutory 

measure requiring Arizona’s incorporated cities and towns to 
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deposit money into the state general fund is an appropriation 

that may be included in the general appropriations bill. See 

Ariz. Const. art. 4, pt. 2, § 20. We hold that it is not such 

an appropriation. 

I. FACTUAL AND PROCEDURAL BACKGROUND 

¶2 On June 26, 2008, the Arizona Legislature passed House 

Bill 2209 (“HB 2209”), which is the general appropriations act 

for the 2008-2009 fiscal year. 2008 Ariz. Sess. Laws, ch. 285 

(2d Reg. Sess.). Section 47 of the bill requires the 

petitioning cities and towns to pay approximately eighteen 

million dollars into the state general fund during the current 

fiscal year: 

A. Notwithstanding any other law, in fiscal year 

2008-2009, counties, incorporated cities and towns 

shall deposit $29,748,400 into the state general fund. 

The amount transferred to the state general fund by 

each county, incorporated city and town shall be 

calculated by the joint legislative budget committee 

staff, who shall publish the allocations by August 31, 

2008. The joint legislative budget committee staff 

shall base its allocation on the distributions 

provided under section 28-6538, subsection A, 

paragraphs 2, 3, and 4, Arizona Revised Statutes.[1]

B. Notwithstanding any other law, a county may meet 

any statutory funding requirements of this section 

from any source of county revenue designated by the 

county, including funds of any county wide special 

 

1

 The allocations are based on the formula used to determine 

distributions from the Arizona Highway User Revenue Fund 

(“HURF”) to the counties, incorporated cities, and towns. Under 

that formula, the cities and towns must deposit $18,329,822 into 

the general fund, while the counties are responsible for 

$11,418,578. 
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taxing district in which the board of supervisors 

serves as the board of directors. 

C. Contributions made pursuant to this section are 

excluded from the county expenditure limitations. 

Id. § 47. The Governor signed HB 2209 into law on June 27, 

2008. The legislature then promptly adjourned sine die. Four 

days later, the 2008-2009 fiscal year began. It ends on June 

30, 2009. See Ariz. Const. art. 9, § 4; Ariz. Rev. Stat. 

(“A.R.S.”) § 35-102 (2000). 

¶3 Two weeks after the passage of HB 2209, the League of 

Arizona Cities and Towns (the “League”) contacted the Governor’s 

Office to express concern over § 47’s constitutionality. The 

League and its counsel met with the Governor’s staff at least 

four times between August and October 2008 to discuss the 

dispute over § 47. When discussions failed to resolve the 

issue, the League filed a special action in this Court on 

November 14, approximately four and one-half months after HB 

2209 was signed into law.2

 The petition named as respondents the 

Governor of Arizona and the Arizona State Treasurer.3

 Following 

 

2

 The League represents only the cities and towns. The 

counties are not parties to this action and have not challenged 

the constitutionality of § 47. 

3

 The Treasurer agrees with the League that § 47 violates 

Article 4, Part 2, Section 20 of the Arizona Constitution. 

Since this lawsuit was briefed and argued, Janice K. Brewer has 

succeeded Janet Napolitano as Governor of Arizona. The Court 

has received no filings by the Office of the Governor indicating 

a change in legal position.
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oral argument, we issued an order accepting jurisdiction. This 

opinion explains our grant of relief. 

II. DISCUSSION 

A. Special Action Jurisdiction 

¶4 Our decision to accept jurisdiction of a special 

action is highly discretionary. Ariz. R.P. Spec. Act. 3, State 

Bar Committee Note; see also Forty-Seventh Legislature v. 

Napolitano, 213 Ariz. 482, 485, ¶ 11, 143 P.3d 1023, 1026 

(2006). Several factors support our exercise of jurisdiction in 

this matter. The case presents novel constitutional issues of 

statewide importance. See Forty-Seventh Legislature, 213 Ariz. 

at 485, ¶ 11, 143 P.3d at 1026; Randolph v. Groscost, 195 Ariz. 

423, 425, ¶ 6, 989 P.2d 751, 753 (1999). In addition, “this 

case involves a dispute at the highest levels of state 

government” and requires a swift determination because it 

concerns the state budget for the current fiscal year. Rios v. 

Symington, 172 Ariz. 3, 5, 833 P.2d 20, 22 (1992); see also 

State Comp. Fund v. Symington, 174 Ariz. 188, 192, 848 P.2d 273, 

277 (1993) (noting that “prompt resolution is needed [in cases 

affecting the state budget] so that the legislative and 

executive branches will know where they stand and can take such 

action as they determine necessary relative to budgetary 

matters”). 

¶5 The Governor urges us to decline jurisdiction because 
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of the League’s delay in filing suit. Although the Governor 

frames the issue as a jurisdictional challenge, we analyze it 

under our laches jurisprudence because it does not implicate our 

authority to decide the case; rather, it relates to our exercise 

of discretion whether to take the case. 

¶6 “Laches will generally bar a claim when the delay [in 

filing suit] is unreasonable and results in prejudice to the 

opposing party.” Sotomayor v. Burns, 199 Ariz. 81, 83, ¶ 6, 13 

P.3d 1198, 1200 (2000). Delay alone will not establish a laches 

defense, however. Id. at ¶ 8; Harris v. Purcell, 193 Ariz. 409, 

412, ¶ 16, 973 P.2d 1166, 1169 (1998). Rather, in determining 

whether the delay was unreasonable, “we examine the 

justification for delay, including the extent of plaintiff’s 

advance knowledge of the basis for challenge.” Harris, 193 

Ariz. at 412, ¶ 16, 973 P.2d at 1169. The delay must also 

result in prejudice, either to the opposing party or to the 

administration of justice, id., which may be demonstrated by 

showing injury or a change in position as a result of the delay. 

Flynn v. Rogers, 172 Ariz. 62, 66, 834 P.2d 148, 152 (1992) 

(citing Jerger v. Rubin, 106 Ariz. 114, 117, 471 P.2d 726, 729 

(1970)); Tovrea v. Umphress, 27 Ariz. App. 513, 521, 556 P.2d 

814, 822 (1976); see also Lubin v. Thomas, 213 Ariz. 496, 497, 

¶ 10, 144 P.3d 510, 511 (2006) (finding prejudice to system). 

¶7 The Governor contends that by waiting to bring its 
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action until November, the League prevented prompt judicial 

resolution of the matter and exacerbated the already precarious 

budget situation. The League counters that the parties’ ongoing 

negotiations justified the delay. It further maintains that no 

prejudice has occurred because substantial budget adjustments 

are still required before the end of the fiscal year to balance 

the State budget. 

¶8 Section 47 requires the cities and towns to deposit 

roughly $18.3 million into the general fund by the end of the 

current fiscal year, which concludes on June 30, 2009. When the 

petition was filed, more than seven months remained before the 

League members’ payments were due. Even now, nearly five months 

remain. Thus, while we recognize the complexities associated 

with balancing the budget during the course of the fiscal year, 

in this case, adequate time remains for the legislature to make 

adjustments. The time remaining before the payment deadline 

distinguishes this case from other cases in which we have found 

delays in filing suit unreasonable. Those cases often dealt 

with last-minute challenges to ballot propositions filed shortly 

before impending printing deadlines. See, e.g., Sotomayor, 199 

Ariz. at 83, ¶ 7, 13 P.3d at 1200 (holding unreasonable 

petitioners’ failure to file a special action until the day 

before the voter information pamphlet printing deadline);

Mathieu v. Mahoney, 174 Ariz. 456, 459, 851 P.2d 81, 84 (1993) 
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(finding unreasonable filing the complaint days before the 

absentee ballot printing deadline). Here, the League did not 

wait until an imminent deadline approached to file its special 

action. 

¶9 But even had the delay been unreasonable, delay alone 

will not satisfy the test for laches. Sotomayor, 199 Ariz. at 

83, ¶ 8, 13 P.3d at 1200. The complaining party must also prove 

prejudice. Id. In this case, the Governor has not demonstrated 

prejudice because she has not shown substantial harm caused by 

the League’s delay. When § 47 was passed, the State’s budget 

deficit was projected to be approximately $400 million. The 

anticipated deficit has steadily grown and is currently reported 

to be nearly $1.6 billion. JOINT LEGISLATIVE BUDGET COMM., JLBC –

MONTHLY FISCAL HIGHLIGHTS: JANUARY 2009, at 1 (2009), 

http://www.azleg.gov/jlbc/mfh-jan-09.pdf. Section 47 requires 

the cities and towns to make a payment that represents only a 

small fraction of the current deficit. 

¶10 The Governor suggests that measures might have been 

taken to find alternate sources of revenue to replace the amount 

at issue here had it been known that the League would challenge 

§ 47. Yet she knew months before the special action was filed 

of the League’s claim that § 47 is unconstitutional. Governor 

Napolitano did not exercise her constitutional authority to 

convene an extraordinary session of the legislature to address 
-8-

this issue, see Ariz. Const. art. 5, § 4 (authorizing 

extraordinary session). Even after this action was filed, 

neither she nor the legislature requested a special session, see 

id. art. 4, pt. 2, § 1(2) (authorizing a special session upon 

petition of two-thirds of members of each house). If a special 

session was not called during that time to resolve a $1.6 

billion deficit it seems unlikely one would have been called to 

find an alternate source for funding the $18.3 million payment 

at issue here. We therefore do not find that the delay in this 

case caused prejudice. 

¶11 The availability of an alternative remedy also 

undermines the Governor’s claim of prejudice. The cities and 

towns receive payments from the State through the Urban Revenue 

Sharing Fund (the “URSF”), A.R.S. § 43-206 (Supp. 2008). For 

the current fiscal year, the legislature appropriated 

$727,677,400 from the general fund to the URSF. See 2006 Ariz. 

Sess. Laws, ch. 351, § 14 (2d Reg. Sess.).4

 The Treasurer 

distributes monies from the URSF to the cities and towns in a 

proportional amount each month. A.R.S. § 43-206(C). At this 

time, the URSF contains several months’ worth of appropriated 

 

4

 This appropriation was made in lieu of the transfer 

required by § 43-206(A). 2006 Ariz. Sess. Laws, ch. 351, § 14. 

Under the formula provided in § 43-206(A), the URSF would have 

contained $709,936,400 for the current fiscal year, $17,741,000 

less than the amount the legislature appropriated. House Fact 

Sheet for S.B. 1160, 48th Leg., 2d Reg. Sess. (2008). 
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monies that have not yet been distributed. See id. The 

legislature could suspend, reduce, or eliminate part of the 

remaining payments to the incorporated cities and towns. If 

that were to happen, contrary to the Governor’s prejudice claim, 

funds of other state entities would not be required to offset 

the expected $18.3 million deposit from the League’s members.5

¶12 The Governor urges us not to overlook the burden that 

the League’s delay imposes on the state budget process. We 

agree that parties wishing to challenge the budget must do so in 

a timely manner and, in some circumstances, a four-month delay 

will be too long. See Mathieu, 174 Ariz. at 460, 851 P.2d at 85 

(“Litigants and lawyers involved in [public] litigation must be 

keenly aware of the need to bring such cases with all deliberate 

speed or else the quality of judicial decision making is 

seriously compromised.”). But we disagree with the Governor’s 

conclusion that the League’s delay was unreasonable or caused 

 

5

 The League argues that any reduction in the existing URSF 

appropriation of approximately $728 million would require a twothirds vote of each house of the legislature because it would 

change the allocation of taxes among the state and cities. See

Ariz. Const. art. 9, § 22(7). We need not decide that issue 

because Chapter 351 of the 2006 session laws appropriates monies 

from the general fund for fiscal year 2008-2009 in lieu of an 

amount equal to fifteen percent of net state income taxes for 

fiscal year 2006-2007. Thus, even if reducing the URSF 

appropriation below the formula-based amount might be subject to 

a supermajority vote, an issue we do not decide here, reducing 

the appropriation to that amount would not change the allocation 

of taxes among the State and cities for purposes of Article 9, 

Section 22. 
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prejudice under the circumstances of this case. 

¶13 Laches is an equitable doctrine based on the principle 

of fundamental fairness. Harris, 193 Ariz. at 414, ¶ 24, 973 

P.2d at 1171. When determining whether laches should preclude a 

claim, we consider all factors, including not only the length of 

the League’s delay, but also the magnitude of the problem at 

issue. Employing this approach leads us to conclude that the 

League’s delay does not bar this action. 

B. Is § 47 an Appropriation? 

¶14 The Arizona Constitution strictly limits the contents 

of general appropriations bills: “The general appropriation 

bill shall embrace nothing but appropriations for the different 

departments of the State, for State institutions, for public 

schools, and for interest on the public debt. All other 

appropriations shall be made by separate bills, each embracing 

but one subject.” Ariz. Const. art. 4, pt. 2, § 20. Any 

legislation in a general appropriations bill that is neither an 

appropriation of money for a specific purpose nor a provision 

necessary for the proper expenditure of that money is improper. 

State v. Angle, 54 Ariz. 13, 21, 91 P.2d 705, 708 (1939). 

¶15 We have set forth the standards for determining 

whether legislation is an “appropriation” on several occasions. 

In Hunt v. Callaghan, we defined an appropriation as “the 

setting aside from the public revenue of a certain sum of money 
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for a specified object, in such manner that the executive 

officers of the government are authorized to use that money, and 

no more, for that object, and no other.” 32 Ariz. 235, 239, 257 

P. 648, 649 (1927) (citations omitted). The essential parts of 

this definition are the “certain sum,” the “specified object,” 

and the “authority to spend.” Rios, 172 Ariz. at 7, 833 P.2d at 

24 (quoting Black & White Taxicab Co. v. Standard Oil Co., 25 

Ariz. 381, 406, 218 P. 139, 148 (1923) (Lockwood, J., 

dissenting)). The legislature may set aside money from the 

public revenue by “authoriz[ing] spending from the general fund 

or . . . authoriz[ing] payments of ascertainable amounts from a 

special fund.” Forty-Seventh Legislature, 213 Ariz. at 487, 

¶ 20, 143 P.3d at 1028. We have also determined that under 

certain circumstances the legislature may make an appropriation 

by transferring money from a previously appropriated sum back 

into the general fund. See Rios, 172 Ariz. at 9, 833 P.2d at 

26. 

¶16 In Rios v. Symington, we addressed whether fund 

transfers shifting money from special funds into the general 

fund constituted appropriations. Id. at 8-9, 833 P.2d at 25-26. 

In that case, we applied the three-part test for an 

appropriation to each special fund at issue and ruled that all 

were created by appropriations. Id. at 6-8, 833 P.2d at 23-25. 

We then held that fund transfers reducing the amount of a prior 
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appropriation also constituted appropriations. Id. at 8, 833 

P.2d at 25. The reason was apparent: “When the Legislature 

transfers monies from a previously-made appropriation, the 

obvious effect is to reduce the amount of the previous 

appropriation.” Id. at 9, 833 P.2d at 26. Rios emphasized that 

before a transfer of funds from a special fund may be considered 

an appropriation, the special fund itself must meet the test for 

an appropriation. Id. at 6, 9, 833 P.2d at 23, 26. Rios thus 

obliges the legislature to identify some appropriation that must 

be reduced to make the payment demanded by § 47 if it wishes to 

include the transfer in the general appropriations bill. 

¶17 While § 47 identifies an ascertainable sum to be paid, 

the question remains whether § 47 identifies and reduces 

something that meets the definition of an appropriation. We 

conclude that it does not. The legislature did not expressly 

attach the assessed amount to any public revenue that it had 

previously set aside for the cities and towns. Because § 47 

fails to identify any prior appropriation, it fails to meet the 

definition of an appropriation. 

¶18 The Governor argues that the cities and towns received 

monies from the State far exceeding the $18.3 million at issue, 

and the Court should infer that these were the prior 

appropriations intended to be reduced by § 47. The Governor 

first identifies $17.7 million of additional funding to the 
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Urban Revenue Sharing Fund as a specific appropriation for 

fiscal year 2008-2009 that § 47 could constitutionally reduce. 

See supra note 4. But the Governor admits that this extra 

funding does not cover the total $18.3 million requirement 

imposed on the cities and towns, leaving a portion of the § 47 

payment obligation unattached to any prior appropriation. More 

importantly, § 47 does not identify the additional urban revenue 

sharing funding as an appropriation that the legislature 

designated for reduction. The Governor also points to various 

discretionary grants made for the benefit of the cities and 

towns as appropriations that § 47 might be deemed to reduce. 

Those funds, however, are often subject to restrictions, such as 

use or reimbursement limitations imposed by the federal 

government, and many are not appropriated to the cities and 

towns themselves, but to various executive agencies for use by 

the cities and towns. And again, those grants are not 

identified in § 47 as the prior appropriations now being 

reduced. Because § 47 does not reduce any identified prior 

appropriation, it violates Article 4, Part 2, Section 20, and is 

therefore unconstitutional.6

 See Angle, 54 Ariz. at 21, 91 P.2d 

 

6

 In its petition for special action, the League also argued 

that § 47 violates Article 9, Section 22 of the Arizona 

Constitution because it imposes a new tax, fee, or assessment 

without approval by a two-thirds vote of both houses of the 

legislature. Because we conclude that § 47 is unconstitutional 

under Article 4, Part 2, Section 20, we do not reach this issue. 
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at 708. 

C. Attorneys’ Fees

¶19 The League has requested an award of attorneys’ fees 

pursuant to A.R.S. § 12-348(A) (2003). That section requires an 

award of attorneys’ fees “to any party other than . . . a city, 

town or county which prevails by an adjudication on the merits 

in . . . [a] special action proceeding brought by the party to 

challenge an action by the state against the party.” Id.

(emphasis added). Under the statute, the cities and towns are 

prohibited from recovering fees. Accordingly, the League, which 

asserted standing in this matter as the representative of the 

cities and towns, cannot be awarded attorneys’ fees under § 12-

348(A). 

III. CONCLUSION 

¶20 For the foregoing reasons, we conclude that § 47 is 

not an appropriation and therefore was not properly included in 

the general appropriations bill. It therefore violates Article 

4, Part 2, Section 20 of the Arizona Constitution. The League’s 

request for attorneys’ fees is denied. 

 _______________________________________ 

 Rebecca White Berch, Vice Chief Justice 

CONCURRING: 

_______________________________________ 

Ruth V. McGregor, Chief Justice 
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_______________________________________ 

Michael D. Ryan, Justice 

_______________________________________ 

Andrew D. Hurwitz, Justice 

_______________________________________ 

W. Scott Bales, Justice 

B A L E S, Justice, Concurring 

¶21 While joining in the Court’s opinion, I write briefly 

to explain why I conclude this action is not barred by laches. 

The legislature has ample time within this fiscal year to remedy 

the identified constitutional problem and to achieve nearly the 

same budget reduction sought by § 47 without impacting 

recipients of appropriations other than the cities and towns. 

¶22 As a general matter, I would be inclined to accept the 

Governor’s argument that a party cannot wait several months to 

challenge the validity of an appropriations bill. Delay in 

bringing such challenges obviously poses the risk of unduly 

prejudicing governmental entities that could be forced to absorb 

significant budget adjustments over the remaining fiscal year. 

These concerns, however, are not implicated here given the 

unique circumstances of this case. 

¶23 The legislature, as the Court recognizes, see n. 6 

supra, could achieve almost all the $18.3 million budget savings 
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intended by § 47 by instead rescinding $17.7 million from the 

existing $728 million appropriation to the Urban Revenue Sharing 

Fund (URSF). Because monies are distributed to cities and towns 

from the URSF on a monthly basis, there are hundreds of millions 

of dollars still remaining in the URSF for this fiscal year. 

The legislature could, by a majority vote of each house, reduce 

the outstanding appropriation by some $17.7 million, the 

difference between the amount the legislature appropriated in 

2006 and the amount calculated by the statutory formula in 

A.R.S. § 43-206(A). 

¶24 If the Legislature can achieve nearly the same result 

by reducing this year’s urban revenue sharing appropriation to 

cities and towns, one might ask if our decision unduly elevates 

form over substance. This is an area, however, in which the 

form of legislation has constitutional significance. Section 47 

does not identify any appropriation of state funds from which 

the cities and towns are to provide the mandated deposit of 

money. This fact readily distinguishes § 47 from lump sum 

reductions that can be linked to identifiable appropriations to 

departments or subunits of the state. Such reductions are 

treated as “appropriations” that may be included in a general 

appropriations bill and are subject to the Governor’s line item 

veto. Rios v. Symington, 172 Ariz. 3, 10-11, 833 P.2d 20, 27-28 

(1992). By today holding that § 47 cannot be included in a 
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general appropriations bill because it does not reduce any 

identifiable appropriation, the Court’s decision not only honors 

the language of Article 4, Part 2, Section 20 of the 

constitution, but also promotes accountability and transparency 

in the state’s budgeting process. 

 ________________________________ 

 W. Scott Bales, Justice 

CONCURRING: 

_________________________________ 

Andrew D. Hurwitz, Justice