Opinion ID: 4580544
Heading Depth: 2
Heading Rank: 1

Heading: The 100-word description

Text: ¶6 Section 19-102(A) requires initiative sponsors to insert on petition signature sheets “a description of no more than one hundred words of the principal provisions of the proposed measure.” The description must be followed by this language: Notice: This is only a description of the proposed measure (or constitutional amendment) prepared by the sponsor of the measure. It may not include every provision contained in the measure. Before signing, make sure the title and text of the measure are attached. You have the right to read or examine the title and text before signing. § 19-102(A). ¶7 Increasingly, sponsors, opponents, and courts have struggled both to identify “principal provisions” in measures and to determine whether their descriptions satisfy § 19-102(A), particularly when the proposed measures are lengthy or complex. There is also confusion about 4 JAIME A. MOLERA et al. v. KATIE HOBBS et al. Opinion of the Court whether omission of a principal provision alone disqualifies a measure from the ballot or whether the omission also must make the description misleading or confusing. Further guidance on what § 19-102(A) does and does not require is warranted before addressing the superior court’s ruling here. ¶8 There are two grounds on which to challenge a measure’s 100word description under § 19-102(A). The first is that the sponsor omitted a “principal provision” of the measure from the description. If the court agrees, it should disqualify the measure from the ballot without further inquiry. Whether the omission made the description misleading, confusing, or unfair is irrelevant. We did not intend to suggest otherwise in Molera, where we observed that omitting a principal provision concerning the elimination of tax indexing also “create[d] a significant risk of confusion or unfairness and could certainly materially impact whether a person would sign the petition.” 245 Ariz. at 297 ¶ 25. Section 19-102(A) requires a sponsor to describe all principal provisions of a measure. ¶9 What are “principal provisions”? They are the “most important,” “consequential,” and “primary” features of the initiative. Id. ¶ 24 (quoting Sklar v. Town of Fountain Hills, 220 Ariz. 449, 453 ¶ 13 (App. 2008)). They are not all provisions. The 100-word description serves as the “elevator pitch” that alerts prospective signatories to the measure’s key operative provisions, enabling them to decide in short order whether to sign the petition, refuse to do so, or make further inquiry about the measure. See id. at 297 ¶ 27 (stating that the purpose of the description is to enable prospective signatories to determine whether to endorse the measure for the ballot); see also Kromko v. Superior Court, 168 Ariz. 51, 60 (1991) (observing that “rare is the elector who stops long enough in the summer heat to read or listen to a complete description of the entire nature and scope of a proposed measure”). ¶10 The second ground on which to challenge a 100-word description focuses on the manner of describing the measure’s principal provisions. Section 19-102(A) does not require the description to be impartial. Save Our Vote, Opposing C-03-2012 v. Bennett, 231 Ariz. 145, 152 ¶ 28 (2013). But to comply, the description must describe the principal provisions to accurately communicate their general objectives. In light of the 100-word limit, and the constitutional right to propose initiatives of any length, the sponsor may cast the description in broad terms, and more complex or multi-faceted initiatives may be unavoidably less detailed than 5 JAIME A. MOLERA et al. v. KATIE HOBBS et al. Opinion of the Court shorter measures. See Quality Educ. & Jobs Supporting I-16-2012 v. Bennett, 231 Ariz. 206, 208 ¶ 9 (2013) (providing that “[t]he length and complexity of the initiative” and the fifty-word limit for the Secretary of State’s ballot summary are “factors in assessing compliance” with the statute requiring that summary). If necessary, a sponsor may refer potential signatories to the measure’s text for more detail when explaining technical terms or difficult-to-grasp concepts. ¶11 Reasonable people can differ about the best way to describe a principal provision, but a court should not enmesh itself in such quarrels. See id. at 209 ¶ 13. If the chosen language would alert a reasonable person to the principal provisions’ general objectives, that is sufficient. Applying this reasonable person standard, the trial judge should ordinarily decide the sufficiency of a description without expert witness evidence. See Ariz. R. Evid. 702. ¶12 What constitutes a deficient description under § 19-102(A)? In recent years, we have described such deficiencies as those that are “fraudulent or create[] a significant danger of confusion or unfairness,” Molera, 245 Ariz. at 295 ¶ 13 (quoting Save Our Vote, 231 Ariz. at 152 ¶ 26), contain “untrue representations designed to defraud potential signatories,” or “obscure[]” a measure’s principal provisions or “thrust,” Wilhelm v. Brewer, 219 Ariz. 45, 48 ¶¶ 13–15 (2008) (quoting Kromko, 168 Ariz. at 59). We now rephrase these standards more precisely to assist both initiative sponsors in complying with § 19-102(A) and courts in deciding whether sponsors did so. ¶13 The court should disqualify an initiative from the ballot whenever the 100-word description either communicates objectively false or misleading information or obscures the principal provisions’ basic thrust. The latter can occur through the language used to describe the principal provisions or by failing to refer to key features of those provisions. In other words, although sponsors are free to describe the measure in a positive way and emphasize its most popular features, they may not engage in a “bait and switch” in which the summary attracts signers but misrepresents or omits key provisions. In addressing challenges, a court should “consider the meaning a reasonable person would ascribe to the description.” Ariz. Chapter of the Associated Gen. Contractors of Am. v. City of Phoenix, 247 Ariz. 45, 48 ¶ 15 (2019). 6 JAIME A. MOLERA et al. v. KATIE HOBBS et al. Opinion of the Court
¶14 The Initiative is nine pages long and proposes to amend both A.R.S. Title 15 (Education) and Title 43 (Taxation of Income). The 100word description in the petition signature sheets for the Initiative provides: The Invest in Education Act provides additional funding for public education by establishing a 3.5% surcharge on taxable income above $250,000 annually for single persons or married persons filing separately, and on taxable income above $500,000 annually for married persons filing jointly or head of household filers; dedicates additional revenue to (a) hire and increase salaries for teachers, classroom support personnel and student support services personnel, (b) mentoring and retention programs for new classroom teachers, (c) career training and post-secondary preparation programs, (d) Arizona Teachers Academy; amends the Arizona Teachers Academy statute; requires annual accounting of additional revenue. The notice required by § 19-102(A) followed the description. See supra ¶ 6. ¶15 The superior court found that this summary omitted five principal provisions, which also made the description misleading and “created a significant danger of confusion or unfairness to a reasonable Arizona voter.” It further ruled that use of the word “surcharge” masked the Initiative’s proposal to substantially increase the tax rate for wealthier taxpayers. We review the court’s ruling de novo. See Molera, 245 Ariz. at 294 ¶ 8. ¶16 (1) Percentage distribution of new revenues. The 100-word description listed who would receive the new tax revenues but not in what percentages. The superior court reasoned that the percentage distribution is a principal provision because a reasonable voter’s decision whether to support or reject the measure might turn on that knowledge. It pointed out that “[t]o some reasonable voters, devoting 50% of the money generated by the Initiative directly to teacher salaries may have sounded too rich; to other reasonable voters, devoting 50% of the money raised directly to teacher salaries may have sounded too modest.” The court also found that this omission risked confusing reasonable voters “who may believe that 7 JAIME A. MOLERA et al. v. KATIE HOBBS et al. Opinion of the Court more or less than 50% of the funds raised would be used to increase teacher salaries.” ¶17 The percentage distribution is not a principal provision because it is not the Initiative’s “most important,” “consequential,” or “primary” provision that must be described to alert prospective petition signatories to the measure’s key operative provisions. See Molera, 245 Ariz. at 297 ¶¶ 24, 27. The Initiative’s principal provisions impose a substantially increased tax rate on individuals’ taxable income exceeding $250,000 and $500,000, depending on filing status (the “marginal tax rate”), and dedicate the resulting revenues to public education needs. The 100word description sufficiently describes these provisions by setting out the tax rate increase and identifying the recipients who will divide the resulting revenues. It was not necessary to describe the percentage distribution for the reader to understand these provisions. Similarly, omission of this detail did not make any part of the description false or misleading or obscure the Initiative’s key operative provisions. Pursuant to the required notice beneath the 100-word description, prospective signatories interested in learning the percentage distribution could readily discover it by reading the Initiative text appended to the petition. ¶18 (2) The percentage increase in the marginal tax rate. The superior court found that the Committee omitted a principal provision by failing to describe the percentage increase in the marginal tax rate. It construed Molera, 245 Ariz. at 298 ¶ 29, which disqualified that initiative for falsely describing the proposed percentage increase of a marginal tax rate, as meaning that the percentage increase of the marginal tax rate is a principal provision. Likewise, the court ruled that omission of that information concealed “how profoundly taxes are being increased” for wealthier individuals. ¶19 The superior court misconstrued Molera and therefore erred in its ruling. The 100-word description there stated that the measure would raise the tax rate “by 3.46%” on individual incomes over $250,000 and household incomes over $500,000, and “by 4.46%” for individual incomes over $500,000 and household incomes over $1,000,000. Id. at 293 ¶ 2. In fact, the affected tax rates would have increased by 76% and 98%, respectively, making the description false. Id. at 298 ¶ 29. But in finding that the description of the tax rate increase was false, we did not require that any percentage increase in a given tax rate must be included in an initiative description to comply with § 19-102(A), as the superior court here 8 JAIME A. MOLERA et al. v. KATIE HOBBS et al. Opinion of the Court surmised. See id. ¶ 30 (acknowledging that the sponsor could have stated that the marginal tax rate would “increase[] by 3.46 and 4.46 percentage points” without providing the rate’s percentage increase). Rather, we specified that any description of the increase must be truthful. See id. (stating that the sponsor was not required to describe the change in the tax rate in great detail but could not do so “in a confusing way”). ¶20 The description here accurately stated that a 3.5% surcharge would be imposed on individuals’ taxable incomes over specified amounts. This sufficiently communicated a principal provision—raising the marginal tax rate on wealthier taxpayers—to alert a prospective signatory to the Initiative’s substance. See Ariz. Chapter of the Associated Gen. Contractors of Am., 247 Ariz. at 49 ¶ 18 (stating sponsors are not required to describe “all potential effects of a measure”). Although the Committee could have provided the percentage increase, it was entitled to cast its description in the best light to garner support, as long as the wording was accurate and did not obscure the tax increase. See Molera, 245 Ariz. at 295 ¶ 13 (noting that a sponsor is not required to use neutral wording); Save Our Vote, 231 Ariz. at 152–53 ¶¶ 27–28 (to same effect). ¶21 Relatedly, the court found the word “surcharge” confusing because prospective signatories could have understood it “to mean a temporary tax, or to mean a modest 3.5% increase of the existing tax rate.” But neither the definition of “surcharge” nor other language in the description supports this finding. The term is commonly understood to mean an additional charge, not a temporary one. See Surcharge, Webster’s Third New International Dictionary (3d ed. 2002) (defining “surcharge” as meaning “a charge in excess of the usual or normal amount: an additional tax, cost, or impost”); see also Saban Rent-a-Car LLC v. Ariz. Dep’t of Revenue, 246 Ariz. 89, 98 ¶ 34 (2019) (recognizing that a surcharge can be a “special tax” not levied generally on all businesses). And because the summary describes the Initiative as providing “additional funding” for K-12 education that is subject to an “annual accounting” requirement, it is doubtful a reasonable voter would have believed the surcharge to be temporary. Also, unlike the situation in Molera, the description here did not assign a percentage increase to the existing tax rate. Instead, it accurately described an additional 3.5% tax on taxable incomes exceeding $250,000. ¶22 (3) The applicability to pass-through business income. Under existing tax law, income generated by some businesses, for example, 9 JAIME A. MOLERA et al. v. KATIE HOBBS et al. Opinion of the Court Subchapter S corporations and partnerships, is “passed through” to owners and taxed as individual taxable income. See, e.g., Watts v. Ariz. Dep’t of Revenue, 221 Ariz. 97, 100 ¶ 8 (App. 2009). The superior court found that the description omitted a principal provision by failing to alert prospective signatories that the proposed marginal tax rate would apply to business income. It further found that this omission created a substantial danger that a signatory would fail to appreciate this fact. We disagree. ¶23 What is taxable as income is dictated by state and federal law. The Initiative does not alter or affect the type of income Arizona has chosen to tax as individual taxable income, including business income. The fact the increased marginal tax rate on individual taxable income would encompass business income taxable to individuals is therefore not a principal provision, but rather is an effect of a principal provision that was not required to be included in the description. See Ariz. Chapter of the Associated Gen. Contractors of Am., 247 Ariz. at 49 ¶ 18. Also, omission of language describing this application does not make any language in the description false or misleading, nor does it obscure a basic thrust of the Initiative. Challengers and amici argue that the Initiative’s applicability to pass-through taxable income is material to reasonable voters due to the “impact on economic growth, employment, and the uneven profits that a business generates from year to year.” That may be so, but “[t]he proper forum to argue the consequences of passing the Initiative is in statements of support and opposition, editorials, and the like.” See id. ¶24 (4) The proscription on decreasing other education funding. The Initiative proposes adding § 15-1284(E), which provides that monies received by school districts, charter schools, and career technical education districts under the Initiative “are in addition to any other appropriation, transfer or allocation of public or private monies from any other source and may not supplant, replace or cause a reduction in other funding sources.” The superior court found that this is a principal provision that should have been described because it “[c]urtail[s] the discretion, authority, and operations of the Legislature as it relates to funding public education,” which is a constitutionally bestowed function. It additionally found that the omission was confusing because a prospective signatory would not be put on notice of this curtailment. 10 JAIME A. MOLERA et al. v. KATIE HOBBS et al. Opinion of the Court ¶25 The Committee did not violate § 19-102(A) by omitting mention of § 15-1284(E) or its impact on legislative funding decisions in the 100-word description. Curtailing legislative discretion is not the Initiative’s most important, consequential, or primary feature, so the proposed statute is not a principal provision. And omitting it from the 100-word description is not fatal. The description states that the new tax revenue would be “additional funding for public education,” and proposed § 15-1284(E) furthers that purpose. See Wilhelm, 219 Ariz. at 48 ¶ 15 (rejecting challenge to 100-word summary because proposed extension of a statute of repose not mentioned in the description was nevertheless “consistent with the ten-year warranty” highlighted in the description). A reasonable person would not expect that the legislature could effectively nullify that “additional funding” by using the fact of new funding to decrease education funding from other sources. Whether § 15-1284(E) unconstitutionally curtails legislative authority, as the superior court implies, cannot be decided until after its adoption. See Tilson v. Mofford, 153 Ariz. 468, 473 (1987) (concluding that the proper time to consider the constitutionality of a proposed initiative is after its adoption when affected litigants can present the issue). ¶26 (5) Expenditure limitation. Article 9, section 21 of the Arizona Constitution imposes an expenditure limitation on school districts. Proposed § 15-1285(1) declares that this limitation does not apply to revenues generated by the new tax. The court found that the failure to describe this provision’s application to districts’ expenditures of Initiativegenerated revenues constituted an omission of a principal provision, and that prospective signatories would have been confused by not appreciating that “the Initiative was an attempt to change and/or circumvent Constitutional spending limits.” But whether article 9, section 21 limits district expenditures despite § 15-1285(1) is undecided and will remain so unless the Initiative is adopted and later challenged. See Tilson, 153 Ariz. at 473. Section 19-102(A) does not require mention that article 9, section 21 may limit district expenditures or that proposed § 15-1285(1) may be unconstitutional. See Iman v. Bolin, 98 Ariz. 358, 364–65 (1965) (“[E]ven were the measure in conflict with the Constitution, this has no bearing on the right of the people to enact it. The same is true of an act of the legislature.” (internal citation omitted)). ¶27 In sum, the 100-word description here complies with § 19-102(A). The description sufficed to alert prospective signatories to the Initiative’s principal provisions to enable them to endorse the measure 11 JAIME A. MOLERA et al. v. KATIE HOBBS et al. Opinion of the Court for the ballot, reject it, or seek more information. It did not contain any objectively false or misleading information or conceal a basic thrust of the Initiative. The superior court erred by ruling otherwise. In light of our holding, we do not address the Committee’s additional arguments concerning the 100-word description.