PHOENIX – Voters on Tuesday rejected a ballot proposition to establish a permanent 1 cent-per-dollar sales tax earmarked for schools, transportation projects and human services.
Unofficial returns showed Proposition 204 trailing by a wide margin.
The sales tax would have replaced a temporary one that voters approved in 2010 and is set to expire in 2013.
The tax would have raised an estimated $1 billion in the first year, of which most would have gone toward education. About $100 million was earmarked for transportation projects each year.
Opponents, including Arizona State Treasurer Doug Ducey, said the sales tax would hurt businesses and restrict the Legislature’s ability to budget effectively.
Ducey said the proposition was “a bad bill.”
“I traveled around the state and it was obvious to me that Arizonans think this is a bad idea,” Ducey said.
Supporters of the initiative, including Ann-Eve Pedersen, chairwoman of the Yes On 204 campaign, said Arizona needs a permanent revenue source for education that the Legislature can’t touch.
Pedersen said that while voters support education, many voted against Proposition 204 because they were misled by misinformation spread by the opposing campaign.
“The loss will definitely hurt children,” Pedersen said. “As parents, we will continue fighting for our kids.”
Pedersen said she would continue her efforts by putting pressure on the Legislature and possibly trying to get another measure on the ballot in the future.
“Some people assume we feel defeated, but the opposite is true,” she said. “We feel empowered and more motivated than ever to fight for our children.”
Some prominent supporters of the temporary sales tax passed in 2010, including Gov. Jan Brewer and the Arizona Chamber of Commerce and Industry, the League of Arizona Cities and Towns and the Arizona Tax Research Association, opposed the ballot measure.
The campaign supporting the ballot measure got financial support from groups including We Build Arizona, a group representing contractors; the National Education Association and Arizona Education Association Education Improvement Fund; and Friends of the Arizona School Boards Association Inc.
The largest contributor to No New Taxes, No on 204, the group leading the campaign against the measure, was an obscure Phoenix-based nonprofit called Americans for Responsible Leadership. It had contributed at least $925,000.
Because of the way that Americans for Responsible Leaderships registered with the Internal Revenue Service, it doesn’t under federal or Arizona law have to disclose where it gets the money it contributes.
Pedersen accused the group of using that anonymity to keep the voters from learning who was putting up money against Proposition 204.
In response to a lawsuit filed in California, Americans for Responsible Leadership disclosed Monday that $11 million contributed in that state came from a conservative, pro-business nonprofit via another nonprofit. A member of California’s Fair Political Practices Commission said the group’s actions qualify as money laundering and violate state law requiring disclosure of contributors if a nonprofit is using the money for political purposes.
Directors of Americans for Responsible Leadership, including former state House speaker Kirk Adams, didn’t respond to repeated requests for comment on the group’s Arizona contributions.
Other groups contributing six-figure sums against Proposition 204 were the Arizona Free Enterprise Club and the Arizona Automobile Dealers Association.