Biggs v. Betlach, 242 Ariz. 55

Background

In 2013 the Arizona Legislature passed HB 2010 (A.R.S. § 36-2901.08), expanding AHCCCS coverage and authorizing a hospital assessment to be set by the AHCCCS director.
The bill passed by a simple majority; plaintiffs (legislators who voted against the bill) sued, arguing the hospital assessment was a new tax requiring a two-thirds vote under Ariz. Const. art. 9, § 22.
The superior court granted summary judgment to defendants, holding the assessment fell within an exception to the super‑majority requirement. Plaintiffs appealed.
The central constitutional provision is Article 9, Section 22: acts that increase net state revenues require two‑thirds vote, but subsection (C)(2) exempts “fees and assessments authorized by statute, but not prescribed by formula, amount or limit, and set by a state officer or agency.”
The court analyzed whether the hospital levy is a “tax” versus an “assessment,” whether it satisfies the (C)(2) exception (authorized by statute, not prescribed by formula/amount/limit, and set by a state officer/agency), and whether federal approval/MA requirements impose a state-law “limit.”

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Was the hospital levy a "tax" within §22?	The levy functions as a new tax increasing state revenues and thus needed two‑thirds vote.	The levy is an assessment imposed and administered by AHCCCS director for the benefit/ regulation of hospitals.	Levy is an assessment, not a tax; three-factor test (imposing entity, targeted parties, purpose/use) supports assessment.
Does §22(C)(2) exception require the authorizing statute itself be enacted by two‑thirds?	§22(C)(2) requires fees be "authorized by statute," which plaintiffs read to mean the initial authorizing statute must meet §22’s two‑thirds rule.	The plain text of (C)(2) exempts certain statute‑authorized fees from §22; it does not require the authorizing statute to have been passed by two‑thirds.	(C)(2) does not require the authorizing statute to have been enacted by supermajority; the exception applies to fees/assessments set by officers/agencies under a statute.
Do federal approval and federal medical assistance conditions constitute a "formula, amount, or limit" under (C)(2)?	Federal regulations and approval conditions operate as limits/formulae, so the assessment is prescribed and not exempt.	Federal approval/MA conditions are external constraints or a trigger for termination, not state‑law formula/limit prescribed in the statute.	Federal approval requirement and MA percentage condition are not state‑law "formula, amount or limit" for (C)(2); they do not remove the exemption.

Key Cases Cited

May v. McNally, 203 Ariz. 425 (2002) (three‑factor test to classify levy as tax or assessment)
Jachimek v. State, 205 Ariz. 632 (2003) (levy imposed by regulatory entity treated as assessment)
Niehaus v. Huppenthal, 233 Ariz. 195 (2013) (presumption of statute constitutionality)
Powell v. McCormack, 395 U.S. 486 (1969) (judicial role as final arbiter on constitutional questions)
Kyrene Sch. Dist. No. 28 v. City of Chandler, 150 Ariz. 240 (1986) (charges benefiting other parties may still be assessments)