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Appeals court rules in favor of Gov. Ducey in Prop. 123 lawsuit

(AP Photo/Ross D. Franklin, Pool)

PHOENIX — A federal appeals court ruled in favor Tuesday of Gov. Doug Ducey, vacating an earlier decision that said he acted illegally by withdrawing money from a state land trust to fund education without congressional approval.

The 9th U.S. District Court of Appeals overturned a U.S. District Court decision from September 2019 regarding Proposition 123.

State resident Michael Pierce sued the governor after Prop 123, which allocated $3.5 billion from the trust and the state’s general fund to education, was narrowly approved in 2016.

“Today’s decision is a victory for our public schools and students and the people of Arizona,” Ducey said in a press release.

Pierce argued the state dipping into its land trust to fund schools without congressional approval was illegal.

The governor’s office argued that the action was legal because voters supported it and Congress subsequently approved it in the Consolidated Appropriations Act in 2018.

U.S. District Judge Neil Wake disagreed in his ruling, saying the state “took those monies illegally and spent them.”

He said a single provision about the withdrawals in the 2,400-page appropriations bill that likely went unnoticed was not enough to be considered congressional approval.

Wake wasn’t expected to force Arizona to pay back the money from the state land trust. Instead, the ruling bars Arizona from adopting a similar tactic to boost withdrawals from the land trust in the future.

Wake’s rulings had infuriated the Republican governor. He lashed out at him after last year’s order, calling him an “activist judge”

“Judge Wake puts on a robe in the morning and thinks he’s God, but he’s not,” Ducey said last October. “I want to tell you what everyone down at the courthouse needs to know: It’s time for Judge Wake to retire.”

The appeals court ruling ends the federal case. But there is a parallel state case that has been on hold and may now resume, said Andy Jacob, the attorney for Pierce.

“We’d be asking for the same relief we got in federal court, which is just a ruling that the state can’t make future changes without going back to Congress and having Congress authorize it,” Jacob said. “And if Congress doesn’t want that responsibility, Congress is free to change the law and say the state can do whatever the state wants.”

Jacob said he’d have to talk to Pierce to see if he wants to proceed.

The Associated Press contributed to this report.

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