Mohave Daily News: State

PHOENIX - A judge signaled Monday that she will likely dismiss a lawsuit challenging the constitutionality of a new law that created a tax break for business donations for private school tuition grants.

Judge Janet Barton of Maricopa County Superior Court held a hearing on motions by the state and the tax break's supporters to dismiss the lawsuit. It was filed Sept. 19 by the American Civil Liberties Union and the Arizona School Boards Association.

Barton opened and closed the hearing by saying she felt her hands were tied, at least in part, by a 1999 ruling in which the Arizona Supreme Court upheld a similar tax credit for donations by individuals.

‘‘But it does seem to me I simply do not have the ability or the power to disregard the Supreme Court opinions that I believe are on point,'' she said. ‘‘Nor do I have the ability to tell the Arizona Supreme Court that I think they got it wrong.''

On the other hand, Barton said regarding another legal issue raised by the challengers in the Arizona case, she was free to disregard the Florida Supreme Court's 2006 ruling that a private-school voucher program violated the Florida Constitution's requirement for a uniform system of public schools.

Barton said at the outset that she had reviewed legal papers filed by participants in the case and was disclosing her preliminary view so lawyers could tailor their courtroom arguments accordingly.

At the hearing's conclusion, the judge promised a formal ruling ‘‘in due course.'' Whichever side loses in Superior Court is expected to appeal.

The corporate tax credit was a priority for school-choice advocates during the 2005 and 2006 legislative sessions.

It provides companies with a dollar-for-dollar income tax savings for qualifying donations to groups that provide low-income students with grants for private school tuition.

The Republican-led Legislature enacted the tax credit last spring with the acquiescence of Democratic Gov. Janet Napolitano. She previously vetoed several versions but ultimately let it become law without her signature as a gesture to Republican lawmakers who charged that she broke a promise on similar legislation in 2005.

Supporters say the tax credit will enable more parents to send their children to the schools of their choice.

Critics contend the tax credit diverts tax dollars from the public school system and that it violates state constitutional provisions prohibiting public funding for religious schools and mandating that the state provide a general and uniform public school system.

Lawyers disagreed during Monday's hearing on the potential reach of the Arizona Supreme Court's 1999 ruling that upheld the other law.

That ruling found the individual income tax credit did not violate the prohibition against state funding of private or religious education, largely because the money involved was donated by the individuals and never reached the state treasury.

ACLU attorney Marvin Cohen argued that the corporate tax credit is different in several ways, including wording that specifically said the credits involve taxes imposed by the state but then forgiven in exchange for donations.

‘‘This is just what the constitution says you can't do - impose a tax for private schools,'' he said.

Assistant Attorney General Michael Kempner said the tax credit was intended to improve education and did not run up against the constitutional restrictions.

On a separate front, a federal appeals court has yet to rule on an appeal of a trial judge's dismissal of a challenge to the individual income tax credit on First Amendment grounds.