PHOENIX — Governor Katie Hobbs wants to increase the amount of money taken from the state land trust and give it to schools but the Arizona State Treasurer is calling that plan "dangerous".
At issue is what comes after Proposition 123 expires in 2025. Prop 123 was passed by voters in 2015 as a way to funnel more money to Arizona's schools.
That money came from the state land trust, an investment account for the money made off state land sales and leases. It's reinvested to make more money.
Prop 123 took about 6% of that money for schools, mostly for staff salaries.
“It has worked as advertised," Arizona School Board Association Director of Governmental Affairs Chris Kotterman said. "We have been able to increase the value of the land trust as well as withstand the additional distribution."
More than $300 million a year currently comes out of the state land trust to fund schools, Kotterman said, and schools have come to rely on it.
But Prop 123 is scheduled to sunset in 2025. Katie Hobbs announced her plan to increase the amount of money taken from the state land trust to 8.9%.
But almost immediately, Republican State Treasurer Kimberly Yee said the governor's plan was impossible. It said in part:
“Governor Hobbs just announced her proposal to increase Prop 123 distributions to 8.9%. The Governor's proposal is dangerous and unsustainable. It would break the bank. Governor Hobbs wants to raid the land trust to cover for her mismanagement of the state budget and overzealous spending plans in an ever-increasing inflationary environment. That is irresponsible and doesn't look out for the long-term vision of Arizona, and this land trust was put in place for our state's future."
The statement went on to say the Yee would be recommending a 4-5% distribution from the land trust.
But it's not as simple as deciding on a number. Prop 123 had to be passed by the voters. Any plan to replace it, whether 8.9% or 5%, would also have to go to the voters for approval.
Kotterman said the hope is that any Prop 123 replacement plan gets on the ballot and is passed by 2025, with the money coming in for 2026.
Hobbs spoke about her plan on Jan. 29. Watch the full video below.
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