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Arizona Revenue Director Fired After Defending Proposition 208's Voter-Approved Tax Hike

The head of the Arizona Department of Revenue was ousted Tuesday, the apparent victim of taking a legal position on a new tax contrary to that of Gov. Doug Ducey, his boss.

In a press release, Ducey announced that Rob Woods, the agency's deputy director, will serve as interim director.

More telling is that the release makes absolutely no reference to Carlton Woodruff, whom Ducey tapped for director in September 2019 with a glowing endorsement of him as "a highly qualified, dedicated public servant.'' Instead, only Woods was mentioned.

"I'm grateful to Rob for stepping up to this important role during a challenging time for our state,'' the governor said in his prepared statement.

And what of Woodruff?

"We don't comment on personnel matters,'' said gubernatorial spokesman C.J. Karamargin.

But the action comes less than 24 hours after Capitol Media Services reported that an attorney representing the agency and Woodruff mounted a vigorous defense of the legality of Proposition 208, the voter-approved levy on the richest Arizonans to raise money for K-12 education.

"This does not reflect Gov. Ducey's position on this issue,'' Karamargin said.

The governor was actively opposed to the Invest in Education initiative which imposes a 3.5% surcharge on incomes of individuals earning more than $250,000 a year and couples with adjusted incomes of more than $500,000. The levy, which does not affect anyone with earnings below that level, is expected to raise anywhere from $827 million to $940 million a year, depending on whose estimates are used.

Despite that, it was approved by a margin of 51.7%.

The business interests who unsuccessfully fought for its defeat are now in court arguing that the plan is unconstitutional. They are asking Maricopa County Superior Court Judge John Hannah to immediately bar collection of those dollars until there can be a full trial on the issue, something that could take months. Those arguments are getting a fight from initiative supporters.

But the claims by foes that Proposition 208 is illegal also are being disputed by attorney Brian Bergin. Retained by the Attorney General's Office, he represents both the Department of Revenue and the state as a whole, both of whom had to be named as defendants in any lawsuit challenging a statute, even one enacted by voters.

Bergin did more than simply argue that statutes are presumed valid.

"Proposition 208 apparently reflects the voters' belief that the state's educational system is underfunded and requires additional permanent funding that the legislature has been unable, or unwilling, to provide,'' he wrote.

"The people have spoken in approving Proposition 208,'' Bergin continued. "Public policy heavily weighs against imposing injunctive relief.''

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That filing — and the Capitol Media Services report on it — apparently came as a surprise to the governor.

"The role of state agencies is not to take policy positions but to implement the law,'' said Karamargin.

"Courts will ultimately decide what the law is,'' he continued. "And our expectation is that state agencies will follow the law.''

Efforts to reach Woodruff were unsuccessful.

Documents obtained by Capitol Media Services show that Begin was appointed by the Attorney General's Office, which normally defends the state in lawsuits, on Dec. 3 to represent the Department of Revenue and the state in the case. Ryan Anderson, a spokesman for the office, said he could not specify why the decision was made to farm this case out.

"Generally speaking, we assign outside counsel for a number of reasons such as conflicting matters within the office, insufficient resources or a lack of expertise on certain legal matters,'' he said. Anderson said such decisions also are made on "agency client considerations.''

Anderson said he could not comment on what instructions the Department of Revenue provided Bergin in the kind of defense of the law he was to provide, referring those questions to Bergin who did not immediately return a call seeking comment.

Woodruff had become interim director of the agency in December 2018 after Ducey was reelected and David Briant, who was heading the department, announced he was retiring. The pick became permanent in September 2019, with the governor saying that Woodruff had made the department more efficient, effective and responsive.

Before taking the reins at the agency, he had been a deputy director and was deputy state treasurer since 2011. He also had served as finance director for the town of Clarkdale from 2005 to 2009.

Born in Prescott, he received his accounting degree from Missouri State University.

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Mark Brodie is a co-host of The Show, KJZZ’s locally produced news magazine. Since starting at KJZZ in 2002, Brodie has been a host, reporter and producer, including several years covering the Arizona Legislature, based at the Capitol.