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What Proposition 118 will do: Change the formula by which returns on investments made with state trust land money are calculated. Supporters say it will simplify the formula and guarantee a more consistent return to beneficiaries, including public schools. Opponents say the proposed formula is based on economic projections that could be wrong.

State trust lands, the background: Arizona has land held in trust that can be used to produce revenue for public institutions. The land generates money through sale or exchange, natural products sales and mineral royalties. The money goes into the State Trust Land Permanent Endowment Fund and is invested by the state treasurer. On March 30, 2012, the fund was valued at $3.57 billion.

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The state has 9.3 million acres of trust land.

Thirteen beneficiaries receive returns from the fund, the largest being public schools. Returns are distributed according to a formula that measures the average rate of return for the previous five years, adjusted for inflation. This figure is then multiplied by the average market value over the past five years. The result has been wildly fluctuating returns, especially in the wake of the national economic recession. For example, public schools received nothing from the fund in 2010, while in fiscal year 2012, received nearly $78,000.

Proposition 118 would, from fiscal years 2013-2021, change the distribution formula to 2.5% of the average monthly market values of the fund, as measured for five years preceding.

Supporters, including the Arizona Department of Education, the Arizona State Land Department, Arizona State Treasurer Doug Ducey and former Arizona Treasurer Dean Martin, say the newly set rate of the formula would make calculating the returns simpler and lead to more consistent returns.

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Dean Martin, Arizona State Treasurer from 2007 to 2011.

“What this does is provide a lot more stability for education and all the other beneficiaries of the trust,” says Martin. The new system under proposition 118 “...is based on how big the trust is...so as we grow the trust, if the economy’s good it’ll grow faster, if the economy’s poor it will still be there.”

What Proposition 119 will do: Change the requirements for how the state exchanges its trust lands with other public or private land. The only previous mandate was that the state sell the lands to the highest bidder. The measure gives the state an exception, provided one of two requirements are met: the exchange must be related to protecting military facilities from encroaching development, or for improving management of trust lands. The process for approving such exchanges includes getting two independent appraisals and analyses, holding public hearings and letting the public vote on it.

Proponents of the measure are broad-based, including The Sierra Club, The Wilderness Society, The Arizona Chamber of Commerce and the Military Affairs Commission. All say it's needed to protect military installations from land exchanges that could threaten their existence.

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Arizona State Land Commissioner Maria Baier

Maria Baier, Arizona State Land Commissioner, oversees 9.3 million acres of state trust land. She's also part of the Yes on Prop 119 group. She says the measure will also help with conservation efforts. “Some of the land that we have that should be in conservation can also be traded to the federal government for revenue-producing properties,” says Baier. “So it really is a win-win proposition.”

There is no organized opposition to Proposition 119, but some individual opponents say state trust lands simply should not be exchanged at all.

At least six similar propositions have been referred to Arizona voters in recent years. All were rejected.

Supporters say voters will approve this version because of built-in protections that ensure any proposed exchanges are in the best interest of the state Land Trust and voters. They also say it will protect military installations from adjacent development that may be incompatible with military activity.

More resources:
Find out where Arizona's state trust lands are, at The Sonoran Institute's Trust Land Profiles

Read the text of Proposition 118:

HCR2056 - Prop118: View at Google Docs | Download File

Read the text of Proposition 119:

SCR1001 - Prop119: View at Google Docs | Download File

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Photo: Robert Jaime, AZPM