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Attorney General says Phoenix wrong over Sky Harbor fee hike

Flanked by staffers, Attorney General Mark Brnovich explains Tuesday his decision to use state consumer fraud laws to sue two companies that manufacture and sell vaping devices. (Capitol Media Services photo by Howard Fischer)

Flanked by staffers, Attorney General Mark Brnovich speaks at a recent news conference. (Capitol Media Services photo by Howard Fischer)

The Arizona Attorney General’s Office punted on a lawmaker’s complaint into the City of Phoenix’s imposition of higher rideshare fees at Sky Harbor to the Arizona Supreme Court. 

The office made the move despite concluding Phoenix violated the “plain language” of Proposition 126, an initiative voters approved in 2018. The law bans the enactment of any new taxes on services. 

The Attorney General’s Office cited a variety of mitigating factors that prevented it from reaching a definitive ruling. 

Notably, the office said, Proposition 126 is broad and has yet to face scrutiny by the courts. That law, the office said, “has not yet been interpreted by Arizona courts,” and, therefore, a definitive conclusion is unjustified.

By saying the Phoenix ordinance “may violate” Proposition 126, the case gets fast-tracked to the state Supreme Court. The Attorney General’s Office said it will “expeditiously seek relief” from the court. 

Attorney General Mark Brnovich had pursued the case under SB1487, which requires his office to a special action before the Supreme Court – and for the court to give that action “precedence over all other cases” – if Brnovich concluded a complaint “may” violate state law. 

The Phoenix ordinance increases pick-up and drop-off fees of rideshare companies, such as Uber and Lyft, to $4 by February and then up to $5 by 2024.

Rep. Nancy Barto, R-Phoenix, had sought redress from Brnovich and filed the SB1487 complaint after the city adopted the fee hike last December. 

“I’m very pleased with the results of General Brnovich’s investigative report,” Barto said in a news release. “It’s especially important that we get a resolution as quickly as possible. The opportunity we have to have the Supreme Court look at the case will really put this issue to rest quickly for the benefit of everybody to know one way or another.”

This case is especially complicated because the city’s ordinance isn’t the only law up for debate. Some have raised questions about the constitutionality of both Proposition 126 and SB1487, under which lawmakers can compel the Attorney General to investigate laws passed by local governments they deemed to have violated a state law or the Arizona Constitution. 

If the Attorney General rules against a city or count after an investigation, the local entity has 30 days to remedy the situation or lose its state shared revenue, which means hundreds of millions of dollars in Phoenix’s case. 

The Attorney General’s Office pointed to three key factors in this case. Aside from not having a definitive ruling by the courts, “there are non-frivolous arguments about how to best read the chief words and phrases here,” its ruling said. Additionally, the ruling encouraged the courts to harmonize the city’s argument – that its constitutional rights supercede voter-approved constitutional amendments – with the language of Proposition 126. 

“The Phoenix approach of ensuring that companies profiting from the airport pay their fair share is smart — and legal,” Phoenix Mayor Kate Gallego insisted in a statement. “Despite this being the law of the land, political pressure has led the AG to punt the issue to the Arizona Supreme Court.” 

Actually, Brnovich appears unmoved by most of the city’s arguments, especially those grounded in policy – namely, that the city wants Uber and Lyft to pay their fair share to fund airport operations, such as maintaining the Sky Train. 

He has branded himself as a lawyer “on the side of the taxpayers.” The Phoenix ordinance faced immediate scrutiny from members of the public, rideshare companies and conservative councilmembers and legal groups. This is not necessarily to say that the policy is illegal or ineffective, just that, as lobbyist Chuck Coughlin told the Capitol Times last week, the city’s messaging missed the mark. 

In an interview last week, Coughlin speculated that Brnovich has a “pretty good grip” on the Republican nomination in the next gubernatorial race. Additionally, the attorney general is himself an alumnus of the Goldwater Institute, the libertarian think tank that’s pitched a public fit about the rideshare increase. For these reasons, legal experts and lobbyists have been skeptical throughout this process that Brnovich would rule with the city.

It’s unclear whether the city will go ahead with the fee increase or hold off until the Supreme Court has rendered its opinion. 

A spokesman with Brnovich’s office said the Attorney General will file a special action with the Arizona Supreme Court next week, and also ask the court to stop the fee increase from going into effect. 

The first increase was slated to hit in February. Uber and Lyft have both threatened to leave Sky Harbor.

“The city of Phoenix stands by its ordinance and legal position,” said city spokeswoman Julie Watters. “We are confident that the Arizona Supreme Court will properly interpret the law of Arizona and uphold the constitutionality of the city ordinance.”

One comment

  1. Way to go AG Brnovich and gov Ducey. This increase is a total money grab and certainly not reasonable nor justified. When a “fee” for drop off is at 20% of what would be my typical cost to get to the airport (I travel on a regular basis) their is no nexus between the that fee and actual expenses incurred by the city. Maybe the city thought since a number of folks coming and going from the airport are not constituents so they could quietly do this. Hopefully the supreme court will agree with the AG and gov Ducey.

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