Arizona AG: Phoenix Rideshare Fees Likely Violate Constitution
Arizona’s attorney general says Phoenix likely violated the state constitution when it added new rideshare fees at Sky Harbor Airport.
Attorney General Mark Brnovich said Arizona voters clearly spoke in 2018 when they passed Proposition 126. It amended Arizona's constitution to ban the state and cities “from enacting any new or increased tax on services that was not already in effect on December 31, 2017.”
Phoenix argued the constitution does not prohibit fees on businesses using the airport. The city says the fees cover the use and maintenance of city property and just as Phoenix charges airlines, retailers and restaurants to use airport space, it also charges ridesharing companies.
In a press release the Attorney General's Office said the "Phoenix City Council very likely acted in violation of Article IX, § 25 of the Arizona Constitution." Brnovich said, "We will now take this matter to the Arizona Supreme Court and seek an expedited ruling. This is the most definitive way to provide clarity on the law, protect Arizona taxpayers, and hold the City of Phoenix accountable.”
In a statement to KJZZ, Phoenix said, “The city of Phoenix stands by its ordinance and legal position. We are confident that the Arizona Supreme Court will properly interpret the law of Arizona and uphold the constitutionality of the city ordinance.”
State Rep. Nancy Barto sparked the state investigation by filing a formal complaint with the Attorney General’s Office on Dec. 19, 2019.
Citing Proposition 126, which was approved in 2018 with almost 65 percent of the statewide vote, Brnovich says the fees are most likely illegal.
“Arizona voters overwhelmingly passed Proposition 126, and that says that cities cannot increase or impose any sort of fees, taxes, or assessments on any businesses or persons providing services,” Brnovich said. “It’s a very broad proposition, I think the voters clearly intended to stop cities from doing exactly what the City of Phoenix is trying to do now.”
The city of Phoenix says its fee on rideshares to Sky Harbor Airport is just that — a fee imposed to conduct business on city-owned property. The city’s legal counsel Jean-Jacques “J” Cabou says it’s no different than the fees that airlines, vendors, and restaurants at the airport have to pay.
“No tax revenues support airport operations. The airport, which is the state’s largest economic engine, is sustained solely by fees and revenues generated on the airport,” Cabou said. “So the idea that this is somehow related to taxes, or that the city’s general budget is somehow related, that’s all incorrect.”
Since the airport is city property, Cabou argues the city is within its rights to impose fees.
“Proposition 126 was about taxes. This is not a tax. Rideshare operators are free to offer their services anywhere in the City of Phoenix without paying a fee to do so,” he said. “What they can’t do is operate them on city property at the airport without paying a fee specific to the access and use of that property.”
Brnovich disagrees. He believes the fees still violate the state Constitution.
“The city can make all sorts of policy arguments, they can call it whatever they want to call it,” he said. “But they are assessing a fee, a tax, a surcharge on any persons or businesses engaging in a service of picking up or dropping off individuals at the airport.”
In the past, Uber and Lyft have criticized the new fees as an unfair burden on ridesharing companies paying for a train. PHX Sky Train operations currently eliminate buses that move people between terminals and take people to the economy parking lot. In the future, the train will eliminate more buses when it is able to take people to a new rental car facility. Airport officials have said reducing and removing buses alleviates congestion for curbside transportation companies.
Uber and Lyft previously said they would cease operations in January. KJZZ requested updates from both companies and will update this story as we learn more.
A $2.80 drop-off and pick-up fee at the PHX Sky Train
A $4 drop-off and pick-up fee at the terminal curb.
Phoenix Mayor Kate Gallego issued the following statement Thursday:
"The Phoenix approach of ensuring that companies profiting from the airport pay their fair share is smart – and legal. This fee is no different from the fee every other vendor has paid at our airport since its creation. Lyft and Uber have been paying access fees since they began operations at Sky Harbor, the same fees they pay at most every other airport of our size. As our response demonstrated, and as AG Brnovich’s report acknowledges, Arizona state law gives cities the right to condition commercial access to airports with the payment of a fee.
Despite this being the law of the land, political pressure has led the AG to punt this issue to the Arizona Supreme Court. Phoenix Sky Harbor is one of the best airports in the nation and an incredible economic driver for our entire state. We refuse to allow state officials playing politics to condemn its success."
Councilman Sal DiCiccio who, along with Councilman Jim Waring, voted against the fees, called the AG’s decision fantastic and said, “I believe it is clear that this horrible tax is not only a direct attack on working- and middle-class families in Arizona, but it is also an outrageous violation of our constitution, and I am confident that the Supreme Court will throw out the horrible burden that Phoenix politicians recklessly imposed.”
For more on what Brnovich's statement means, The Show spoke to Jessica Boehm with the Arizona Republic.