Arizona Attorney General Mark Brnovich on Thursday said he's determined that Phoenix's new increased fees for ride-share drivers at Sky Harbor International Airport likely violate the Arizona constitution.
Brnovich said he will file an action with the Arizona Supreme Court to determine whether Phoenix's fees for Uber and Lyft run afoul of Prop 126, a constitutional ballot question approved by voters in 2018 prohibiting new taxes on services.
"The Phoenix City Council is placing its policy preferences above the rights of the people to whom the government must always answer," Brnovich said in a press release.
In December, Phoenix approved a $4 fee for pickups and drop-offs at Sky Harbor for ride-share companies like Uber and Lyft, up from the existing $2.66 fee that only applied to passenger pickups.
Airport officials said they need the additional revenue to pay for ground transportation infrastructure, including road maintenance and repairs, and operating the Sky Train, an electric rail that connects passengers from the 44th Street light rail station to the airport.
Uber and Lyft, however, both claimed the fee was overly burdensome and argued they were being unfairly treated compared with taxi companies, who are subjected to lower fees. Both companies vowed to stop service to and from Sky Harbor, but have not done so yet.
Shortly after Phoenix passed the fee, Republican State Representative Nancy Barto made good on a promise to ask the AG to investigate whether it violates the constitution. Under an Arizona law passed in 2016 (SB 1487), the state government has the authority to withhold tax revenue from cities that pass ordinances that violate state law.
By sending Phoenix's ride-share ordinance directly to the state Supreme Court, Brnovich is taking the fastest option to potentially strike down the new ordinance. Under SB 1487, Brnovich could have determined that the ordinance was unconstitutional, but that likely would have led to an appeal and drawn-out court process that could last for years.
Since Brnovich said the fee is "likely" unconstitutional, SB 1487 means the ordinance goes straight to the state Supreme Court.
Ryan Anderson, spokesperson for the AG's office, said Brnovich wants to resolve the issue quickly because "there is a potential for real financial harm" under the new ordinance for both consumers and ride-share drivers.
"You could have a scenario where a city would collect millions of dollars over a period of years," he said.
Attorneys representing Phoenix have maintained that the ordinance does not violate Prop 126. In a letter to Brnovich prior to his announcement on Thursday, attorney Jean Jacques Cabou of Perkins Coie said the fees are more like rent payments to use curb space at the airport, similar to the way restaurants or shops pay to operate at Sky Harbor.
Sky Harbor, Cabou noted, runs on its own revenue, and the ride-share fees help maintain the cost of providing ground transportation options at the airport.
"The fees are nothing like a sales tax on services provided by a daycare center, a hairdresser, auto mechanic, or plumber of the sort that were the focus of the proponents of Prop. 126," Cabou wrote.
Late Thursday, Phoenix Mayor Kate Gallego weighed in on the AG's move, saying in a statement that the ride-share fees are no different than the fees other airport vendors pay, and that state law allows cities to "condition" vendor access to airports with fees.
"Despite this being the law of the land, political pressure has led the AG to punt this issue to the Arizona Supreme Court," Gallego's statement said. "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."
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