Republican State Representative Nancy Barto threatened today to file a complaint with the Arizona Attorney General's Office if the Phoenix City Council raises airport fees for ride-share companies like Lyft and Uber.
The move represents an escalation by opponents of the proposed fee, which led Lyft to announce that it will cease operations at Sky Harbor in 2020 if the rate hike goes through.
Mirroring a position from the Goldwater Institute — a libertarian think tank — Barto said Phoenix's proposed ride-share fees violate Proposition 126, a voter-approved constitutional amendment that prohibits Arizona cities from taxing services.
Barto indicated that if the City Council approves a higher airport fee for Uber and Lyft, she will ask AG Mark Brnovich to investigate whether the new ordinance violates state law. Under a bill (SB 1487) passed by the legislature in 2016, the state could withhold funds from the city of Phoenix if Brnovich were to find that the new fee violates Proposition 126.
In October, all but two of Phoenix's City Council members approved an ordinance that raised fees for Uber and Lyft to pick up and drop off customers at Sky Harbor International Airport. But due to a technicality, the council will vote again on the proposal on December 18.
Under the new fee schedule, ride-share companies would have to pay $4 for each airport ride. The fees would increase incrementally to $5 in 2024. That's up from the current rate of $2.66. Uber and Lyft would have the choice of whether to pay the fee themselves or to pass it onto drivers, who are independent contractors, or customers.
Taxi companies, meanwhile, would be charged $1.75. Taxis would pay less under the proposal because they are subject to stricter regulations, including a cap on ride costs.
Most of the fees would go toward costs for maintaining and operating the Sky Train airport transit system, which shuttles passengers to the airport from the intersection of 44th and Washington streets. A smaller portion would go toward maintaining airport roads and other necessities, such as signage and traffic controllers.
Barto and the Goldwater Institute's argument that Phoenix's proposed airport transit ordinance violates Proposition 126 hinges on whether Uber and Lyft count as a service, according to David Wells, the research director of the Grand Canyon Institute.
Wells, an opponent of Proposition 126, argued that the initiative did not provide a clear definition of "service." He said the courts likely will be the final arbiter on whether Uber and Lyft fall under that definition.
"So the Goldwater Institute has a viable case here because these are ride-sharing services that are experiencing an increase in fees," Wells said.
He predicted that city officials will likely point out that Uber and Lyft "do not follow the stricter rules regarding taxis." Consequently, the city "added administrative costs assorted with regulating their access to the airport so other passengers being picked up by private vehicles are not negatively impacted."
In a letter to Mayor Kate Gallego arguing that the proposed fee is unconstitutional, the Goldwater Institute cited a law dictionary that defines service as "labor performed in the interest or under the direction of others, usually for a fee."
The letter stated: "The provision and operation of a ride-sharing platform is plainly the application of labor and skill provided to platform users. Additionally, ride-sharing drivers are providing labor under the direction of riders for a fee. Both are services."
Asked for a response to the Goldwater Institute's claim, a spokesperson for Gallego said: "We have received the letter and the city attorney is reviewing."
Leezie Kim, the chair of the city's Aviation Advisory Board, which helped draft the ride-share fee schedule, argued that the fee is more like a rent payment to use Sky Harbor's limited curb space. She compared the fee to payments made by restaurants and stores to operate in the airport
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"It's just pure business rent, like in any business transaction," Kim said. "They all pay rent for the way they use airport space."
Uber has itself made statements that suggest it does not consider its transportation services to be part of its core business.
After California passed a law requiring certain companies to classify workers as employees, rather than contract workers, Uber argued that its drivers do not do work in the company's "usual course" of business. Under the new law, that would mean drivers could still be classified as contractors.
The company pointed to court rulings that found that "that drivers’ work is outside the usual course of Uber’s business, which is serving as a technology platform for several different types of digital marketplaces.”