AG rules on rideshare fees

AG rules on rideshare fees

PHOENIX (3TV/CBS 5) -- Arizona Attorney General Mark Brnovich has ruled that increasing rideshare fees at Sky Harbor Airport "very likely" violates our state constitution.

The fees approved by the Phoenix City Council probably violated a 2018 ballot measure prohibiting higher taxes on services, Brnovich said.

[WATCH: Sky Harbor rideshare issue headed to court]

“By imposing these new user fees they violated the state constitution. So unless the city rescinds those new fees, we will be in court litigating against them, protecting the hard-working Arizona taxpayers,” Brnovich said. 

The Arizona Supreme Court will make a final determination on the issue. By law, Phoenix could lose its share of state revenue, a third of its general fund budget, if the fee hike is found to be illegal and isn’t repealed by the city.

Brnovich has been investigating the proposed hike which would affect rideshares like Lyft and Uber. The rideshare companies have been pushing back the fee increase, threatening to stop service at the airport.

[ORIGINAL STORY: Sky Harbor proposing price increase for ride-share users]

A statement released by Brnovich's office Thursday afternoon stated that "The Ordinance, which imposes new "drop-off' fees and increases existing "pick-up" fees on companies that provide commercial ground transportation services to and from the airport... very likely violates" the Arizona Constitution.

“I believe very confidently, not only is the law on our side, but I believe that what we’re doing is the right thing,” said Brnovich. “I am very confident that if we go to court we’re gonna win this.”

You can read the full ruling HERE.

CITY OF PHOENIX RESPONDS

Lawyers for the city say the higher fees are not taxes on services, but rather permissible charges for businesses to use the city-owned Sky Harbor International Airport, one of the largest U.S. airports serving some 44 million passengers a year.

The fees, the city argues, are akin to rent and landing fees charged to restaurants and airlines.

“The Phoenix approach of ensuring that companies profiting from the airport pay their fair share is smart — and legal,” Mayor Kate Gallego, a Democrat, said in a statement. “This fee is no different from the fee every other vendor has paid at our airport since its creation.”

Phoenix airport officials say ride-hailing operators represented just 9.3% of the commercial traffic when they began at Sky Harbor in June 2016 but now represent 70 percent of the commercial traffic. 

The City of Phoenix issued the following statement on Thursday afternoon: "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."

[WATCH: Sky Harbor could become one of most expensive airports for ride-share users]

BRNOVICH'S OPINION

Republican Rep. Nancy Barto filed a complaint with Brnovich, also a Republican, under a 2016 Arizona law requiring the attorney general to investigate if any lawmaker complains that a city or county ordinance violates state law.

Brnovich sent out a series of tweets on the issue Thursday, stating:

"Arizonans overwhelmingly approved Prop 126 with over 64% of the vote in 2018. Arizona’s Constitution prohibits a city from increasing or imposing any new tax/fee on anyone for providing a service in Arizona."

He says that what the City of Phoenix is trying to do is "to effectively rewrite the Constitution in light of the council’s policy preference, placing the powers of government above the rights of the people to whom the government must always answer."

Brnovich promises that his office will "promptly file a special action with the Arizona Supreme Court to strike down Phoenix’s unconstitutional rideshare fee and prevent the ordinance from taking effect."

The state Supreme Court is required by law to prioritize the issue ahead of all others. The city is also required to post a bond equal to 6 months of state-shared revenue — an enormous sum — but Brnovich said his office hasn’t asked for that in previous cases.

“They’ll have time to rescind this ordinance and if they don’t we’ll see them at the Supreme Court,” Brnovich said.

THE REASON BEHIND THE FEES

Phoenix is raising the fee of $2.66 per curbside pickup at Sky Harbor to $4 on Feb. 1. It also will create a drop-off fee of $4. The fees to the ride-hailing companies would gradually increase to $4.25 in 2021, $4.50 in 2022, $4.75 in 2023 and $5 in 2024. 

[RELATED: Passengers worried about Uber and Lyft leaving Sky Harbor if fees increase]

A city aviation commission had recommended the fee increase after a study showed airports in many other cities charge ride-hailing companies more to drop off and pick up passengers.

The state constitution’s ban on new or higher fees for services has never been litigated, so courts have never had a chance to interpret when it applies and when it doesn’t.

“We thought the quickest and best way to resolve this issue and to create certainty is to go right to the Supreme Court,” Brnovich said. “Otherwise it could end up in litigation for the next two or three years.”

Phoenix City Councilman Sal DiCiccio, who has been against the fees from the start, posted a response to Brnovich's decision on his Facebook page. "This is fantastic news for everyone who drives for or uses rideshare at the airport!" he wrote. "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. Thank you AG Mark Brnovich for stepping in to protect Arizonans who depend on rideshare."

[RELATED: Rideshare drivers offering black market rides at Phoenix Sky Harbor]

Some rideshare drivers have suggested they would offer "black market" rides. But both Uber and Lyft have policies that prohibit drivers from taking passengers "offline." If drivers are caught doing so, they could be banned from either community. 

 

Copyright 2020 KPHO/KTVK (KPHO Broadcasting Corporation). All rights reserved.

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