SUPREME COURT OF ARIZONA

STATE OF ARIZONA, ex rel. Case No.:

MARK BRNOVICH, Attorney General,
Petitioner,
v.

CITY OF PHOENIX, Arizona,

Respondent.

PETITION FOR SPECIAL ACTION

MARK BRNOVICH
Attorney General
Firm State Bar No. 14000
Brunn W. Roysden III (State Bar No. 28698)
Oramel H. Skinner (State Bar No. 032891)
Linley Wilson (State Bar No. 27040)
Dustin Romney (State Bar No. 034728)
Assistant Attorneys General
2005 N. Central Ave.
Phoenix, AZ 85004
602-542-8958
602-542-4377 (fax)
Beau.Roysden@azag.gov
Linley.Wilson@azag.gov
acl@azag.gov
 TABLE OF CONTENTS

TABLE OF AUTHORITIES .....................................................................................3

INTRODUCTION .....................................................................................................5
PARTIES....................................................................................................................6
JURISDICTIONAL STATEMENT ..........................................................................7
STATEMENT OF THE ISSUE .................................................................................9
STATEMENT OF FACTS ........................................................................................9
I. Voters Approve Proposition 126 to Amend the Arizona Constitution. ...........9

II. The City of Phoenix Adopts Ordinance G–6650 ..........................................10

A. The Ordinance Imposes New “Drop-Off” Fees……………………..10

B. The Ordinance Increases Other “Trip Fees” (“Pick-Up” Fees)...........11

ARGUMENT ...........................................................................................................13
I. The Ordinance’s Imposition and Increase of “Trip Fees” Violates the
Unambiguous Language of Article IX, § 25 of the Arizona Constitution ....13

A. The City Is Created By Law With Authority To Impose A Fee ……15

B. The Ordinance “Impose[s]” And “Increase[s]” A Fee………………15

C. The Fees Are “Transaction-Based” And Are Imposed On “The

Privilege To Engage In” A “Service Performed In This State” ..........16

II. Even Assuming Article IX, § 25 Is Ambiguous, the History and

Purpose of Article IX, § 25 Shows the Ordinance is Still
Unconstitutional .............................................................................................20

III. The Home Rule Charter Provision in Article XIII, § 2 Further Confirms
that the City Lacks Power to Violate the Prohibition Against New or
Increased Transaction-Based Fees for Services ............................................25

REQUEST FOR ATTORNEY FEES ......................................................................26

CONCLUSION ........................................................................................................27

2
 TABLE OF AUTHORITIES

CASES PAGES

Ariz. Dept. of Water Resources v. McClennen,

238 Ariz. 371 (2015) ..................................................................................... 14, 18
Ariz. State Liquor Bd. v. Poulos,
112 Ariz. 119 (1975) ............................................................................................18
Buntman v. City of Phoenix,
32 Ariz. 18 (1927) ................................................................................................25
Calik v. Kongable,
195 Ariz. 496 (1999) ............................................................................................13
City of Phoenix v. Glenayre Electronics, Inc.,
242 Ariz. 139 (2017) ..................................................................................... 17, 22
City of Phoenix v. Orbitz Worldwide Inc.,
247 Ariz. 234 (2019) ............................................................................................14
City of Phoenix v. Yates,
69 Ariz. 68 (1949) ................................................................................................13
City of Tempe v. State,
237 Ariz. 360 (App. 2015) ...................................................................................26
DBT Yuma, L.L.C. v. Yuma Cty. Airport Auth.,
238 Ariz. 394 (2015) ............................................................................................14
Heath v. Kiger,
217 Ariz. 492 (2008) ............................................................................................21
Hughes v. Martin,
203 Ariz. 165 (2002) ........................................................................................8, 26
Jachimek v. State,
205 Ariz. 632 (App. 2003) ............................................................................ 16, 20
Jett v. City of Tucson,
180 Ariz. 115 (1994) ..................................................................................... 21, 24
Kotterman v. Killian,
193 Ariz. 273 (1999) ............................................................................................14
Saban Rent-a-Car LLC v. Ariz. Dept. of Revenue,
246 Ariz. 89 (2019) ....................................................................................... 13, 20

3
Sorenson v. Sec’y of the Treasury,
475 U.S. 851 (1986) .............................................................................................16
State ex rel. Brnovich v. City of Tucson,
242 Ariz. 588 (2017) .................................................................................... passim
State v. McLamb,
188 Ariz. 1 (App. 1996) .......................................................................................15
United States v. Gonzales,
520 U.S. 1 (1997) .................................................................................................17

CONSTITUTIONAL PROVISIONS

Ariz. Const. art. II, § 2 .............................................................................................26

Ariz. Const. art. VI, § 5 ..............................................................................................7
Ariz. Const. art. IX, § 25 .................................................................................. passim
Ariz. Const. art. XIII, § 2 ........................................................................ 6, 10, 15, 25

STATUTES

A.R.S. § 9–283(A) ...................................................................................................25

A.R.S. § 9–284(B)............................................................................................. 25, 26
A.R.S. § 41–194.01 ....................................................................................................7
A.R.S. § 44–7002(17) ..............................................................................................17

OTHER AUTHORITIES

Arizona 2018 General Election Publicity Pamphlet (Nov. 6, 2018) ................ 21, 22
Privilege, Black’s Law Dictionary (11th ed. 2019) .................................................18
Ryan Randazzo, Uber in Arizona: A timeline of events leading up to
shutdown of self-driving cars, AZ Central (May 23, 2018) ................................23
Service, Black’s Law Dictionary (11th ed. 2019)....................................................17
Steven Totten, Report: This ride-hailing company has a $40M impact
on Phoenix, Phoenix Business Journal (Dec. 12, 2016) ......................................23
Transaction, Black’s Law Dictionary (11th ed. 2019) ............................................17

4
 INTRODUCTION

This is a “mandatory” jurisdiction case brought under A.R.S. § 41–

194.01(B)(2). See State ex rel. Brnovich v. City of Tucson, 242 Ariz. 588, 593–96,

¶¶ 12–29 (2017).

In 2018, the voters amended the Arizona Constitution to prohibit

“impos[ing] or increas[ing] any sales tax, transaction privilege tax, luxury tax,

excise tax, use tax, or any other transaction-based tax, fee, stamp requirement or

assessment on the privilege to engage in … any service performed in this state.”

ARIZ. CONST. art. IX, § 25 (emphasis added).

In December 2019, the City of Phoenix (the “City”) enacted an ordinance

that imposes and increases transaction-based “trip fees” on commercial ground

transportation companies for transporting passengers to and from the Phoenix Sky

Harbor International Airport (“Airport”). Specifically, § 4–78 of the Phoenix City

Code (the “Ordinance”) requires authorized providers––who are granted a

privilege to operate at the Airport under a City permit––to pay new “pick-up” and

“drop-off” fees whenever drivers enter or exit the airport and pick up or drop off

passengers. Petition for Special Action Appendix (“App.”) A at 25–26.

This Ordinance is contrary to the plain language of article IX, § 25 of the

Arizona Constitution, and it is therefore unconstitutional. Even assuming any part

of § 25 were ambiguous, its history and purpose confirm that the Ordinance

5
contravenes it. And to the extent the City may contend that article IX, § 25’s

prohibition against new and increased transaction-based fees cannot be applied to

fees at the city-owned airport in light of the City’s authority to manage its property

under article XIII, § 5, the City would be mistaken. Article IX, § 25 does not

infringe upon cities’ constitutional powers, and Arizonans’ constitutional right

against new and increased fees can be reconciled with other provisions that grant

cities authority to exercise certain powers. Indeed, the “home rule charter”

provision of the Arizona Constitution expressly states that “[n]otwithstanding any

provision of this section to the contrary, no charter shall provide a city with any

power to violate article IX, section 25, which preempts such power.” ARIZ. CONST.

art. XIII, § 2.

Pursuant to A.R.S. § 41–194.01(B)(2), Petitioner respectfully requests that

this Court declare the Ordinance violates the Arizona Constitution and is therefore

null and void.

PARTIES

Petitioner State of Arizona ex rel. Mark Brnovich, Attorney General, is the

proper party to bring actions under A.R.S. § 41–194.01. Respondent City of

Phoenix is a municipal corporation and charter city, organized under the laws of

the State of Arizona.

6
 JURISDICTIONAL STATEMENT

This Court has jurisdiction over this petition under Article VI, § 5(6) of the

Arizona Constitution, which grants this Court “[s]uch other jurisdiction as may be

provided by law,” and A.R.S. § 41–194.01(B)(2). See City of Tucson, 242 Ariz.

at 593–96, ¶¶ 12–29 (holding § 41–194.01(B)(2) “quite clearly makes [this

Court’s] jurisdiction mandatory”).

Under § 41–194.01(A), a member of the Legislature may request that the

Attorney General investigate “any ordinance, regulation, order or other official

action adopted or taken by the governing body of a county, city or town that the

member alleges violates state law or the Constitution of Arizona.” If the Attorney

General determines that an ordinance “may violate” state law (as it concluded

here), then the Attorney General is directed to file a special action petition in this

Court “to resolve the issue,” and this Court is directed to “give the action

precedence over all other cases.” A.R.S. § 41–194.01(B)(2); see also City of

Tucson, 242 Ariz. at ¶ 22.

On December 19, 2019, Representative Nancy Barto submitted a request for

legal review of the Ordinance pursuant to A.R.S. § 41–194.01, identifying the

Ordinance’s imposition and increase of “trip fees” as a violation of article IX, § 25

of the Arizona Constitution. The Attorney General’s Office commenced an

investigation, soliciting public records and a written response on legal and factual

7
issues from the City. On January 16, 2020, the Attorney General’s Office issued

its statutorily-prescribed report, which concluded that a plain-language analysis of

the Ordinance and the Constitution demonstrates a “very likely” violation of the

Constitution.1

The Attorney General’s Office recognized that resolution of the legal issue

presented involves issues of first impression that may require harmonizing multiple

constitutional provisions “to preserve the full expression of the voters’ intent”

underlying article IX, § 25. See Hughes v. Martin, 203 Ariz. 165, 168, ¶ 17 (2002)

(courts should reconcile constitutional amendments whenever possible to “give

effect to both”). Accordingly, the Attorney General’s formally determined that the

Ordinance “may violate” state law under § 41-194.01(B) because “existing law

[does not] clearly and unambiguously compel[]” the conclusion that the Ordinance

violates article IX, § 25 of the Arizona Constitution. See City of Tucson, 242 Ariz.

at 595, ¶ 25. This Special Action followed.

//

//

//

//

1
The request (Request No. 19–002), the City’s response, and the Attorney
General’s Report are available at https://www.azag.gov/complaints/sb1487-
investigations (last visited January 21, 2020).

8
 STATEMENT OF THE ISSUE

Whether the City of Phoenix, in violation of article IX, § 25 of the Arizona

Constitution, imposed or increased transaction-based fees on the privilege to

engage in a service performed in this State when it approved an Ordinance that

imposes and increases new “trip fees” for commercial ground transportation

services beginning or terminating at the Airport.

STATEMENT OF FACTS

I. Voters Approve Proposition 126 to Amend the Arizona Constitution

Article IX, § 25 of the Arizona Constitution is a constitutional amendment

that voters passed in 2018 through an initiative measure, Proposition 126

(“Prop. 126”). Section 25 states, in relevant part, that “any … city … created by

law with authority to impose any tax, fee, … or other assessment, shall not impose

or increase any … transaction-based … fee … on the privilege to engage in … any

service performed in this state.” ARIZ. CONST. art. IX, § 25. Taxes, fees, and other

assessments that were already in effect on December 31, 2017, are not subject to

this prohibition. See id.2

Prop. 126 also amended the “home rule charter” provision of the Arizona

Constitution to expressly state that “[n]otwithstanding any provision of this section

2
Here, § 4–78 of the City Code, which is currently in effect and existed prior to the
City’s adoption of the Ordinance, took effect on June 17, 2016. See App. B at 29.

9
to the contrary, no charter shall provide a city with any power to violate article IX,

section 25, which preempts such power.” ARIZ. CONST. art. XIII, § 2; see also City

of Tucson, 242 Ariz. at 598–99, ¶¶ 39–40 (discussing origin and purpose of the

home rule charter provision).

II. The City Adopts Ordinance G–6650

On December 18, 2019, the City adopted the Ordinance, see App. A,

amending Chapter 4, Article IV of the Phoenix City Code (“City Code”), which

governs “commercial ground transportation vehicles rules and regulations[,]” see

App. B.3 As relevant here, the Ordinance: (1) creates a new type of trip fee (“drop-

off” fee) that all authorized ground transportation providers must pay; and

(2) increases another type of trip fee (“pick-up” fee) for some providers. See App.

A at 25–26; City Code § 4–67 (defining “trip fee” as “a fee imposed pursuant to

[§] 4-78”).

A. The Ordinance Imposes New “Drop-Off” Fees

First, the Ordinance establishes new “drop-off” fees that are assessed against

transportation network companies (“TNCs”) and “non-TNC authorized providers.”

App. A at 25–26; see also id. at 6 (expanding the definition of “trip” to include

3
For ease of reference, the Attorney General has included the current City Code as
Appendix B to this Petition. All citations to the City Code above refer to the
current sections contained in Chapter 4, Article IV, unless otherwise noted.
Appendix D consists of the City Council Report adopting the Ordinance, including
Attachment A, the City’s “summary sheet” of the new “trip fees.”

10
“dropping off a passenger on an airport”); City Code § 4-67 (defining

“transportation network company” as “an entity that has been issued a permit by

the State of Arizona, that operates in the State of Arizona, that uses a digital

network or software application to connect passenger(s) to transportation network

services provided by transportation network company drivers, and that may but is

not deemed to own, operate or control a personal motor vehicle of a transportation

network driver”).

The Ordinance requires TNCs to pay a “drop-off” fee of $4.00, which is

scheduled to increase to $5.00 by 2024. App. A at 25. Beginning in 2025, this fee

“will automatically increase annually at the greater rate of three percent or the

percentage change in the most current consumer price index for all urban

consumers (CPI-U)” (“Automatic Increase provision”). Id. For non-TNC

authorized providers, the “drop-off” fee is between $1.75 and $5.00, depending on

the vehicle size. Id. at 26. Beginning in 2021, the “drop-off” fees for non-TNC

authorized providers will “automatically increase” at the same rate as set forth in

the Automatic Increase provision. Id.

B. The Ordinance Increases Other “Trip Fees” (“Pick-Up” Fees)

Second, the Ordinance increases existing “pick-up fees” (currently labeled

“trip fees”) that are assessed against TNCs. App. A at 25; see also City Code § 4–

67 (defining “trip” as “an authorized provider picking up a passenger on an

11
airport”); id., § 4–78(A) (establishing “trip fees”). The Code does not distinguish

between TNCs and other authorized providers to determine the applicable “trip

fees”; instead, the Code sets “trip fees” in amounts ranging from $2.25 to $9.00,

depending on the vehicle size and the date on which an authorized provider was

“permitted.” See City Code, § 4–78(A)(1)–(3).

By definition, TNC vehicles do not exceed eight passengers. See id., § 4–

67. The “trip fees” for vehicles equipped with one to eight seats ranged from $2.25

to $3.25 in calendar years 2017, 2018, and 2019; these “trip fees” were scheduled

to increase somewhat (“at the lesser of three percent or the percent of change in the

most current [CPI-U]”) on January 1, 2020. See id., § 4–78(A)(1)–(3), (6).

The 2019 (and present) trip fee for TNCs operating at the Airport is $2.66.

See App. C. The Ordinance re-labels the “trip fee” as “pick-up” fee, increases the

fee from $2.66 to $4.00 for TNCs, and establishes a schedule that increases the

“pick-up” fee to $5.00 by 2024. App. A at 25. Under the Ordinance, starting in

2025, the pick-up fee for TNCs will rise on an annual basis at the same rate as set

out in the Automatic Increase provision that the Ordinance similarly establishes for

drop-off fees. See id.

12
 ARGUMENT

I. The Ordinance’s Imposition and Increase of “Trip Fees” Violates the

Unambiguous Language of Article IX, § 25 of the Arizona Constitution

The Ordinance violates the Arizona Constitution’s prohibition against

“impos[ing] or increas[ing] any sales tax, transaction privilege tax, luxury tax,

excise tax, use tax, or any other transaction-based tax, fee, stamp requirement or

assessment on the privilege to engage in … any service performed in this state.”

ARIZ. CONST. art. IX, § 25. As a preliminary matter, the Ordinance characterizes

the charges at issue as “trip fees”; the constitutional text unambiguously includes

“fees”; and, as discussed below, the new “drop-off” fees and the increased “pick-

up” fees qualify as transaction-based fees on the privilege to engage in services

performed in Arizona.

In construing a constitutional provision, the primary goal “is to effectuate

the electorate’s intent in adopting it.” Saban Rent-a-Car LLC v. Ariz. Dept. of

Revenue, 246 Ariz. 89, 95, ¶ 21 (2019). If the provision’s meaning is discerned

“from its language alone,” it is applied “without further analysis.” Id.; see also

Calik v. Kongable, 195 Ariz. 496, 498, ¶ 10 (1999) (“With only a few exceptions,

if the language [of an initiative] is clear and unambiguous, we apply it without

using other means of statutory construction.”). “Each word, phrase, and sentence

must be given meaning so that no part will be [void], inert, redundant, or trivial.”

City of Phoenix v. Yates, 69 Ariz. 68, 72 (1949).

13
 When the Arizona Constitution does not further define a term, courts “look

to their ‘natural, obvious, and ordinary meaning.’” Kotterman v. Killian, 193 Ariz.

273, 284, ¶ 33 (1999); see also DBT Yuma, L.L.C. v. Yuma Cty. Airport Auth., 238

Ariz. 394, 396, ¶ 9 (2015) (“Absent statutory definitions, courts generally give

words their ordinary meaning … and may look to dictionary definitions[.]”

(internal citations omitted)). “It is a ‘fundamental principle of statutory

construction (and, indeed, of language itself) that the meaning of a word cannot be

determined in isolation, but must be drawn from the context in which it is used.’”

Ariz. Dept. of Water Resources v. McClennen, 238 Ariz. 371, 376, ¶ 26 (2015)

(quoting Deal v. United States, 508 U.S. 129, 132 (1993)).

“City … ordinances are to be construed by the same rules and principles

which govern the construction of statutes[.]” City of Phoenix v. Orbitz Worldwide

Inc., 247 Ariz. 234, 279, ¶ 10 (2019) (quoting Rollo v. City of Tempe, 120 Ariz.

473, 474 (1978)).

Here, the Ordinance falls within the plain language of the Constitution’s

prohibition. The City is vested with the authority to impose the types of taxes,

fees, and assessments to which § 25 is directed; the Ordinance imposes and

increases a “fee” within the meaning of § 25; and the “trip fees” are “transaction-

based” on a “privilege” to engage in a “service” within the meaning of § 25.

14
 A. The City Is Created By Law With Authority To Impose A Fee

The City is “created by law with authority to impose any … fee” within the

meaning of article IX, § 25. See State v. McLamb, 188 Ariz. 1, 4 (App. 1996)

(“The City of Phoenix, as authorized by the Arizona Constitution, Article 13,

Section 2, has adopted a charter permitting it to enact municipal ordinances.”); see

also ARIZ. CONST. art. XIII, § 2 (authorizing a city with a population of more than

3,500 to “frame a charter for its own government consistent with, and subject to,

the Constitution”).

B. The Ordinance “Impose[s]” And “Increase[s]” A Fee

The Ordinance both “impose[s]” and “increase[s]” “trip fees” within the

meaning of § 25. See ARIZ. CONST. art. IX, § 25 (cities “shall not impose or

increase…”). The City has mandated compliance with the Ordinance and

satisfaction of the “trip fees” provision for those who enter the Airport. See City

Code, Ch. 4, Art. I, § 4–2 (“[a]ny person who is granted permission by the City of

Phoenix or Aviation Director … to enter or use any part of the airport shall comply

with the airport rules and regulations” and “rules, regulations or other airport

requirements” established by the Aviation Director “shall have the force and effect

of law”) (emphasis added). Commercial ground transportation providers must

have a permit to engage in commercial activities at the Airport. See City Code,

§4–68. The “trip fees” are therefore “impose[d]” under § 4–78, see App. A at 25–

15
33, which trigger an authorized provider’s “decision to comply with the legally

imposed regulations and fees[.]” See Jachimek v. State, 205 Ariz. 632, 636, ¶¶ 14–

17 (App. 2003) (reasoning that a City of Phoenix ordinance “[i]mposed [an]

[a]ssessment [u]pon [t]hose [s]ubject [t]o [i]ts [r]egulatory [c]ontrol” and that

“[b]ecause [a] fee is charged for each transaction, the charge is imposed”).

The word “impose” appears twice in § 25. As discussed above, the City

indisputably has the authority to impose fees as a charter city, and has used that

authority here. This Court cannot interpret “impose” as meaning something

different within the same sentence; this would violate a basic canon of statutory

construction. See Sorenson v. Sec’y of the Treasury, 475 U.S. 851, 860 (1986)

(“‘[I]dentical words used in different parts of the same act are intended to have the

same meaning.’”). 4

C. The Fees Are “Transaction-Based” And Are Imposed On “The

Privilege To Engage” In A “Service Performed In This State”

The “trip fees” also fall within the meaning of “transaction-based” fees that

are imposed “on the privilege to engage in … any service performed in this state.”

ARIZ. CONST. art. IX, § 25 (cities “shall not impose or increase any sales tax,

4
Even assuming for the sake of argument that the new “drop-off” fees are not
“impose[d,]” these fees still constitute an “increase” of “trip fees” in violation of
the Constitution. ARIZ CONST. art. IX, § 25. The City cannot contend that the
Ordinance did not “increase” the trip fees by creating new “drop-off” fees and
increasing the existing “pick-up” fees. The Ordinance thus both imposes and
increases fees.

16
transaction privilege tax, luxury tax, excise tax, use tax, or any other transaction-

based tax, fee … on the privilege to engage in … any service performed in this

state”). The ordinary meaning of “transaction” is “[t]he act or an instance of

conducting business or other dealings; especially, the formation, performance, or

discharge of a contract,” “a business agreement or exchange,” or “[a]ny activity

involving two or more persons.” Transaction, Black’s Law Dictionary (11th ed.

2019); accord A.R.S. § 44–7002(17) (“‘Transaction’ means an action or set of

actions occurring between two or more persons relating to the conduct of business,

commercial or governmental affairs”). “Service” is generally understood as

“[l]abor performed in the interest or under the direction of others; specifically, the

performance of some useful act or series of acts for the benefit of another, usually

for a fee.” Service, Black’s Law Dictionary (11th ed. 2019).

Notably, the Constitution prohibits “any … transaction-based … fee”

imposed on the privilege to engage in “any service.” ARIZ. CONST. art. IX, § 25

(emphasis added). “Read naturally, the word ‘any’ has an expansive meaning, that

is, ‘one or some indiscriminately of whatever kind.’” United States v. Gonzales,

520 U.S. 1, 5 (1997) (quoting Webster’s Third New International Dictionary 97

(1976)). This Court has repeatedly recognized this principle––that “the word ‘any’

is ‘broadly inclusive.’” City of Phoenix v. Glenayre Electronics, Inc., 242 Ariz.

139, 144, ¶ 17 (2017) (quoting City of Phoenix v. Tanner, 63 Ariz. 278, 280

17
(1945), citing Gonzales, 520 U.S. at 5, and rejecting City’s argument for a narrow

construction of the phrase, “[n]otwithstanding any other statute”). The electorate’s

approval of the word, “any,” therefore supports an expansive reading of

“transaction-based” and “service.” However, neither of these terms should be read

in isolation. See Ariz. Dept. of Water Resources, 238 Ariz. at 376, ¶¶ 25–26.

Instead, “transaction-based” and “service” must be read in context of the entire

clause. Id.

The constitutional text states that a transaction-based fee is charged “on the

privilege to engage in … any service[.]” See ARIZ. CONST. art. IX, § 25. A

privilege “grants someone the legal freedom to do … a given act.” Privilege,

Black’s Law Dictionary (11th ed. 2019); see, e.g., Ariz. State Liquor Bd. v. Poulos,

112 Ariz. 119, 121 (1975) (“[A] liquor license is … a privilege to engage in a

business subject to the regulation of the state.”).

The Ordinance itself confirms that the “trip fees” are “transaction-based”

and charged on authorized providers’ “privilege” to offer passengers transportation

“services” to and from the Airport. First, the Ordinance defines “trip” as “an

authorized provider picking up or dropping off a passenger on an airport.” App. A

at 6. To explain when “trip fees apply[,]” § 4–78(A)(3) provides as follows:

For authorized providers using global positioning system (GPS)

trip tracking, trip fees apply each time a driver enters a geofence,
makes one or more stops, and completes a pick-up or drop-off of one
or more passengers. For all other authorized providers, trip fees apply
18
 each time a driver enters or exits an airport and stops at one or more
designated passenger pick-up or drop-off locations.

Id. at 27.

Specifically, the “transaction” consists of entering or exiting the airport (a

“pick-up” or “drop-off”), which involves “two or more persons” (drivers and

passengers); the “trip fees” are charged on a “privilege” that the City grants

authorized providers to operate a business at the Airport; and that privilege relates

to the “services” performed by drivers, who give rides to passengers for a fee. See

City Code, § 4–67 (defining “[a]uthorized provider” as “a person, authorized by

the Aviation Director under permit or contract, to engage in commercial ground

transportation” and defining “[d]river” as “any individual who drives, is driving, or

is in actual physical control of, a ground transportation motor vehicle”); App. A

at 6 (defining “[t]ransportation network driver” as a “person who receives

connections to potential passenger(s) and related services from a [TNC] in

exchange for payment of a fee to the [TNC]” and defining “[t]ransportation

network vehicle” as a motor vehicle “that is used by a transportation network

driver to provide transportation network services”) (emphasis added).

Indeed, the “trip fees” are a condition of the permit issued by the Aviation

Director. See App. A at 25 (“all authorized providers will pay the trip fees”)

(emphasis added); City Code, Ch. 4, Art. I, § 4–2(B) (“rules, regulations or other

airport requirements” established by the Aviation Director “shall have the force
19
and effect of law”). In exchange for complying with the City’s fees and

regulations, commercial ground transportation providers receive a privilege that is

not given to others––the right to provide these services commercially at the

Airport. Cf. Jachimek, 205 Ariz. at 636, ¶ 16 (reasoning that “the decision to

become a pawnbroker is a voluntary one, and … [i]n exchange for complying with

the[] [city’s] fees and regulations, the pawnbroker receives a privilege not given to

others––the right to engage in pawn transactions”).

The remedy for non-compliance with the Ordinance further confirms the

Ordinance falls within the plain language of § 25’s requirement of a “privilege.”

Authorized providers must pay the trip fees or risk losing their permit. See City

Code, Ch. 4, Art. I, § 4–4 (“[t]he use of any portion of the airport for revenue-

producing commercial activities or to solicit business or funds is prohibited unless

authorized by the Aviation Director by lease, permit or license agreement under

such terms and conditions that may be required by the Aviation Director[.]”).

Lastly, the transportation services that drivers provide to and from the

Airport are indisputably “performed in this state.” ARIZ. CONST. art. IX, § 25.

II. Even Assuming Article IX, § 25 is Ambiguous, the History and Purpose
of Article IX, § 25 Show the City’s Ordinance Is Unconstitutional

The plain language of article IX, § 25 is clear. But even assuming any part

of article IX, § 25 is ambiguous, the history and purpose of § 25 supports a finding

of unconstitutionality. Where a constitutional provision is ambiguous, courts

20
“consider its text in conjunction with the history and purpose of the provision.”

Saban Rent-a-Car LLC, 246 Ariz. at 96, ¶ 22; see also Jett v. City of Tucson, 180

Ariz. 115, 119 (1994) (“The fact that [a constitutional provision] is not clear on its

face . . . permits us to . . . consider the history behind the provision, the purpose

sought to be accomplished, and the evil sought to be remedied.”). When

interpreting a constitutional provision passed by ballot initiative, courts look to the

publicity pamphlet as an indicator of the electorate’s intent. Heath v. Kiger, 217

Ariz. 492, 496 (2008) (“To determine the intent of the electorate, courts may also

look to the publicity pamphlet distributed at the time of the election.”).

The publicity pamphlet for Prop. 126 indicates that the electorate intended to

prohibit increased or newly-imposed fees on ride-sharing services. The pamphlet

makes clear that the constitutional prohibition would apply broadly to many

services that Arizonans use. For example, under the “findings and intent” section,

the pamphlet states: “Each day millions of Arizonans pay for an array of services

integral to daily life, ranging from medical treatments and auto repairs to haircuts

and childchare [sic], and much more.” Arizona 2018 General Election Publicity

Pamphlet, 24 (Nov. 6, 2018) (emphasis added). In the “Arguments For” section,

voters were presented with a wide range of services that they assumed would be

covered, including such diverse services as funerals, self-defense instruction,

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banking, and air conditioning. Id. at 27. As one supporter in the pamphlet noted,

“the list could go on and on.” Id. at 29.

There is nothing unique about ride-sharing services or commercial ground

transportation services for Phoenix’s largest and busiest Airport that indicate these

services should be excluded from the broad range of services voters intended to

protect from increased fees. Transportation services are no less “integral to daily

life,” id. at 24, than those services the voters intended to cover through Prop. 126.

Considered in conjunction with § 25’s broad language (“any service performed in

this state”, emphasis added), the publicity pamphlet further supports a conclusion

that the commercial ground transportation services to the Airport here are covered.

See Glenayre Electronics, Inc., 242 Ariz. at 144, ¶ 17 (emphasizing “the word

‘any’ is ‘broadly inclusive’”).

The purpose of article IX, § 25 was to prohibit taxes and fees that would

make every day services more expensive, increase the “financial strain on working

families,” and make it more difficult to create jobs. Arizona 2018 General Election

Publicity Pamphlet, 24 (Nov. 6, 2018). Here, the City-imposed “trip fees” for a

round-trip ride to and from the Airport using a ride-share service (defined as a

“TNC” under the City Code) are $2.66, subject to a slight adjustment in 2020

22
permitted by § 4–78(A)(6). 5 Under the Ordinance, however, the “trip fees” for the

same round-trip will be $8.00 in 2020, increasing to $10.00 by 2025. App. A

at 25–26.

Ridesharing services have positively contributed to the Phoenix economy.

See Steven Totten, Report: This ride-hailing company has a $40M impact on

Phoenix, Phoenix Business Journal (Dec. 12, 2016) (stating, inter alia, that Lyft

alone “contributed $39.6 million to the Phoenix economy” in 2016 and that “32

percent of rides start in underserved areas”); 6 Ryan Randazzo, Uber in Arizona: A

timeline of events leading up to shutdown of self-driving cars, AZ Central (May 23,

2018) (stating that Uber has 550 employees in the state and 16,000 contract

drivers).7 Lyft and Uber, for example, have created flexible economic

opportunities for drivers, i.e., working Arizonans.

The Ordinance will discourage ride-sharing at the Airport, which in turn will

negatively impact Arizona’s economy, including job opportunities and

transportation access for passengers across Phoenix and its suburbs. The publicity

5
See City Code, § 4–78(A)(6) (“Beginning January 1, 2020, fees will increase
annually at the lesser of three percent or the percent of change in the most current
Consumer Price Index…”).
6
https://www.bizjournals.com/phoenix/news/2016/12/12/report-this-ride-hailing-
company-has-a-40m-impact.html
7
https://www.azcentral.com/story/money/business/tech/2018/05/23/uber-arizona-
timeline/637497002/

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pamphlet confirms the voters intended to block all financially-straining and work-

reducing fees imposed on services by government entities.

The City cannot rely on the title of the act and publicity pamphlet to argue

that the Ordinance’s “trip fees” were not intended to be prohibited by voters simply

because the titles focus on “taxes.” As discussed above, the plain text of Prop. 126

is as broad in its prohibition on revenue-raising mechanisms as it is on the services

it covers. It prohibits “any sales tax, transaction privilege tax, luxury tax, excise

tax, use tax, or any other transaction-based tax, fee, stamp requirement or

assessment[.]” ARIZ. CONST. art. IX, § 25 (emphasis added). The history and

purpose behind a statute cannot be used to contradict its clear text. See Jett, 180

Ariz. at 119 (“No extrinsic matter may be shown to support a construction that

would vary [the Constitution’s] apparent meaning.”).

The publicity pamphlet for the passage of Prop. 126 indicates a broad

reading of the services it covers. Simply put, the voters knew they were blocking

any future increase in taxes and fees. Thus, the history and purpose of article IX, §

25 support a conclusion that the Ordinance’s imposition and increase of “trip fees”

on commercial ground transportation services provided to and from the Airport are

unconstitutional.

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III. The Home Rule Charter Provision In Article XIII, § 2 Further
Confirms That The City Lacks Power To Violate The Prohibition
Against New Or Increased Transaction-Based Fees for Services

Finally, as noted above, Prop. 126 also amended the “home rule charter”

provision of the Arizona Constitution to expressly state that “[n]otwithstanding any

provision of this section to the contrary, no charter shall provide a city with any

power to violate article IX, section 25, which preempts such power.” ARIZ. CONST.

art. XIII, § 2. This is further evidence of the voters’ intent to deprive charter cities

of the “power” to violate the constitutional prohibition against new and increased

transaction-based fees on services.

Although the home rule charter provision in article XIII, § 2 gives charter

cities autonomy, that autonomy must be “consistent with” and is “subject to” the

Arizona Constitution. ARIZ. CONST. art. XIII, § 2; see also A.R.S. § 9–284(B) (a

charter “shall be consistent with and subject to the state constitution, and not in

conflict with the constitution and laws relating to the exercise of the initiative and

referendum…”); City of Tucson, 242 Ariz. at 602, ¶ 55 (emphasizing, “[o]ur cases

have consistently recognized this significant constitutional restraint on charter

cities’ powers” and collecting cases). The City may contend that it possesses

constitutional authority to impose the “trip fees” here. But cities’ constitutional

powers are not self-executing; instead, cities’ charter provisions must be

constitutional themselves. See A.R.S. §§ 9–283(A) (“On approval the charter shall

25
become the organic law of the city”); –284(B) (requiring charter to be “consistent

with and subject to” the Arizona Constitution); Buntman v. City of Phoenix, 32

Ariz. 18, 26–27 (1927) (provisions of a city charter are “equivalent to an act of the

Legislature granting the powers set forth therein” and cities’ constitutional power

“to engage in business [i]s not self-executing”).

Provisions in the Arizona Constitution governing the City’s constitutional

powers are easily reconciled with article IX, § 25 because § 25 does not deprive

the City of conducting is business, managing its property, or engaging in other

lawful activities. Instead, § 25 reflects a specific limitation on the City’s authority

to impose or increase taxes and fees on services performed in Arizona. Thus, these

constitutional rights and powers at issue can be reconciled. See Hughes, 203 Ariz.

at 168, ¶ 17 (courts should reconcile constitutional amendments whenever possible

to “give effect to both”). But to the extent any constitutional provisions conflict,

the rights of the people of Arizona must govern. See ARIZ. CONST. art. II, § 2 (“All

political power is inherent in the people, and governments derive their just powers

from the consent of the governed, and are established to protect and maintain

individual rights.”).

REQUEST FOR ATTORNEY FEES

Pursuant to A.R.S. § 12–348.01, the Attorney General requests reasonable

attorney fees in preparing this petition and conducting proceedings in this Court.

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See City of Tempe v. State, 237 Ariz. 360, 367 ¶¶ 26–27 (App. 2015) (affirming

mandatory fees award under § 12–348.01 in action seeking declaratory and special

action relief).

CONCLUSION

The Ordinance imposes and increases transaction-based fees on the privilege

to engage in a service performed in this State, and therefore violates article IX,

§ 25 of the Arizona Constitution. The Attorney General therefore respectfully

requests that this Court declare the Ordinance violates the Arizona Constitution

and is null and void.

RESPECTFULLY SUBMITTED this 21st day of January, 2020.

MARK BRNOVICH
ARIZONA ATTORNEY GENERAL

/s/ Linley Wilson

Brunn W. Roysden III (State Bar No. 28698)
Oramel H. Skinner (State Bar No. 032891)
Linley Wilson (State Bar No. 27040)
Dustin Romney (State Bar No. 034728)
Assistant Attorneys General

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