Legislature keeps its thumb on Arizona cities

If the Arizona Legislature had a theme this session, it was power – specifically, making sure the state has it and cities and counties don't.

State lawmakers introduced more than a dozen bills to strip cities and counties of the authority to regulate by declaring everything from dog breeders and rental-home taxes to plastic grocery bags and backyard chickens  "a matter of statewide concern" that only the state can regulate.

Then they sealed the deal with a new law signed by Gov. Doug Ducey to strip cities of state-shared revenue if they pass ordinances that conflict with state authority.

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That's a big stick. For some cities, state-shared revenue equals half or more of their revenue.

Arizona's assertion of the state's primacy over local governments didn't come out of thin air. State legislatures nationwide are on track to consider a record number of pre-emption bills, so named because they overrule any conflicting city or county regulations.

Helping drive it is the conservative, corporate-backed American Legislative Exchange Council and its local government task force, the American City County Exchange. ALEC serves as a clearinghouse for conservative ideas developed by lawmakers and business leaders working together in closed-door meetings. The ideas are turned into model legislation for lawmakers to then take back to their own state houses.

The organization is influential in Arizona. Several pieces of ALEC model legislation are introduced in Arizona each year. A number of local lawmakers, including sponsors of some of the pre-emption bills, are active members of ALEC.

ALEC has model policy similar to one that Arizona Republican lawmakers introduced this session declaring the minimum wage to be a state matter. Its city/county subsidiary held a virtual town hall recently on the issue featuring Phoenix Councilman Sal DiCiccio.

Republican leadership push

Ducey foreshadowed the the pre-emption push on the first day of the legislative session.

In his State of the State address, Ducey issued a warning to Arizona cities and towns, telling them to halt efforts to take local action on employment policies or risk losing some of their state revenue.

Residents of some communities had pushed for local governments to raise the minimum wage above the state's $8.05 an hour. Other local governments were pushing back against other state laws, including last year's law preventing cities from banning plastic grocery bags.

“If these political subdivisions don’t stop, they’ll drive our economy off a cliff,” Ducey said. “These efforts are based on the trendy, feel-good policies that are stifling opportunity across the nation."

Lawmakers took the issue and ran with it, introducing bill after bill asserting the state has control over various issues. The bills saw mixed success.

Senate President Andy Biggs, R-Gilbert, introduced Senate Bill 1487, which allows any lawmaker to direct the attorney general to investigate an alleged violation that a city is trying to regulate an issue under state control. If the attorney general found the community in violation and it was not addressed, the state treasurer could then withhold state-shared monies until the problem was resolved. Ducey signed the bill into law, and it goes into effect 90 days after the session ends.

"If you knowingly violate a state law, why should you get a pass?" Biggs has said repeatedly when asked about the situation. "Local jurisdictions are subdivisions of the state; they are violating the law."

Ducey spokesman Daniel Scarpinato said they don't consider the bills "anti-city," but consider it the state's responsibility to protect residents and taxpayers from overreaching municipalities.

He said bills regulating rules on businesses, including minimum wage, provide consistency and benefit economic development.

"Particularly in Maricopa County, we have a lot of major municipalities that bump up against each other. You can't really tell when you leave Tempe and enter Mesa," he said. "You need to be aware of how a patchwork of laws would impact jobs in the state, and that's really what the governor's focus has been."

Rep. Doug Coleman, R-Apache Junction, is a former mayor and Apache Junction City Council member. He said the state and cities need to find a balance, and that's not something he saw this session.

"There's clearly some things that are of a statewide concern that cities are starting to get into. And when cities push like that, the state pushes back," he said, mentioning minimum wage, Bisbee's early efforts to recognize the marriages of same-sex couples and plastic grocery bags.

But he said just like the federal government shouldn't overreach into state affairs, the state shouldn't overreach into local issues like zoning and local taxes.

"Local control is very important," he said. "Things are different community by community, and I think that's how it ought to be."

City input

Tempe Councilwoman Lauren Kuby found herself at the center of the pre-emption fight at the Legislature this session.

A new state law preventing cities from banning plastic grocery bags overturned her successful effort to ban the bags in Tempe. A bill declaring the state has the authority to regulate dog breeders, if Ducey signs it, will pre-empt a tougher ordinance she helped pass in Tempe.

"Despite the fact that I'm engaged in the pre-emption war, I really believe pre-emption is not the issue," she said. "It's the ever-expanding power of ALEC and passing state laws to benefit special interest. It's frightening how much ALEC can determine what is introduced ... in the state Legislature. They have a stranglehold."

She said the Tempe ordinance regulating dog breeders was the result of months of investigation, research and community meetings and it had unanimous council support.

The legislation, she said, passed with a push from a large pet store corporation and the support of Sen. Jeff Dial, R-Chandler, who also represents part of Tempe and, according to state records, attended a recent ALEC conference.

"It is a long-treasured value in Arizona that cities have the right to pass legislation of local interest," Kuby said. "In Tempe, we want our values represented in our ordinances, in our budget. People trust the local government to get things done because the Legislature decides their agenda based on ALEC meetings behind closed doors, ordinances written before session and lobbyists deciding which laws are going to be promoted and voted on."

Ken Strobeck, executive director of the League of Arizona Cities and Towns, said he doesn't understand the recent pre-emption push. He said there have been bills here and there for years, but nothing like this session.

"I always think it's ironic that people who don't like government telling them what to do feel like they are able to tell city government what to do," he said, "and justify that by saying, 'We have to have cities and towns all do the same thing.' "

Strobeck said they have had little communication from Ducey or his top staff this session.

"We a number of times have reached out to say we're all working for the benefit of the people of Arizona and we should be working together," he said. "We wish we had a better sense of working with this administration and how we could be mutually supportive. But we're perceived as being government and part of what maybe some people perceive as being a problem."

Strobeck said some may see some local laws, such as an effort to limit restrictions on short-term rentals such as those advertised on Airbnb, as infringing on private-property rights. But Strobeck said cities need the ability to protect their residents.

"When there are loud parties at a rental and the neighbors call, they don't call the people who do the renting," he said. "They call the city and say, 'Come and stop this.' In some cases, those tools are being taken away from us."

But some city officials say cities don't have the right to such tools.

Councilman DiCiccio recently participated in an ALEC-hosted virtual town hall with Jon Russell, a Virginia city councilman and director of the American City County Exchange. The two said states should be tamping down on cities.

"Nowhere in the Constitution does it talk about the delegation of powers to cities and counties," Russell said. "Local governments are known as political subdivisions. Power can be given or power can be taken away or amended by the states."

Russell said in the past six years, local governments have increasingly tried to regulate issues such as fracking, plastic bags, drones, minimum wage and businesses such as Uber. He said "special interest" groups like the Sierra Club and labor unions are using cities to go around legislatures. States have been forced to respond by passing more pre-emption bills, he said.

"And that's their prerogative," he said. "You have to have levels of uniformity so people easily understand what the rules are when they come into that state."

DiCiccio said Arizona is continually running into this issue because state statute wasn't clear originally on the designation of powers.

"We don't have clearly defined lines of what is local and what is state-mandated," he said. "If you want to find ways to make things work ... you've got to have uniform laws."

He said while some things like overseeing law enforcement or city infrastructure should remain city issues, things like the minimum wage and taxes should not.

"The more you control a business, the more you control someone's life, the less likely they are to be a productive entity," he said. "The whole idea behind uniformity is to bring uniform laws across so you can conduct commerce, so you can live your life."

DiCiccio predicted Arizona will see more efforts to clarify the state's authority over local governments.

Some of the bills

Dog breeders: Senate Bill 1248, which passed the Legislature and awaits a signature or veto from Ducey, sets some regulations for pet breeders, but prevents cities and counties from passing stricter regulations. 

Taxing rental homes:  House Bill 2026 failed, but it would have prevented cities and counties from taxing rental housing.

Airbnb: Senate Bill 1350, which passed the Legislature and awaits a signature or veto from Ducey, prevents cities and counties from banning short-term rentals and sets state rules for taxation.

Energy use:  HB 2130, which has passed and been signed into law, prevents cities and counties from requiring an owner of a business, building or apartment complex to measure and report energy consumption.

Plastic grocery bags:  HB 2131, which has passed and been signed into law, prevents cities from banning or regulating plastic grocery bags.

Immigration:  HB 2223, which failed, would have prohibited cities and counties from refusing to provide federal officials with information regarding an individual's immigration status.

Improvement districts:  HB 2440, which passed and is now law, changes the statewide requirements to form districts for extra municipal services, essentially giving the power to those who own the highest valued land in the proposed districts, as opposed to giving an equal voice to all property owners. Opponents said the law was pushed by property owners who opposed a district in Phoenix's downtown Roosevelt Row.

Backyard chickens:  Senate Bill 1140, which was never given a hearing and failed, would have forbidden cities from banning homeowners from keeping fowl in their backyard.

Pawn brokers:  HB 2566, which failed, would prevent a city from charging a fee to pawn brokers. HB 2690, which also failed, would have given the state Department of Public Safety authority over pawn brokers instead of city or county law enforcement.

Guns in public buildings:  SB 1257, which failed, would have required cities and counties to allow individuals to carry firearms into most public buildings.

Gun regulations:  SB 1266, which the Legislature passed and awaits a signature or veto from Ducey, declares any local regulation or tax that violates state statute preventing cities and counties from regulating firearms invalid and allows the court to potentially fine the city or county up to $50,000. It allows any individual affected by the regulation to sue the city or county, and allows the court to award them up to $100,000 in damages.

Sanctuary cities: SB 1378, which failed, prohibited the state from giving general-fund money to a city or county determined to be a "sanctuary city" that does not follow federal or state regulation of immigrants who may be in the country illegally.

Regulations:  SB 1524, which the Legislature passed and is awaiting a signature or veto from Ducey, limits the regulations a city or county can place on any business or individual unless there is a threat to the health, safety or welfare of the public that has not been addressed by the Legislature or by the industry itself.

Property taxes: SB 1523, which passed the Legislature and is awaiting a signature or veto from Ducey, regulates how local governments or school districts can raise property taxes.