Unconstitutional fees threaten ride-sharing at Sky Harbor

The city of Phoenix is attempting to raise rates by 200% for customers using ride-sharing platforms like Uber or Lyft when they travel at Sky Harbor Airport.

And it’s doing so in direct violation of the Arizona Constitution, which was amended with overwhelming voter support just last year to prohibit fee increases of exactly this sort.

Over the last several years, ride-sharing services have reduced the cost of ground transportation substantially, while offering a product that is better and more reliable than traditional taxi services. Today, the average cost of a Lyft ride to or from Sky Harbor is about $10. And many of these rides originate in low-income areas.

In an astounding money grab that has little to nothing to do with ride-sharing, the city of Phoenix wants to increase the cost of a ride share by adding a new $5 fee to get dropped off at the airport, as well as substantially raising the fees to get picked up from Sky Harbor.

Currently, when you take a ride-share from Sky Harbor, you pay a $2.66 pick-up fee that goes to the airport. However, the city plans to immediately increase the pick-up fee to $4 and create a new drop-off fee of $4. These prices will increase to $5 each way by 2024. That means that in a few years, the city plans to take a $10 fee just to get a ride from your house to the airport and back — nearly doubling the cost of the ride for many riders.

This substantial rate increase will affect Arizona’s national standing as a tourist and business destination, harm passengers (especially low- to middle-income passengers), and impact ride-sharing drivers who earn modest pay by providing a reliable and valued service. This horrendously bad policy — passed by a handful of local lawmakers — will thus cause ripple effects throughout the entire state of Arizona.

Even more appalling is that the city of Phoenix passed this measure without regard to a provision of the Arizona Constitution that prohibits cities from creating or raising fees on services in this state.

Just last year, Arizona voters overwhelming passed Prop 126, a ballot initiative that added Article IX, § 25 to the Arizona Constitution. That provision prohibits any city in Arizona from “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, or the gross receipts of sales or gross income derived from, any service performed in this state.”

In other words, the imposition or increase of “any…fee” on any service in this state are expressly prohibited by Arizona’s Constitution.

Here, the city is adding an entirely new drop-off fee on ride-sharing services to Sky Harbor that never previously existed. And the city is substantially increasing the pick-up fee at Sky Harbor. Obviously, both ride-sharing platforms and drivers utilizing ride-sharing platforms are providing a service in this state.

Thus, under the plain and unambiguous language of the Arizona Constitution, the city’s proposal that imposes new fees and increases existing fees on ride-sharing services at Sky Harbor is patently unlawful. The Goldwater Institute has sent a letter to Phoenix Mayor Kate Gallego asking the city to withdraw the proposed rate increases.

The city has a final opportunity to reject this punitive fee at a council meeting on December 18. They would be wise to do so. Ride-sharing drivers and passengers should not be made to pick up the tab for a few local lawmakers looking to break the law and thwart the will of countless voters.

Jon Riches is the Director of National Litigation at the Goldwater Institute.