By Sean Krieg.
In October 2021, the Mayor, Councilmembers, and City Manager of Mesa received a threat. It was not sent by an anonymous troublemaker nor was it from a disgruntled citizen. Instead, it was sent by three members of the Arizona State Legislature. They were threatening to withhold all of the state-shared revenue owed to the City of Mesa—a sum of more than $190 million in the current fiscal year.
What possible reason could the legislature have for threatening to torpedo the budget of one of the largest cities in Arizona? Food trucks. The three legislators claimed that a Mesa zoning interpretation, which suggested restrictions on a large-scale food truck operation located a few feet from residential property, violated Arizona’s “Food Truck Freedom” bill, passed in 2018 to streamline the operation of mobile food vendors. This claim was made despite the fact that a plain reading of the relevant statute clearly grants municipalities the right to restrict food truck operations within 250 feet of a residentially zoned area.
While it seems incongruous that three state legislators have the power to deny over half a million Arizona residents funds they have been statutorily allocated, in fact, any single legislator has this power. Any legislator can submit a complaint to the Attorney General’s Office alleging that a local governmental entity has violated Arizona state law. Such a complaint is commonly referred to as a SB1487 complaint, named after the 2016 senate bill which granted this power to the legislature. SB1487 complaints can lead to losses of hundreds of millions of dollars without providing local governments any manner in which to appeal.
INITIATING AN INVESTIGATION
The SB1487 investigation process is governed by Arizona Revised Statutes (ARS) § 41-194.01 and is automatically triggered when the Attorney General’s Office receives a complaint from a legislator. The Attorney General must decide whether the local entity’s official action is in violation within thirty days. Once this decision is reached, the Attorney General issues a report concluding that the action in question “violates,” “may violate,” or “does not violate” any provision of state law or the Constitution of Arizona.
If the Attorney General concludes the action is in violation, the county, city, or town has thirty days to resolve the violation or else that entity’s state-shared revenues will be withheld. Alternatively, the report can indicate that the action may violate state law. A “may violate” determination results in a special action in the Arizona Supreme Court for a final decision. Finally, if the Attorney General decides that no violation has occurred, the matter is considered resolved in favor of the local entity. Significantly, whether an action “violates” or “does not violate” the law is wholly up to the Attorney General. Because of this, it is entirely possible for a municipality to be denied all of its state-shared revenue without ever having the opportunity to be heard in court.
PREEMPTION AND POLITICS
Considering the stakes, SB1487 provides a potent weapon to state legislators who seek to preempt local laws. That is, state legislators can use SB1487 to compel local governments to submit to the state, and to displace laws passed by cities and towns. This power has often been exercised when local government entities engage in politically contentious actions.
One of the first SB1487 investigations was conducted in 2016 to decide whether Tucson had the authority to destroy forfeited firearms. The following year, Attorney General Brnovich decided that the City of Bisbee could not prohibit retailers from providing single-use plastic bags. Both firearms and single-use plastics were politically contentious. Both Tucson and Bisbee repealed their ordinances to avoid jeopardizing their state-shared revenue.
In August and September 2021, the Attorney General’s Office issued back-to-back SB1487 reports. The first report concluded that the Maricopa County Board of Supervisors had violated state law by not turning over confidential election materials to the Arizona State Senate. This report played a significant role in forcing Maricopa County to capitulate and—according to Senate President Fann—“go[] home with its tail between its legs.” The second report concluded that Tucson could not require city employees to show proof of vaccination for COVID-19. Both of these reports had significant political ramifications.
CRITICISMS AND CONSTITUTIONALITY
Perhaps unsurprisingly, SB1487 has been condemned by municipal leaders. It has been called “draconian” and denounced by one city attorney as one of the worst pieces of legislation he had ever seen. The League of Arizona Cities and Towns opposed SB1487 when it was introduced, claiming it attacked local authorities and unconstitutionally bypassed due process. More recently, Mayor Romero of Tucson decried a SB1487 report as “a campaign speech filled with political commentary rather than a fact-based legal opinion.”
Despite this sharp criticism, SB1487 (or more accurately, the underlying statute) has been generally upheld by the Arizona Supreme Court as constitutional. Even so, when making this decision the Court did not engage with the question of constitutional due process, instead focusing on potential separation of powers issues. Additionally, the Court only analyzed the portions of the statute directly implicated in the underlying dispute and did not consider the statute as a whole. Still, while the Court did not find any violation of the separation of powers in that particular instance, it did later decline to enforce a bond provision contained in the statute as “incomplete and unintelligible and therefore unenforceable.” Clearly, some questions still remain about the validity of SB1487. It is likely that further litigation will better clarify the ability of the legislature to leverage municipalities’ dependence on state-shared revenue to coerce compliance.
AN (EPHEMERAL?) EXCULPATION
With respect to Mesa’s food truck fiasco, the city probably doesn’t have too much to worry about. Even aside from the Food Truck Freedom bill’s express grant of permission to restrict food trucks in residential areas, SB1487 may not even apply.
A.R.S. § 41-194.01 was amended in 2021 to expand the scope of SB1487 from only applying to actions taken by a “governing body” to also include actions taken by “any agency, department, or other entity.” However, this amendment was included in a budget reconciliation bill in violation of Arizona’s single subject rule and was stricken from the bill. Because this amendment was stricken, the changes to the statute are void. Crucially, Mesa’s zoning interpretation was not issued by the City Council—its governing body—but by its zoning director. Accordingly, this particular action is unlikely to be the type of action contemplated by SB1487 as originally drafted.
It appears that Mesa, as well as other local government bodies, may have been granted a reprieve. Still, there is nothing preventing the legislature from amending A.R.S. § 41-194.01 in a future session. The past political use of SB1487 suggests that cities and towns would be wise to anticipate this course of action. Unless and until the Court takes action to protect local government, the threat of SB1487 will likely loom large in local governance.
