Alia Beard Rau

The Republic | azcentral.com

Watch out, Arizona cities and counties. The ordinances you pass could impact your bottom line.

Gov. Doug Ducey has signed into law a bill that allows state leaders to withhold state-shared revenue from cities if the attorney general determines a city or county has passed a regulation that conflicts with state law. Under Senate Bill 1487, any state lawmaker can ask the attorney general to investigate a regulation. The city or county will be given a period of time to resolve the issue and then, if it does not, will be fined.

The bill, sponsored by Senate President Andy Biggs, R-Gilbert, stems from clashes between cities and states over minimum wage, paid sick time, gun regulations, plastic grocery bags and even dog breeders.

“As Governor Ducey has made clear, for Arizona to be competitive, we can’t have a patchwork of different laws across the state," said Ducey spokeswoman Annie Dockendorff in a statement. "This legislation ensures everyone is playing by the same rules.”

The bill followed the spirit of Ducey's call during his January State of the State address to withhold tax revenue from cities and towns that enact their own wage and employment laws.

Back then, Ducey called on local jurisdictions "to put the brakes on ill-advised plans to create a patchwork of different wage and employment laws." He vowed to "use every constitutional power of the executive branch and leverage every legislative relationship to protect small businesses and the working men and women they employ — up to and including changing the distribution of state-shared revenue."

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Local mayors and the League of Arizona Cities have criticized the legislation.

"We're spending an awful lot of time at the state government chasing cities for I'm not sure what kind of problem," League of Arizona Cities and Towns Executive Director Ken Strobeck said in February. "We certainly do not like having shared revenue thrown around as a punishment."

Hours before Ducey signed the bill, Tempe Mayor Mark Mitchell, Chandler Mayor Jay Tibshraeny and Lake Havasu City Mayor Mark Nexsen sent Ducey a letter requesting a veto.

"This bill is heavy-handed, intrusive and minimizes the important role of local elected officials," they wrote in the letter. "What possible hubris could drive one single legislator to think he or she has more wisdom than the local elected officials who have been chosen by the voters to govern their communities?"

Arizona shares with local governments 15 percent of collected taxes on income, sales and transportation. The money funds significant portions of the local governments' budgets.

According to the mayors, state-shared revenue represents about 40 percent of cities' general funds.

"State leaders should be concerned about the success of cities and towns and their ability to effectively and efficiently serve their constituents, rather than seeking new ways to punish them for real or imagined transgressions," the mayors state in their letter.

Biggs noted that cities and counties are subdivisions of the state and so must obey state laws. He said he included a notification requirement to help cities that may unintentionally violate a law come into compliance before penalties kick in. But in his mind, he said, several recent incidents have been intentional — particularly the city efforts to ban plastic bags.

Strobeck has said the bill lacks due process.

"The attorney general is making a determination without going to any court or deliberative body or making an argument in front of a judge," he said. "One lawmaker can go to the attorney general and one attorney general can make a finding, and thousands of people lose local services."

The bill will become law 90 days after the legislative session ends, which is likely in mid-summer.

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Follow the reporter on Twitter @aliarau. Reach her at alia.rau@arizonarepublic.com or 602-444-4947.