City of Tucson’s Local Business Bid Preference Ordinance Headed to Court

Phoenix (11/13/2014)—Should locally-owned businesses get a special preference when doing business with City Hall? That’s the question at issue in a lawsuit challenging the City of Tucson’s local business contracting preference. Next Monday, lawyers for the City and the Goldwater Institute will face off before Pima County Superior Court Judge Gus Aragon.

“We can all agree that supporting locally-owned businesses so they can grow and thrive is important for the economy. After all, you never know what home-grown small business will be the next Cold Stone Creamery. But giving special advantages to some businesses and not others isn’t the way to do that,” said Jon Riches, an attorney at the Goldwater Institute.

Tucson adopted a city ordinance in 2012 that gives businesses based in Tucson a significant financial advantage when bidding to do business with the City. Businesses that are headquartered in Tucson are able to bid up to 5 percent more on city contracts and still win. This not only disadvantages other small businesses in Tucson who do not qualify for the preference, or that may be headquartered in another part of the state, but it also means Tucson taxpayers will pay more for city services than they need to.

The Goldwater Institute is challenging this city ordinance on several grounds, particularly that this ordinance is a violation of the “equal protection” clauses in the U.S. and Arizona constitutions. Equal protection clauses are meant to keep the government from singling out certain citizens for special advantages or disadvantages. The Arizona Supreme Court struck down a similar state bid preference law more than 20 years ago.

The Goldwater Institute has filed several successful legal challenges to various laws that offered special preferences to some businesses but not others. This lawsuit could have an impact on local business bid preference laws across the country.

“All businesses should be treated the same. Just like big-box stores shouldn’t get special tax breaks that mom-and-pops can’t get, mom-and-pops shouldn’t get special deals to charge taxpayers more for services,” said Riches. “This lawsuit is about leveling the playing field for all businesses and keeping the public procurement process a politics-free zone.”

Judge Aragon will hear arguments in this case, Hirshman v. Rothschild, on Monday, November 17, 2014 at 3:30 p.m. Click here for more information about Hirshman v. Rothschild.

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