Judge Strikes Down City of Tucson’s Local Business Bid Preference Ordinance

Phoenix (11/25/2014)—Today Pima County Superior Court Judge Gus Aragon struck down a City of Tucson ordinance giving local businesses special privileges in city contracting.

“This is a victory for all businesses and for all Tucson taxpayers. Everyone should be on a level playing field when trying to do business with City Hall,” 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 challenged 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.

Judge Aragon ruled in the Goldwater Institute’s favor on every issue raised, finding that the bid preference ordinance “violates the Arizona Constitution and the United States Constitution.” In his ruling, Judge Aragon wrote Tucson’s bid preference ordinance “discriminates among bidders for government work/services and it violates the [Arizona Constitution’s] Gift Clause by granting a direct taxpayer subsidy to certain preferred bidders, and the City receives no direct consideration in return.”

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 protecting taxpayers and leveling the playing field for all businesses and keeping the public procurement process a politics-free zone.”

Click here for more information about this case, Hirshman v. Rothschild.

###