Court Overturns Key Union Contracts in Major Cities Shake-Up

A new ruling by the Arizona Supreme Court could potentially disrupt agreements that Arizona cities maintain with their labor unions. The unanimous decision declared that a contract negotiated by Phoenix with one of its unions is illegal because it permits employees to address union issues during city time while still receiving pay. The court highlighted there was no evidence proving the costs to taxpayers were offset by the benefits received.

Tucson City Attorney Mike Rankin stated that the July 31 ruling necessitates a review of the city’s contracts with four unions. He indicated that portions of these agreements might no longer be legally viable. Rankin mentioned amendments could be made to align with the Supreme Court’s concerns, such as having employees report on their union-related activities and placing restrictions on paid time off.

Despite possible changes, Rankin noted these modifications might not suffice to appease the justices. He explained any revised contract could still face scrutiny under the requirement that public funds must serve a “public purpose.” The ruling touches on the Gift Clause of the Arizona Constitution, which restricts state and local governments from making donations or grants to individuals, associations, or corporations.

Justice Clint Bolick, writing for the court, clarified that the clause aims to prevent tax dollars from benefiting private entities. The court employs a two-part test to evaluate compliance: first, does the expenditure serve a public purpose; second, is there “adequate consideration” demonstrating a direct benefit to the community relative to the tax dollars spent.

Phoenix’s agreement with its union failed this test, with the justices deeming the costs and benefits as one-sided, favoring the union over public interests. Rankin mentioned this standard now applies to Tucson’s contracts with various unions, including police, firefighters, non-public safety employees, and blue-collar workers.

Rankin admitted it’s increasingly challenging to predict what constitutes a Gift Clause violation until the court provides clarity. He suggested Tucson would have to scrutinize aspects like city control over workers’ union activities during paid time and the detailed reporting of those activities.

He proposed that Tucson might adjust its release time provisions to ensure constitutional compliance, potentially by more precisely identifying benefits to the employer and defining reasonable hours. However, he also acknowledged there’s no certainty the Supreme Court would approve such modifications.

Rankin concluded that even robust evidence from Tucson demonstrating a public purpose for release time provisions might not satisfy the Supreme Court if the “adequate consideration” test is perceived to be unmet.