Arizona Lawmakers Curb Nonprofit Competition

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In a precedent-setting more this May, Arizona lawmakers slapped controls on state agencies and state-supported institutions to prevent them from offering goods and services to the public that the private sector can provide. Additional provisions deal with bidding procedures, exemptions, and specific prohibitions for universities.

"Agencies aren't the god-almighties they used to be," says Francis Keller, owner of the Student Book Center in Tempe and a prime mover behind the legislation. Keller says he has been asking for relief from competition from the state-supported Arizona State University bookstore for 13 years but was ignored until last summer. "I sent petition letters and never even got a response," Keller says. The university store, supported with tax money, had a lower overhead because of rental and utility subsidies, Keller says, and didn't have to charge customers sales tax.

The measure won't go into effect until July 1, 1982, and it will expire at the end of 1985, giving the legislature a chance to review its effectiveness. James West, press secretary for Gov. Bruce Babbitt, says ambiguous language in the law raises potential legal problems that the governor hopes to work out in the next legislative session. West says the governor declined to sign the bill because of questions about specifically what the government can and cannot do, but also declined to veto it because "he approves of the bill's principles."

Earlier in the state's legislative session, legislators adopted an equal access to justice act similar to the federal measure adopted last year (see INC., January, page 23). As with the federal measure, the Arizona law allows companies that successfully defend themselves against agency actions to recover legal fees incurred in the fight. Unlike the federal law, however, there is no stipulation that the business be small to recover expenses and no loophole allowing agencies to avoid paying the fees if they can show their original action was "substantially justified." Robert Robb, vice-president of the Arizona Chamber of Commerce, says the state's bill "provides an excellent model" for other states considering similar legislation.

Robb says a move is under way to eliminate the government sale of goods and services to itself when the private sector can provide those services.