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POLICY report Goldwater Institute

No. 185 I December 8, 2003

Burdensome Barriers: How Excessive Regulations Impede Entrepreneurship


in Arizona
by Timothy D. Keller, Staff Attorney, Institute for Justice, Arizona Chapter

EXECUTIVE SUMMARY

In Arizona, occupational licensing requirements and regulations stifle competition, diminish quality of
service, and drive up prices. Thousands of laws restrict entry into occupations for people wishing to become
cosmetologists, barbers, African hairbraiders, taxicab drivers, and street vendors. State agencies and occupational
licensing boards act as gatekeepers, restricting competition and ensnaring entrepreneurs in thick layers of red tape.

Arizona municipalities also create burdensome barriers. If a Phoenix business owner wants to remodel or
change the use of an existing structure, the city requires him to pay $630 to meet with its Development Services
Department. Then the applicant must ensure the proper application is filed, which costs at least $1,200. Once
final site approval is granted, an applicant must obtain several other permits and pay applicable fees. In Tucson,
would-be entrepreneurs must navigate a 17-step process that the city’s own Small Business Commission has
described as “seemingly never-ending.” And those are just two small tips on the regulatory iceberg floating in the
way of Arizona entrepreneurs.

Although regulatory boards and commissions are frequently defended on the grounds of alleged health or
safety concerns, the principal effect of many occupational licensing schemes is to promote the vested interests of
those already engaged in regulated professions, creating government-sanctioned cartels. To the extent that
regulation adds marginal protections for consumers, those protections come at a significant price in lost
productivity and lost economic dynamism. When government regulation is necessary, regulations should be
highly circumscribed, easily understandable, and narrowly tailored to achieve legitimate goals such as preventing
fraud.

Arizona’s elected officials have a duty to protect economic liberty and an obligation to allow for a dynamic
economy. If set free from burdensome and needless regulations, Arizona entrepreneurs would find it easier to
open new businesses. Among their ranks would be hundreds of low-income and minority entrepreneurs who
would be climbing the first rung on the proverbial economic ladder.
GOLDWATER INSTITUTE I policy report

Burdensome Barriers: How Excessive Regulations Impede


Entrepreneurship in Arizona

by Timothy D. Keller, Staff Attorney, Institute for Justice, Arizona Chapter

Introduction driving, and street vending. In Arizona,


“a license is needed to operate almost
This report on barriers to any type of business.”2 Most regulatory
entrepreneurship has been conducted as schemes are ostensibly enacted to protect
a part of the Institute for Justice Arizona public health and safety, but in reality
Chapter’s ongoing examination of they do little more than keep out
economic liberty as a fundamental potential competitors.
American right.1 Arizona’s general
entrepreneurial climate is discussed first, All too often our “Land of
followed by an examination of the Opportunity” is a place where
All too often our “Land common hurdles entrepreneurs face regulations block competition, diminish
of Opportunity” is a when seeking to open businesses in quality of service, and drive up prices.
place where regulations Phoenix and Tucson – cities chosen Indeed, as many as 1 in 10 occupations
block competition, because of their large populations and suffers from a government-imposed
diminish quality of geographic locations. This study could cartel.3 The historical, political and
service, and drive up not begin to discuss in detail the economic forces that have created this
prices. processes required for opening busi- anti-competitive regime are varied and
nesses of every kind. Instead, it outlines complex, but constitutional juris-
the most common procedures required prudence has played a major role.
of all businesses prior to opening. Although the course of constitutional
jurisprudence cannot be summarized
The report then looks at specific easily, one U.S. Supreme Court decision
barriers erected for selected occupations stands out as emblematic of the
by the State of Arizona, Maricopa and American judiciary’s frequently lack-
Pima counties, and the cities of Phoenix luster defense of economic liberty: The
and Tucson, and focuses on entry-level Slaughter-House Cases.4
businesses and occupations, such as taxi
cabs, sidewalk vendors, and child care, In a 5-4 decision sanctioning a
because they typically require relatively government-imposed monopoly, the
little capital and no formal training, thus Supreme Court effectually repealed the
providing market access to the portion of the Fourteenth Amendment
economically disadvantaged. mandating, “No State shall make or
enforce any law which shall abridge the
Many of the obstacles to free privileges or immunities of citizens of
enterprise are invisible to consumers. the United States.”5 One of the most
Literally thousands of laws restrict entry important “privileges or immunities”
into occupations such as cosmetology, that the Fourteenth Amendment’s
hairstyling, African hairbraiding, taxicab architects attempted to protect was the

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December 8, 2003

right of individuals to engage in the preventing fraud.10


business or occupation of their
choosing. Individuals are not truly free
without this right.6 Thus, it is essential
to undo the effects of harmful legislative Arizona’s Entrepreneurial Climate
regulation and restore meaningful
judicial protection of our constitutional Arizona is highly urbanized, with
right to earn an honest living. more than 75 percent of its population
living in an incorporated city or town,
Today, entrepreneurs are shackled by and urbanization tends to breed
unnecessary regulation and licensing overregulation.11 The Small Business
requirements. If set free, many would Survival Committee’s 2003 index ranked
rush to open new businesses. Among Arizona as the 18th friendliest state to
their ranks would be hundreds of low- entrepreneurs.12 Arizona fared better in a As a general rule, this
income and minority entrepreneurs who recent study titled Economic Freedom of report suggests that
would be climbing the first rung on the North America, which took into account regulations should be
proverbial economic ladder. A recent the size of government, taxation, and highly circumscribed,
report by the World Bank validates these even occupational licensing, ranking easily understandable,
claims, finding a direct link between Arizona as the 9th most economically and narrowly tailored
poverty and overregulated business free state.13 The Arizona Department of to achieve legitimate
environments, and demonstrating that Commerce estimates the total number goals such as preventing
the world’s poorest countries have the of businesses in Arizona, including fraud.
highest levels of business regulation.7 home-based businesses, at approx-
The authors found that the heavier the imately 665,000.14 It also estimates that
regulation, the more inefficiency existed 98 percent of those businesses are
in public institutions, manifested in “small,” having fewer than 100
longer delays, higher costs, higher employees. According to the U.S. Small
unemployment, and corruption, with Business Administration’s Office of
no corresponding increase in quality of Advocacy, which defines small
goods or services.8 Although it is unclear businesses as those with fewer than 500
what level of government regulation of employees, small businesses employ
business is optimal, the World Bank nearly 50 percent of Arizona’s 1.8
study declares it is possible to regulate in million workers and are one of the state’s
good fashion and suggests that only two most important sources of new jobs.
procedures are necessary for business More than 13 percent of businesses in
entry: 1) registering for statistical Arizona are minority owned.15 Moreover,
purposes, and 2) registering for tax and there are nearly 300,000 home-based
social security.9 As a general rule, this businesses statewide.16
report suggests that regulations should
be highly circumscribed, easily A 2002 study released by the Small
understandable, and narrowly tailored to Business Survival Committee ranked
achieve legitimate goals such as Arizona 20th for its cost and ease of

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GOLDWATER INSTITUTE I policy report

conducting a small business, taking into its credit, the Department of Commerce
account government-imposed costs such does try to help would-be entrepreneurs
as business, personal property, and sales by offering a one-stop-shopping center
taxes.17 Kevin McCarthy, president of online.24 The Department’s virtual
the Arizona Tax Research Association, representative offers a step-by-step
said he was surprised Arizona did so business checklist to help would-be
well, noting that Arizona’s tax scheme entrepreneurs determine which of
forces business owners to “pay property several state agencies might regulate the
taxes at two and one-half times what business, as well as to help navigate the
homeowners pay.”18 As a recent city, town, and county licensing
Goldwater Institute publication processes.25
explained, “although tax rates in the
The Arizona state state do not discriminate by property Numerous state agencies and boards
government has use, assessment values do, with business exist to enforce the state’s occupational
adopted a large number property assessed at 2.5 times that of licensing laws. A complete list of state
of regulations that erect private homes.” Not surprisingly, the regulatory boards is attached as an
unnecessary barriers to Goldwater Institute calls for elimination appendix, but a representative sample
market entry, increase of the property classification system and includes:
consumer costs, and, in the adoption of a uniform assessment
some instances, ratio.19 • Acupuncture, Board of Examiners
unconstitutionally bar • Board of Barbers
manufacturers direct The Arizona state government has • Board of Behavioral Health
market access. adopted a large number of regulations Examiners
that erect unnecessary barriers to market • Board of Chiropractic Examiners
entry, increase consumer costs, and, in • Board of Cosmetology
some instances, unconstitutionally bar • Board of Dispensing Opticians
manufacturers direct market access. A • Board of Funeral Directors and
good example of that kind of barrier is Embalmers
Arizona’s ban on the direct shipment of • Board of Optometry
out-of-state wines to consumers, which • Board of Physical Therapy
the Institute for Justice is challenging in • Board of Private Postsecondary
Federal District Court.20 Arizona also Education
forbids car manufacturers from selling • Board of Psychologist Examiners
automobiles directly to consumers.21 • Veterinary Medical Examining
Those laws do nothing more than Board
protect wholesalers and dealerships
while impairing access to consumers and State regulation of industries is
driving up costs.22 largely redundant in a civil society,
whose regulatory forces include
In addition to those restrictive laws, consumer choice, consumer watchdog
Arizona requires that a licenses for a organizations, insurer risk assessment,
large number of business activities.23 To and tort law. To the limited extent that

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state regulation adds marginal required.30 Additional hours mean more


protections for consumers, that tuition and increased profits for those
protection comes at a significant price in schools.
terms of lost productivity and economic
dynamism. Many of Arizona’s regulatory Many of the state’s licensing schemes
boards could be combined or eliminated may be legally challengeable. In the past,
entirely in favor of regulation by the the Arizona Supreme Court has shown
institutions of civil society.26 While those itself capable of protecting the right to
boards or commissions are frequently earn an honest living by conducting a
defended on the grounds of alleged searching inquiry into government
health or safety concerns, the principal regulation. For example, the Court
effect of occupational licensing schemes struck down photography licensing and
is to promote the vested interests of practice requirements as uncon-
The principal effect of
those already engaged in regulated stitutional,31 and also struck down a
occupational licensing
professions and to create government- statute fixing prices in the barbering
schemes is to promote
sanctioned cartels. industry.32 The Court struck down those
the vested interests of
schemes because there was no rational
those already engaged
The government’s thirst for basis for such restrictions and because
in regulated professions
increased regulation appears insatiable. they served to establish and support
and to create
During the 2003 legislative session, monopolies in those industries. In no
government-sanctioned
Arizona’s legislators created yet another uncertain terms, the Court declared, “It
cartels.
regulatory body: the Arizona Board of will not prosper the community or other
Massage Therapy.27 The statute lines of business or trade to limit the
authorizing this new agency requires an number of those who may engage in the
applicant for a massage therapy license business. . . The police power, broad and
to take 500 classroom hours of comprehensive as it is, may not be used
education at a state-approved school, to prevent a person from. . . the right to
pay a $250 license fee, and pass an exam earn a living.”33
administered by either a national
certification board approved by the
agency or an agency-administered
exam.28 While the board’s proponents Phoenix by the Numbers
claim it is necessary to protect public
health and safety, they provide no When asked to relocate to Phoenix
credible evidence of consumer harm.29 to pastor a church, it is rumored that
Not surprisingly, proponents of the one man of the faith declined, offering
statute tended primarily to be those with three reasons: June, July, and August.
a vested interest in protecting themselves But in spite of the 100-plus degree
from competition. For example, massage summers, Phoenix’s overall moderate
therapy schools pushed for increased climate helps make it the nation’s eighth
hours for certification, with some fastest-growing city.34 It is the sixth-
preferring 700 to the 500 hours now largest city in the United States, by

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GOLDWATER INSTITUTE I policy report

population, and is well on its way to use of an existing structure, they must
taking over the number five spot.35 With follow a lengthy process, outlined in
luck, it won’t have the nation’s fastest- Figure 1. They must begin by scheduling
growing regulatory regime. a meeting with the city’s Development
Services Department.41 The meeting
Minorities own approximately 11 itself costs the prospective applicant
percent of all businesses in the Phoenix $630,42 and the meeting usually occurs
metropolitan area.36 That number is up about two weeks after it is requested.43
from recent years. However, because After the meeting, the would-be
minorities constitute one-third of entrepreneur must fill out an application
Maricopa County’s population, many and pay a fee, which is determined at the
minority-business advocates call for pre-application meeting and based on
reforms to improve conditions for the size of the project. The fee is based
minority entrepreneurs.37 Former Gover- on a complex equation involving
In Phoenix, a zoning
nor Jane Hull’s small business advocate, proposed use and complexity, with the
change costs an
Nereyda Lopez-Brown, pointed out that base fee running anywhere from $1,200
applicant $2,790, plus
many minorities are mired in the for parking areas to $5,200 for
$295 per acre for up to
complex regulatory process as they go commercial projects, with additional
40 acres, $150 per acre
from one agency to another simply costs per acre and surcharges for things
for 41 to 100 acres, or
trying to figure out which business such as “environmentally sensitive lands
$49 per acre for 100 or
permits or licenses are required.38 impact.”44 The applicant then files a
more acres.
preliminary site package, and may
In addition to having to visit various receive approval within 30 days.45 After
offices at city hall, would-be entre- that, the business owner must have his
preneurs wanting to open any kind of or her building plans approved. The next
business in Phoenix must first open their step is final site approval, followed by
wallets. The first stop would likely be the the issuance of a building permit.
Phoenix Planning Department to ensure Construction is followed by an
that the planned uses of their land do inspection and the issuance of a
not violate the city’s zoning code. If the Certificate of Occupancy.46
uses violate the code, those would-be
entrepreneurs can attempt to change the Businesses must pay a sewer fee and
zoning for their property through what a water fee to the city.47 A new
the city itself describes as a “lengthy and development (i.e., a new building on
costly process.”39 A zoning change costs previously undeveloped land) must pay a
an applicant $2,790, plus $295 per acre “development impact fee” and a “water
for up to 40 acres, $150 per acre for 41 resources acquisition fee.”48
to 100 acres, or $49 per acre for 100 or
more acres.40 If Phoenix entrepreneurs want to
put up signs, they need permits, which
If business owners want to erect a means paying additional fees to the
new building, or remodel or change the city.49 There is a $55 application fee, plus

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December 8, 2003

Figure 1. City of Phoenix Building/Remodeling Approval Process


Request Planning
Planning 2 Week Wait Meeting Fee:
Meeting $630

After Meeting:
Pay Fee: File
Application Determined by preliminary
project size site package
If Phoenix
entrepreneurs want to
Final site Building plans Approval: 30 put up signs, they need
approval approval days permits, which means
paying additional fees
to the city. There is a
$55 application fee, a
Issuance of ground sign fee of
Issuance of
Certificate $115, and a billboard
building permit
of Occu- permit of $365.
Construction Inspection pancy Businesses must also pay
for the city to review
their site designs, at a
cost of $120 per hour.
a $60 permit fee for wall, window, seems that Bruce’s rotating barber pole
directional, construction, or real estate was the target of city zoning officials
signs.50 A permit for a ground sign costs because he did not have the proper
$115, and a billboard permit costs permit to plug in the pole.53 The permit
$365.51 In addition, businesses must pay application process, including public
for the city to review their site designs, at hearings and inspections, could have
a cost of $120 per hour, and to review cost him as much as $1,400. When
the structural engineering of their signs, Phoenix mayor Skip Rimsza, a customer
also at a cost of $120 per hour (with a of over 20 years, sat down for his routine
minimum of two hours). If the sign is hair cut, Bruce explained his problem.
electric, the owner must pay another Having a friend in a high place paid off
$120 for its inspection, plus $120 per for Bruce. The Phoenix City Council
sign for electrical component voted to exclude three-foot-tall poles
inspections.52 from the particular zoning regulation.
Unfortunately, most small business
An interesting anecdote concerning owners are not so well-connected.
electric signs and the zoning code
involves Phoenix barber Gary Bruce. It Any person entering the following

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GOLDWATER INSTITUTE I policy report

businesses must pay the city a $16 • Massage practitioners ($125


licensing fee:54 application fee, $30 annual fee)63
• Swap meet operators ($230
• Advertising application fee, $175 annual fee)64
• Construction contracting • Liquor sales ($940 application
• Jet fuel sales fee)65
• Manufactured building sales
• Timbering Businesses that want to serve food,
• Mining including street and sidewalk vendors,
• Publishing/periodicals distribution also have to deal with Maricopa County.
• Rental occupancy Before building or significantly
• Hotels modifying a food establishment, the
• Restaurants and bars owner must have detailed plans for the
Phoenix entrepreneurs • Retail sales project approved by the Maricopa
are quite limited in • Telecommunication services County Health Department.66 Plan
their ability to operate • Transporting for hire review fees range from $65 for pushcart
businesses out of their • Utility services operators to $700 for larger
homes. A business • Wastewater removal services restaurants.67 A permit is required for a
within a home cannot food establishment to operate.68 Any
employ non-family The city requires special permits and food establishment that also sells alcohol
members living in the fees to establish any of the following for on-premise consumption must
home. businesses: provide separate bathrooms for men and
women.69 Individuals operating food
• Alarm agent and alarm business establishments must be Certified Food
($70 to $200 permit fee, $10 to $20 Protection Managers, meaning that they
annual fee, and the owner must pay have been through an accredited food
the cost of a criminal background safety program or can correctly answer a
check)55 county inspector’s questions about
• Amusements (fee varies depending various food safety matters.70
on the type)56
• Auctioneering ($85 permit fee, Home-Based Businesses in Phoenix
$30 annual fee)57
• Auction houses ($230 permit fee, Phoenix entrepreneurs are quite
$30 annual fee)58 limited in their ability to operate
• Scrap metal dealers ($230 permit businesses out of their homes. A business
fee, $30 annual fee)59 within a home cannot employ non-
• Second-hand dealers ($230 permit family members living in the home.71 A
fee, $30 annual fee)60 home business cannot have any exterior
• Curb painters ($45 permit fee, $30 displays or emit any odor, dust, gas,
annual fee)61 noise, vibrations, smoke, heat, or glare
• Massage establishments ($335 beyond the property.72 It can operate
application fee, $30 annual fee)62 only from 7:00 a.m. to 10:00 p.m.73

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Figure 2. City of Phoenix Restrictions on Home-Based Businesses

A home-based business
cannot occupy more
Such a business cannot use any one Phoenix couple is likely in violation than 25 percent of a
mechanical equipment except that of the space requirements. Jeff and Amy residential property.
which would ordinarily be used for are in the enterprising business of Such floor restrictions
domestic, hobby, office, or household supporting their family of four by selling are arbitrary and do
purposes.74 Home-based businesses must items at online auction sites. The two nothing to promote
provide on-site parking.75 A permit from spend their weekends searching garage aesthetics or safety.
the city is required if: (1) the business sales looking for items that fit the old
generates traffic from individuals who proverb “one man’s junk is another man’s
do not live in the home, (2) business is treasure.” They have converted their
conducted in an accessory building, (3) living room into a mini-shipping facility
the business is conducted as an outside and photography studio, where they
use, or (4) the business would require an take pictures of the items they post on
exception to the restriction on odor, the Internet. They have also converted
dust, gas, etc.76 Certain businesses space in their home for warehousing the
cannot be operated on residential many videos, books, golf clubs,
property at all, including barbershops, collectibles, and other goods that are
beauty parlors, commercial stables, waiting a turn on the auction block.
veterinary offices, dog grooming From the outside looking in, the
businesses, massage parlors, restaurants, residence is completely quiet. Trips to
veterinary hospitals, and commercial the post office or private shipping
kennels.77 company are the only visible signs of the
business. Neighbors simply have no idea
A home-based business cannot there is a business operating inside the
occupy more than 25 percent of a home. Yet inside there is a thriving
residential property.78 Such floor home-based Internet business that
restrictions are arbitrary and do nothing allows the couple to make a comfortable
to promote aesthetics or safety. At least living while raising two children.

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GOLDWATER INSTITUTE I policy report

Recommendations includes licenses such as those for liquor


and massage establishments, which are
Phoenix needs to simplify the already regulated and licensed by the
process of starting a small business. state.
Eliminating unnecessary zoning
requirements would be a good place to
start. For instance, would-be
entrepreneurs should not be required to Tucson by the Numbers
navigate a lengthy and costly process just
to receive a zoning change. The The City of Tucson’s Small Business
presumption should be that a variation Commission (SBC), a part of the city’s
Phoenix needs to
will be granted unless the proposed use Office of Economic Development,
simplify the process of
is a nuisance or would endanger the operates a website designed to inform
starting a small
health or safety of neighborhood small businesses of current and proposed
business. Eliminating
residents. Phoenix should also ease city policies.79 Perhaps the most helpful
unnecessary zoning
restrictions on home-based businesses, aspect of the SBC’s site is its “Guide to
requirements would be
especially the limit on floor space. Operating a Business in the City of
a good place to start.
Tucson.”80 The guide includes a 17-step
Also, Phoenix should
The fees imposed during the “checklist” to assist entrepreneurs in
conduct a top-to-
rezoning and licensing process also obtaining a business license. The SBC
bottom review of its
should be lower for entrepreneurs. If the explains that the guide was prepared to
current restrictions on
process of starting a business is assist “City of Tucson business license
business advertising,
streamlined, the city will not have to applicants in successfully completing the
including signage
impose as many fees. For example, fees seemingly never-ending – but necessary –
restrictions.
to the planning department to request a steps in the business-licensing process.”81
meeting on a zoning variance are Obtaining a business license involves a
unnecessary and only add to the cost tedious process that forces would-be
and delay of starting a business. Once entrepreneurs to navigate multiple layers
new businesses open, the increased of government with sometimes
revenue will offset any losses that result overlapping jurisdictions.
from lower fees.
Miles of Red Tape
Also, Phoenix should conduct a top-
to-bottom review of its current The SBC is not kidding when it says
restrictions on business advertising, that the steps to opening a new business
including signage restrictions. Any seem never-ending. The morass of
restriction not related directly to the regulations and agencies a prospective
health and safety of the community businessperson must wade through
should be eliminated. Finally, any could easily dissuade even the most
duplicate licensing fees involving tenacious entrepreneur. The most likely
activities already regulated by the state or first stop for a new business is Tucson’s
county should be eliminated. That Development Services Department to

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December 8, 2003

Figure 3. Tucson Development Services Department

Building code
Obtain inspection: $224
Prior to
Certificate of
issuance
Occupancy
Fire code
inspection

Zoning: Application
DSD deter- Request to
mines whether rezone/obtain Public hearing
properly zoned exception before Zoning Obtaining a business
Examiner license involves a
tedious process that
Consideration by forces would-be
Mayor and City entrepreneurs to
Council navigate multiple layers
of government with
sometimes overlapping
jurisdictions.

obtain a certificate of occupancy, which Another hurdle to obtaining a


is required of all commercial spaces. certificate is a sign code review.
There is no charge for a certificate of Businesses planning to use a sign to
occupancy.82 The DSD will first help the advertise must obtain a sign permit from
entrepreneur determine if his or her DSD before erecting, reinstalling,
desired business location has the proper altering, changing the copy, repairing, or
zoning.83 Requests to rezone an area and relocating a sign.85 A sign permit is also
requests that a special exception be made required to use banners, pennants,
to accommodate a new business require balloons, or portable signs.86 An on-site
an application to DSD’s rezoning sign permit costs $13 per year plus 12
section and a public hearing before the cents per square foot for all signs on the
zoning examiner. All rezoning requests premises.87 Off-site sign permits are $26
and certain special exception requests per year plus 18 cents per square foot.88
also require approval by the mayor and Prior to DSD issuing a Certificate of
city council. Once proper zoning has Occupancy, a new business must pass a
been obtained, the new business may building code inspection. A full building
also have to make improvements and code inspection costs $224.89 The
provide additional parking, paving, and business owner must also schedule a fire
landscaping.84 code inspection with the Tucson Fire
Department.

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GOLDWATER INSTITUTE I policy report

Special licenses and/or fees are establishments and is used by the Pima
required for the following businesses: Health Department when evaluating
plans for food establishments. A busi-
• Adult care homes ($50 annual ness wishing to serve liquor must obtain
license fee)90 a license from the Arizona Department
• Auction houses ($50 license of Liquor Licenses and Control, and a
application fee and posting of a Liquor Business License from the city’s
$5,000 bond)91 Business License Section.101
• Youth dance halls ($25 daily or
$100/annual fee)92 Depending on a host of issues,
• Drive-in restaurants ($5 license businesses may also need to contact the
application fee)93 Pima County Recorder’s Office, the
• Fortune tellers ($100 license Pima County Assessors office, the
A Tucson business
application fee)94 Tucson Fire Department Fire Prevention
wishing to serve liquor
• Massage establishments ($50 Division, the State Compensation Fund,
must obtain a license
license application fee)95 and/or the Arizona Department of
from the Arizona
• Massage therapists ($25 license Revenue. A business will most likely
Department of Liquor
application fee)96 need to obtain a Business Privilege
Licenses and Control,
• Pawnbrokers97 license so that tax on retail sales can be
and a Liquor Business
• Swap meet operators (one-time passed on to customers and, last but not
License from the city’s
$24 occupational license tax)98 least, the business will need to obtain a
Business License
Business License from the Business
Section.
Businesses that involve food Licensing Section of the City of
preparation must jump through Tucson.102 The one-time fee for the
additional hoops to obtain a food business privilege license is $10.103
establishment operating license from the Businesses not subject to sales tax, such
Pima County Health Department. The as barbers and accountants, must obtain
Health Department publishes a 35-page an occupational tax license. The
“do-it-yourself ” manual, available over quarterly fee, which ranges from $24 to
the Internet, to guide entrepreneurs $186, is based on the number of
through the process of starting a food employees in the business.104
business.99 Food businesses must go
through a Plan Review Process that can Home-Based Businesses in Tucson
cost anywhere from $53 to $382 and
take up to 90 days.100 An applicant must Home-based businesses are
complete a plan review packet and permitted in Tucson, but are subject to
follow the guidelines established by the numerous restrictive laws. To operate a
Pima County Health Department and business from home, one must complete
the State of Arizona Food Code, as well a home occupation application.105
as consult the Food and Drug Home-based business must: (1) be
Administration’s Plan Review Guide, secondary to the residential use of the
which discusses design aspects for food dwelling; (2) be conducted in a manner

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December 8, 2003

Figure 4. Tucson Restrictions on Home-Based Businesses

Tucson must revisit its


small business regu-
lations. First, the
number of steps
necessary before success-
that is “compatible” with the character opening a business is daunting even to fully opening a business
of the neighborhood; (3) occupy no the most sophisticated business people. is daunting even to the
more than 25 percent of the dwelling; Therefore, Tucson should review its 17- most sophisticated
(4) not sell goods on the premises; (5) step process and eliminate duplicative or business people.
not be visible from the street, with the unnecessary procedures. For example, Therefore, Tucson
exception of a single one-square-foot in obtaining a zoning variance, an should review its 17-
sign; (6) employ no more than one entrepreneur must first submit an step process and
nonresident on the premises; and (7) application to DSD, then undergo a eliminate duplicative or
have only one client at a time, with a cap public hearing with a zoning examiner, unnecessary procedures.
of five clients per day.106 Those desiring and then wait while the mayor and city
to operate a home-based business must, council consider the application. This
as part of the application for a home three-step process is both burdensome
occupation license, authorize the zoning and costly to would-be entrepreneurs.
or building inspector to have access to
the home “at reasonable times” for Tucson should relax its floor space
inspection to ensure compliance with restrictions for home-based businesses
city ordinances.107 Tucson prohibits and consider allowing more than one
automotive service or repair businesses, nonresident employee to work on the
hair salons, or medical services as home- premises of a home business. The city
based businesses. should also increase, or entirely do away
with, the cap on customers who may
Recommendations visit a home-based business. While
increased patronage may create logistical
Tucson must revisit its small problems in otherwise residential areas,
business regulations. First, the number increased employment and added sales
of steps necessary before successfully tax revenues offset this concern.

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GOLDWATER INSTITUTE I policy report

Case Study: Vehicles for Hire taxicab operators and consumers.

Arizona’s taxicab market is, generally Arizona Law


speaking, free from unreasonable
regulation. Currently, the state imposes The State of Arizona places relatively
only several fees and an insurance few barriers in the way of those who
requirement on cab owners, but that wish to enter the taxicab business. Still,
could change. A growing number of would-be cab operators must jump
critics are urging the legislature to adopt through a number of small hoops: they
new rules governing taxi operation and must pay a commercial registration fee
A Phoenix city licensure.108 The problem, critics charge, ($4), an annual gross weight fee ($7.50),
ordinance allows the is that there are uninsured taxicabs and an annual “light motor vehicle” fee
aviation director to operating without proper credentials.109 ($64).113 In addition, the state requires
restrict the number of This concern is validated by the fact that that taxicab drivers buy insurance, with
taxicab and limousine Arizona’s Motor Vehicle Division has minimum coverage of $300,000, and
companies that may registered 2,170 taxis, while the uninsured motorist coverage of
service Sky Harbor Department of Weights and Measures $300,000.114 Other drivers are not
International Airport. records 2,270 registered taxi timing subject to those insurance requirements.
This hidden barrier devices.110 Fortunately, the proposals Those costs are in addition to the costs
allows only a privileged currently on the table to address this imposed on anyone who wants to drive
few access to a problem do not appear overly a car in Arizona, including registration
significant portion of burdensome. The MVD and Weights ($8), certificate of title ($4), license
the money to be made and Measures are reportedly “drafting plates ($5), and a driver’s license ($10).115
in the city’s vehicle-for- legislation that would require a taxi
hire business. operator to show proof of commercial Phoenix
licensing and insurance before the
agency issues a registration for a timing At first glance, Phoenix appears to
device.”111 This proposal avoids one of place little in the way of individuals who
the most objectionable vehicle-licensing want to enter the city’s taxicab market.
schemes: a board with the power to limit However, a city ordinance allows the
entry into the market. aviation director to restrict the number
of taxicab and limousine companies that
Assuming the Arizona taxi market may service Sky Harbor International
remains free from onerous regulation, Airport. This hidden barrier allows only
there is only one serious obstacle a privileged few access to a significant
standing in the way of low-income portion of the money to be made in the
entrepreneurs: a Phoenix ordinance that city’s vehicle-for-hire business, while it
allows the city’s Aviation Department to tramples on the economic liberty of
restrict taxicab service at Sky Harbor would-be entrepreneurs who lack
International Airport by granting a political privilege.116 Given the
monopoly to a privileged few peculiarities of the Phoenix taxicab
companies.112 This hurts both would-be market and the nature of the taxicab

14
December 8, 2003

business, this particular barrier hits behind limiting the number of


taxicabs without airport permits companies are “quality control” and
particularly hard. “efficiency.” She says that it is easier for
customers to make complaints or find
Not surprisingly, given Phoenix’s low lost items if the airport is dealing with a
population density and intense limited number of companies. Rivas
summers, casual travel by taxicab is further suggests that business is so
uncommon in Phoenix – one cannot minimal at the airport, post-9/11, that
simply stand on a street corner and to allow any more taxicabs to make
expect to be able to hail a cab.117 But pickups would be economic “suicide”
there are a few places where people are for all involved.120
more likely to want a cab and The airport could easily
accordingly more likely to find one: the Airport administrators have take steps to ensure
most obvious of these is Sky Harbor. forgotten a basic economic principle: if quality control without
Any Phoenix taxicab can drop passen- there were no restrictions, Phoenix cab granting particular
gers off at the airport as long as the cab companies would send as many cabs to companies a monopoly,
keeps moving and does not pick anyone the airport as it would be profitable to by requiring that any
else up. But for pickups, a city ordinance send. The only parties it might be cab making airport
allows the city’s aviation director to limit “suicide” for are the monopolists, who pickups obtain a
cab service at the airport to an “efficient” would then be forced to compete fairly permit, which would be
number of companies.118 with independent cab drivers and other granted to any operator
companies. who met certain basic
At the present time, only three quality and safety
companies are permitted to make airport As for Rivas’ other concern, in the specifications.
pickups: AAA Taxicab Service, All State absence of restrictions, quality is
Cab Company, and Discount Cab. controlled by consumers, who would
Those companies have four-year decide how much quality they want and
contracts, which began on August 5, then pay for it. The airport could easily
2000, and end on August 4, 2004, with take steps to ensure quality control
the city having the sole option to renew without granting particular companies a
the contracts for an additional four monopoly, by requiring that any cab
years. According to the airport’s ground making airport pickups obtain a permit,
transportation coordinator, Lindsay which would be granted to any operator
Woodard, this means that “in essence, who met certain basic quality and safety
no other taxicab company can operate at specifications.121 If the Aviation
the airport.”119 Indeed, phone calls to the Department insists on overseeing
city’s other cab companies reveal that taxicab complaints and lost-and-found
they are not permitted to make airport items (although the rest of the city
pickups. manages to function without any such
oversight), it could also require, as a
According to airport parking condition for receiving a permit, that
supervisor Tracey Rivas, the purposes cab companies participate in a collective

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GOLDWATER INSTITUTE I policy report

clearinghouse for lost-and-found items least one year of experience


and complaints. That way, airport operating a taxicab service of at least
customers would still be assured service 30 cabs or that all taxicab drivers in
of acceptable quality while taxicab an association have at least one year
drivers would be free to do business. of experience;123
• the cab association and its
In August 2000, the City of Phoenix members prove their “financial
issued a request for proposals (RFP) stability”;
soliciting new bidders for airport taxi • the cab association show that its
service. The proposed effective date for members will be able to earn a
The airport insisted any contracts ultimately signed pursuant “livable wage” working at the
that any successful to the RFP was February 1, 2001, for a airport;124 and,
bidder meet extremely period ending January 31, 2005. If any • all taxicab drivers conform to a
onerous conditions, proposals had been accepted, this would specific dress code, in addition to the
including requirements have increased competition at the dress code requirements already
that: all vehicles be airport. A group of independent taxicab imposed by the Phoenix Aviation
brand new; 10 percent owners joined to form the Independent Ground Transportation Manual.125
of the fleet consist of Drivers Association, in an effort to gain
“disabled accessible access to the airport, but the airport The natural gas requirement is
taxicab vans;” and all insisted that any successful bidder meet particularly burdensome. The large
taxicabs be originally extremely onerous conditions, including companies already operating at the
manufactured to run requirements that: airport had the financial ability to
on compressed natural contract for entire fleets of natural gas-
gas. • all of the vehicles be brand new powered cars, including the disabled
(model year 2000); accessible vans. Similarly, to require
• 10 percent of the fleet consist of those cab drivers who have been kept
“disabled accessible taxicab vans”; out of the airport’s taxicab market by the
• all taxicabs be Ford Crown city’s anti-competitive laws to prove
Victorias, Toyota Camrys, “or their financial stability in advance
equivalent”; and, unfairly favors already-established cab
• all taxicabs be “Compressed companies over would-be entrepreneurs.
Natural Gas/Original Equipment Because they could not meet all of the
Manufactured,” meaning that the airport’s demands, the Independent
cars must not only run on Drivers Association was denied a
compressed natural gas (instead of contract to serve the airport. That group
the same gasoline conventional cars has been succeeded by the Arizona
run on), but also must be originally Airport Flyers, a group of cab owners
manufactured to do so.122 that says it can come closer to meeting
the airport’s stringent demands. But now
The city further demanded that: the airport says it is no longer seeking
proposals, even though it has not
• all taxicab service operators have at awarded a single contract to a new

16
December 8, 2003

taxicab company since it rejected the services” allowed to operate at the


Independent Drivers Association’s airport is limited, by city ordinance, to
application. just a single provider.131 The anointed van
operator is subject to the same permit,
In addition to a contract, ground identification card, operating privilege,
transportation providers at the airport and decal requirements as other
must also obtain a permit.126 This entails commercial ground transportation
filling out a form that includes, among vehicles.132 Vans are subject to an annual
other things, certification of automobile fee of $1,000.133
liability insurance, including an
endorsement that names the City of Operating a taxicab in Phoenix,
Phoenix and its officers, officials, agents, anywhere other than the airport, is
employees, and volunteers as “additional relatively easy. The regulations are
Phoenix imposes an
insureds” and an indemnification appropriate to protect consumers from
even harsher monopoly
agreement in favor of the City of fraud: cabs must state their fares on the
on van services at the
Phoenix.127 outside, provide the names and business
airport. The number of
addresses of the owner and the operator
“time-scheduled van
In addition to obtaining a permit on the inside, take the most direct route
services” allowed to
from the aviation director, taxicab and available unless the passenger requests
operate at the airport is
limousine operators who have contracts otherwise, and have accurate meters.
limited, by city
must pay a $200 annual fee, plus “such Those rules protect consumers, while
ordinance, to just a
other fees for temporary or daily use allowing the laws of supply and demand
single provider.
vehicle permits as [the aviation director] to operate freely, giving consumers the
deems necessary for the safe, efficient quality and quantity of taxicab services
and orderly operation of the airports.”128 they want. Such simple rules should be
Taxi operators must also collect a $1 sufficient to take care of consumers at
surcharge for each trip generated from the airport as well, without granting
the airport.129 anyone monopoly privileges or unfairly
excluding those without political power
The city imposes fare restrictions on or privilege. Sadly, such legitimate
cabs leaving the airport. A taxicab regulations are frequently buried under a
carload fare may not exceed $5 for the mountain of unnecessary and harmful
first mile and $1.50 for each additional regulations.
mile. Owners may additionally assess a
traffic delay charge in accordance with Tucson
the cab’s service contract, at a rate not to
exceed $18 per hour, plus the $1 airport Tucson places only minor obstacles
surcharge recoupment.130 in the way of those who want to start
and operate taxicab businesses. Taxicabs
The city imposes an even harsher must display their rates on their exterior
monopoly on van services at the airport. in letters at least one inch high in a color
The number of “time-scheduled van that contrasts with the background,

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GOLDWATER INSTITUTE I policy report

along with the cab company’s name in According to Jacqueline Mann,


letters at least two inches high.134 The ground transportation coordinator, the
fare must also be displayed and readily Airport Authority restricts the number
visible on the interior, along with a of taxicabs in relation to passenger
photo I.D. card, a statement that the cab traffic. The authority has determined
owner has complied with state insurance that the “optimal” number of taxis to
requirements, and the address and satisfy passenger demand is 32 cabs. The
phone number of the cab company.135 authority recently issued an RFP
Cabs must be equipped with a soliciting bids to provide airport pick-up
functional two-way radio, operational service, with new contracts effective
on a 24-hour basis, and they must have November 1, 2003, through October
accurate meters, charge no more than is 21, 2007, with the possibility of a one-
displayed on the meter, and take the year extension. Only four companies
The Tucson Airport most direct route available.136 Like all responded to the RFP and the three
Authority restricts the Tucson businesses, taxicab companies selected will be the sole providers for
number of taxicabs in may be subject to an occupational taxicab pick-up services for the Tucson
relation to passenger license tax. The quarterly tax is $24 for International Airport. The proposals
traffic. The authority firms with zero to 10 employees, $48 for were evaluated using a point system
has determined that the 11 to 35 employees, $123 for 36 to 100 based on factors such as the age, size,
“optimal” number of employees, and $186 for more than 100 and mileage of vehicles (required to be
taxis to satisfy passenger employees.137 less than 15,000 miles), as well as the
demand is 32 cabs. number of vehicles the company could
Taxicab service at Tucson provide. The authority’s familiarity with
International Airport is controlled by the cab company and the company’s
the Tucson Airport Authority, a expertise and financial condition were
nonprofit “quasi-government organ- also factors. An independent cab driver
ization” made up of 115 community could have submitted a proposal in
volunteers, a nine-person board, and response to the RFP and been accepted
about 300 employees.138 The authority as long as the driver met minimum
receives no local tax dollars, instead requirements. The authority’s overriding
funding its operations from revenues concern is to reach the magic number of
generated by activities such as parking, 32 cabs.
airline landing fees, fuel sales, and
concessions. Through October 31, In addition to limiting the number
2003, the authority contracted with four of taxicabs and providers, the Airport
taxicab companies: AAA Airport Taxi, Authority also restricts the rates airport
Allstate Cab, Independent Cab, and taxicab companies can charge
Yellow Cab.139 On November 1, 2003, passengers. Officially, the authority does
the number of cab companies contracted not control rates, but “taxicab fares are
to provide pick-up service at the airport established through a proposal process
was reduced to three.140 and operators are obligated to honor the
rates published.”141 These rates are

18
December 8, 2003

currently $4.50 per flag drop, $1.50 for Hispanics.


each additional mile, and $18.00 per
hour of waiting time. The authority also Jessica Lemus is the co-owner of Big
requires that taxi service providers meet Dog’s Fun Spot, a permitted hot dog
certain standards of operation pursuant cart in Mesa that was recently issued a
to the authority’s rules and warning for selling nachos not prepared
regulations.142 in accordance with county regulations.145
According to Lemus, “We try to play the
right way, yet we’re the ones that get
targeted.” The county is also busting
Case Study: Street and men like Bautista Calisto Emiliano, who
Sidewalk Vendors was stopped while selling corn-on-the-
cob out of a grocery cart.146 Emiliano Phoenix goes too far in
In many cities across the country told the officer dispatched to arrest him granting monopoly
vending is an ideal business for that he is simply trying to earn a living privileges to park
entrepreneurs because start-up costs are so he can pay back the debt owed for vendors and, with one
usually quite low. However, the City of coming from Mexico to the United narrow exception,
Phoenix imposes substantial restrictions States. According to a spokesperson for banning sidewalk
on vending, especially in public parks. Chicanos Por La Causa in Phoenix, most vending altogether,
Tucson’s regulations are fairly reasonable peddlers are new to the country and are thereby destroying
and provide a better model than simply trying to make ends meet.147 To opportunities for both
Phoenix’s. Phoenix simply goes too far ease the burden on recent immigrants entrepreneurs and
in granting monopoly privileges to park and help meet the robust demand for consumers.
vendors and, with one narrow the type of homemade fare offered by
exception, banning sidewalk vending peddlers, it would make more sense for
altogether, thereby destroying Maricopa County to consider offering
opportunities for both entrepreneurs permits for food prepared inside
and consumers. residential homes by applying similar
inspection requirements as commercial
In addition to dealing with the city and public kitchens. However, the
restrictions discussed below, vendors Arizona Department of Health Services
wishing to sell food in Maricopa County prohibits the sale of “food prepared in a
must obtain a county permit. “Permits private home.”148 Sadly, unless both the
require that food be prepackaged or state and county change their
cooked in a commercial or public regulations, the cat-and-mouse game
kitchen that can be inspected.”143 The will go on, and individuals like Emiliano
county is serious about enforcing its will be arrested for doing nothing more
permitting requirements. Five mobile than try to earn an honest day’s wage.
unit inspectors are kept busy searching
the streets of the nation’s fourth most Phoenix
populous county for illicit sidewalk
vendors.144 Enforcement often affects Street vendors, such as ice cream

19
GOLDWATER INSTITUTE I policy report

trucks, are subject to several fees and Ice cream trucks in residential areas
restrictions in Phoenix, while sidewalk are subject to several safety requirements
vendors – hot dog stands and the like – and cannot sell after 7:00 p.m., except at
cannot operate in Phoenix at all, except sporting events, where they may sell
in the downtown area, and then only until 9:00 p.m. Ice cream trucks are not
under limited circumstances.149 permitted to sell anything other than
food items and toys.156
Street vendors
Mobile food vendors
All Phoenix street vendors must have
and display a license from the city.150 The In fall 2000, Hispanic mobile food
license application fee is $130, and there vendors clashed with neighborhood
Too often, regulators
is an annual license fee of $30.151 A activists and city hall.157 The vendors
choose to use a
license is denied only to those who have cater to an almost exclusively Hispanic
sledgehammer when the
submitted a fraudulent application, clientele, selling Sonoran-style hot dogs,
precision of a scalpel is
violated city laws on street or sidewalk tacos, tamales, and Mexican sodas. Men
more appropriate. Why
vending within the past year, been like Hernán Rivera can earn anywhere
set up unnecessary
convicted of a felony within the past five from $400 to $3,000 a week running
licensing schemes when
years, had their street vendor licenses operations like his “Nogales Hog Dogs”
enforcement of existing
revoked within the past year, employed stand. The hot dog stand was a second
statutes can remedy the
persons who have lost their vendor job for Rivera so that he could support
perceived problems?
licenses in the past year, or employed his young family, and he hoped it would
persons in connection with the street or be a first step toward owning his own
sidewalk vending business who did not restaurant. He almost did not get his
have the required license.152 opportunity. The neighbors complained
that the vendors were open all night,
A street vendor cannot remain in often playing loud music.158 City officials
one place for more than an hour in any originally moved to shut down the
eight-hour period, and cannot sell vendors, but a “compromise” in the
within 600 feet of a school from 7:00 form of a licensing scheme was adopted
a.m. to 4:30 p.m.153 Street vending is after the vendors picketed city hall.159
prohibited entirely downtown, in public Now, vendors must pay a nonrefundable
parks, or on a street abutting a public $120 application fee and $30 per year
park within 150 feet of a “lawfully for a mobile vendor license.160 Vendors
established park concession.”154 Such must also be photographed and
park concessions are operated only by fingerprinted.161 They are prevented
those who have contracts with the Parks from operating between the hours of
and Recreation Board, and only they are 2:00 a.m. and 6:00 a.m. and from using
permitted to sell anything in public “bells, chimes, microphones,
parks, other than certain types of printed loudspeakers, or amplified music” as
material that can be sold by anyone.155 part of a mobile vending operation.162

20
December 8, 2003

A better solution would have been to resources more effectively by allowing


fine individuals for violating noise homemade food to be sold. The truth is
ordinances, rather than assuming all that consumers are not as helpless as
vendors were in violation. That would government presumes and inspections of
have ensured a lower barrier to entry home ovens could easily be arranged in a
while quieting down the most egregious manner similar to those of commercial
offenders. Too often, regulators choose ovens.
to use a sledgehammer when the
precision of a scalpel is more Sidewalk Vendors
appropriate. Why set up unnecessary
licensing schemes when enforcement of Sidewalk vending is entirely
existing statutes can remedy the prohibited in Phoenix, except with some
perceived problems? restrictions in the downtown area.165
Downtown sidewalk vendors are only Sidewalk vending is
Since the ordinance went into effect, permitted to sell food items.166 Vending entirely prohibited in
vendors have pooled their resources and carts may not be placed within 50 feet of Phoenix, except with
put money down toward the purchase of any building’s premises if the building’s some restrictions in the
a two-acre lot at the corner of 27th owner or lessee objects.167 Nor may a downtown area.
Avenue and Van Buren, where they vending cart be parked or placed within Downtown sidewalk
operate a grocery store and park their 150 feet of any building premise selling vendors are only
vehicles. Vendors who want to park on the same commodity.168 Sidewalk permitted to sell food
the lot pay an $85 monthly fee, which is vendors must also have and display items.
in many instances cheaper than the fees licenses from the city, and are subject to
vendors used to pay to park in private the same application procedures and fees
lots. Each morning, the mobile vendors as street vendors. A sidewalk vendor’s
pull out of the lot and spread out across license is denied under the same
Phoenix to sell specialty food items.163 circumstances that a street vendor’s
license is denied.169
While the conflict between Phoenix
and its street vendors appears to be Park concession contracts are
resolved, Maricopa County recently awarded on the basis of competitive
conducted a “sweep to catch mobile bidding, after the Parks and Recreation
food vendors who lack proper permits or Board makes an RFP to parties who
equipment.”164 The county’s have asked to be placed on a list of
Environmental Services Department potential applicants. Evaluation criteria
unleashed approximately 50 inspectors include degree of experience in
to search for vendors offering successfully providing similar services at
homemade food in violation of county similar facilities, proposers’ financial
regulations. Due to the popularity of the capability to successfully perform the
foodstuffs offered by mobile food services required, the degree to which
vendors, the county (and as noted above, the proposal would be financially
the state) should consider employing its beneficial to the Parks and Recreation

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GOLDWATER INSTITUTE I policy report

Board, and the degree to which must also obtain health permits from the
proposers’ operations plans meet the Pima County Health Department.175
standards of quality, price, and service Concessionaires not regularly licensed
desired by the board.170 All applicants are subject to fees: a vendor selling on a
must meet the city’s affirmative action regular basis must pay $160 per month
requirements.171 to sell in a regional park or $80 per
month to sell in a district park. Vendors
Phoenix is serious about cracking at special events must pay $20 per day.176
down on illegal park vendors. Since
January 2003, nearly a dozen vendors Tucson limits the amount of sound
have been cited by Phoenix park rangers that street vendors can make. It is
for illegal peddling.172 Such vendors unlawful to make sound in excess of 70
“specialize in everything from frozen decibels measured at a distance of 50 feet
Phoenix should learn
fruit bars to Native American jewelry.” from a pushcart, bicycle, or other
from Tucson, which
City officials recognize that such vending vehicle. It is also unlawful for
imposes minimal
vendors are simply trying to earn an vendors to make noise while their
restrictions on street
honest living but insist that “they just pushcarts, bicycles, or vehicles are not in
and sidewalk vendors
can’t do it in the park.”173 If it is litter motion, or between the hours of 1:00
and provides an
that the city fears, it should fine p.m. and 3:00 p.m., and 9:00 p.m. and
example of how free
scofflaws rather than prohibit vending. 10:00 a.m.177
and open competition
benefits entrepreneurs
Tucson Phoenix should look to Tucson as an
and consumers alike.
example of how minor, reasonable
Phoenix should learn from Tucson, restrictions on street and sidewalk
which imposes minimal restrictions on vending can protect consumers while
street and sidewalk vendors and provides allowing entrepreneurs to earn an honest
an example of how free and open living serving the people in their
competition benefits entrepreneurs and neighborhoods.
consumers alike. Because it is so easy to
obtain a vending permit in Tucson, the
number of ice cream truck owners and
sidewalk pushcart vendors has increased. Case Study: Cosmetology
As a result of increased competition,
vendors have been lowering their prices In 1996, Arizona’s Board of
and increasing their variety, offering Cosmetology placed a new host of
items such as the popular Mexican absurd barriers in the way of those who
paletas.174 would like to enter the cosmetology
business, regulating anyone who wants
Still, Tucson requires a permit to to earn money by cutting, washing,
vend in a public park. Vendors of styling, straightening, or otherwise
“potentially hazardous” prepackaged servicing people’s hair.178
foods or any non-prepackaged foods

22
December 8, 2003

Perhaps worst among the • 200 hours of Arizona cosmetology


regulations is a requirement that anyone laws and rules;
who so much as styles hair for money • 100 hours of facials and makeup,
must have a cosmetology license. “including massage and physical and
Acquiring a cosmetology license entails chemical depilatories”;
taking hundreds of hours of classes on • 100 hours of massage;
subjects unrelated to styling, including • 75 hours of manicuring, pedi-
facials, makeup, massage, manicures, curing, sculpture nails, extension,
pedicures, “light therapy,” and more. wraps, overlays, and “related
“Styling” includes African hairbraiding, services”;
even though African hairstyling typically • 50 hours of shampooing, condi-
involves no chemicals or anything else tioning, re-conditioning, rinse In 1996, Arizona’s
that would pose a potential danger to application, and chemical removal; Board of Cosmetology
consumers. Such extreme requirements • 50 hours of disinfection proce- placed a new host of
for hairbraiders and others similarly dures; absurd barriers in the
engaged in harmless occupations offer • 40 hours of the student’s “creative way of those who would
consumers no additional protection. preference”; like to enter the
Instead, they benefit cosmetology • 35 hours on salesmanship, ethics, cosmetology business,
schools and protect those who already and salon management; regulating anyone who
have cosmetology licenses, at the • 20 hours of scalp treatment and wants to earn money by
expense of low-income would-be brushing; and, cutting, washing,
hairstylists who can scarcely afford the • 10 hours of “electricity and light styling, straightening,
extra training (which typically costs therapy as related to the practice of or otherwise servicing
around $10,000 for the required 1,600 cosmetology.” people’s hair.
hours).179
The law requires that students be
A would-be hairbraider is not only trained in “all hair and skin types,”
required to take 230 hours of classes in regardless of the type of work they plan
“hairstyling, pressing, thermal curling, to do in their careers.180
and waving,” which generally involve no
instruction on African hairbraiding, but Most of those requirements have no
must also take: relevance at all to African hairbraiding.
They are a waste of time for braiders
• 230 hours on “chemical hair such as Arizona native Essence Farmer.181
restructuring, including permanent For the past three years, Farmer has been
waving and chemical hair relaxing, working as a braider in Maryland salons
specifically thioglycolate and and barber shops, with a primarily male
sodium hydroxide”; client base. Braiders are not required to
• 230 hours of “hair coloring, obtain cosmetology licenses in
including tinting and bleaching”; Maryland.182 Prior to moving to
• 230 hours of haircutting; Maryland to attend Prince George’s

23
GOLDWATER INSTITUTE I policy report

Community College, Farmer braided required number of hair dryers to such


hair for five to six clients per week from items as a “receptacle large enough to
her parents’ Phoenix-area home. Now, completely immerse both feet, for each
having recently moved back to Arizona, 20 cosmetology students in attendance
Essence hopes to open her own natural during practical instruction.”184
hair salon in downtown Phoenix. She
wants to offer braiding and locking As if these arduous and often
services and to hire additional braiders arbitrary restrictions were not sufficient
but says that paying thousands of dollars to keep would-be entrepreneurs from
to a cosmetology school “is not an entering the business, the Arizona Board
option.” Attending cosmetology school of Cosmetology decided in May 2003 to
would be a waste of time for Farmer increase the fees exacted in the licensing
Haibraiders like
because she already knows everything process for salons and schools.185 The
Farmer are forced to
she needs to know to do her job and board explained that it is purchasing an
expend large sums of
does not intend to do anything e-licensing system that, rather than
money to spend 1,600
cosmetology-related outside of her making the licensing process easier, will
hours of their lives in
narrow specialty. Nevertheless, braiders “require constant monitoring by an
cosmetology school
like Farmer are forced to expend large Outside and Professional Network
sitting through lectures
sums of money to spend 1,600 hours of Engineer” and will therefore require
on subjects that bear
their lives in cosmetology school sitting increased funds. Curiously, although the
virtually no relation to
through lectures on subjects that bear board’s written notice of the rule
what they will be doing
virtually no relation to what they will be changes contains a section for studies
in their occupation.
doing in their occupation. and other “supporting material” on
which the board relied for its “evaluation
Individuals interested in opening or justification” for the new rules, the
cosmetology schools face barriers of board’s response states that there were
their own. Despite the fact that there none.186 In addition, the section which
was already an accreditation process for provides for a “showing of good cause
cosmetology schools,183 the State Board why the rule is necessary to promote a
of Cosmetology adopted a laundry list of statewide interest” is filled out with “not
its own requirements in 1996 – applicable.”187 The board admits that
essentially adopting its own “small businesses, including individual
accreditation process. The board’s licensees, will bear the brunt of the fee
requirements include a mandate of one increases,” but the board apparently
“area of instruction” for every 20 justifies this by pointing to other boards,
students, a requirement that every such as the Arizona Barber Board, which
student have at least “2 cubic feet of impose even more oppressive licensing
individual locked area with a different fees.188 The fee changes are too numerous
locking device for each enrolled to list individually, but involve dramatic
student,” and requirements about the increases. For example, the new
types and amounts of equipment that cosmetology examination requirements
must be on hand in the school, from the have doubled in number and nearly

24
December 8, 2003

tripled in cost. The previous rule stylists take basic health and safety
provided for one examination at a fee of precautions, they should be free to use
$33, while the revised rule provides for their skills to earn a productive living
both a written and a practical without suffering needless and expensive
examination at a combined fee of $100. regulations. The Arizona Board of
The fee for the “personal license” has Cosmetology should stop protecting the
gone from an initial cost of $27 to $40, special interests of cosmetology schools
and the renewal fee has increased from and those who are already
$18 to $30. The various fees required for cosmetologists and start protecting
the salon or school license, the “Board consumers and would-be entrepreneurs.
administered educational classes,” the They should exempt hairbraiders from
review of examination, and other cosmetology licensing requirements
requirements have shot upward in a altogether and honestly evaluate whether
similar fashion. cosmetology licensing is actually in the As long as hairbraiders
public interest. and other stylists take
The story of Russell and Kristine basic health and safety
Blatchford’s struggle to open an in- precautions, they should
home, one-chair beauty salon is worth be free to use their skills
examination. In order to realize their Case Study: Child Care to earn a productive
dream, which would not be permissible living without suffering
under most city restrictions on home- While the state has a strong interest needless and expensive
based businesses, the Blatchfords in protecting the health and safety of regulations.
purchased a home in an unincorporated children entrusted to the care of others,
portion of Maricopa County.189 To the it is essential to avoid overregulation of
county’s credit, the Blatchfords were child care. Small and informal child care
granted a special-use permit to open businesses are ideal for entrepreneurs
their salon. However, in an attempt to outside the economic mainstream, and
force the Blatchfords out of business, convenient, affordable child care is a
several residents have started a drive to prerequisite for many parents to be able
ask the Town of Gilbert to annex the to work. Government should take all
land to put it under the town’s possible steps to encourage child care
jurisdiction. Gilbert’s zoning code businesses and to draft regulations to
prohibits salons as home-based avoid expensive or obstructive
businesses. According to the town’s requirements.
attorney, if the Blatchfords’ property is
annexed the decision over whether to Child care regulation in Arizona
allow the business to continue will takes place primarily at the state level,
depend in part on the ability to though Tucson places additional
demonstrate “a significant investment in burdens on home-based day care
the business.” centers.190 Arizona’s child care regu-
lations cover the entire spectrum, from
As long as hairbraiders and other the rational to the absurd. While the

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GOLDWATER INSTITUTE I policy report

state of Arizona does not regulate child Child Care Group Homes
care facilities that provide service to less
than five children for payment or The state defines a “child care group
compensation, the state has numerous home” as a child care service provided in
regulations that make it difficult for a residential home for at least 5 children,
larger private providers to offer but no more than 10, up to 12 years of
affordable child care to the most age.193 The City of Tucson applies the
disadvantaged segments of Arizona’s same definition to classify a day care
population.191 Child care businesses operation as a home-based business.194
While the state has a providing service to five children or The state does not count the provider’s
strong interest in more are subdivided into two categories, own children for purposes of the “5 to
protecting the health “Child Care Group Homes” and “Child 10” range, but no more than 15 children
and safety of children Care Facilities,” each regulated by the may be present at any given time.195 A
entrusted to the care of State Department of Health Services. provider of group home child care must
others, it is essential to Repealing many of the paternalistic and obtain a license from Health Services
avoid overregulation of burdensome regulations governing and pay a $30 application fee.196 A
child care. Small and group homes and care facilities would certificate issued by Health Services is
informal child care allow regulated child care providers to valid for three years and is renewable
businesses are ideal for compete on a more level playing field along with a renewal fee of $30.197
entrepreneurs outside with unregulated providers without
the economic main- jeopardizing children’s health or safety. Many parents and group home
stream, and convenient, Increased competition would greatly providers do not object to regulations
affordable child care is benefit consumers by giving them more requiring background checks, health and
a prerequisite for many options, and would help ensure that safety inspections, and minimum
parents to be able to prices for child care services are insurance requirements. In fact, some
work. reasonable. providers like the idea of licensing as a
means of distinguishing themselves from
To its credit, Arizona’s Department unlicensed providers. But licensing can
of Economic Security administers the be a double-edged sword, as Chandler
Arizona Child Care Resource and group home provider Teresa Bagdol
Referral Network (CCR&R), a program discovered. Teresa had experience
designed to foster greater child care operating both in-home and commercial
services in response to unmet demand.192 day care centers in California and Texas
Where there is a disparity between and hoped to obtain a state license as a
supply and demand, CCR&R seeks to means of assuring parents of her
stimulate the development of needed qualifications – even though she cares
child care resources. Ironically, for only four children and is not
regulation is the likely cause of unmet required to have a license. But as soon as
demand: in an unregulated environ- she applied for a state license, Teresa
ment, supply would correct itself and no learned that she would first need to
“stimulation” would be necessary. obtain a use permit from the City of

26
December 8, 2003

Chandler. Then local bureaucrats denial of a use permit (technically


decided that her house was not her required only when a permit holder
home and recommended denial of the cares for five or more children). The city
use permit.198 also served the Bagdols a cease and desist
order for operating a commercial child
Teresa’s situation requires some care center for four children, but
explanation. She offers in-home child suspended enforcement of the cease and
care to a small number of children desist order after Teresa signed an
because she believes it is best for the affidavit attesting that the house where
children. She says that she wants to be she conducted her child care business
“like extended family to the children in was also her home. The Institute for
[her] care,” and feels that “kids thrive Justice intervened shortly thereafter and
Child care regulation
when they feel like they get to stay at invited each of the members of the
in Arizona takes place
home rather than spend their days in an Chandler City Council to visit Teresa’s
primarily at the state
institution.” She also does not want the house so they could see for themselves
level, though Tucson
stress of hiring and supervising the Bagdol’s unique living arrange-
places additional
additional staff. In pursuit of her vision ment.199 Finally, under threat of
burdens on home-based
of child care Teresa and her husband litigation from the Institute for Justice,
day care centers.
Frank searched for the perfect two-story the City Council approved the use
Arizona’s child care
home to provide adequate space for the permit. However, the experience left
regulations cover the
kids in their care but were unable to find Teresa shaken, and she now has no desire
entire spectrum, from
a suitable two-story building. When to seek state licensing.
the rational to the
they got the chance to purchase a second
absurd.
(one-story) house right next door to To apply for a group home license, a
their original home, they did so, and prospective provider must be at least 21
spent several months renovating the years old, have a high school diploma or
place. As Teresa describes the concept of equivalent, and be certified in child care
the “dual homes,” one house is her first aid and infant/child cardiopul-
family’s “downstairs,” while the other monary resuscitation through a course
house serves as her family’s “upstairs.” approved by Health Services.200 An
The second house is where Teresa cares applicant must never have been arrested
for the children, with the bedrooms for or charged with a number of
dedicated to nap and play areas, but it is particular offenses involving moral
also where the family cooks and eats all turpitude and child abuse.201 An
of its meals. It is the only one of the two applicant must also attend a Health
homes with a washer and dryer, and the Services orientation program for child
Bagdols frequently entertain in the care group homes.202
second home on weekends.
Group home providers are required
Chandler bureaucrats decided that to carry a minimum of $100,000 general
the second home was not being used as liability insurance covering the enrolled
residential property, and recommended children.203 No other business may be

27
GOLDWATER INSTITUTE I policy report

conducted in the facility or grounds Tucson allows only one full-time,


designated for use by enrolled children nonresident employee in a home-based
during hours of operation.204 day care facility.213

Applicants must provide written A group home applicant must


references from persons attesting to their submit to Health Services a floor plan of
good character.205 Applicants must also the proposed facility, with dimensions, a
provide Health Services with fingerprint site plan of the surrounding grounds and
registration for all adult residents.206 One outdoor activity areas, a notarized
adult personnel member is required to statement that the applicant has the
be present when caring for 1 to 5 financial resources to maintain and
The level of detail in
children, and two must be present for 6 operate the facility, and copies of
the regulation of group
to 10 children. When more than 10 violation-free fire, sanitation, and gas
homes is beyond what is
children are present, three personnel inspections. All records of inspections
necessary to provide a
members must be present. The third must be kept and maintained in the
safe and nurturing
personnel member may be 16 or 17 facility.215
environment for
years old if directly supervised by the
children. Health
provider.207 Group day care homes are required
Services should engage
to provide at least 30 square feet of
in a wholesale review of
The requirements for personnel indoor open floor space for each child in
its regulations, with the
working in group home facilities are in their facilities, not including kitchens,
goal of eliminating
many respects more rigorous than those family bedrooms, bathrooms, laundry
well-meaning but
for providers. All personnel working in a rooms, shop areas, or garages.216 Group
unnecessary regulations.
home must be at least 18 years old and homes must maintain room
have a high school diploma or its temperatures between 68 and 82 degrees
equivalent.208 Personnel must not be Fahrenheit.217 A group home must have
awaiting trial and must not have been “available” an outdoor activity area that
convicted or admitted by plea to any provides 80 square feet of activity space
criminal offense regarding children, such for each child, includes shaded areas
as sexual abuse of a minor, incest, felony large enough to accommodate every
child abuse, or murder.209 All personnel child playing in the area, is accessible by
must be familiar with the statutes and a “safe” route, is easily accessible to
rules governing group homes and with indoor activity areas and bathrooms,
their facilities’ policies and procedures.210 provides play equipment in good repair,
Personnel must also have the physical is arranged to eliminate hazards and
and emotional health necessary to minimize conflicts with other activities,
perform the required duties and and has both hard surfaces and grass.
responsibilities and must attend nine The regulations for outdoor activity
hours of child care training each year.211 areas also detail the minimum number
Personnel are prohibited from using of feet from which play equipment must
tobacco products, alcohol, or drugs be surrounded by grass or other resilient
while providing care for the children.212 surfaces.218 Finally, an outside play area

28
December 8, 2003

must be “totally enclosed by a secure for three years and must indicate the
fence” at least four feet high and number and age limitations of the
equipped with a self-closing latch that children and the classification of services
remains unlocked during business that the facility will provide.224 The
hours.219 Nearly all of those regulations license application must be submitted
should be repealed, and the provisions with fingerprint clearance cards for the
should be amended so that homes applicant and all personnel, and the
accessible to public parks and applicant must not have been arrested or
community green belts could qualify as charged for the same offenses that apply
child care group homes. for group home providers.225

A group home licensee must also Certain entities are exempt from the
provide educational and recreational statutes and regulations governing child
activities suitable for children, prepare a care facilities. Those include homes of
discipline and guidance plan, prepare a parents or blood relatives, religious
It is easy to see the
nutritional meal plan, submit to an institutions conducting nurseries in
irony in the fact that
annual sanitation inspection, and meet conjunction with religious services, units
none of these credentials
additional child transportation of the public school system, private
is necessary, or required
requirements. Transportation require- schools, facilities providing specific
by law, for a person to
ments include written permission from subjects such as dancing, drama, music,
become a parent.
parents prior to transporting enrolled self-defense, or religion, facilities
children, certain vehicle safety standards, offering only recreational instructional
and standards of conduct for vehicle activities for children who can come and
operators.220 The level of detail in the go at their own volition, and any of the
regulation of group homes is beyond Arizona state schools for the deaf and
what is necessary to provide a safe and blind.226 However, private schools off-
nurturing environment for children. ering child care services beyond regular
Health Services should engage in a school hours or to children not regularly
wholesale review of its regulations, with enrolled in their programs are subject to
the goal of eliminating well-meaning but the child care facility regulations.227
unnecessary regulations.
An applicant for a child care facility
Child Care Facilities license must be at least 18 years old,
complete at least four hours of Health
A “child care facility” is defined as a Services-provided training, and comply
facility in which commercial child care is with all state statutes and regulations.228
regularly provided for five or more An applicant must also fill out, sign, and
children not related to the proprietor.221 have notarized a registration form
As with a child care group home, a child containing the applicant’s name, birth
care facility must obtain a license from date, home address, and telephone
Health Services.222 The application and number, and must indicate whether he is
renewal fee is $150.223 A license is valid awaiting trial, or has been convicted of

29
GOLDWATER INSTITUTE I policy report

certain crimes.229 facility directors should be required to


attend classroom instruction. Qualified
A licensee must appoint a “facility directors could be cultivated through
director,” who is required to be at least apprenticeships, as the skills necessary to
21 years old.230 The director must submit care for children can be, and usually are,
to Health Services proof of one of the learned through experience.
following: a high school diploma or
equivalent and six hours or more in The facility director must designate,
childhood, child development, or related in writing, an individual who can act on
classes in an accredited college or behalf of the director in the director’s
university; or 60 hours of actual absence. The designee must also be at
instruction, provided at conferences, least 21 years old and possess nearly
While the state has a
seminars, lectures, or workshops. The identical credentials as a facility director,
legitimate interest in
director must also submit proof of with the number of credits and amount
protecting the health
having 24 months of child care of experience dropping slightly in each
and safety of children,
experience; an N.A.C (National of the several categories.232 Facility staff
there is no reason why
Administrators Credential), C.D.A. members designated “teacher-caregivers”
care facility directors
(Child Development Associate Cre- must also meet certain requirements:
should be required to
dential), C.C.P. (Certified Child Care they must be at least 18 years old; have a
attend classroom
Professional Credential), or a C.P.C. high school diploma or equivalent and
instruction. Qualified
(Certified Professional in Childcare) six months of child care experience;
directors could be
credential for at least 18 months of child N.A.C. C.D.A., C.C.P., or C.P.C.
cultivated through
care experience; a minimum of 24 credit credentialing; or have an associate’s or
apprenticeships
hours from an accredited college or bachelor’s degree from an accredited
university, including six hours of child- college or university in a child-related
related courses and 18 months of child area.233
care experience; an associate’s degree
from an accredited college or university Facility staff members designated
in areas of childhood, or related field; “assistant teacher-caregivers” must be at
and six months of child care experience, least 16 years old and be either a current
a bachelor’s degree from an accredited and continuously enrolled high school
college or university in areas of student or equivalent, have a high school
childhood or related field, and three diploma or equivalent, be enrolled with
months of child care experience.231 a STRIVE234 program, or be enrolled in
a vocational rehabilitation program.235
It is easy to see the irony in the fact Student aides must provide to the
that none of these credentials is licensee proof of high school enrollment,
necessary, or required by law, for a STRIVE program participation, or
person to become a parent. While the participating in a child development
state has a legitimate interest in program.236 Volunteers must simply be
protecting the health and safety of 16 years old.237
children, there is no reason why care

30
December 8, 2003

A child care facility must maintain square feet of indoor activity space for
the following staff-to-children ratios: for each infant or one-year-old child, at least
infants, one adult for every 5 children or 25 square feet for a child not an infant,
two adults for every 11 children; for one or over one year, and 35 square feet if
year-olds, one adult for every 6 children one year-olds are in the same area with
or two for every 13; for two year-olds, older children.241 The state also requires
one adult for every 8 children; for three that child care facilities provide an on-
year-olds, one adult for every 13 premises outdoor activity area.242 The
children; for four year-olds, one adult state could ease its indoor space
for every 15 children; for five year-olds, requirements without adversely affecting
one adult for every 20 children; and for safety or the learning environment, and
school-age children, one adult for every it should not require on-premise Regulating minutiae
20 children.238 outdoor areas if a provider can yields only marginal
demonstrate it has access to a park or benefits but does serious
Additionally, child care facilities playground. harm to child care
must comply with a laundry list of providers and
regulations involving diaper changing, How to Fix Arizona’s Child Care consumers. Costs
general nutrition, food service and Regulations imposed on existing
handling, discipline and guidance, providers are passed on
sleeping materials and equipment, The East Valley Tribune recently to parents as inflated
cleaning and sanitation, pets and published a year-long series of articles prices, and turn away
animals, accident and emergency examining what young children need in many would-be
procedures, illness and medication, and order to become healthy kindergartners. providers.
transportation standards.239 One aspect of the story was an
exploration into child care facilities. The
Although many of those regulations Tribune reported that nearly 500
are well-intentioned and designed to regulated child care facilities across
protect the health and safety of children, Arizona did not receive their annual
the state should closely scrutinize its inspections.243 The reason, according to
child care facility policies. Regulating the Tribune, is that the state’s 28
minutiae yields only marginal benefits inspectors spend the vast majority of
but does serious harm to child care their time investigating complaints
providers and consumers. Costs imposed rather than conducting routine
on existing providers are passed on to inspections.244 Over half of all
parents as inflated prices, and turn away complaints are dismissed outright, and
many would-be providers. most of the violations concern “too few
staff, substandard equipment and
Child care facilities must also inadequate programs for children.”245
comply with all local building, fire, and Arizona could address those complaints
zoning codes. A child care facility may through limited regulations stipulating
not be a manufactured home.240 Any that providers clearly present what they
child care facility must have at least 35 have to offer to potential consumers.

31
GOLDWATER INSTITUTE I policy report

Although inspectors may be well- existing occupational licensing system,


intentioned and diligent, the state will with the goal of eliminating or
never be able to hire enough inspectors combining many of its licensing boards.
to adequately police child care facilities. The governor’s regulatory review board,
But parents visit their child care which is generally the final stop in the
facilities at least twice a day, several days administrative rule-making process,
a week, and have a personal stake in their could begin the process with a thorough
children’s well-being. analysis of the costs and benefits of
current regulations. Each of Arizona’s
The best and most reliable method licensing boards should engage in a
of alleviating problems in child care is to comprehensive inventory of its functions
spur new entrants into the market by and requirements. The Cosmetology
Arizona’s legislature,
easing the regulations on child care Board, for example, should immediately
judiciary, and elected
providers. While the drafters of Arizona’s exempt African hairbraiders from its
officials at all levels
child care regulations have sought to regulations and evaluate whether the
have a constitutional
protect children to the utmost degree, 1996 regulations have actually done
duty to protect
the result is a Byzantine labyrinth of anything to protect consumers. And the
economic liberty. But
requirements that discourage many Department of Health Services should
governments at all
talented and qualified individuals from consider eliminating many of the
levels have trapped
opening up child care businesses. It is regulations currently thrust upon child
Arizona businesses in a
essential that legislators and Health care group homes and child care
labyrinth of
Services officials work together to facilities.
burdensome and
eliminate regulations that provide
confusing regulations.
insignificant health and safety. Phoenix and Tucson should consider
taking immediate action to simplify the
process of opening a small business.
Tucson should not need this reminder.
Recommendations The Tucson Small Business Commission
made a compelling case for reform when
Arizona’s legislature, judiciary, and it pointed out that opening a business
elected officials at all levels have a requires jumping through a “seemingly
constitutional duty to protect economic never-ending” series of city-created
liberty. But governments at all levels hoops. Both cities should ease
have trapped Arizona businesses in a restrictions placed on home-based
morass of burdensome and confusing businesses, particularly limits on the
regulations. Many state, county, and city amount of floor space that may be
regulations do little to protect occupied by in-home businesses, as well
consumers, while reducing productivity as easing restrictions on employing
and discouraging would-be entre- persons not living in the home. Phoenix
preneurs from starting a business. needs to eliminate or reduce the fees
required to start new businesses,
Arizona should re-examine its particularly for entrepreneurs wishing to

32
December 8, 2003

build, remodel or alter the use of existing


structures.

Phoenix and Tucson also need to


reform regulations on specific industries
and services. For instance, the
prohibition of sidewalk vendors outside
Phoenix’s downtown should be
eliminated. Also, restrictions on taxicabs
imposed by the City of Phoenix and the
Tucson Airport Authority should be
eliminated. Replacing those restrictions
with a simple registration scheme could
protect consumers without harming
independent cab drivers.

Arizona officials should work to


reduce barriers to entrepreneurship and
competitive enterprise. When govern-
ment regulation is necessary, regulations
should be highly circumscribed, easily
understandable, and narrowly tailored to
achieve legitimate goals such as
preventing fraud. Otherwise, Arizona
should set entrepreneurs free from
burdensome and needless regulations,
making it easier for them to open new
businesses and manage existing ones.
Among the ranks of Arizona
entrepreneurs would be hundreds of
low-income and minority citizens who
would be climbing the first rung on
America’s economic ladder.

33
GOLDWATER INSTITUTE I policy report

APPENDIX – State Agencies and Boards

Board of Examiners - Acupuncture Naturopathic Physicians Board of


Board of Accountancy Medical Examiners
Department of Agriculture Arizona State Board of Nursing
Board of Appraisal Nursing Care Institution
Banking Department Administrators and Assisted Living
Board of Barbers Facility
Board of Behavioral Health Examiners Board of Examiners of Managers
Boxing Commission Board of Dispensing Opticians
Department of Building and Fire Safety Board of Optometry
Board of Chiropractic Examiners Board of Osteopathic Examiners in
Registrar of Contractors Medicine and Surgery
Corporation Commission State Parks Board
Board of Cosmetology Board of Pharmacy
Board of Dental Examiners Board of Physical Therapy
Department of Economic Security Joint Board on the Regulation of
State Board of Education Physician Assistants
Department of Environmental Quality Board of Podiatry Examiners
Board of Funeral Directors and Board of Private Postsecondary
Embalmers Education
Game and Fish Department Board of Psychologist Examiners
Arizona Geological Survey Department of Public Safety
Board of Homeopathic Medical Arizona Department of Racing
Examiners Radiation Regulatory Agency
Industrial Commission of Arizona Department of Real Estate
Arizona Industries for the Blind Board of Respiratory Care Examiners
Department of Insurance Department of Revenue
Department of Liquor Licenses and State Parks Board
Control Structural Pest Control Commission
Lottery Board of Technical Registration
Board of Medical Examiners Department of Transportation
Medical Radiological Technology Board Veterinary Medical Examining Board
of Examiners Department of Water Resources
Mine Inspector Department of Weights and Measures

34
December 8, 2003

NOTES through strategic litigation arguing


“mainstream” legal theories grounded in
Tremendous thanks to J. H. Huebert, a the equal protection and due process
summer law clerk for IJ AZ in 2002, clauses of the Fourteenth Amendment.
for his dedicated and thorough
research, his assistance in preparing a 5. For a detailed discussion of the
draft of this study, and his excellent history of the Fourteenth Amendment
editing skills. Thanks also to IJ AZ law see Clint Bolick, Unfinished Business: A
clerks Yvonne Tagart, Hugo Larios, Civil Rights Strategy for America’s Third
Hayley Reynolds, David Hammond, Century (Pacific Research Institute for
Michele Cain, and IJ paralegal intern, Public Policy, 1990), 47-60.
Jennifer Wright.
6. Notwithstanding The Slaughter-
House Cases, the U.S. Supreme Court
1. In 1997, the Institute for Justice has declared that “the right to work for a
conducted similar studies of seven U.S. living in the common occupations of the
cities: Baltimore, Boston, Charlotte, community is of the very essence of the
Detroit, New York, San Antonio, and personal freedom and opportunity that
San Diego. With the launch of IJ’s state it was the purpose of the [Fourteenth]
chapter initiative, each new chapter will Amendment to secure.” Truax v. Raich,
conduct an entrepreneurship study of a 239 U.S. 33, 41 (1915). The Ninth
city or cities within the state’s borders, in Circuit U.S. Court of Appeals, the
the hopes that the study will provide a circuit having jurisdiction over Arizona,
litigation blueprint as well as offer has similarly said that “the due process
helpful advice to local politicians and clause protects a liberty or property
small business leaders about reducing interest in pursuing the ‘common
regulatory burdens on small business. occupations or professions of life.’”
Benigni v. City of Hemet, 879 F.2d 473,
2. Eileen Brill Wagner, “Location & 478 (9th Cir. 1988) (citing Schware v.
Regulations,” Entrepreneur’s Edge 2003 Board of Bar Examiners, 353 U.S. 232,
(The Business Journal, 2003), 19. 238-39 (1957)). The Arizona Supreme
Court has also recognized the right to
3. Chip Mellor, “Uncork freedom, earn an honest living: Schillerstrom v.
close the lid on cartels,” East Valley Arizona, 180 Ariz. 468, 471 (App. 1994)
Tribune, May 3, 2002. (“[T]he practice of a profession is a
right, not just a privilege”); Application
4. 83 U.S. 36 (1872). It is IJ’s long- of Levine, 97 Ariz. 88, 91 (1964)
range objective to overturn The (“[O]ne may not be excluded by state
Slaughter-House Cases. However, given action from a business, profession, or
that lower courts are bound by Supreme occupation in a manner or for reasons
Court precedent, it is IJ’s short-term which contravene the due process
goal to “dismantle” the effects of the case clause”).

35
GOLDWATER INSTITUTE I policy report

7. Doing Business in 2004: http://www.sba.gov/advo/stats/profiles/


Understanding Regulations (Washington, 02az.pdf.
D.C.: World Bank and Oxford
University Press, 2004). 16. Yvette Armendariz, “At-home
Businesses Up,” Arizona Republic, Sept.
8. Ibid., xiv. 30, 2002.

9. Ibid., xv. 17. Michelle Swafford, “Arizona Ranks


20th for Small Business,” East Valley
10. For a full discussion on dismantling Tribune, July 30, 2002.
the modern regulatory state, see Richard
A. Epstein, Simple Rules for a Complex 18. Ibid.
World (Cambridge: Harvard University
Press, 1997). 19. “42 Ideas for a Free and Prosperous
Arizona,” Goldwater Institute Policy
11. Dan A. Cathron, “Local Report no. 177, Goldwater Institute,
Government in Arizona,” Politics and January 24, 2003, 36-7, http://
Public Policy in Arizona, (Westport, CT: www.goldwaterinstitute.org/article.php/
Praeger, 1993), 55. 223.html.

12. Small Business Survival Com- 20. Geri Koeppel, “Suit challenges
mittee, “Small Business Survival Index state’s wine shipping rules: Group seeks
2003: Ranking the Policy Environment ability to buy out-of-state,” East Valley
for Entrepreneurship across the Nation,” Tribune, October 8, 2003. The Institute
www.sbsc.org. for Justice, which filed a case in Federal
District Court in Arizona, has
13. Amela Karabegovic, Fred successfully challenged similar
McMahon and Dexter Samida, restrictions on direct shipment of wine
Economic Freedom of North America in New York. See Swedenburg v. Kelly,
(Vancouver, B.C.: Fraser Institute, 232 F. Supp. 2d 135 (S.D.N.Y. 2002).
2002). For more information on Arizona’s wine
regulations, see Mark Brnovich,
14. Arizona Department of Commerce, “Trading Grapes: The Case for Direct
“Number of Businesses in Arizona,” Wine Shipping in Arizona, Goldwater
May 2002. http://www.azcommerce Institute Policy Report no. 184,
.com/pdf/smallbus/Number%20of%20 Goldwater Institute, November 18,
Businesses%20in%20Arizona%200506 2003, http://www.goldwaterinstitute
02% 20FINAL.pdf. .org/article.php/369.html.

15. U.S. Small Business Admini- 21. Ariz. Rev. Stat. § 28-4460.
stration, Office of Advocacy, “2002
Small Business Profile: ARIZONA,” 22. The Goldwater Institute reported

36
December 8, 2003

that restrictions on auto sales drive up (B)(1), Ariz. Rev. Stat. § 32-4227(A),
the price of a car anywhere from one to and Ariz. Rev. Stat. § 32-4222 (B)(2)).
four percent. See “42 Ideas,”12-14.
29. L. Romero, “Massage therapists
23. Arizona Department of Revenue, may face new rules; legislature considers
“Guide to Arizona Licensing bill,” Arizona Republic, April 16, 2003.
Requirements,” http://www.revenue. In fact, the most substantial “harm”
state.az.us/609/licensingguide.htm#PR asserted was the threat of prostitution.
OFESSION. But the law already prohibits
prostitution, so enforcement of current
24. Arizona Department of Revenue, laws, not a licensing scheme, is the
“Arizona Business Connection,” appropriate course of action.
http://www.commerce.state.az.us/webap
ps/SmallBusVR/intro.asp. 30. Ibid.

25. Ibid. 31. In Buehman v. Orville, 57 Ariz.


363, 376 (1941), the Court declared
26. A good argument for the that “[A] statute allowing one class of
elimination of the Board of Barber persons to engage in what is
Examiners, Board of Cosmetology, presumptively a legitimate business,
Board of Dispensing Opticians, and while denying such right to others, must
other state agencies, can be found at “42 be based upon some principle which
Ideas,” 15-18. A more thorough may reasonably promote the public
examination of the costs and benefits of health, safety or welfare . . . .”
state regulation can be found in Public
Goods and Market Failures: A Critical 32. In Edwards v. State Board of Barber
Examination, by Tyler Cowen, ed. (New Examiners, 72 Ariz. 108, 114 (1951),
Brunswick, NJ.: Transaction Publishers, the Court noted that “individual
1991). See also Yesmin Yilmaz, “Private liberties can be sacrificed only upon a
Regulation: A Real Alternative for clear showing of a benefit to the public
Regulatory Reform,” Cato Institute commensurate with the loss of
Policy Analysis, April 20, 1998, individual rights.”
http://www.cato.org/pubs/pas/pa303.pd
f; and “Health and Safety Policy,” Cato 33. Buehman, 57 Ariz. at 372.
Handbook for Congress: 108th Congress,
http://www.cato.org/pubs/handbook/hb 34. U.S. Census Bureau, “Table 5:
108/hb108-35.pdf. Metropolitan Areas Ranked by Percent
Population Change: 1990-2000.” See
27. See http://massagetherapy.az.gov. Romana Smith, “Phoenix Gaining, but
Philly’s Still 5th Largest,” Philadelphia
28. 2003 Arizona Session Laws, ch. 202 Daily News, July 10, 2003.
(adopting Ariz. Rev. Stat. § 32-4222

37
GOLDWATER INSTITUTE I policy report

35. U.S. Census Bureau, County and 48. Phoenix, Arizona, Code §§ 29-30.
City Data Book: 2000 (13th ed.), 642,
644. 49. Phoenix, Arizona, Zoning Code §
705.
36. Yvette Armendariz, “Minority-
Owned Business Up,” Arizona Republic, 50. Phoenix, Arizona, Code Appendix
August 28, 2002. A.2 § 71 and § 81.

37. Ibid. 51. Phoenix, Arizona, Code Appendix


A.2 § 81.
38. Ibid.
52. Phoenix, Arizona, Code Appendix
39. City of Phoenix, “Operating a A.2 § 81.
Business in the City of Phoenix,”
http://phoenix.gov/BUSINESS/opbusin 53. Yvonne Wingett, “High-Placed Pal
e.html. Helps Businessman Keep Barber Pole,”
Arizona Republic, May 27, 2002.
40. Phoenix, Arizona, Zoning Code
Appendix A. 54. Phoenix, Arizona, Code § 14-300.

41. Phoenix, Arizona, Zoning Code § 55. Phoenix, Arizona, Code § 10-72.
507.
56. Phoenix, Arizona, Code §§ 7-8, 7-
42. Phoenix, Arizona, Code Appendix 13
A.2 § 11.
57. Phoenix, Arizona, Code §§ 19-3,
43. City of Phoenix, “Development 19-5.
Services Dept. Major Commercial
Overview,” http://www.ci.phoenix.az.us 58. Phoenix, Arizona, Code §§ 19-3,
/DEVELOP/overview.pdf. 19-5.

44. http://phoenix.gov/DEVPRO/sitpl 59. Phoenix, Arizona, Code §§ 19-3,


nfe.pdf. 19-5.

45. Ibid. 60. Phoenix, Arizona, Code §§ 19-3,


19-5.
46. Phoenix, Arizona, Zoning Code §
507. 61. Phoenix, Arizona, Code §§ 31-112,
31-114.
47. Phoenix, Arizona, Code §§ 19B-2,
19D-2. 62. Phoenix, Arizona, Code §§ 10-19,
10-25.1.

38
December 8, 2003

63. Phoenix, Arizona, Code §§ 10-19, 71. Phoenix, Arizona, Zoning Code §
10-25.1. 608(C)(9)(a).

64. Phoenix, Arizona, Code §§ 10-34, 72. Phoenix, Arizona, Zoning Code §
10-36. 608(C)(9)(b) and (c).

65. Phoenix, Arizona, Code § 6-5. A 73. Phoenix, Arizona, Zoning Code §
state liquor license must also be 608(C)(9)(d).
obtained. The state’s application fee is
$100 and the actual license fee ranges 74. Phoenix, Arizona, Zoning Code §
from $100 to $2000 depending on the 608(C)(9)(e).
type of business seeking the license. Bar,
Beer and Wine Bar, or Liquor Store 75. Phoenix, Arizona, Zoning Code §
licenses must be purchased from an 608(C)(9)(g).
independent broker, as those licenses are
limited by quota and have been “sold 76. Phoenix, Arizona, Zoning Code §
out.” According to one web site 608(C)(9)(h).
(www.therestaurantbrokers.com/pages/i
nform/liquor.htm) one Internet broker 77. Phoenix, Arizona, Zoning Code §
was selling a license in Tucson for 608(C)(9)(i).
$7,000 and one in Phoenix for $12,000.
A transfer fee must also be paid to the 78. Phoenix, Arizona, Zoning Code §
Arizona Department of Liquor License 608(C)(9)(f ).
and Control.
79. http://www.ci.tucson.az.us/oed/Sit
66. Maricopa County Health Code, e_Map/Business_Resources/City_of_Tu
Chapter VIII, § 1(2). cson_SBC/city_of_tucson_sbc.html.

67. Maricopa County, “Plan Review 80. Ibid.


Fees & Permit Schedule,” http://
www.maricopa.gov/envsvc/envhlth/PLA 81. Ibid (emphasis added).
NS/planfee.asp (accessed June 13,
2003). 82. http://www.ci.tucson.az.us/dsd/Cer
tificate_of_Occupancy/certificate_of_oc
68. Maricopa County, Arizona, Health cupancy.html.
Code, Chapter VIII, § 1(3).
83. The city also has a clickable grid
69. Maricopa County, Arizona, Health map available online at http://www
Code, Chapter VIII, § 1(8)(j). .ci.tucson.az.us/planning/zonemaps.htm
to provide would-be entrepreneurs with
70. Maricopa County, Arizona, Health the zoning of and the permitted uses in
Code, Chapter VIII, § 2 (1)(2). the area.

39
GOLDWATER INSTITUTE I policy report

84. City of Tucson, “Guide to 101. An overview of the liquor licensing


Operating a Business in the City of procedure is available at http://www
Tucson,” http://www.cityoftucson.org/ .azll.com/overview.htm.
oed/Site_Map/Business_Resources/City
_of_Tucson_Guide_to_Operat/city_of_ 102. City of Tucson, “Business License
tucson_guide_to_operat.html. Process for the City of Tucson,”
http://www.ci.tucson.az.us/oed/Business
85. Tucson, Arizona, Code § 3-27. _Resources/New_Business_Guide/new_
business_guide.html.
86. Ibid.
103. City of Tucson, “Guide to
87. Ibid. Operating a Business in the City of
Tucson,” http://www.cityoftucson.org/o
88. Ibid. ed/Site_Map/Business_Resources/City_
of_Tucson_Guide_to_Operat/city_of_t
89. http://www.ci.tucson.az.us/dsd/Cer ucson_guide_to_operat.html.
tificate_of_Occupancy/certificate_of_oc
cupancy.html. 104. Ibid.

90. Tucson, Arizona, Code § 7-223. 105. City of Tucson, Office of


Economic Development, “Guide to
91. Tucson, Arizona, Code § 7-3. Operating a Business in the City of
Tucson,” http://www.cityoftucson.org/o
92. Tucson, Arizona, Code § 7-351, 353. ed/Site_Map/Business_Resources/City_
of_Tucson_Guide_to_Operat/city_of_t
93. Tucson, Arizona, Code § 7-164. ucson_guide_to_operat.html.

94. Tucson, Arizona, Code § 7-64. 106. Tucson, Arizona, Land Use Code
§ 3(5)(7)(2).
95. Tucson, Arizona, Code § 7-134.
107. http://www.ci.tucson.az.us/planni
96. Tucson, Arizona, Code § 7-134. ng/homeocc.pdf.

97. Tucson, Arizona, Code § 19- 108. Nena Baker, “Taxi Industry In
28(109). State Unchecked, Uninsured,” Arizona
Republic, December 16, 2002.
98. Tucson, Arizona, Code § 7-202.1.
109. Ibid.
99. http://www.pimahealth.org/chfs/di
y_plan_review.pdf. 110. Ibid.

100. Ibid. 111. Ibid.

40
December 8, 2003

112. See Phoenix City Code § 4-82. natural gas was $31,140, while the same
Ford Crown Victoria originally
113. Ariz. Rev. Stat. §§ 28-5433, 28- manufactured to run on regular gasoline
5492. would cost $24,345, http://autos.
yahoo.com.
114. Ariz. Rev. Stat. § 28-4033.
123. Ibid., 4.
115. Ariz. Rev. Stat. §§ 28-2003, 28-
3002. 124. Ibid., E-3.

116. Phoenix, Arizona, Code § 4-82. 125. Ibid., K-5, K-6.

117. This is not to suggest that Phoenix 126. Phoenix, Arizona, Code § 4-70.
has an inadequate taxi market; given its
low population density, the supply of 127. Ibid.
taxis in Phoenix may be adequate to
meet consumer demand. 128. Phoenix, Arizona, Code § 4-78.

118. Ibid. 129. Phoenix, Arizona, Code § 4-83(A).

119. Lindsay Woodard (ground 130. Ibid.


transportation coordinator, Phoenix Sky
Harbor International Airport), 131. Phoenix, Arizona, Code § 4-84(C).
telephone interview with the author on
June 21, 2002. 132. Phoenix, Arizona, Code §§ 4-68, 4-
69, 4-70, 4-84.
120. Tracey Rivas (parking supervisor,
former land side operations manager, 133. Phoenix, Arizona, Code § 4-78.
Sky Harbor International Airport),
telephone interview with the author on 134. Tucson, Arizona, Code § 20-303.
July 2, 2002.
135. Tucson, Arizona, Code § 20-304.
121. A permit process is already in place
for ground transportation providers and 136. Tucson, Arizona, Code §§ 20-305,
is discussed elsewhere in detail. 20-306, 20-307.

122. City of Phoenix Aviation 137. Tucson, Arizona, Code §19-41.


Department, “Request for Proposals for
Taxicab Association,” 1 (August 2000). 138. http://www.tucsonairport.org/taa/
A quick Internet search revealed that the html/taa_who.html. The Authority
cost of a Ford Crown Victoria originally receives no local tax dollars and is
manufactured to run on compressed funded by revenues from parking, space

41
GOLDWATER INSTITUTE I policy report

rentals, land leases, fuel sales, airline 151. Phoenix, Arizona, Code § 31-30.
landing fees, and concessions.
152. Phoenix, Arizona, Code § 31-32.
139. http://www.tucsonairport.org/htm
l/tia_ground_taxi.html. 153. Phoenix, Arizona, Code § 31-24.

140. Jacqueline Mann (ground 154. Phoenix, Arizona, Code § 31-24.


transportation coordinator, Tucson
Airport Authority), interview with the 155. Phoenix, Arizona, Code § 24-40.
author, September 24, 2003.
(Independent Cab will no longer be 156. Phoenix, Arizona, Code §§ 31-
contracted to provide pick-up service). 24.1, 31-24.2.

141. http://www.tucsonairport.org/htm 157. Edward Lebow, “Taco Hell;


l/tia_ground_taxi.html. Mexican Food Vendors Circle Wagons
As Community Activists Fume over
142. Ibid. Neighborhood Blight,” Phoenix New
Times, September 28, 2000.
143. Jennifer Ryan, “Illegal food sellers
targeted: County officers strive to keep 158. Ibid.
all vendors in line,” East Valley Tribune,
March 31, 2002. 159. “Phoenix Street Vendors May Face
New Restrictions,” Associated Press, Feb.
144. Ibid. 17, 2000; Elvia Diaz, “Mobile food
thriving in Phoenix: Vendors got
145. Ibid. organized after dispute with City,”
Arizona Republic, Sept. 16, 2002.
146. Ibid.
160. Phoenix, Arizona, Code § 10-162.
147. Ibid.
161. Phoenix, Arizona, Code § 10-
148. See Arizona Administrative Code § 163(A)(23), (24).
R9-8-107 (incorporating by reference
section 3-2, specifically subpart 3- 162. Phoenix, Arizona, Code § 10-
201.11, of the U.S. Food and Drug 166(B)(2), (5).
Administration’s Food Code: 1999).
163. Elvia Diaz, “Mobile food thriving
149. Phoenix, Arizona, Code §§ 31-22 - in Phoenix:”
31-32.
164. Christina Leonard, “Food vendors
150. Phoenix, Arizona, Code § 31-26. target of sweep,” Arizona Republic, April
5, 2003.

42
December 8, 2003

165. Phoenix, Arizona, Code § 31-25. 174. Ernesto Portillo Jr., “Ice Cream
Traffic Heats Up; Truck Owners,
166. Phoenix, Arizona, Code § 31-27. Walkers Vie for Business,” Arizona Daily
Star, August 10, 2002, B1.
167. Phoenix, Arizona, Code § 31-27.
175. Tucson, Arizona, Code § 21-4(b).
168. Phoenix, Arizona, Code §§ 31-26,
31-29. 176. Tucson, Arizona, Code § 21-4(c).

169. Phoenix, Arizona, Code §§ 31-26, 177. Tucson, Arizona, Code § 16-31(i).
31-29, 31-30.
178. Ariz. Rev. Stat. § 32-501.
170. City of Phoenix Parks and
Recreation Board, “Request for 179. See for example, http://www.univ
Proposals, Paddleboat and Canoe Rental ersities.com/Schools/A/Arizona_Acade
Concession, Encanto Park,” March 26, my_Of_Beauty.asp; http://www.universi
1999. ties.com/Schools/C/Carsten_Institute_
Of_Hair_And_Beauty.asp; and http://
171. The city should repeal affirmative www.universities.com/Schools/A/Allure
action requirements, which do little to _Career_College_Of_Beauty_Scottsdale
help those outside of the economic .asp.
mainstream while tending to bestow
entitlements on those with the greatest 180. Arizona Administrative Code § R4-
skill and resources. See Clint Bolick, The 10-304 (2002).
Affirmative Action Fraud (Washington:
Cato Institute, 1996) 4-5, 133 (Only 181. The author spoke with Essence
“the removal of barriers to opportunity Farmer on October 14, 2003.
that prevent individuals from
controlling their destinies” will achieve 182. MD Code, Business Occupations
the goals of affirmative action). For a & Professions, § 5-101(k)(2)(iii).
broader discussion of the principles of
empowerment as it relates to economic 183. The National Accrediting
liberty, see Clint Bolick, Transformation: Commission of Cosmetology Arts and
The Promise and Politics of Empowerment Sciences (www.naccas.org) is a nonprofit
(Institute for Contemporary Studies, corporation recognized by the U.S.
1998) 68-93. Department of Education as a national
accrediting agency for cosmetology
172. Yvonne Wingett, “Phoenix schools. The accreditation process
Targeting Illegal Vendors,” Arizona includes site visits and curriculum
Republic, July 28, 2003. reviews to ensure compliance with the
commission’s adopted standards.
173. Ibid. Schools are re-evaluated at least once

43
GOLDWATER INSTITUTE I policy report

every five years. care.org. Funding for Arizona’s CCR&R


program comes from the Federal Child
184. Arizona Administrative Code § R4- Care and Development Block Grant.
10-203 and § R4-10-206.
193. Ariz. Rev. Stat. §§ 36-897(1), 36-
185. Board of Cosmetology, Notice of 897.02(B).
Final Rulemaking no. 6 (effective May 6,
2003), 2. 194. Tucson, Arizona, Land Use Code
Section 3.5.7.3(B).
186. Ibid., no. 7.
195. Ariz. Rev. Stat. § 36-897.02(C),
187. Ibid., no. 8. (E).

188. Ibid., no. 9. 196. Ariz. Rev. Stat. § 36-897.01(A),


(C).
189. Brian Powell, “E.V. Neighbors
Split over Idea of Annexation,” East 197. Ariz. Rev. Stat. § 36-897.01 (E).
Valley Tribune, April 4, 2003.
198. Angela D. Wagner, “Splitting
190. Tucson, Arizona, Land Use Code Houses and Hairs? Chandler: Setup Fails
Section 3.5.7.3. Tucson’s restriction on Definition of In-Home Day Care,” East
the amount of floor area devoted to a Valley Tribune, August 19, 2003.
home-based business does not apply to
day care use. Section 3.5.7.3(E). 199. Angela D. Wagner, “Chandler
Additionally, outdoor activity and Couple Get Legal Help in Flap over Day
equipment are permitted for home- Care: Attorney Urges Tour of Homes
based day care centers so long as they are before Decision,” East Valley Tribune,
screened by a five-foot fence, wall, or August 27, 2003.
hedge where the property adjoins certain
more restrictive zoning areas. Section 200. Arizona Administrative Code § R9-
3.5.7.3(F). 5-801(A)(1-3).

191. Unregulated providers may have 201. Pursuant to Ariz. Rev. Stat. § 36-
two of their own children in the home 897.01(K), (L) an applicant must not
for a maximum of six children. Arizona have been arrested for or charged with
Department of Economic Security, an offense listed in A.R.S. section 41-
“Arizona Child Care Resource and 1758.03(B) or (F). Offenses listed in
Referral,” http://arizonachildcare.org/a section 41-1758.03(B) and (F) include:
law.htm. sexual abuse of a minor or a vulnerable
adult, incest, first or second degree
192. For more information about the murder, kidnapping, sexual assault,
program, visit http://arizonachild sexual exploitation of a minor or a

44
December 8, 2003

vulnerable adult, commercial sexual 212. Arizona Administrative Code § R9-


exploitation of a minor or vulnerable 5-802(B)(3).
adult, felony offenses involving sale,
distribution, transportation of danger- 213. Tucson, Arizona, Land Use Code
ous drugs or narcotics, robbery, child 3.5.7.3(C).
prostitution, child abuse, sexual conduct
with a minor, molestation of a minor, 214. Arizona Administrative Code § R9-
aggravated assault, dangerous crimes 5-701.
against children, exploitation of minors
involving drug offenses, felony offenses 215. Arizona Administrative Code § R9-
involving contribution to the delin- 5-804.
quency of a minor, and neglect or abuse
of a vulnerable adult. 216. Arizona Administrative Code § R9-
5-1001(A).
202. Arizona Administrative Code § R9-
5-801(A)(4). 217. Arizona Administrative Code § R9-
5-1001(B).
203. Arizona Administrative Code § R9-
5-808. 218. Arizona Administrative Code § R9-
5-1001(D)(1)-(7).
204. Arizona Administrative Code § R9-
5-809. 219. Arizona Administrative Code § R9-
5-1001(D)(8).
205. Arizona Administrative Code § R9-
5-801(B)(12). 220. Arizona Administrative Code § R-
9-901, § R9-5-909, § R9-5-910, § R9-
206. Arizona Administrative Code § R9- 5-1004(A), and § R9-5-912.
5-703(A).
221. Ariz. Rev. Stat. § 36-881(3).
207. Arizona Administrative Code § R9-
5-803. 222. Ariz. Rev. Stat. § 36-882(A).

208. Arizona Administrative Code § R9- 223. Ariz. Rev. Stat. § 36-882(F).
5-802(A).
224. Ariz. Rev. Stat. § 36-882(G).
209. Ariz. Rev. Stat. § 36-883.02(C)(1).
225. Pursuant to Ariz. Rev. Stat. § 36-
210. Arizona Administrative Code § R9- 883.02(A), (C)(1), child care facility
5-802(B)(1). applicants must not have been arrested
for or charged with an offense listed in
211. Arizona Administrative Code § R9- Ariz. Rev. Stat. § 41-1758.03(B) or (F).
5-802(B)(2), (6).

45
GOLDWATER INSTITUTE I policy report

226. Ariz. Rev. Stat. § 36-884. 237. Arizona Administrative Code § R9-
5-401(5).
227. Ariz. Rev. Stat. § 36-884(4).
238. Arizona Administrative Code § R9-
228. Arizona Administrative Code § R9- 5-404(A).
5-201(A)(1), (5).
239. Arizona Administrative Code §§
229. Arizona Administrative Code § R9- R9-5-502 - R9-5-518.
5-201(A)(5). Applicants must not be
awaiting trial or have been convicted of 240. Arizona Administrative Code § R9-
a crime described in Ariz. Rev. Stat. § 5-601.
41-1758.03(B) or (F).
241. Arizona Administrative Code § R9-
230. Arizona Administrative Code § R9- 5-603(A), (B) (When computing indoor
5-301. space, the following are to be excluded:
room space occupied by teacher/
231. Arizona Administrative Code § R9- caregivers’ desks, file cabinets, storage
5-401(A)(1)(a)-(e). cabinets, hand-washing sinks for use by
staff, rooms used to isolate one child
232. Arizona Administrative Code § R9- from the other children, storage rooms,
5-301(A). stairs, entryways, hallways, kitchens and
bathrooms.)
233. Arizona Administrative Code § R9-
5-401(2). 242. Arizona Administrative Code § R9-
5-603(C).
234. STRIVE stands for Students
Together Rising in Vocational Edu- 243. Mary K. Reinhart, “Day Care
cation. The State Board of Education is Roulette: Lax Oversight at Facilities Puts
authorized to execute the powers and Kids at Risk,” East Valley Tribune,
duties of vocational education pursuant September 29, 2002.
to Ariz. Rev. Stat. § 15-203(A)(24).
244. Ibid.
235. Arizona Administrative Code § R9-
5-401(3). 245. Ibid.

236. Arizona Administrative Code § R9-


5-401(4). Acceptable programs include
“an educational, curriculum-based
course in child development, parenting,
or guidance counseling, or a vocational
educational or occupational develop-
ment program.”

46
The Goldwater Institute was established in 1988 as an independent, nonpartisan research and educational
organization dedicated to the study of public policy in Arizona. Through research papers, commentaries, policy
briefings and events, Goldwater scholars advance public policies based on the principles championed by the late
Senator Barry Goldwater during his years of public service – limited government, economic freedom and
individual responsibility. Consistent with a belief in limited government, the Goldwater Institute neither seeks
nor accepts government funds and relies on voluntary contributions to fund its work.

500 East Coronado Rd., Phoenix, AZ 85004 I Phone (602) 462-5000 I Fax (602) 256-7045 I email info@goldwaterinstitute.org