Arizona Supreme Court Rules In Favor Of Minimum Wage Increase

By Will Stone, Mark Brodie
Howie Fischer, Capitol Media Services
Published: Wednesday, August 2, 2017 - 5:12pm
Updated: Thursday, August 3, 2017 - 11:32am
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Arizona’s new minimum wage is here to stay. Arizona’s high court ruled Wednesday that the new law isn’t a violation of the constitution.

The wage hike from $8.05 an hour to $10 kicked in at the beginning of the year, but opponents of Proposition 206 took one last shot at overturning the new law.

The Chamber of Commerce argued the voter-approved measure required the state to spend money without identifying a revenue source — a violation of state law. That’s because the state’s Medicaid program has to pay third party contractors, like caregivers for those with developmental disabilities, higher wages.

The "revenue source" rule, approved by voters in 2004, says that if a measure requires some new or increased state spending, it must also include a source of those funds. It is designed to keep initiatives from diverting existing revenues from other programs.

Proposition 206 has no direct effect on the state payroll as state employees are not covered by the measure. But opponents contended that the measure will force the Arizona Health Care Cost Containment System, the state's Medicaid program, to increase what it pays private firms that provide nursing home and in-home care.

Providers whose contracts were negotiated when they could pay their workers as little as $8.05 an hour said they would go out of business if forced to pay more. The state responded by increasing their reimbursement.

The Supreme Court disagreed with arguments that the rule made Proposition 206 unconstitutional, writing that’s a result of the state’s discretionary policies and nothing about the measure inherently requires the state to spend more.

"Proposition 206 itself does not requires the state to increase rates for AHCCCS providers or reimburse increased labor costs to other state contractors," Justice Ann Scott Timmer wrote for the unanimous panel. "And increasing the minimum wage and providing earned paid sick time for non-state workers does not inherently require the state to expend revenues."

The new wage law mandates employers provide at least three days of paid sick leave and eventually pay $12 an hour by 2020.

Capitol Media Services contributed to this report.

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