PHOENIX — The Arizona Supreme Court has agreed to consider whether a voter-approved hike in the state minimum wage is legal.
In a brief order late Tuesday, the justices said they will hear arguments next month by the Arizona Chamber of Commerce and Industry and other business interests that Proposition 206 violates a constitutional provision that all new spending mandates must also contain a source of revenues.
Even if the court sides with challengers, it may provide no financial relief for businesses. The only remedy for violating the provision is that the state government does not have to spend the money. That would mean workers for anyone but the state, whether in private industry, nonprofit organizations, schools or local government, would get to keep their higher pay.
Proposition 206 raised the state’s minimum wage to $10 an hour on Jan. 1, up from $8.05. A series of future increases will peg the minimum at $12 by 2020, with future increases linked to inflation. Under the measure, employers also have to provide at least three days of paid sick leave for workers.
Strictly speaking, the state is exempt from the requirement to pay its workers more or give them time off.
But attorneys for the state have pointed out that private firms that do work for the state, such as companies that provide home health care and nursing, are required to comply. And several of these firms, whose contracts were negotiated under the old $8.05-an-hour minimum, have said they will go out of business, and stop providing services, without more money.
Beth Kohler, deputy director of the Arizona Health Care Cost Containment System, has said her agency is increasing reimbursement.
The challengers’ arguments already have been rebuffed once.
Last month, Maricopa County Superior Court Judge Daniel Kiley acknowledged that AHCCCS is going to be spending more.
But Kiley ruled that the initiative doesn’t force the state agency to increase what it pays its contractors. He also pointed out that both Arizona law and the contracts with Medicaid specify the state does not have to spend money it doesn’t have.
Business interests had tried an alternate theory that could have voided the entire initiative: a claim that the issues of higher wages and paid time off should have been presented to voters as separate ballot measure.
But the Supreme Court in its order Tuesday left intact Kiley’s conclusion that both are sufficiently interrelated to “minimum conditions of employment.”
