PHOENIX (AP) - An attorney representing Arizona business groups urged a judge Tuesday to block a voter-mandated minimum wage increase, saying it will cause irreparable harm because it will cost the state $55 million to comply in the coming six months alone.
A lawyer for the state’s Medicaid agency also told Maricopa County Superior Court Judge Daniel Kiley that it had no choice but to boost payments to providers to help them stay in business when the wage increase takes effect on Jan. 1.
The Medicaid agency position contradicts the argument put forward by the Arizona Attorney General’s office, which says any increased payments are discretionary and don’t invalidate Proposition 206.
The measure, which passed with 58 percent of the vote, exempts the state but not its contractors. But because the state has no choice but to boost payments, opponents say it violates a state Constitution provision requiring a separate funding source be provided.
“Essentially, unfunded mandates put out by people who are proponents of propositions are not allowed in the state of Arizona,” Brett Johnson, the attorney representing the Arizona Chamber of Commerce and Industry and other groups, told the judge. “As long as the expenditure is caused by the proposition, if state government feels that it has no choice but to expend that money, then it is a violation.”
Assistant Attorney General Charles Grube argued that there is no mandatory state spending triggered by the new law. He said instead that the increased costs are an indirect cost, not a mandatory one.
“The trigger is a mandatory expenditure, not one that might be caused by it, a mandatory expenditure of state funds,” Grube told the judge. “If we talk in terms of every initiative that may have an indirect economic impact flunking this (rule)… we could never have an initiative that didn’t have some kind of financing system built into it.”
The measure raises the minimum wage from $8.05 an hour to $10 on Jan. 1 and to $12 in 2020. An estimated 700,000 Arizonans earn less than $10 an hour now, according to backers of the law.
Kiley heard arguments in the case Tuesday afternoon and promised a quick decision. Whichever side loses is expected to appeal.
The state Medicaid program has decided to increase the rates it pays to nursing home, home health aide and developmentally disabled program providers on Jan. 1. That’s expected to cost $48 million for six months, although all but $11 million of it is federal money.
The Chamber also argued that Proposition 206 illegally added a second, unrelated issue, mandatory paid time off. Grube said that is related to wages, no fair game in the proposition.
State Medicaid program attorney Logan Johnston told Kiley that federal law requires it to pay providers what is needed to ensure patients have access to care, and it is therefore required to boost its contracted rates.
“If the minimum wage increase goes into effect, raising rates is necessary in the judgment of the director in order to comply with his obligations under Medicaid,” Johnston said. “Inevitably, if the law goes into effect and the minimum wage is raised, sooner or later (Medicaid) will have to come back to the Legislature and ask for more funds.”
The backers of Proposition 206 have joined the defense of the lawsuit, represented by attorney Jim Barton. Barton also says that the proposition doesn’t mandate any state spending and doesn’t violate the multiple subject law.
In addition, Barton says the Chamber and other plaintiffs have no right to sue and seek a complete blocking of the law, something not contemplated by the law. The remedy, he told the judge, is for the state not to spend the money. He also said the Chamber waited too long to bring the suit.
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