Arizona high court explains minimum wage law ruling

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The Arizona Supreme Court upheld Prop. 206, which increased the minimum wage to $10 per hour on Jan. 1. (Source: 3TV/CBS 5) The Arizona Supreme Court upheld Prop. 206, which increased the minimum wage to $10 per hour on Jan. 1. (Source: 3TV/CBS 5)
PHOENIX (AP) -

Backers of initiatives don't have to account for every possible state cost of implementing voter-approved laws for them to pass constitutional muster, according to a written opinion issued by the Arizona Supreme Court Wednesday.

The unanimous opinion by the seven-member court explained why justices in March rejected a challenge to a minimum wage increase approved in the November election.

The court turned away arguments from the Arizona Chamber of Commerce and Industry and other business groups that Proposition 206 triggered a provision in the state Constitution requiring a new funding source. The Chamber pointed to higher state costs for contractors providing elderly and disabled care through the state's Medicaid program.

But the court said state expenditures were not required and it would be "implausible" for backers to scour every state business dealing to identify possible incidental costs.

"A mandatory expenditure of state revenues does not occur if an initiative or referendum only indirectly causes an expenditure of state revenues," Justice Ann Scott Timmer wrote for the court. If that were the law, she noted, initiative backers would have to account for and provide new revenue for "costs to train affected employees, contract for goods and services, or even to publish the new law itself."

[RELATED: Arizona Supreme Court rejects minimum wage challenge]

Low-wage workers got an increase to a minimum $10 per hour from $8.05 on Jan. 1 and will see minimum pay go to $12 an hour in 2020. Rules requiring employers to provide mandatory sick time kicked in on July 1 under the law that was approved by 58 percent of the state's voters.

The court also rejected arguments that the measure didn't provide for enforcement expenses, saying new fines mandated by Proposition 206 can pay those costs. And Timmer noted that if the fines don't cover those expenses, the Legislature can simply lower the appropriation to the agency, in this case the Industrial Commission of Arizona.

The court nearly completely accepted arguments put forward by Arizona Attorney General Mark Brnovich's office and the backers of Proposition 206, who argued that increased costs were indirect and didn't require new funding.

But Timmer did make one distinction, declining to broaden the ruling to free initiative backers from providing a new funding source if the proposal specifically directs a state action that "itself inherently requires such an expenditure."

"If we were to adopt this construction, the Rule could be easily circumvented," Timmer wrote. "For example, rather than directing the legislature to spend one million dollars to establish a new agency, an initiative could simply direct the legislature to establish the agency. This would result in the type of unfunded mandate the Revenue Source Rule sought to remedy."

The passage of the minimum wage increase infuriated the Chamber and Republican lawmakers responded by passing two laws which opponents say will make it harder to get initiatives on the ballot.

One changes the legal standard for review for qualifying petitions and the initiatives they aim to ask voters to enact into law, and the second changes rules for how signatures can be gathered for initiatives. A legal challenge to the law changing the legal standard is pending, as is a voter effort to block both laws.

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