House speaker mulls minimum wage lawsuit

December 13, 2016
AZ Daily Sun
Howard Fischer

PHOENIX -- The new speaker of the Arizona House said Monday there appear to be legal grounds for someone to sue to overturn the minimum wage hike just approved by voters.

But it's not him, at least not at this point.

J.D. Mesnard said the mandate that will require most employers to pay at least $10 an hour beginning next month will have a major impact on organizations, both public and private, that provide services to the developmentally disabled.

The reason is that is those groups work under contract to the state, using tax dollars. And those contract rates are already in place.

Harlie Garcia, president of the board of directors of Echo Hope Ranch in Hereford, said she thinks her organization that serves Cochise and Pima counties can weather the first wage hike in January.

Garcia said the state's reimbursement rate for services like providing in-home and respite care is below $10 an hour, particularly for those working outside the Tucson area. There's also a group home in Hereford with seven full-time residents and up to 30 in day programs.

"We figure that with Proposition 206 it's going to increase what we have to pay out of pocket by close to $3,500 a month,'' she said.

Some of that, she said, can be filled in with donations and grants from foundations and others. But Garcia said that her organization, which specializes in people with autism and other disabilities, is so new that it does not have a lot of these outside dollars.

And she said it will only get worse.

"When it goes to $12 an hour it's going to be very difficult for us to keep all of our programs and do everything we need to do for this important population,'' Garcia said. "There are very few services available in Pima County and Cochise County for individuals, especially adults with autism.''

Flagstaff has passed its own minimum wage law that will raise the minimum to $12 on July 1, 2017, and $15 by 2021.

Mesnard, a Chandler Republican, told Capitol Media Services the legal issue arises because the Arizona Constitution specifically requires that any ballot measure that will force an increase in state funding must contain an identified revenue source, like a new tax. This initiative does not have one -- other than employers.

But attorney Jim Barton who represents the group that got voters to approve the measure, said the constitutional provision Mesnard is citing provides no basis to void the initiative. All it does, he said, is permit the state to refuse to fund anything when additional dollars are not provided.

More to the point, Barton said nothing in the initiative requires the state to boost payments to those who provide services.

"If that contractor's costs go up because they have to pay someone a living wage and there's no wiggle room and they have to come back to the state for more money, the state still gets to say 'yes' or 'no' to that,'' Barton said.
"So that's not a mandatory expense of state revenues,'' he explained. "You just don't have to fund it.''

But Barton said that doesn't exempt other employers from having to comply -- or provide a basis to try to void the entire measure. And he noted the initiative was crafted to get around the constitutional mandate, specifically exempting state employees from the mandate for higher wages, though it does cover local governments.

A 2006 voter-approved law established Arizona's first-ever minimum wage, setting it as $6.75 an hour when the federal mandate was just $5.15. With mandatory inflation adjustments that has now reached $8.05.

Proposition 206, approved by a 58-42 percent margin, updates the same sections of law, pegging the wage at $10 on Jan. 1, eventually rising to $12 an hour by 2020. It also mandates that employers provide at least three days of paid personal leave, something not in the original measure.

Since the election, many of the organizations that provide care for the developmentally disabled have said they simply cannot afford to give their staff the increases the initiative mandates, at least not at the reimbursement rates provided by the state.

Rep. Kate Brophy McGee, R-Phoenix, has already said she wants the issue addressed when the legislature convenes in January.

Bill Scheel, the campaign manager for the pro-206 campaign, said there's no reason for the Republican-controlled legislature not to come up with the cash.

"It's unconscionable that GOP leaders believe that workers caring for the most vulnerable and disabled among us should be earning less than fast food workers,'' he said.

Mesnard said higher state reimbursements "will be in the discussion.'' But he pointed out that legislative budget staffers have said the total amount of uncommitted funds for the new budget is in the range of just $24 million.

As to litigation, Mesnard said at this point he's moving to take the case to court.

"I'm not spearheading anything,'' he said. "Until today, I had no legal staff on hand,'' Mesnard said, saying others may have to take the lead.

State contractors aside, Mesnard has a more immediate worry.

"I've got pages that are at $9 an hour,'' he said. "Now I've got to increase their pay.''

The new speaker acknowledged that, legally speaking, state employees -- including pages -- are exempt. But he said that does not matter.

"How am I ever going to get somebody to work here if I'm paying them less than minimum wage?'' he said.

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