TUCSON, AZ (Tucson News Now) - A partner in the recently accepted Arizona minimum wage lawsuit says businesses are still struggling to recover from the voter-passed initiative, and that's why they are challenging the proposition.
The Arizona Supreme Court will take on the argument to decide if the minimum wage boost is constitutional, or whether it violates a state provision that requires ballot initiatives to identify a source of funding for increased state costs.
Lea Marquez-Peterson, President of the Tucson Hispanic Chamber of Commerce, called the dramatic increase in wages "alarming."
Proposition 206 was approved in the November election by 58 percent of Arizona voters. The minimum wage was raised on Jan. 1 to $10 an hour from $8.05 an hour. It will rise as high as $12 an hour in 2020.
Marquez-Peterson's organization was one of the filing agencies in the lawsuit, along with the Arizona Chamber of Commerce and Industry.
"What they're looking at in particular is the Revenue Source Rule, that says that when a bill or initiative is passed there must not be a financial impact to the state of Arizona. We believe that although they exempted the state employees, they did not take into account the many businesses that have contracts with the state of Arizona," she said.
The plaintiffs argue the initiative creates new costs associated with the general fund. The state needs to pay some state contractors more and is not contributing a new revenue source.
One example of this, Marquez-Peterson said, is care workers for the developmentally disabled. Staffing at some of these non-profit organizations say that unlike a coffee shop or fast food restaurant, they are legally bound and contracted with the government to keep their service rates the same, although they have to pay their employees more due to the minimum wage increase.
"Yet, they can't raise their rates and they're not receiving additional funding from the state, typically. But in this case the state has had to increase dollars to them because of the increase in minimum wage," she said.
On Tuesday, Feb. 14, the high court formally accepted the case and will hold a first hearing March 9.
Marquez-Peterson explained a ruling in their favor would "impact the state's contracting ability with the businesses and modify those pieces."
But she said the ruling would not cause a repeal of Proposition 206.
"We're encouraged that they've taken it on, that they think this is something that is questionable," she said.
As far as immediate changes go, the Supreme Court refused to stop or block the minimum wage increase as it considered whether to accept the lawsuit.