(Update) AZ Supreme Court oral argument on Prop. 206, Minimum Wage Initiative

It looks as if our corporate overlords at the Chamber of Commerce organizations seeking to overturn the will of the voters on Prop. 206, the Minimum Wage Initiative — and by extension to eliminate your constitutional right to pass laws by citizen initiatives — had a bad day in court on Thursday.

The Arizona Capitol Times (subscription required) reports, AZ Supreme Court skeptical of minimum wage challenger arguments:

Arizona’s Supreme Court justices spent time March 9 imagining a world in which the state’s voters may never get to pass laws by the ballot again.

Justices repeatedly posed that scenario to Brett Johnson, an attorney representing the Arizona Chamber of Commerce and Industry and other plaintiffs in their challenge to a higher minimum wage approved overwhelmingly by voters in November.

Johnson argued that parts of Proposition 206, including new mandates for benefits such as paid sick leave, are a direct mandate for the state to spend money, which violates the Arizona Constitution’s revenue source rule. That rule is a measure adopted in 2004 that requires ballot initiatives to identify funding sources for new government spending.

Chief Justice Scott Bales opened the hearing with a question that cut to the case’s potentially dramatic implications: If even indirect expenditures are sufficient to violate the revenue source rule, is there realistically any initiative that could be proposed that wouldn’t violate the Constitution?

Justice Ann Scott Timmer asked if a requirement to send even one simple letter qualifies as an increase in spending under the revenue source rule?

Johnson’s short answer was, “unfortunately, yes.” He argued that a simple letter, too, would violate the revenue source rule and render a voter-approved ballot initiative moot.

“Doesn’t that construction essentially eliminate the citizens’ ability to pass any initiative?” Timmer said. “It’s difficult to imagine an initiative in this day and age that wouldn’t require a letter or something administerial by the government.”

Johnson later told reporters that’s just the way it is. He did point the justices to Proposition 204, a 2014 ballot initiative that amended the Arizona Constitution to declare the state has the power to refuse to use resources to enforce federal laws the state finds illegal.

“That’s what the people wanted when they passed the revenue source rule,” he said. “It’s specifically, the state’s going to spend one dollar in support of a proposition that’s been passed, it’s going to violate the revenue source rule. And yes, it’s draconian, and it is what it is, but that’s what the people want.”

Attorney General Mark Brnovich bristled at this interpretation of the law, telling reporters after the hearing that to accept Johnson’s logic, “you would never have an initiative pass in this state again.”

And Assistant Attorney General Charles Grube argued before the justices that a plain reading of the initiative reveals that there’s no mandate for government spending of any kind. He conceded that there may be some indirect expenses caused by Proposition 206, but argued that the minimum wage law does nothing to remove the authority of the Legislature to appropriate or not appropriate funding.

Essentially, as long as legislators maintain their power of the purse, there is a relief in place that protects them from being forced to spend money, particularly funds they don’t have, Grube said.

While other justices debated the contention by Johnson that government agencies must spend more money as a result of Prop. 206, Justice Andrew Gould seemed convinced by arguments that there is in fact a cost associated with the new minimum wage and sick leave benefits for entities like the Arizona Department of Administration, the Arizona Health Care Cost Containment System and the Industrial Commission.

Gould questioned Grube about the need for Arizona to provide some federally-mandated services, particularly to those with disabilities. Providing services to Arizonans with disabilities is a minimum wage job, he said, so how can you divorce the cost of the minimum wage from providing those services, Gould asked.

“Is it really an answer to say, well if we don’t have the money, we don’t have to pay for those services, when in fact there’s a federal statute that says we have to provide sufficient care and access to care for these people?” Gould said.

Grube argued that such an argument doesn’t apply in this case because Prop. 206 does not call for a mandatory expenditure.

Other justices were skeptical even of the agency’s claims of a need to spend new dollars to comply with the minimum wage and sick leave benefits. Johnson insisted that the figures provided by the government are based in reality.

“We know from AHCCCS, we know from the ADOA, and we know from the Industrial Commission that there’s going to be increased costs,” Johnson said in court.

Bales questioned how those agencies could make such a claim at this point, and noted that the Grand Canyon Institute, filed an amicus brief detailing the indirect benefits of Prop. 206.

For instance, with higher wages, tax revenues could increase and fewer people may be reliant on government service.

When Johnson countered that those calculations were hypothetical and had to be made with assumptions, Bales noted that so are the numbers provided by government agencies that are claiming hardship in complying with Prop. 206.

Bales said a decision would be made in “due course,” giving no timeline for a ruling.

Stay tuned.

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