Business community files lawsuit challenging constitutionality of Proposition 206

Arizona Chamber of Commerce and Industry, Greater Phoenix Chamber of Commerce, Tucson Hispanic Chamber of Commerce, Greater Flagstaff Chamber of Commerce, restaurateur plaintiffs cite lack of funding source for initiative’s budget implications, separate amendment violation. Published by Garrick Taylor, Sr. Vice President of Government Relations & Communications, Arizona Chamber of Commerce and Industry.

PHOENIX (December 15, 2016) – A group of plaintiffs representing job creators this morning filed suit over the constitutionality of Proposition 206, the ballot measure passed in November that dramatically raises the statewide minimum wage and imposes a new paid leave mandate on employers.

The Arizona Chamber of Commerce and Industry, Greater Phoenix Chamber of Commerce, the Tucson Hispanic Chamber of Commerce, Greater Flagstaff Chamber of Commerce, and the proprietors of restaurant Valle Luna and its employees argue that the proponents of Proposition 206 failed to identify a funding source for the proposition’s budget implications. The ramifications of this include that several care providers to the developmentally disabled, operating under state contracts, are unable to continue to offer their services without an additional infusion of funding. Arizona ballot initiatives are constitutionally required to identify a funding source when the state general fund could be reduced by them.

“The organized-labor-affiliated backers of Proposition 206 sloppily constructed their initiative to exempt state employees, yet failed to properly account for those employers who hold state contracts. This failure is poised to a blow a giant hole in the state budget,” Arizona Chamber President and CEO Glenn Hamer said. “According to a recent rulemaking notice, AHCCCS and the Department of Economic Security are facing millions of dollars in additional costs for the remainder of just this fiscal year.”

The plaintiffs also argue that Proposition 206 violates the Arizona Constitution’s separate amendment requirement because Proposition 206’s provisions have distinguishing legal frameworks that are not intertwined. While the separate amendment rule has historically only applied to constitutional amendments, the plaintiffs argue that, due to the Voter Protection Act and the difficulties it poses for attempts to amend a proposition after its passage, the separate amendment rule should also apply to propositions like Proposition 206.

“Throughout the campaign, the business community argued that Proposition 206’s passage would have devastating effects on Arizona’s economy,” Hamer said. “Unfortunately, those predictions are being proven true. Special interests that want to use Arizona’s ballot initiative process to carry out their job-killing agendas should have to play by the rules set out in the state constitution; Proposition 206’s backers haven’t done so. We are confident that the court will agree with us.”

Questions and answers

Why bring this suit now? Didn’t you have these same arguments before the election?

These challenges can only be brought after the election results. They could not have been brought prior due to case law.

Will there be additional plaintiffs?

We anticipate that additional plaintiffs will join the suit.

Does the business community have legal standing to bring this challenge?

Yes, the plaintiffs are taxpayers and represent taxpayers, which is what is required in order to bring suit.

Why are chambers of commerce and a restaurant suing?

We are deeply concerned about the measure’s effect on employers, employees, and the state’s overall economic competitiveness, which we argued throughout the campaign on Proposition 206. However, despite our stark disagreements with the proposition’s proponents on policy grounds, our lawsuit is over the proposition’s constitutionality.

What will happen if Proposition 206 is implemented on January 1, 2017?

We argued throughout the campaign that we believe that if Proposition 206 is implemented on schedule that prices will rise; that employers will reduce their employees’ hours; that employers will implement layoffs; and that some businesses will close their doors. We know now, for example, that state-contracted care providers to the developmentally disabled cannot continue to operate under current state funding levels after the proposition is implemented. By not following the Revenue Source Rule, the backers of Proposition 206 are harming the state’s most vulnerable individuals and those who work to serve them.

If the interests behind Proposition 206 are so hellbent on implementing the proposition, they must at least follow the Arizona constitution.

If the state Legislature were to respond to Proposition 206 by appropriating new dollars to impacted agencies, that could have negative funding implications for other budget priorities, including K-12 and higher education. Is that what the state and national teachers unions had in mind when they made their big-dollar contributions to the pro-206 campaign?