Suit filed to block minimum wage hike as Medicaid payments increased

December 15, 2016

Submitted by:  Veronica Coffin

By Howard Fischer Capitol Media Services

Money

 

PHOENIX — Unable to defeat it at the ballot, business interests filed suit today to void the voter-approved hike in the state minimum wage.

The lawsuit filed in Maricopa County Superior Court contends Proposition 206 violates a constitutional provision that requires all measures that increase state funding to also have a specific dedicated funding source. The initiative does not spell out where the state will come up with the additional dollars it will need to cover the higher costs incurred by those who have contracts with the state to provide various services like health care.

James Barton, attorney for Proposition 206 supporters, said there is no basis for the claim. He said nothing in the ballot measure actually requires the state to increase its reimbursement rate to providers.

But attorney Brett Johnson, hired by the Arizona Chamber of Commerce and Industry, pointed out that the Arizona Health Care Cost Containment System already has posted a notice that it intends to increase what it pays to providers to compensate for the fact the minimum wage will go from $8.05 an hour now to $10.

More to the point, Johnson said those additional dollars will come out of general tax dollars, leaving less money for other priorities. And he said that is exactly what the constitutional provision about an identified funding source is designed to prevent.

AHCCCS said the payments will cover higher costs of providing long-term care for the elderly and disabled and services for the developmentally disabled. The cost for the first six months of 2017 is about $48 million. More than $11 million will come from the state, $3 million from counties and the rest the federal government.

Beth Kohler of the state’s Medicaid program said Thursday the state share will come from existing reserves but will need Legislative approval.

The Hozhoni Foundation in Flagstaff is among the service providers for the developmentally disabled that the boost in Medicaid funding is meant to help.

CEO Monica Attridge said its unclear to what extent the money will help her organization, however, because the state has not released information about how it will distribute those additional dollars.

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