Arizona Governor Threatens Financial Retribution Against Cities That Raise Minimum Wage

In the middle of his State of the State address this week, Arizona Governor Doug Ducey (R) went off on a doozy of a rant, threatening to cut of legally required state revenue sharing to cities or counties that enact higher local minimum wage rates or other local employment laws such as paid sick days or anti-discrimination provisions to protect gay, lesbian and transgender workers.  Local elected officials, on hand for the annual address, appear to have been taken quite by surprise – and are none too happy with the governor’s threats.

Ducey, the millionaire former CEO of the Cold Stone Creamery ice cream chain, painted a dire picture of “ninety-one cities and towns” in Arizona “with ninety-one different employment laws” and local minimum wages, what he called a “California-style chaos” that will “drive our economy off a cliff.”


But here’s the thing:  In states across the country, growing numbers of cities are adopting local minimum wages, especially in higher wage localities where the statewide minimum wage clearly isn’t adequate — and they have proved to be manageable for employers and highly beneficial for workers.

Meanwhile, no city, county, or other local jurisdiction in Arizona has enacted its own minimum wage.  Not one.  Not yet.  A few cities have enacted local paid sick day legislation, and several have passed laws protecting gay, lesbian and transgender workers from employment discrimination.  Workers in cities including Phoenix, Tucson and Flagstaff have protested low wages, joining Fight for $15 demonstrations calling for a $15 minimum wage and union rights.  But, thus far, only in Flagstaff has there been an active campaign for either a local legislative or, potentially, a local ballot initiative – neither having yet succeeded.

Still, the governor warned against “the trendy, feel-good policies” like raising the minimum wage “that are stifling opportunity across the nation” and, he asserted, “failing everywhere they are being tried” – without giving specific examples or citing any data whatsoever.

And what if local citizens or local elected officials work together to actually enact higher local minimum wages?  Then Ducey warned he would change “the distribution of state shared revenue” to cut off funding to those cities – a step that would certainly violate current law.  For decades, following a voter-approved ballot initiative, the state has provided financial assistance to local governments through a state shared revenue system that distributes 15 percent of state tax revenues to cities, towns and counties based on population counts.  The shared revenues make up a significant portion of local funds, supporting everything from schools and roads to water systems and many other services.

The threat to cut off the shared revenue funds received loud and extended applause from the predominantly Republican state lawmakers in attendance.

Such extremism in support of keeping low-wage workers impoverished is an outrage.

In 2013, the state legislature passed a so-called “preemption” bill in Arizona, seeking to bar local jurisdictions from enacting higher local minimum wages.  But last year, the Flagstaff Living Wage Coalition challenged that action in court, charging that the preemption law violated the Voter Protection Act in trying to overturn a 2006 law — passed overwhelmingly by statewide ballot initiative — that put in place an annual cost of living adjustment to the state minimum wage and explicitly gave local jurisdictions the legal right to set their own minimum wages and set them higher than the state’s.  Were it not for the passage of that 2006 voter initiative, cities could be barred from establishing local minimum wages and Arizona’s minimum wage — now just $8.05 — would be stuck even lower at the federal $7.25 minimum wage.

In June of last year, the Flagstaff coalition won their suit, with the state agreeing to a settlement that essentially voided the preemption measure and upheld the right of local jurisdictions to enact their own minimum wages.  Let’s hope they do – and beat back the governor’s extremist threats.

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About the Author

Mitchell Hirsch

Areas of expertise:
  • Living Wage & Minimum Wage,
  • Unemployment Insurance

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