Budget would force Flagstaff to pay state for minimum wage costs

Photo by Matt Boulton | Flickr/CC BY-SA 2.0

By Jeremy Duda | Arizona Mirror

Flagstaff voters who twice approved a $15 minimum wage may soon find their city on the hook to pay for some of the extra costs that state is incurring because of it.

One of the budget bills that legislative leadership introduced on Tuesday includes a provision allowing the state to charge cities, towns and counties for compensation if it racks up additional costs due to local minimum wages that are higher than the $12 minimum wage in place for the state as a whole. If a local government entity doesn’t pay, the state can withhold a local government’s share of shared revenue from sales taxes.

Only one city has a minimum wage that’s higher than the rest of the state. Flagstaff voters approved a $15 minimum wage in 2016, and in November rejected a proposal by the city council to slow down the gradual increase in the wage hike. Flagstaff’s minimum wage is currently $12, and will jump to $13 in 2020, eventually reaching $15.50 in 2022. 

The higher minimum, both in Flagstaff and across the state as a whole, has become problematic for the Department of Economic Security, which has struggled to pay higher wages for people who contract with the state to provide care for adults with developmental disabilities. Advocates say the state has failed to adequately pay those providers since the budget cuts of the Great Recession in 2009-10, and that the problem has become worse since the minimum wage started going up.


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