Arizona law means local minimum wage hikes may bear a cost

PHOENIX - A new state law taking effect August 27 could make Arizona municipalities and counties reimburse the state for new costs resulting from minimum wage increases.

It would only apply to places that raise the minimum wage above the statewide rate.

The measure, as part of a budget bill approved by the Legislature and signed into law by Gov. Doug Ducey last spring, also allows the state to then assess reimbursement amounts owed by local governments.

Supporters say it's only fair to protect taxpayers statewide from added costs resulting from decisions by local communities, while critics say it's a pressure tactic intended to discourage cities from raising minimum wages.

Arizona voters in 2016 raised the minimum wage to $10 in 2017, $10.50 in 2018, $11 an hour this year and $12 an hour in 2020, with adjustments for inflation after that.

Flagstaff voters went further, requiring a minimum wage of $12 this year. The city’s minimum wage will go up to $15.50 in 2022 and must be $2 above the state minimum wage in the future if Arizona raises its rate again. 

“We don’t feel the taxpayers around the state should be forced to bear the burden of the additional cost,” said Rep. Regina Cobb, R-Kingman.

In 2018, Flagstaff residents rejected a ballot measure that would've rolled back the city's minimum wage increase.

It will be up to the next Legislature to decide whether to collect reimbursements for additional costs from revenue the state splits with cities.