399 P.3d 80
Ariz.2017Background
- Arizona voters approved Proposition 206 (The Fair Wages and Healthy Families Act) in Nov. 2016, raising the minimum wage and establishing earned paid sick leave; wage provisions effective Jan. 1, 2017, sick-leave provisions effective July 1, 2017.
- Proposition 206 was codified at A.R.S. §§ 23-363 and 23-371 to -381 and exempts the State, the United States, and certain small businesses.
- Petitioners (Arizona Chamber of Commerce & Industry and others) sued, arguing Proposition 206 violated the Arizona Constitution’s Revenue Source Rule (art. 9, § 23), Separate Amendment Rule (art. 21, § 1), and Single Subject Rule (art. 4, pt. 2, § 13), and sought preliminary injunctive relief.
- The superior court denied preliminary injunction; the Arizona Supreme Court accepted special-action jurisdiction, heard the constitutional challenges, and previously denied relief with this written opinion to follow.
- The Court evaluated whether Proposition 206 (1) mandatorily requires state expenditures or inherently requires state action that mandates expenditures, (2) implicates the Separate Amendment Rule, and (3) falls within the Single Subject Rule.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Revenue Source Rule — does Prop 206 propose a mandatory expenditure of state revenues? | Prop 206 forces state agencies (ICA and others) to implement provisions and causes state spending (e.g., AHCCCS rate increases) without independent funding, violating art. 9 § 23. | Rule applies only to initiatives that directly require state expenditures or state actions that inherently require non-discretionary expenditures; Prop 206 provides funding for ICA and does not mandate state to pay private-worker wage increases. | Court: § 23(A) applies where an initiative either (a) explicitly requires state expenditures or (b) expressly requires state action that inherently requires non-discretionary expenditures. Prop 206 complies because it funds ICA implementation through civil penalties; indirect costs to AHCCCS/contractors are discretionary and outside § 23(A). |
| Revenue Source Rule — funding for ICA implementation obligations | ICA must promulgate regulations and notices (non-discretionary), so funding must be provided. | Defendants point to civil penalties retained by agency per § 23-364(G) to finance enforcement and implementation. | Court: ICA obligations are mandatory but Prop 206 supplies a permissible funding source (civil penalties); if fines prove insufficient, § 23(B) permits legislative reduction of expenditures. |
| Separate Amendment Rule — does it apply to statutory initiatives combining wage and sick-leave provisions? | Prop 206 bundles distinct matters (minimum wage; sick leave) and thus violates art. 21 § 1. | Separate Amendment Rule governs only proposed constitutional amendments; Prop 206 is statutory and not subject to that rule. | Court: Rule applies only to constitutional amendments; it does not extend to statutory initiatives, so Prop 206 does not violate it. |
| Single Subject Rule — does it constrain initiatives? | Prop 206 violates single-subject principles by combining unrelated topics; court should apply the rule to initiatives. | Single Subject Rule applies to legislative acts only (acts = statutes enacted by Legislature), not to initiatives; prior Arizona precedent supports this. | Court: Declines to extend the Single Subject Rule to initiatives; prior case law controls and Prop 206 not invalid on that ground. |
Key Cases Cited
- League of Ariz. Cities & Towns, 213 Ariz. 667 (2006) (discussed timing and scope of Revenue Source Rule challenges to initiatives)
- Brewer v. Burns, 222 Ariz. 234 (2009) (textual construction principles and giving constitutional words their ordinary meaning)
- Randolph v. Groscost, 196 Ariz. 423 (1999) (severability doctrine in constitutional invalidation)
- Herbst Gaming, Inc. v. Heller, 141 P.3d 1224 (Nev. 2006) (Nevada court interpreting similar revenue/expenditure limitation; enforcement costs alone do not necessarily trigger funding requirement)
- Citizens Clean Elections Comm’n v. Myers, 196 Ariz. 516 (2000) (Arizona precedent that Single Subject Rule applies to legislative acts, not initiatives)
- Barth v. White, 40 Ariz. 548 (1932) (early Arizona authority distinguishing initiatives from "acts" for single-subject analysis)