(Photo by Will Stone - KJZZ)

Susan Bastian and her family have run the Blythe Center in Peoria for about 30 years. After years of underfunding, she says the new minimum wage hike is forcing her to close down.

Last month, hundreds of thousands of Arizonans got a raise. That’s thanks to the voter-approved ballot measure Proposition 206, which boosted the state’s minimum wage. But for businesses that care for people with developmental disabilities, this wage hike could be devastating.

It’s lunch time at the Blythe Center, and Susan Bastien is doing the rounds. "Looks like you just did your hair," she jokes with one of her members as they prepare for an impromptu music performance in the reconverted school cafeteria.

"We're doing a little karaoke. We have our disco ball, which is great," Bastian said.

The family-run business in Peoria offers adult day care and other services for people with developmental disabilities. She relocated to this old school about a year ago for more space.

"We moved in here, got everything just how we wanted it and were super excited," Bastian said.

But now Bastian is preparing to close her doors.

“Yeah, we just can’t make it; the state doesn’t pay us $10 an hour to provide the service," Bastian said.

That’s the new minimum wage. By 2020, it’ll be $12. While the law doesn’t apply to state employees, it does to businesses like Bastian’s that contract with the state.

“We have just been operating on a shoestring. I mean, there’s no profit in this industry. It’s, you know, a labor of love.”

You hear this overwhelmingly from providers who serve individuals with developmental disabilities. They’ve been underfunded for years. And this minimum-wage hike is pushing them over the edge.

“Since I’ve been in the field, I have been fighting every year. And I have probably become jaded. It makes me angry that it is not seen as a valuable service," she said.

A mix of state and federal Medicaid dollars pays for the care. Nicole Jorwic is with The Arc of the United States, a national advocacy group. She said what’s happening in Arizona is no surprise.

“For the last decade, human-services budgets across the country have been decimated," Jorwic said. 

State lawmakers here slashed rates during the recession by 15 percent. Some of that’s been restored, but, on average, providers are still only reimbursed about 70 cents on the dollar.

“The state investment has gone down, which is why you are seeing these problems. You need to see legislation that increases rates to go alongside anything that’s going to raise minimum wage for this exact reason," she said.

That did not happen in Arizona, leaving providers with less than two months to prepare.

Regina Cobb is a Republican state representative from Mohave County.

“They did a very good job with lots of money pushing Prop. 206 and how great it is," Cobb said.

She says the multi-million dollar campaign should have made voters more aware of this potential fallout.  

“I think if the voters would have saw that ahead of time, there would have been a change in how people voted," she said.

Cobb believes Prop. 206 is unconstitutional because it amounts to an unfunded mandate that impacts the general fund. That led the Chamber of Commerce to sue. The case is now in front of the state Supreme Court.

If that challenge isn’t successful, though.

“They are a priority, they are at the top, so we’re going to have to find some funds to go in that direction," she said. 

Cobb knows what’s at stake. Her legislative committee recently heard hours of testimony from people like George Raymond, whose 46-year-old daughter has Down syndrome.

“Where are they supposed to go and what are they supposed to do if the day-care programs they have been attending for years are closed? Many will end up homeless, and I guess some will have to go to mental institutions," Raymond said.

Gov. Doug Ducey made an emergency appropriation for these providers to get through this fiscal year and has recommended another $15 million for the upcoming one. But that’s still about $60 million short of what they need to cover the minimum wage hike in 2018, according to the Arizona Association of Providers for People with Disabilities, which represents about 80 organizations. 

Democratic House Minority Leader Rebecca Rios says to blame this crisis on the new minimum wage “... is really unfair and disingenuous. Even during the times of economic downturn, the Republican-controlled legislature found money to give away special interest tax breaks,” Rios said.

Rios says lawmakers could tap the state’s rainy-day fund, but admits that’s ultimately in the hands of Republicans.  

“If they want to properly fund these programs, they can. And if they don’t, it’s because they never wanted to in the first place," she said.

Even if the legislature comes up with more money for the minimum wage, it only gets the industry back to where it was before Prop 206 — shortchanged and struggling to get by.

Bastian of the Blythe Center isn’t that optimistic.

“It’s a whole collapse of a system. And unfortunately because I’m small and have all my eggs in one basket, I don’t have any other resources. We’re one of the first ones to fall,” Bastian said.

That’s troubling not only for her members but for the tens of thousands of Arizonans who rely on people like her every day.