Tom Horne caught in the middle of budget controversy
PHOENIX, Arizona: Arizona was awarded a $1.6 billion share - the third greatest, after California and Florida - of the 49 state, $26 billion settlement paid by 5 major mortgage institutions over nefarious lending practices. When the settlement was reached in February, 2012, the terms of how the pot would be distributed among, and within, the lawsuit's member states were laid out; Arizona was to direct $1.3 billion of its share to homeowners whose mortgage debts currently exceed their homes' value, $110 million in payments for those who already lost their homes to lender misconduct, $85 million for interest rate reductions, and, finally, $97.7 million was entrusted to the attorney general for discretionary spending on behalf of the recovery effort. Specifically, the attorney general's slice is reserved for the purposes of avoiding preventable foreclosures, easing the strain imposed on individuals and the economy by the foreclosure crisis, as well as prosecuting further related incidences of fraud.
Months later, Arizona lawmakers devised a plan to balance the budget via a governor-approved absorption of roughly half of that money into the state government's checking account. Horne lobbied against the decision, calling it "bad public policy." Despite informing the legislature and Gov. Jan Brewer that the money was intended for the victims of the crisis, not for general government purposes, he pledged to voluntarily comply with the $50 million transfer. "It would be suicidal for me to get into a war with [them] over a matter that is clearly constitutionally within their area of responsibility, namely the budget," Horne confessed- a statement with which Tim Hogan, an attorney for the Center for Law in the Public Interest, disagreed. In a letter to the attorney general, Hogan wrote that neither Arizona's budget controlling apparatus, nor Horne, as the fund's Trustee, has the authority to "voluntarily give half of the court-ordered trust fund to the state General Fund."
To legally justify the transfer, the bodies responsible for drawing up the budget invoked language from the settlement which gives states permission to distill internally from the fund on the specific, necessary condition of compensating "for costs resulting from the alleged unlawful conduct of the defendants." They reasoned the state is covered under this contingency because when the housing bubble bust people could not pay their taxes, causing the state to go into a recession. Indeed, the crisis wreaked havoc on the Arizona's economy, but Hogan contended that the provision is not broad enough to include the general costs of government and seeks to block the transfer. Horne said he will oppose efforts like Hogan's, and, barring an injunction, intends to proceed with turning over the $50 million to the treasurer on July, 1, 2012, which begins the next fiscal year.
The money is putatively destined for prison construction.