Posted by AzBlueMeanie:
Governor Brewer has signed the Tea-Publican budget. Brewer signs $8.6B AZ budget. All is right in Tea-Publican land. Or is it?
As I posted last week, there already is a Legal challenge to fund sweep of mortgage fraud settlement fund in the works. The Arizona Capitol Times (subscription required) reports Housing group preparing lawsuit over mortgage sweep | Arizona Capitol Times:
Attorney Tim Hogan, of the Arizona Center for Law in the Public Interest, said he will represent the Arizona Housing Alliance in a suit trying to block the sweep. The money is from a $97.7 million pool the state received as part of a multistate settlement with several banks.
Hogan said the suit will allege that the sweep is illegal for two reasons.
One, he argued, is that it would violate the separation of powers between the Legislature and the Attorney General’s Office.
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Hogan said the Legislature cannot directly appropriate the money, so it instead passed a bill ordering Horne to transfer the money to the general fund.
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Hogan said it would also be unlawful for Horne to transfer the money because the settlement stipulates that it can only be used for specific purposes, such as avoiding preventable foreclosures, ameliorating the effects the foreclosure crisis, strengthening law enforcement efforts against financial fraud or deceptive acts in the housing market, or compensating the state “for costs resulting from the alleged unlawful conduct of the defendants.”
“Were he to transfer the money it would violate his duty as trustee of this court-ordered trust fund,” Hogan said.
Today, the Arizona Daily Star editorializes against the fund sweep (a day late and a dollar short). Foreclosure-aid funds should be used as intended:
One of the legacies of the housing crisis is a failure to provide meaningful assistance to the millions of homeowners across the country who lost big on their homes. We bailed out Wall Street, but did nothing for borrowers, who often waited for loan modifications that never came. That's one reason we strongly disagree with the diversion of $50 million from a fund that was supposed to be applied to foreclosure assistance, but instead is being used for the state budget.
The funds are part of a $26 billion settlement announced earlier this year between five major lenders and a number of states, including Arizona, which claimed lenders acted improperly in their supposed assistance to struggling borrowers. We believe the $26 billion was a pittance for the price homeowners have paid, but the bulk of the money was supposed to go directly to borrowers as either assistance for underwater homeowners or payments for people who lost their homes.
Arizona received $1.6 billion. Besides the assistance to borrowers, $99.7 million was directed to Attorney General Tom Horne's office. The money was supposed to be used for things like foreclosure prevention and mitigation as well as the prosecution of financial fraud, which has been another missing piece of the housing crisis's aftermath.
But the Arizona Legislature has applied $50 million of these funds to the budget.
"There's a lot of pressure on the budget," House Speaker Andy Tobin said.
This simply is not the case.
At the same time they were raiding the foreclosure fund, Arizona lawmakers stashed $450 million in the state's rainy-day fund. The money was there for social welfare programs without taking it from the foreclosure settlement.
Senate President Steve Pierce said the intended purposes of the foreclosure fund were not state priorities.
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Foreclosure tracking firm RealtyTrac recently reported that the state had the highest foreclosure rate in the country for the first quarter of the year.
The numbers demonstrate there are plenty of struggling homeowners, and that this issue is by no means past us. It's alive and well for families across the state.
Part of being fiscally conservative is using money as it is intended. Lawmakers should be using funds from the foreclosure settlement for foreclosure prevention and mitigation, as well as prosecution of financial fraud - not for balancing the budget when there is other money available to do just that.
The other fund sweep of note was from the state courts. Independence of Arizona judiciary under assault in Tea-Publican budget - contact your legislators. The Arizona Capitol Times (subscription required) reports Budget deal saves courts from ‘virtual shut down’ of system | Arizona Capitol Times:
The Arizona Supreme Court was able to work out a deal allowing the Legislature to take money from a variety of smaller accounts rather than a larger, more critical one that lawmakers were targeting.
The original budget proposed a $12 million sweep of the Supreme Court Automation Fund, an account that touches nearly every court in the state. Its loss would have crippled the court system, court officials said.
Instead, the money, $6 million a year, will be swept from eight other funds in fiscal years 2013 and 2014. The sweep includes $5 million each year from the Juvenile Probation Services Fund, which provides intervention services for teenagers on probation.
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Jerry Landau, a court lobbyist, said the court is still evaluating how the various accounts will be affected.
“There will be impacts on any of these funds, but certainly not anything like the automation fund that would have virtually shut down the whole court system and the connectivity among all the courts and all the outside agencies,” Landau said.
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The adopted budget forbids the court from charging political subdivisions fees to offset the sweeps.
The proposed budget had $6 million to be transferred from the automation fund for each of the next two fiscal years.
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Arizona court funds swept for the general fund:
• State Aid to Courts Fund — $50,000 Used to for processing criminal cases in Superior Court and Justice Courts.
• Alternative Dispute Resolution — $200,000 Supplements local funding for local courts for alternative dispute resolution programs.
• Arizona Lengthy Trial Fund — $100,000 To compensate jurors who serve on juries lasting longer than five days.
• Public Defender Training Fund — $25,000 County public defender training.
• Judicial Collection Enhancement Fund — $400,000 Used to manage money collected by the courts for restitution, child support, fines and civil penalties and improve automation projects.
• Criminal Justice Enhancement Fund — $75,000 Used to reduce juvenile crime, process criminal and delinquency cases, pay salaries of Superior Court judges and provide drug treatment to adults on probation.
• Drug Treatment and Education Fund — $150,000 For drug treatment and education.
• Juvenile Probation and Services Fund — $5 million Used for intervention services for youth on probation.
The attitude of our Tea-Publican legislature is best summed up as thus: “It proves the old adage that if you shake the judicial branch of government hard enough, an apple eventually falls out,” said Rep. John Kavanagh, chairman of the House Appropriations Committee. They don't care who gets hurt in the process.
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