State budget goes to governor with a $50M question

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By Catherine Holland By Catherine Holland

PHOENIX -- State lawmakers passed an $8.6-billion budget Tuesday evening.  The Republican plan will increase spending on mental health care and restore some education dollars.  It will also put $450 million in the state's rainy-day fund.

But $50 million comes from Arizona's share of the bank foreclosure settlement and a lot of people believe that money was meant to help distressed homeowners.

Foreclosures continue to affect tens of thousands of people in Arizona.  The multi-billion dollar settlement with major banks earlier this year was sweet music to people like Valerie Iverson, who advocates for affordable housing as the executive director of Arizona Housing Alliance.

“We just thought it would be great for communities and Arizona as well,” she said.

Arizona's share of the nationwide settlement, $97 million, flowed in to the attorney general's office, earmarked to help distressed homeowners with counseling and legal assistance.  Then the legislature decided to move $50 million, more than half of that settlement money, into the general fund.
“We were taking money mistakenly delivered to the attorney general’s office,” said Rep. John Kavanaugh, (R) from Fountain Hills.  “In Arizona statute, all moneys from court settlements go to the general fund.”

As you can imagine, Democratic lawmakers have a different view.

“I would completely disagree with his characterization of this,” said Minority Leader Chad Campbell.  “If you read the intent of that money when it was given to Arizona, it was pretty clear it was supposed to be used for homeowners who are distressed.”

But barring a legal challenge, it will now go to something else. Iverson laments losing what that money would have covered.

“75,000 people access home ownership counseling, and 10,000 people access legal aid,” Iverson said.  “Now when we have 10,000 foreclosures a month, that barely goes seven and a half months' worth.”

A spokesperson for the Arizona Attorney General's Office did not return our call.

Arizona Housing Alliance and its partners plan to pursue legal action against the state.