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Arizona Attorney General set to take governor to court if funds from opioid settlement are used to balance budget

Posted 6/14/24

PHOENIX — Attorney General Kris Mayes says if state lawmakers and Gov. Katie Hobbs want to immediately seize $75 million out of an opioid settlement fund to balance the state budget …

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Arizona Attorney General set to take governor to court if funds from opioid settlement are used to balance budget


PHOENIX — Attorney General Kris Mayes says if state lawmakers and Gov. Katie Hobbs want to immediately seize $75 million out of an opioid settlement fund to balance the state budget they’re going to have to come and get it.

And she says she’s prepared to go to court to fight them.

The budget plan set for final vote Friday proposes the dollars from the settlement into the state Department of Corrections, Rehabilitation and Reentry. That agencies is facing new costs, at least in part because of a federal court order finding it has failed to provide proper medical care for inmates.

But that is just part of a larger problem that has the state currently running $729 million in the red for the balance of this fiscal year that ends June 30 and a $690 million deficit for the coming budget year.

What’s wrong with what lawmakers and Hobbs want, Mayes told Capitol Media Services, is that the $1.14 billion settlement of the multi-year lawsuit with manufacturers and pharmacies has specific requirements on how those dollars can be spent. And giving those dollars to lawmakers as part of their plan to fix the budget deficit is not one of them.

More to the point, Mayes said violating the terms of that deal endangers future payments for the next 16 years. There is still more than $1 billion owed.

But Sen. John Kavanagh who chairs the Senate Appropriations Committee, said it is Mayes who is off base.

“Eighty percent of prisoners are addicted to drugs or alcohol,” he said. “There’s more than enough patients there affected by opioids to spend the money on treating them and rehabilitating them.”

Mayes said Kavanagh is just partly right.

The attorney general said she has set aside $10 million for opioid treatment of inmates, a number she said is appropriate to the size of the problem. Anything more, she said, is simply a “scheme” to balance the budget for the current fiscal year.

And it is a scheme, she said, shown by the fact that the budget-balancing plan would take $75 million out of the allocation with just two weeks to go before the end of the fiscal year.

Gubernatorial press aide Christian Slater said his boss, who was involved in negotiating the deal to transfer the money, has no comment.

Arizona was one of many states, along with some local communities, who sued manufacturers and pharmacies, contending that they engaged in policies that were designed to get people hooked on opioids. The result, according to the lawsuits, was that Arizonans got hooked and governments were stuck with dealing with the fallout, including health care, incarceration and treatment.

In a court-approved settlement, the companies agreed to payment — but with specific guidelines.

These include supporting people in treatment and recovery from opioid-use disorder, discouraging or preventing misuse of opioids, ensure appropriate prescribing and dispensing of the drug, and providing money to first responders including appropriate practices and precautions when dealing with fentanyl — a particularly potent opioid — and other drugs.

Of the multi-party settlement, the state got $502 million, with the balance reserved for counties, cities and towns. But all those dollars all go through the Attorney General’s Office.

Mayes pointed out what Hobbs and lawmakers are proposing isn’t just a one-time raid. She said the budget proposal awaiting legislative action also seeks to take an additional $40 million a year out of the fund for each of the next three years.

“I’m trying to let the Legislature know that this is illegal, it’s inappropriate,” she said. “I’ve informed the governor’s office they can’t do this.”

Her hope, Mayes said, is lawmakers will drop their plans to seize the dollars and instead work with her to find ways spend the money legally.

“If that doesn’t happen, then I’m not giving them the money,” she said.

“It’s in my bank account and it’s not going anywhere, because I’m responsible for the stewardship of the opioid settlement fund,” Mayes continued. “And I cannot allow it to be used for an illegal purpose.”

The likely outcome if lawmakers don’t back down, she said, is court.

“If that means I have to sue the Legislature and the governor, so be it,” Mayes said.

“If that means they have to sue me, so be it,” she continued. “But those monies aren’t going anywhere and they’re not going to balance their budget this way.”

Mayes said this isn’t just a turf war. She said the move to take $195 million out of the fund in the four-year period endangers other important programs.

For example, she said, the money helps purchase and distribute naloxone, a drug that can treat narcotic overdoses in an emergency situation. But that, the attorney general said, would not be the only loss.

Mayes said Yavapai and Coconino counties alread run very successful “jail reentry programs,” providing counseling and treatment for inmates before they are released, “providing wrap-around services for them as they’re coming out of jail.”

Her plan, she said, was to try to replicate those programs in other counties. But she said that can’t happen if the funds disappear. And Mayes said there are other priorities.

“We have heard about the dire need for detox centers in rural Arizona,” something she said would no longer be possible if lawmakers can take the dollars.

Mayes is not alone in questioning the bid to take the funds.

“I don’t think what we’re doing with the opioid settlement funds is legal or correct,” Sen. Ken Bennett, R-Prescott, said during a vote on the bill that uses $75 million in the current year and $40 million more in each following year to help fund prison healthcare.

Sen. Anna Hernandez, D-Phoenix, echoed those thoughts.

“I have a lot of concerns and questions around how we can take $75 million from the opioid settlement and put it over into corrections,” Hernandez said. “I definitely agree that there is a lot of red flags in there for me.”

That $75 million is a crucial part of the efforts by lawmakers to balance the current budget as is required by law.

To do that, lawmakers need to get total spending for the current year down to $17.2 billion. With revenues not matching that figure, that means finding  $729 million by June 30.

Part of the deficit is due to the economy which is deterring some new purchases that would generate sales taxes.

The Republican-controlled Legislature also approved revamping the state income tax system, replacing the prior brackets with a flat 2.5% tax. That had a price tag of about $1.5 billion.

There also are new costs from the decision by lawmakers to allow all students to get a voucher of state funds to attend private and parochial schools, not just those with special needs. That opened the door to thousands of students whose parents already were paying tuition instead getting state dollars.