Attorney General Kris Mayes filed suit against the Arizona Department of Administration Thursday to stop the state department from taking money from an opioid settlement fund as directed by state lawmakers and Gov. Katie Hobbs in the state’s newly passed budget.
In court documents, the attorney general argues that taking $75 million from the state’s opioid settlement fund to give to the Department of Corrections would violate national settlement agreements and an agreement made between the state, counties and cities on how to spend the money.
“The decision by the Governor and the Legislature to sweep opioid settlement funds to backfill budget deficits is illegal, and today I asked the court for an injunction to stop the transfer of these funds,” Mayes said in a written statement. “In their rush to end the session, GOP leaders and the Governor ignored other viable options to balance the budget, such as utilizing the rainy-day fund, which has now reached approximately $1.4 billion.”
Maricopa County Superior Court Commissioner Mary Cronin granted the injunction until July 5, preventing the funds from being moved while the court hears the case.
"Plaintiff (Mayes) is likely to succeed on the merits of her claims because the diversion of $115 million from their approved uses ... would be illegal,'' the commissioner wrote. "If the funds are illegally diverted from their approved uses, Arizona and its citizens are likely to suffer irreparable harm,”.
That, she said, is because the funds won't be used to abate the opioid epidemic. And then there's the chance that the diversion risks future payments in violation of the settlement agreement.
The funds at issue are part of a $1.14 billion 18-year settlement the state reached on its own behalf and also for local governments to resolve claims against manufacturers, distributors and pharmacies. All were accused of activities that created and exacerbated opioid abuse.
The budget passed by lawmakers allowed ADOA to take the funding if Mayes did not hand it over before June 20. It also required Mayes to hand over an additional $40 million in funding for the next fiscal year by July 3.
In the complaint, Mayes argues that there’s no guarantee the funds will be spent in a way that complies with the settlement term.
“... instead of spending it on opioid remediation, as required, from what little [the AG’s office] knows now, all $115 million could end up being spent on beans, bullhorns, and buses with barred windows, the daily grist of the DOC’s mill,” the complaint read.
The budget requires the money moved to the DOC to be used only for “care, treatment, programs and other expenditures for individuals with opioid use disorder,” or in ways mandated by court order or the previous opioid settlement agreements.
Christian Slater, the communications director for Hobbs, said the governor disagrees with Mayes’ argument.
“The Attorney General is flatly wrong,” Slater said. “Her characterization of these funds as ‘backfilling’ ADCRR would be more accurately described as funding vital opioid use disorder treatment for a population that is disproportionately impacted by the opioid epidemic.”
In the complaint, Mayes said her office outlined a plan in April to spend $72.1 million of the opioid settlement fund in a variety of different ways. She said the settlement agreements with the pharmaceutical companies allow the attorney general to direct use of the funds with the “advice and consent” of the Legislature.
House Republican leadership did not immediately respond to requests for comment.
Mayes warned lawmakers when the budget was proposed last week that using the funds to fill holes in the state’s budget could be illegal. Several lawmakers advocated against including the funds in the final budget but were ultimately outvoted.
Howard Fischer of Capitol Media Services contributed to this report.
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