The state agency that oversees workers' compensation laws and coverage is asking the Arizona Supreme Court to force the Legislature to give back $4.6 million it took from the agency's funds.
In legal papers filed Tuesday, the Industrial Commission claims that the cash it collects from premiums on workers' compensation policies is earmarked for specific purposes. The primary role is to pay the claims of employees injured on the job when companies or their insurance carriers do not.
Lawmakers took the funds in January to help plug a $1.6 billion hole in the state budget. And that, according to attorney David Ouimette, is illegal.
Gov. Jan Brewer, who signed the budget fix that included the fund sweep - had no comment on the lawsuit. Press aide Paul Senseman said Brewer "will be consulting with counsel and budget team regarding potential options."
That $1.6 million budget fix included about $580 million in spending cuts, $500 million in federal stimulus dollars and the balance from various special funds and accounts scattered throughout state government.
Some of those accounts were funded originally by the Legislature. Others were in accounts set up for special purposes, like paying local law enforcement to patrol lakes at state parks.
What's different here, Ouimette argued, is these dollars were raised by what amounts to a tax on employers for a specific purpose. That, he said, makes them "private or special purpose trust funds" and not state revenues, "and that accordingly, the Legislature cannot lawfully appropriate them for general state use."
The amount of money in dispute is only a small percentage of the budget fix.
But the new lawsuit joins several others that challenge the ability of lawmakers to raid special funds. And if the courts side with the challengers it will remove some options from the list being considered by the Legislature in its efforts to balance the anticipated $3 billion deficit for the coming fiscal year.
Just last week the backers of a successful 2006 tobacco-tax initiative asked the Supreme Court to block the Legislature from taking some of the proceeds. Attorney Charles Blanchard said the Arizona Constitution precludes lawmakers from diverting funds voters had earmarked for other purposes to deal with the $1.6 billion deficit.
The high court is slated to review that case June 1.
Another case pending in Maricopa County Superior Court stems from a lawsuit filed last year by several farm groups after lawmakers, in adopting the original $9.9 billion budget, took $161,000 from various agriculture funds.
Those dollars were raised by fees that lettuce, grain and citrus growers imposed on themselves for research and marketing. That lawsuit, still pending in Maricopa County Superior Court, contends the state was simply holding that money "in trust" for the farmers and that it was not state money - and not subject to being raided.
There have been at least two successful challenges to budget actions by the Legislature.
The Supreme Court in February reversed a provision in the original budget that took $30 million from cities and counties. And a state judge has blocked, at least temporarily, reductions in services to the developmentally disabled that were made after the latest round of budget cuts.