If you’ve listened to any local news source over the past”¦. what, two years? then you’re aware that Arizona ”“ like many states and the Federal government as well ”“ is in a bit of a budget crunch. It’s been painful for Arizona residents, taxpayers, and lawmakers.
I understand that things are rough, that money has to be scraped together, spending cut, taxes raised, etc etc etc.
This story however, annoys me beyond belief. From ABC15 comes, Arizona lawmakers raided consumer protection funds to help balance budget.
Seems the Arizona legislature swept millions of dollars out of consumer protection funds and into the general fund. These protection funds help reimburse consumers from negligent (and other) actions from a variety of professional services.
Arizona Registrar of Contractors Fund: Funds swept = $8.4M. Funds left = $28K
Arizona Department of Real Estate Recovery Fund: Funds swept = $700K. Funds remaining = $6K
Arizona Department of Financial Institutions Escrow Recovery Fund: Funds swept = More than $5M. Funds left = zero. The account is closed.
As a licensed real estate broker in Arizona, I pay into the Real Estate Recovery Fund. As does my wife, and every one of my agents. In fact, the Department of Real Estate info sheet on the recovery fund states, “The recovery fund is funded from a surcharge on license fees. Tax dollars are not used.” (my emphasis)
How then can the legislature re-appropriate non-taxpayer provided money and use it for some purpose other than what it was legally designated for?
Clearly I am neither an attorney nor a legislative representative. But I’m not the only person wondering this. In fact, two insurance protection funds sued the state after lawmakers eyeballed their $29M funds. According to ABC News:
But, lawmakers didn’t get all they wanted. Two insurance funds sued the state.
Lawmakers only got $19,000 for the general fund when they wanted $29 million.
The lawsuit claims the funds have a "particular purpose" of paying consumer claims if an insurer couldn’t. The money comes from insurance companies, not taxpayer money, so they are private, “not public funds subject to appropriation".
Two years later, the fund still has its $29 million. (Arizona State Representative) Kavanagh is backing off.
“When we saw the legal argument, we stopped,” he said.
Huh. Why didn’t the Arizona Department of Real Estate follow the path the insurance funds took? The Real Estate Recovery Fund has a “particular purpose.” The money comes from real estate agents and brokers, not taxpayer money ”“ just like the insurance fund.
According to ABC, Arizona Real Estate Commissioner Judy Lowe is “past the angry stage.”
Well I’m not past the angry stage. I sure hope the Department doesn’t come after me or my agents to replenish the fund they let lawmakers gut. Personally I’d like to hear Commissioner Lowe’s full take on this. “Past the angry stage” implies she was at least angry at some point. Surely the promise that the fund will be repaid doesn’t satisfy her. Where will the money come from to replenish the fund? Is she OK with giving consumers an I.O.U. as she states in the video below? I searched the AZ Department of Real Estate for news on the Recovery Fund sweep and found nothing about this matter. (Of note, there could be something there. It’s excruciating to find anything on that site.)
Below is a short video on the story. My favorite line is from Representative Kavanagh who when asked why the state took funds that were provided in the same manner as the insurance funds replied, "I don’t know what the actual legal arguments were." But you also said, “when we saw the legal argument, we stopped.” If you “don’t know what the actual legal arguments were”, why did you stop going after those particular funds?
For more info on the Real Estate Recovery Fund (or what’s left of it), here’s an article from former Arizona Real Estate Commissioner Sam Wercinski. It’s slightly dated, but accurate as far as I can tell.
Photo Credit: Arizona State Senate Chambers. Willem van Bergen on Flickr. CC Licensed.