Friday, July 09, 2010

EDITORIAL >> AG breaks state law

He is a mean grinch who will question a good deed, but sometimes someone must do the thankless. Attorney General Dustin McDaniel the other day donated $100,000 to a private fund to build a memorial to fallen firefighters on the grounds of the state Capitol and he shouldn’t have.

General McDaniel eloquently explained why he was doing it. The Capitol ought to be the host for a “permanent reminder of our fallen firefighters’ heroic efforts,” he said. We like the idea of a firefighters’ memorial, too, although it ought to be privately funded like some of the other memorials. The monument is to cost $1.1 million and McDaniel’s generosity puts the fund within $64,000 of the goal.

But the $100,000 did not come from McDaniel’s personal checkbook. While the cash did not come directly from taxpayers it was state money, and it should have been spent like your sales-tax dollars —according to the most urgent needs of the state.

The money was part of Arkansas’ share of the proceeds from the settlement of a lawsuit against Pfizer Inc. brought by 33 states, including Arkansas, over the company’s marketing of the drugs Bextra and Celebrex. The settlement followed a five-year investigation going back early in the decade. The state has participated in a number of such multistate lawsuits the past 40 years and reaped many millions of dollars in judgments and settlements from wayward corporations, the tobacco companies being the most famous ones.

McDaniel did not claim that it was his personal gift, although he would later suggest that it came about because of his good lawyering. He might have mentioned the lawyering of his predecessor and the attorneys general of 32 other states and the District of Columbia. But he got lots of political credit for the gesture. Will firefighters, their families and admirers forget his gesture at the next election?

But a little politicking with state money is not our big concern. The governor, mayors, federal and state lawmakers do it all the time. After all, it is for a cause, which, though private, many people will support.

Our problem is that it is unconstitutional and, even if it were constitutional, poor public policy. The Constitution says not once but twice that the state cannot pay any money out of the state treasury without an appropriation. An appropriation is an act passed by the state legislature and signed by the governor that determines what the state can spend money on and how much.

Yes, yes, we know that the Arkansas Supreme Court made a screwball decision in 1949 that said if state money somehow did not actually find its way into the treasury in the first place it could be spent without an appropriation and pretty much however the person or agency that got their hands on the money wanted to spend it. It’s called the “cash funds case” and state colleges and universities and some other institutions have loved it. The chief justice, Griffin Smith, was appalled at his colleagues’ decision and predicted great mischief as a result. He was right.

As you could have anticipated, the ruling was an invitation to create cash funds and avoid the controls on their spending. Now cash funds total some $6.5 billion a year, although the legislature over the years has forced agencies and institutions to submit most of it to the appropriation process. That is good because the legislature, for better or worse, is the body all of us depend upon to weigh the vast needs of the state and to distribute the state’s assets according to those needs.

McDaniel’s little subsidy to the firefighters makes a perfect example of the need to bring the cash funds under control. Not because more statuary on the Capitol’s grounds is a bad idea, although some argue that there is too much already, but because the state has vast unmet needs and the firefighters’ statue ought to be measured against the rest.

The attorneys generals of the states have been racking up some big settlements, and we can’t say that McDaniel has been spending Arkansas’ share of them foolishly. Millions have gone to Medicaid, which has helped shore up the Medicaid fund during the fiscal crisis. But the Constitution did not anticipate that the attorney general would determine how a big share of the state’s money is spent. He’s the state’s lawyer, nothing more. We invest the legislature with the power to determine state needs. We don’t always like its priorities, but that is the system the founders came up with. We should live with it.