Columns » John Brummett

McDaniel's manna gets more criticism

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An appearance of a groundswell emerges against Attorney General Dustin McDaniel's getting to divvy up large sums of legal settlement dollars that occasionally flow to the state.

The practice just doesn't seem right, at least to me and to a more liberal pundit like Max Brantley and to assorted more conservative ones, not to mention, of course, every Republican in sight.

The statewide newspaper did a takeout Sunday, almost seeming to invite a lawsuit about whether this practice, hardly a new one and hardly unique to Arkansas, is constitutional.

The appropriation of state money is supposed to be the legislature's exclusive purview under the state constitution. But, for a recent example, a lawsuit settlement payment of $18.5 million by Eli Lilly to the state for overstating the benefits of a brain drug was actually distributed outside the legislative process, essentially by McDaniel's dictates as laid out in the consent decree.

By his office's negotiation and by rounding: Eli Lilly wrote a $15 million check to the state's Medicaid Trust Fund, another $1 million for Medicaid separately and $2 million to the attorney general's office. McDaniel used a little of that $2 million to buy computers and software for his office so his people can do stings of Internet sex predators of children, a program he ballyhooed in a recent news conference.

State Rep. Jane English, Republican of North Little Rock, proposed a bill in the recent session to direct such settlement funds into the state treasury, where the legislature could distribute them. McDaniel ramped up his lobbying and held off the bill. It sounds as if the measure will come up again, with a tad more impetus next time.

My view of all this is more expansive and far, far more controversial.

I believe legal settlement money ought to go into the state treasury for legislative distribution. But then I also argue that the same goes for all these regulatory agencies that collect their own cash, from licensing and so forth, generating what gets known either as "cash funds" or "special revenue."

Typically, these regulatory agencies get the Legislature to approve their budgets with authority for them to spend their own cash funds or dedicated revenues. But it seems to me that all state agency money ought instead to go directly into the state treasury to await legislative appropriation by policy priority.

Just because an agency collects certain money doesn't necessarily mean it needs all that money operationally.

No longer, for example, should the Real Estate Commission get to keep its own cash and build its independent office palace. That money ought to go to the state general fund. The Real Estate Commission ought to rent spartan office space.

I say that even if the Legislature gives every cent to, say, the Arkansas Sports Hall of Fame, as, heck, it might. At least I could rail against that and constituents could have the opportunity to consider it in their votes next time.

I acknowledge that my view is rather impractical in its breadth.

What's different about the attorney general's settlement money is that, unlike agency-generated cash and certain dedicated revenue streams, it gets disbursed without even a perfunctory review by a Legislature signing off on an authorizing line item in the budget.

Are there arguments for continuing to let the attorney general handle the money this way?

The main one seems to be that a defendant like Eli Lilly might be less inclined to settle if, in the interest of its public relations, it couldn't be party to binding negotiations with the attorney general directing how the dollars would be spent.

The other is a judicial doctrine that settlement dollars ought to be used to address needs revealed in the lawsuit. But that gets us into a Norman French phrase, "cy pres," derived from Latin and made into a legal doctrine by the English.

We'll delve into that kind of thing in this space only under the greatest duress.

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