MONTGOMERY, Alabama — More than three quarters of the money that Alabama is receiving from a national court settlement over alleged foreclosure wrongdoing by banks will, in effect, be used to prop up Alabama’s General Fund budget, according to state leaders.
Such use of the money is common nationwide and likely falls within the settlement’s rules, but advocates for homeowners have questioned whether it truly helps the people who were hurt by the mortgage practices that spawned the settlement.
Between the current 2012 fiscal year and fiscal year 2015, the state attorney general’s office plans to use about $19.3 million of the state’s $25.3 million share of the settlement to help fund parts of its own law enforcement operations and those of district attorneys in Alabama, officials said.
The chairmen of the House and Senate committees that handle the General Fund budget — which finances law enforcement, including the attorney general’s office, as well as prisons, courts, Medicaid and other non-education functions — said they plan to reduce the state dollars that would otherwise go to the attorney general in line with the settlement money. That frees up state money for other agencies.
“Without a doubt, the settlement has provided some relief to the General Fund in fiscal year ‘13 and, it’s my expectation, will continue to provide a small amount of relief for the next few fiscal years,” said Sen. Arthur Orr, a Decatur Republican and chairman of the Senate Finance and Taxation General Fund Committee.
Jim Carnes, communications director for Alabama Arise, said he understands the need to find new revenue for state budgets, but he also expressed hope that part of the money could be directly used to benefit people with housing problems, perhaps through a grant program. Ultimately, this is a symptom of a larger problem, he said.