Judge blocks use of opioid settlement money to balance Arizona’s budget deficit

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A judge on Thursday blocked the transfer of $115 million from the state’s share of the national opioid settlement that legislators approved less than a week ago as a key component of balancing a nearly $1.4 billion budget deficit.

The court stepped in after Attorney General Kris Mayes, who was sharply critical of the proposed transfer when it emerged late last week and said it would violate the terms of the settlement, filed a lawsuit earlier in the day and asked for a judge to take emergency action.

As part of those settlements with opioid manufacturers and distributors, Arizona will be paid $1.14 billion over 18 years. But unlike when states received large settlements from tobacco companies in the 1990s and lawmakers across the country then used that money to plug budget holes, the opioid settlements gave sole authority to attorneys general to distribute the funds – and required they be used for opioid abatement, not the ordinary operation of state agencies.

As lawmakers were considering using the opioid funds to balance the budget, Mayes called it an “egregious grab” and said she would sue to block its implementation if the provision was included. She followed through with that promise on Thursday, suing Gov. Katie Hobbs and the Arizona Department of Administration, which was directed in the budget to transfer the money to the state Department of Corrections, Rehabilitation and Reentry.

The state, Mayes wrote in a request for a judge to immediately step in and block the transfer, is obligated to spend at least 85% of the money for uses authorized by the settlement. Failure to do so, she said, would allow some of the companies to claw back their settlement money.

“That would doom Plaintiff and the whole state of Arizona to possible loss of future payments, court actions seeking return of prior payments, and nothing for the poor epidemic’s victims. That clearly is not what these settlements were for…” Mayes argued.

Late Thursday, Maricopa County Superior Court Commissioner Mary Cronin agreed that Mayes was likely to win her lawsuit and issued a temporary restraining order, blocking the transfer. The restraining order will stay in place until July 5. On June 27, Mayes and the Hobbs administration will have a hearing in front of Judge Scott Minder to discuss the underlying lawsuit.

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