Need to protect special funds from state raids

Arizona employers are learning that money they pay into a fund to compensate injured workers might not actually have to be used for that purpose.

The Arizona Court of Appeals ruled Friday that it was OK for the state to raid the State Compensation Fund to help balance the state budget, which is what happened in 2009 when the Arizona Legislature was trying to cope with falling tax revenue from the recession.

In addition to taking $4.7 million from the compensation fund — which pays for medical care and lost wages for workers injured on the job — the state raided various other special funds intended for other purposes in its effort to find extra money.

Employers, who are required to pay into the workers fund by state law, filed a lawsuit, claiming the money was supposed to be held in trust for that purpose only. A Maricopa County Superior Court judge agreed and ruled the governor and lawmakers broke the law in taking the money.

The Court of Appeals reversed that ruling, basically saying the Legislature makes the rules and if it gives, it can also take away. There have been similar rulings involving some of the other funds “swept” by the state.

State lawmakers need to change the rules to protect these special funds. They are intended for particular purposes and often require collection of special fees for those purposes. They should be protected from raids by lawmakers.

We agree with Farrell Quinlan, who heads the Arizona chapter of the National Federation of Independent Business, that the intention was not that these funds should be “piggy banks” to help the state balance its budget.

Unfortunately, since lawmakers make the rules, it may be hard to convince them to restrict their own actions.