A rush of one-time settlement money related to the 2008 financial crisis is splitting Delaware lawmakers on how to spend it.
Attorney General Matt Denn (D) unveiled a plan last month to boost spending on education, housing and substance abuse programs with $36 million from multi-state lawsuits against Bank of America and Citigroup.
But legislators say it will meet resistance in a state budget hearing Thursday.
“That money doesn’t belong to the Attorney General’s office. It belongs to the general fund – the people is what it belongs to," said Sen. Dave Lawson (R-Marydel), who sits on the Joint Finance Committee.
The state Department of Justice announced another $25 million settlement Tuesday – this time from credit rating agency Standard and Poor’s.
In an interview with Delaware Public Media Wednesday, Denn says he won’t draft a plan unilaterally.
"I don’t know what this money will end up paying for," said Denn.
"We’re going to do what we tried to do with the settlement funds that are currently before the Joint Finance Committee, which is that we’ll be talking to the governor’s office and legislators about how best to use them.”
But Lawson says he hasn’t personally heard from Denn about either plan.
State lawmakers who attended Denn’s press conference last month outlining the $36 million plan were generally supportive, but also called on state officials to make long-term commitments to reducing poverty and crime in Wilmington.
Much of the money would target Delaware’s largest city, by hiring new teachers at low income elementary schools, increasing affordable housing options and revitalizing blighted neighborhoods.
Former Attorney General Beau Biden offered similar plans for a $19 million settlement from JPMorgan Chase last year, but some state lawmakers took offense to the proposal.
They called it too detailed and that specific spending decisions should be up to the budget writing committee.
JFC members did fund part of Biden’s proposal, but used much of the money to help balance the current year’s budget.
Lawson says he expects a similar fate for any plan coming from the AG’s office.
“Well obviously it’s going to be spread around and I think we’ll look at it and see where best to place that money," he said. "It’s a tight budget year, so nobody gets everything they want. It’s that simple. It can’t happen.”
Debra Heffernan (D-Bellefonte) agrees, but left the option open to use Denn’s plan as a roadmap.
“It may be doing the proposal the way the attorney general has asked, but more likely, JFC is going to make the determination of how that money should best be spent,” said Heffernan.
The settlement money comes with strings attached: it must be used to help remediate any harm caused by the financial crisis – especially to homeowners.
Biden’s administration argued that an increase in urban blight was directly tied to the poor economic situation and justified their plan that way.
JFC will consider the plan Thursday afternoon.