Bill would prohibit settlement dollars from going into funds unless designated by Legislature

Lincoln, NE –  Nebraska State Senator Heath Mello (District 5, South Omaha) announced plans today to introduce legislation that would address the controversial use of court settlement dollars by the Nebraska Attorney General’s Office when the Nebraska Legislature convenes on January 4th.

Earlier this month, the Attorney General’s Office announced that it was awarding a $100,000 grant from the Nebraska Attorney General’s Supplemental Environmental Project Fund to the “We Support Agriculture” coalition. Money in the Supplemental Environmental Project Fund, a cash fund that is not referenced in Nebraska state statutes, comes from fines and enforcement payments obtained when the Attorney General’s Office settles cased dealing with violations of Nebraska environmental laws.

“Like many of my colleagues who are only just now learning about this fund, I am concerned about the lack of transparency in the use of these settlement dollars,” said Mello, a member of the Legislature’s budget-writing Appropriations Committee. “If these cases had gong to trial, the fines would have otherwise been allocated toward public schools.”

Under Article VII, Section 5 of the Nebraska State Constitution, fines and penalties for violations of Nebraska law are to be “appropriated exclusively to the use and support of the common schools” and such monies have traditionally been distributed amongst K-12 school districts in the individual counties where the violations were committed.

Mello’s proposed legislation would direct that any settlement funds received by the state would also be distributed in the same manner unless otherwise specifically provided by statute or court order.

“With the impending loss of federal funds and the potential for additional state aid cuts this session, Nebraska school districts could use these settlement funds to offset their losses and keep local property tax burdens low, ” said Mello.

In the event that a court order or judgment provides for settlement funds to be spent for an alternative purpose, the proposed legislation would require that the monies must be credited to a fund that had been statutorily created by the Legislature. Essentially, this requirement would prevent further settlements from adding to the Supplemental Environmental Project Fund unless legislation was passed to establish the fund in state statute.

“These settlement dollars are ultimately taxpayer dollars,” said Mello. “For there to be no established statutory process for awarding these grants, no transparency, is irresponsible.”

For Immediate Release
December 27, 2011

For More Information:
Trevor Fitzgerald, Legislative Aide
(402) 471-2710