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Supreme Court won’t hear water fund sweep challenge

For the moment, the state Legislature can count out one of the many lawsuits it faces, as the Arizona Supreme Court will not hear a challenge to the sweeping of millions of dollars from a fund used to carry out a multi-state water-rights agreement.

The court announced on Dec. 1 that it would not accept review of a petition for special action filed in early October by the Central Arizona Water Conservation District. The district sought to prevent the forced transfer of $5.4 million from an account held by the Arizona Water Banking Authority.

Bob Lynch, an attorney, for the Central Arizona Water Conservation District asked the court to find that fund sweeps contained in state budget bills passed this year illegally netted money deposited by two Nevada-based water commissions.

The money in question is part of a water-management deal affecting Arizona and Nevada that extends until 2018. This year, two Nevada water authorities gave the Arizona Water Banking Authority $100 million to finance the purchase, delivery and storage of water by the Central Arizona Water Conservation District and the Central Arizona Project.

Lynch argued in court filings that the fund sweep could jeopardize Arizona’s future ability to secure needed water supplies to offset the dangers of drought. The fund sweeps were argued as an unconstitutional use of the state budget process to create a substantive, and not a budgetary, policy goal.

The $5.4 million transfer was approved by the Legislature in July, but a similar sweep in January netted $12.5 million from nine different funds operated by the Arizona Water Banking Authority. Roughly $8.5 million of the latter figure was part of Nevada’s payment.

Lynch said in October that he had no expectation that the $8.5 million in Nevada money swept into the state general fund would be recovered. But the Central Arizona Water Conservation still sought to at least have the transfer declared unconstitutional to prevent further forays into the funds.

As of Dec. 3, it was unclear whether the Central Arizona Water Conservation Authority would challenge the fund sweeps by filing a lawsuit with the Maricopa County Superior Court.

The Legislature’s reliance on sweeping funds held by agencies and commissions in efforts to balance recent state budgets has prompted numerous lawsuits by government commissions and interest groups.
In July, the Arizona Supreme Court overturned a sweep that targeted the interest earned from a fund operated by the Arizona Early Childhood Development and Health Board. The court found that the Legislature’s $7 million interest sweep violated the terms of the 1998 Voter Protection Act, or Proposition 105, a constitutional amendment that limited the Legislature’s power to amend voter-approved initiatives.

A similar sweep of private funds held in a state trust to advance the interests of Arizona’s agricultural business community also was ruled illegal by a Maricopa County Superior Court judge in July.

Other fund sweep-related lawsuits have been filed by the Arizona Industrial Commission, a conglomerate of medical board that license physicians and other medical service providers, and the Arizona Power Authority.


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