State litigation spending balloons on Flint crisis

Jonathan Oosting
Detroit News Lansing Bureau

Lansing — Gov. Rick Snyder and Michigan legislators have allocated more than $25 million in extra funding for legal work this fiscal year and last, according to a new budget breakdown highlighting escalating costs spurred by Flint water lawsuits and an ongoing state probe.

The non-partisan House Fiscal Agency report shows appropriations to the state Legal Services Fund have ballooned from $4 million combined in 2014 and 2015 to $17 million combined in the 2016 and 2017 budgets.

The fund is designed to provide support for “major litigation” and to secure “outside legal advice on major statewide issues not unique to a single agency.”

The Snyder administration requested the Legal Services Fund bump in anticipation of mounting Flint litigation costs, said spokeswoman Anna Heaton. There have so far been 12 civil lawsuits filed against the state and 2,000 notices of intent to sue over the water contamination crisis, she said.

“There is also an expansive criminal investigation underway by (Attorney General Bill Schuette’s office) that requires large-scale document production,” Heaton said.

Recent budgets authorized Schuette’s office to spend $3.9 million from the state Lawsuit Settlement Proceeds Fund on expenses associated with the Flint water crisis, including Special Counsel Todd Flood’s ongoing criminal investigation.

Flood’s contract will cost closer to $5 million over two years, including an initial $1 million the attorney general’s office pulled from existing operation funding. Schuette anticipates staying on budget, according to spokeswoman Andrea Bitely.

The 2017 budget includes another $3 million for the attorney general to cover state defense costs associated with lawsuits against the state Department of Environmental Quality and the state Department of Health and Human Services. It also authorizes Schuette’s office to capture $1 million in funds awarded to the state to cover litigation costs.

The recent appropriations for both state litigation and Schuette’s probe total $25.4 million, including $20 million in general fund dollars, according to the fiscal agency.

“It is estimated that a majority of the expenditures will be related to the Flint drinking water declaration of emergency considering the numerous lawsuits that have already been filed or will be filed against the governor, attorney general, the state and state agencies,” the report notes. “Additional appropriations may be requested in the future.”

Separately, Snyder and legislators have approved more than $234 million in Flint-related aid since the state confirmed findings of elevated lead levels in the municipal water supply.

The governor and legislators created the Legal Services Fund in the 2013-14 budget, initially appropriating $2 million that year. Legislators had put $1 million towards the fund for fiscal year 2016 but added another $11 million in supplemental funding while approving the 2017 budget, which includes $5 million for the fiscal year that began this month.

Through Sept. 1, the state had spent roughly $1.5 million from the fund in fiscal year 2016, according to the fiscal agency report. Most of the $1.5 million, nearly $1.4 million, was spent on two private law firms hired by Gov. Rick Snyder to assist his office with Flint-related litigation.

Snyder has since increased those contracts up to a maximum total of $3.4 million. The State Administrative Board last month also approved an environmental department request to increase a Flint-related legal agreement contract from $2.3 million to $4.5 million.

“We don’t anticipate needing to increase the amount of the contracts this year, but we also have no way of knowing how many more suits could be filed or how long the special counsel’s investigation will go on,” Heaton said.

Critics contend Snyder should not use taxpayer funds to pay for private attorneys. State Senate Minority Leader Jim Ananich, D-Flint, recently introduced legislation that would prohibit top officials from using public money for private attorneys “to defend a suit relating to a matter connected with his or her respective office.”

The Department of Technology, Management and Budget oversees the Legal Services Fund and must report itemized expenditures for the preceding budget year by April 1. There are no further requirements or restrictions on the fund, according to the House Fiscal Agency.

Michigan spent roughly $3.7 million from the fund in fiscal year 2014-2015, including $2.75 million defending same-sex marriage and domestic partnership bans ultimately struck down in federal courts.

The state also spent $668,900 that year on litigation related to Detroit’s historic municipal bankruptcy case and $222,600 on litigation involving the State Retirement System.