CHARLESTON, W.Va. (Legal Newsline) - West Virginia lawmakers and others say they are concerned about Attorney General Darrell McGraw's recent decision to dole out $1 million to Legal Aid from the state's share of a nationwide mortgage settlement.
Last week, McGraw's office presented a check to Legal Aid Executive Director Adrienne Worthy, allowing the nonprofit organization to continue to operate its office for Logan and Mingo counties for the next three years.
Legal Aid is the sole provider of no-cost legal assistance with housing, income security and safety issues for the state's low-income or "vulnerable" citizens.
In a news release, McGraw said his Consumer Protection Office was able to secure the funding for the nonprofit through the nationwide mortgage settlement reached in February.
Richie Heath, executive director of West Virginia's Citizens Against Lawsuit Abuse, said Wednesday it's not a question of whether certain nonprofits are deserving of funding, but whether the attorney general should be unilaterally giving state money away without any oversight.
"It's clear that Darrell McGraw has no problem infringing upon the West Virginia Legislature's power of the purse, as he continually spends state settlement funds as he sees fit," Heath said.
"These moneys should be turned over to the Legislature, and spent with the transparency and oversight intended by our state constitution."
State Sen. Corey Palumbo, D-Kanawha, agreed.
"I think that Legal Aid is a good cause and is worthy of support," the Senate Judiciary Committee chairman noted.
"But the question is whether that money should be appropriated by the Legislature, since it is money coming back to the state through that lawsuit."
He continued, "It's the constitutional duty of the Legislature to appropriate funds, and that's what we should be doing."
However, Palumbo said he understands that court orders sometimes are specific in their direction of settlement money.
In this case, West Virginia's share of the nationwide mortgage settlement -- like the other 48 states -- is earmarked to help struggling homeowners, Deputy Attorney General Jill Miles explained.
"There is a provision in the court's order that the money be used for housing-related issues," she said Thursday.
"It's not within our province or the province of the state Legislature (to use it for other purposes). It has been mandated by the federal district court of the District of Columbia."
The nationwide settlement, finally reached between federal officials, 49 state attorneys general and the banks after many months, is worth $25 billion but only covers those mortgages held by the five banks, not Fannie Mae or Freddie Mac.
West Virginia will get more than $33 million in assistance for struggling homeowners.
Of that, an immediate estimated payment of $2,000 will go to each state homeowner who lost their home to foreclosure between Jan. 1, 2008 and Dec. 31, 2011.
More than $18 million will go to loan modifications and benefits to state homeowners currently in default or foreclosure.
More than $5 million will go to free refinancing for "underwater" but current state homeowners.
Another $6 million will go to foreclosure and mortgage assistance and prevention programs in the state.
According to McGraw's office, the $1 million given to Legal Aid will allow it to partner with the office's Project: Save Our Homes initiative and establish an attorney position in the nonprofit's Martinsburg office.
In coordination with the Save Our Homes program, Legal Aid will provide mortgage and litigation help for homeowners at all 12 offices in its West Virginia network, including the Logan office.
Patrick Morrisey, McGraw's GOP opponent in the state's Nov. 6 election, argues that the West Virginia Constitution -- not federal documents -- governs the handling of settlement monies.
"The truth is that Legal Aid does provide valuable services," Morrisey said Thursday.
"But the decision as to who should receive resources should be left up to the Legislature."
The Eastern Panhandle attorney pointed to Article 10, Section 3 of the state constitution, which states: "No money shall be drawn from the treasury but in pursuance of an appropriation made by law, and on a warrant issued thereon by the auditor; nor shall any money or fund be taken for any other purpose than that for which it has been or may be appropriated or provided."
"Funding decisions need to be made by the Legislature, not the Attorney General's Office, plain and simple," Morrisey said. "That settlement money isn't McGraw's, it's taxpayers'."
If elected, McGraw's challenger said all settlement monies awarded to the Attorney General's Office will be returned to the Legislature. "Period," he said.
"As attorney general, I will fight for all West Virginians and make sure we help the most vulnerable of our society," he said. "But we need to run the AG's office in an ethical manner.
"This is just another example of McGraw acting above the law."
He contends the attorney general is "once again" spending millions of dollars in state funds -- during an election year -- on "pet projects" to simply boost his political prospects.
But McGraw's office argues that Legal Aid provides "vital" legal services.
Without the funds from the nationwide settlement -- and the use of taxpayer dollars -- the nonprofit's ability to offer "free, life-changing legal help" would be "severely curtailed," the attorney general said last week.
McGraw noted that Legal Aid lost $1.2 million in federal and other grants this year, and that number is expected to increase next year.
"The whole purpose of the settlement was to address the housing problem," Miles said. "And that's what we're trying to do."
From Legal Newsline: Reach Jessica Karmasek by email at email@example.com.