Arizona farm groups sue governor, state treasurer over state-swept grower funds

Four farm groups have filed a lawsuit against Arizona Gov. Janet Napolitano and State Treasurer Dean Martin to regain $161,400 of grower-paid assessment funds the state “swept” earlier this year to help offset a $1.2 billion 2008 state budget shortfall.

The plaintiffs, Yuma Fresh Vegetable Association (YFVA), Western Growers Association, Arizona Farm Bureau Federation, and the Arizona Wheat Growers Association, contend the grower-fund sweep violates the U.S. and Arizona constitutions. The legal challenge was filed in Maricopa County (Ariz.) Superior Court.

The lawsuit seeks reimbursement by the state to the three councils that were swept: $80,000 from the Arizona Grain Research and Promotion Council (AGRPC); $44,140, Arizona Iceberg Lettuce Research Council (AILRC); and $40,000, Arizona Citrus Research Council (ACRC).

The plaintiffs maintain the grower funds belong to the councils, not the state. The funds were paid through voluntary assessments for the councils’ programs of work to be held in trust by the state treasury. Current assessments include 2 cents per hundredweight for wheat and barley for the AGRPC, 1.5 cents per carton of citrus (ACRC), and $.002 per carton of iceberg lettuce (AILRC).

Joe Sigg, Farm Bureau’s government relations director, Gilbert, Ariz., said most council funds finance food safety-based research. The University of Arizona is awarded most of the research dollars, he said. The state treasurer is to hold funds in trust until the research project is awarded.

“We believe the sweeps of grower money to balance the state budget are illegal, unconstitutional, and wrong,” says Rick Rademacher, YFVA president, Yuma, Ariz.

Western Growers attorney and lobbyist Robert Shuler, Phoenix, Ariz., says, “We believe the law is pretty clear. You can’t take these kinds of funds without due process. These funds were set aside in trust to be held for a particular purpose.” Western Growers is a trade organization representing the fruit, vegetable, and nut industries in California and Arizona.

Sweeping funds held in trust is illegal, said Sigg, a lobbyist. “If a person was a private trustee and was given assets in trust with specific guidelines, parameters, and rules, and then took the funds for something else, the individual could go to jail,” Sigg says. “Yet the state of Arizona feels it can (legally) sweep such funds. We disagree with that.”

In addition to financial restitution, the plaintiffs have a far-reaching goal; gaining a court opinion that will prevent council fund sweeps in the future.

“We’re not talking a lot of money here, but it’s the principle; we want this thing to stop,” Sigg says. What the state has done is legally and morally wrong, Shuler says.

Gov. Napolitano reacted to the lawsuit saying the agricultural fund sweep was legally defensible since the dollars came into the state treasury and then became public monies, according to an article from Capitol Media Services.

Rademacher said the fund sweep issue is ironic. The Arizona Legislature years ago asked the agricultural industry to fund its own research because of a state budget shortfall. “The industry has done that, yet the state is taking the very funds it asked commodity groups to raise to support themselves,” he said.

Meanwhile the AGRPC, a quasi-government agency, plans to file its own lawsuit this month. David Sharp, council chair and a Roll, Ariz., grain producer, said state rules and protocol prohibit the AGRPC from joining the legal challenge with the farm organizations. Yet the overall goals are the same.

“We’re looking for a summary judgment that says we get our money back,” Sharp says. “We also want a declarative judgment so we can hold up a piece of paper in the future when state government wants to sweep our money and say no; the courts say leave our money alone.”

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TAGS: Legislative
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