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Lawmakers Wednesday declined to review a request to allow more state money to be spent on $170,000 worth of outstanding legal fees incurred by Arkansas Treasurer Dennis Milligan's office.

Senate President Pro Tempore Jonathan Dismang, R-Searcy, said Milligan's office should have gone to legislative leaders months ago to discuss a legal bill that in total tops $330,000, related to lawsuits filed by a former employee.

Officials from the treasurer's office had asked lawmakers to approve shifting $205,000 within the treasurer's budget to pay off the $170,000 in outstanding legal fees -- which the office does not have the spending authority to pay -- and to pay outside legal counsel to help implement legislation approved earlier this year on how the office invests money.

The legal bills from the Mitchell Williams law firm are the result of litigation filed in federal and state courts by the treasurer's former outreach manager, David Singer. Arkansas Attorney General Leslie Rutledge's office, which serves as general counsel for state offices and officials, had a conflict of interest and declined to defend Milligan's office.

"I feel like I'm missing something because you've incurred debt to a law firm that you didn't have the money to pay, and now you're coming before us and asking to pay the bill," Dismang said during the Arkansas Legislative Council's Performance Evaluation and Expenditure Review Subcommittee meeting Wednesday.

Sen. Bruce Maloch, D-Magnolia, a co-chairman of the subcommittee, raised similar concerns.

"Our issue is the fact that when you know you're getting close to running out of money, you come and get appropriation before you spend the money," he said. "You put yourselves in a legal limbo of spending money without appropriation. You put the Legislature in a bind."

Rep. DeAnn Vaught, R-Horatio, asked whether it would be a better use of taxpayer funds to settle the case or to use in-house legal counsel.


In response, Chief Deputy Treasurer Jason Brady said he had known since January that a retrial was coming up that would increase legal fees. Because of the legislative session going on earlier this year, Brady said, Wednesday's subcommittee meeting was the first available time to handle the request.


Brady said he did not speak to legislative leaders about the mounting legal fees. He apologized to lawmakers and said he took responsibility for not doing so.

In response to a question from Rep. Kim Hammer, R-Benton, about whether the office was trying to hide something, Chief Deputy Treasurer Grant Wallace said: "There was no attempt to hide these charges. You're in the midst of a legal battle and you're doing what you can to protect the interest of the state at that time."



Brady said the office received an offer to settle the case for $1 million, but he did not believe that amount would cost taxpayers less than going to court.

He also pointed out that Milligan had prevailed in federal court, though a state case is ongoing. A jury trial is scheduled for July 12.

T.J. Fowler, chief legal counsel for the treasurer's office, added that the ongoing litigation is too complex for one person to handle.


The treasurer's office request was initially approved in a voice vote, but after several lawmakers asked for a roll call, that vote was overturned.

During the roll call, five members of the subcommittee voted in favor of review. Maloch said 14 of the 20 members were present and that a majority was needed for review.

Sen. Jason Rapert, R-Bigelow, who voted to approve the request, was the sole lawmaker to defend the office Wednesday.


"I doubt the treasurer at all enjoyed being sued," he said. "We cannot control, any of us, the fact that somebody sued you,especially frivolously sued you, and you did your part to defend yourself."

Singer filed a complaint that the treasurer violated the state's whistleblower law when he fired Singer in April 2015.

In the original state lawsuit filed against Milligan and his then-chief of staff, Jim Harris, in September 2015, Singer's attorney said Singer had complained about "using public funds to engage in political activities and harassment," although the complaint offered no details.

An updated complaint also alleges that Milligan illegally transferred funds within his office to pay a Washington, D.C., company for a program offering financial literacy instruction to elementary school students.

The federal lawsuit ended in February when a jury cleared Milligan of a discrimination claim and Harris of a defamation claim.

Singer alleged that Harris defamed him by writing in an interoffice memo to the deputy chief of staff that Singer had "mental problems." Singer also alleged that Milligan fired him because the treasurer believed, based on viewing the memo, that Singer suffered from a mental disability.

Singer contended his firing violated the Americans with Disabilities Act, which prohibits terminating someone on the basis of a disability, real or perceived.

Wednesday's meeting was the second time the treasurer's office has asked to shift funds to pay for the lawsuits. In March 2016, the Arkansas Legislative Council voted to shift $50,000 to cover the office's legal fees.

At the time, Wallace said the treasurer's office had paid $36,229.16 in legal fees to the Mitchell Williams firm, but the office had enough spending authority remaining to pay $10,000.

He said half of the $50,000 shift would be used to hire a bond attorney.

State records show that the treasurer's office paid the Rose Law Firm, which was hired as the bond attorney, $20,063 in fiscal 2016 and $7,080 in fiscal 2017. It paid Mitchell Williams, which represented the office in the state and federal lawsuits, $60,256 in fiscal 2016 and $83,653 in fiscal 2017.

After Wednesday's meeting, Dismang said he expected the treasurer's office to return to the subcommittee with more information about the request.

"I expect that they will try to bring it back up, but I don't know what their timeline is for doing that," Dismang said. "They were obviously OK with not having paid their bills and Mitchell Williams was OK not being paid, knowing that the funds were not sitting there for their legal fees."

Stacy Peterson, a spokesman for the treasurer, said the office was still formulating its next steps but that it expected to go back before lawmakers at a future date.


If the money isn't appropriated, she said, the law firm could go to the state Claims Commission, which adjudicates claims against the state.

"We don't really feel like that's necessary when the money's there," Peterson said. "We have the money. It's just not in the right line item so we can spend it."

Maybe Milligan can use some of those coins he purchased with public funds (to use while campaigning) to pay down his mounting debt.

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