Lots of people were angered by Wisconsin Governor Scott Walker’s announcement that he would use money gained from the foreclosure fraud settlement to plug his budget hole. I suspected that a lot of states with a budget gap would go this route. And that apparently includes Missouri, a state with a Democratic Governor and a Democratic Attorney General:

Even before state attorneys general put the final touches on a $25 billion settlement with five major banks over improper mortgage practices on Thursday (February 9), Missouri Governor Jay Nixon announced that he wanted to use some of his state’s proceeds for an unexpected purpose: to help fund higher education.

Colleges and universities in Missouri have gone through several rounds of painful budget cuts in recent years, and Nixon, a Democrat, proposed using $40 million from the state’s share of the settlement to help offset the 12.5 percent cut to higher education that he initially proposed in his budget this year, The Kansas City Star reported. Republicans who control the state legislature expressed support for the plan, with the chair of a key budget committee saying he was “glad the governor is finally starting to listen to legislators and the people of this state who make education a priority.”

But while Nixon and Missouri lawmakers may agree on the need to put mortgage settlement dollars into higher education, the decision actually belongs to Attorney General Chris Koster, who signed onto the agreement with the banks and who, under the terms of the deal, has significant leeway to determine how Missouri’s share of the money will be spent. Koster, a Democrat, told reporters on Thursday that he agrees with the governor’s call for more higher education funding and will transfer the $40 million Nixon has requested into the general fund, citing the “severe budget shortages” the state faces.

Obviously, higher education is important, and fiscal transfers to the states should be a regular part of this recovery. But this is a fund paid by banks – the only hard payment in the settlement – ostensibly designed to aid homeowners in a variety of ways. It’s not meant to be a special kitty for whatever budget priority state leaders see fit to use it on. In Missouri, every dollar diverted to higher education means a dollar less for a mediation counselor to put banks and homeowners seeking modifications in the same room, or a dollar less for legal aid for a foreclosure victim, or a dollar less for anti-blight programs to clean up neighborhoods with vacant properties. That undermines the entire point of the settlement and deprives the victims of restitution.

And it’s not like Missouri has no other ways to fill that budget gap. For one, as Think Progress notes, they can stop handing out tax credits to corporations. You can see the settlement, if you will, as funding those tax credits.

So we can delete the $26 million from Walker in Wisconsin and the $40 million in Missouri from the total of the foreclosure fraud settlement, since it’s not going to help homeowners. That’s a $76 million $66 million reduction. And counting.