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In February, we said it was "dumb" for state government officials to use a portion of funds Wisconsin was receiving in a legal settlement to fill a budget hole. We argued then that the Walker administration should use all of the settlement as it was intended: to help communities and individuals who were victims of foreclosure and mortgage-service abuses.

In September, it's even dumber. All of that settlement money - part of a national settlement with the big banks over foreclosure fraud - should go where it was intended.

Under the settlement, Wisconsin is getting $141 million. Up to $60 million is going to loan modifications and other relief for homeowners; $17.2 million to direct payments to eligible borrowers; $31.3 million to refinancing benefits for eligible borrowers; and about $30 million in direct payment to the state.

When Gov. Scott Walker said the state would keep about $24 million of the direct payments, the rationale was that the state, like communities and individuals, had been hurt by foreclosure fraud and needed the money to help with the general budget. This, despite Walker's promise not to use gimmicks to provide a balanced budget and despite legitimate criticism of previous administrations' raids on other settlements and supposedly segregated funds to fix budgets.

But now the state is reporting that higher than expected revenue could result in a $275.1 million surplus. So what's the rationale now? No one knows because Walker is declining to comment.

Milwaukee Mayor Tom Barrett isn't quite as shy.

"I'm delighted to hear the revenue estimates show that the state is gaining revenue. That completely removes any rationale for ripping us off from those dollars that will help this city and other communities deal with foreclosed properties," he told Journal Sentinel reporter Don Walker. "The reason for stealing the money in the first place is gone." The mayor is exactly right.

Ald. Mike Murphy agrees: "The fact remains that thousands of low- and moderate-income residents of Milwaukee and other Wisconsin cities were hurt badly by the foreclosure crisis, and the millions from the settlement was supposed to be used to help them and to mitigate the dire circumstances, such as thousands of vacant and abandoned homes the crisis has caused in especially hard-hit communities like Milwaukee," Murphy told Walker.

Murphy said he hoped the governor would reconsider and send the settlement money back to Milwaukee.

That would be the right thing to do.

But state officials have been going in the wrong direction: In June, Attorney General J.B. Van Hollen said $1.3 million of the settlement money would be used for raises and bonuses for state prosecutors. We have no doubt that the prosecutors deserve a raise. But with the state now expecting to run a surplus, why not take the money from that surplus rather than raid the settlement fund?

As our February editorial noted, Milwaukee "has 4,800 vacant and abandoned properties that would cost about $48 million to tear down. Between 2008 and 2010, almost 16,000 Milwaukee property owners were told that they had defaulted on their mortgage payments. And even though there are signs the economy is improving, the housing crisis is far from over. New foreclosure filings continue to roll in. About 6,000 homes in the city are in foreclosure."

The settlement money was meant to help communities with those specific problems, not help the state pay for prosecutors or anything else. All of the money should be used for that purpose. And with the state now facing a surplus, there is no excuse to use the settlement for anything else.