Analysis: Louisiana governor, treasurer clash over financing
BATON ROUGE, La. (AP) — Louisiana’s Democratic governor and Republican state treasurer are entering the new year locked in a continuing financial fight over the use of unclaimed property dollars to pay for ongoing government expenses, with the threat of litigation looming to settle the dispute.
Treasurer John Schroder is refusing to transfer $20 million-plus each year from Louisiana’s unclaimed property account that Gov. John Bel Edwards and lawmakers intended to spend on programs and services in the state’s $30 billion-plus operating budget.
While Schroder’s decision hasn’t caused budget problems so far, the Edwards administration and some lawmakers are raising concerns that Schroder’s unilateral decision violates the constitutional separation of powers by undermining the Legislature’s authority over state purse strings.
Louisiana collects unclaimed dollars from old savings accounts, payroll checks, stocks and dividends, insurance proceeds, oil royalty payments and utility deposits on behalf of residents who are owed the cash. The treasurer’s office, designated as the custodian of the unclaimed property, tries to locate people and return the money.
Though governors and lawmakers for decades have spent money from the unclaimed property escrow account on programs and services, Schroder said he and his office’s lawyers don’t believe Louisiana law permits the transfers.
“It is very clear that Treasury is required to maintain the funds for safekeeping on the behalf of claimants. In order to ensure that the unclaimed monies are available when a Louisiana citizen comes to claim it, I made the decision not to transfer the unclaimed property receipts,” Schroder wrote in a letter to the state’s income forecasting panel, which includes Edwards’ chief financial officer, the Senate president and House speaker.
Schroder refused to make the transfer last year, but that didn’t cause budget gaps because Louisiana had a surplus. He’s again blocking the transfer this budget year. And he wrote to the Revenue Estimating Conference that he won’t make similar transfers during “any year in which I am the state treasurer.”
Commissioner of Administration Jay Dardenne, the governor’s chief budget adviser, said the treasurer doesn’t have the legal authority he’s asserting. Senate President John Alario, a Republican leaving the Senate in January because of term limits, agrees with the Edwards administration.
“I don’t think anybody wants to curtail the treasurer from doing his job. But I don’t think we want to curtail the Legislature’s job either,” Alario said. “I think the separation of powers should be clear.”
House Appropriations Chairman Cameron Henry, a Republican moving to the Senate in January, used Schroder’s position as one reason for blocking changes to Louisiana’s income forecast, against the wishes of the Edwards administration and Alario. Henry seemed to side with Schroder, even though he agreed to the fund transfer in the budget bill he negotiated earlier this year.
“It’s not the state’s money,” Henry said. “It belongs to the individual taxpayer.”
Louisiana has spent about $25 million to $50 million from the unclaimed property account annually for years, with $15 million shaved off since 2008 to pay Interstate 49 projects and the remaining dollars poured into the general fund to pay for a variety of programs. The I-49 spending is spelled out in state law, and Schroder hasn’t disrupted those transfers.
Dardenne and Alario said they support efforts to return unclaimed property money to the people who own it. But they said new dollars pour into the account each year to cover payouts even as money comes out.
“Not everybody’s going to come forth at the same time,” Dardenne said.
But the treasurer’s office — through technology and a 2018 law that gives it access to the revenue department’s address database to help locate people — has been finding more people owed money.
While the treasurer’s office said it issued an average of 31,000 unclaimed property checks yearly, more than 200,000 checks totaling $52 million headed out the door in the financial year that ended June 30. Schroder said the account temporarily ran out of cash at one point, forcing his office to wait to send checks to people claiming their money.
If the governor or lawmakers want to spend the money, the treasurer said that will require a lawsuit.
“I am willing to go to court to protect this money,” Schroder said in a statement.
Asked if he intended to sue the treasurer, Edwards replied: “We will have more information on that to come.”
EDITOR’S NOTE: Melinda Deslatte has covered Louisiana politics for The Associated Press since 2000. Follow her at http://twitter.com/melindadeslatte