BATON ROUGE, La. (AP) - Gov. John Bel Edwards sued Louisiana's state treasurer Friday for blocking a $25 million fund transfer the governor and lawmakers earmarked for government operating expenses, asking the courts to settle who has ultimate authority over the dollars.
Republican state Treasurer John Schroder repeatedly said if the Democratic governor wanted to spend the unclaimed property dollars included in the state's budget, he'd have to take him to court. After months of disagreement, Edwards complied, filing the lawsuit requesting a judge to declare Schroder's actions are illegal.
Lawmakers appropriated the unclaimed property dollars in Louisiana's $30 billion-plus operating budget. But Schroder has refused to shift the money for spending, and he similarly blocked a $15 million fund transfer last year.
"He doesn't have the discretion not to abide by an appropriation that has been lawfully made by the Legislature," the governor said ahead of the lawsuit's filing in Baton Rouge district court.
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. The treasurer's office, designated as custodian of the property, tries to locate people owed the cash 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.
Schroder didn't immediately comment on the lawsuit, saying Friday morning he had not yet read it.
Edwards and some legislative leaders said Schroder is exceeding his legal authority, meddling in the House and Senate's constitutional jurisdiction over Louisiana's purse strings. Schroder, in office since December 2017, said the dollars belong to individuals and the state shouldn't spend them.
The blocked transfers so far haven't caused budget gaps because Louisiana's had surpluses.
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 for Interstate 49 projects and the remaining dollars poured into the general fund to pay for a variety of programs. The lawsuit says more than $372 million from the unclaimed property account has paid for government operations since 2005.
The I-49 spending is spelled out in state law, and Schroder hasn't disrupted those transfers.
The Edwards administration said it supports efforts to return unclaimed property to the people who own it. But the administration said not everyone will claim their money at the same time, allowing the state to use a slice each year to finance government programs. The administration notes new dollars pour into the account annually to cover payouts even as money comes out.
"The general public would receive no benefit from the fund if it were allowed to continue to grow," the lawsuit says. "Further, no potential obligee of the fund benefits from this growth of the fund as the state has not defaulted, and will not default, on any payment of an obligation to return claimed property."
Schroder, however, has said the account temporarily ran out of cash at one point - forcing his office to wait to send checks to people claiming their money - because the treasury has been boosting its outreach work. The treasurer's office is using a 2018 law that gives it access to the revenue department's address database to help locate people.
The Governor’s Executive Counsel, Matthew Block, issued the following statement:
It is unfortunate the Governor’s Office was forced to take legal action against the Treasurer to compel him to comply with the state’s approved budget, which includes the transfer of unused, excess dollars from the Unclaimed Property Fund to the State General Fund and to pay the bond obligations for I-49 transportation projects. The excess money from the Unclaimed Property Fund was appropriated by the Legislature and signed into law by the Governor in HB 105. So far, the Treasurer has simply refused to transfer the money, completely flouting the will of the people’s elected representatives, their Governor and the letter of the law.
The law is clear: excess revenues in the Unclaimed Property Fund are to benefit the public. At the end of 2019, the Unclaimed Property Fund hit a peak balance of more than $78 million, leaving a healthy balance for the Treasurer to administer the Unclaimed Property Fund, even after the required transfer of funds. The public does not benefit from the Treasurer simply seeking to grow the size of his government bank account; instead, those funds should be used for roads and bridges, education, and health care. If the Treasurer wants to keep this money, he should ask the Legislature to pass a law for him to do so. With regard to the Treasurer’s argument that these funds will be claimed by its owners, the state has always paid claims to the fund and that will not change.
To view the lawsuit, click here [gov.louisiana.gov].
Today, the Office of the Governor filed suit against @LATreasury who has refused to transfer appropriated dollars to the State General Fund, in compliance with the state’s approved budget. #lagov #lalege— John Bel Edwards (@LouisianaGov) February 7, 2020
Read Executive Counsel Matthew Block's statement below 👇 pic.twitter.com/aK71ZSoAgb
State Treasurer John M. Schroder issued the following statement today on the legal action taken against him by Gov. John Bel Edwards:
"Gov. Edwards is suing me because I won't let him spend Unclaimed Property in a state budget that tops $32 billion. Actions like this make it hard for the public to have faith in the government process," said Treasurer Schroder. "Unclaimed Property isn't the state's money. It belongs to the people of Louisiana."
Each year businesses turn over millions of dollars in unclaimed cash, stocks, bonds, securities, and insurance proceeds to the State Treasurer's Office. Known as "Unclaimed Property," these funds include payroll checks, old bank accounts, royalties, utility deposits, interest payments, stock certificates, and life insurance proceeds. One in six individuals in Louisiana has Unclaimed Property, with refunds averaging $900.00.
To search for Unclaimed Property, visit www.latreasury.com.