Judge orders Louisiana state treasurer to turn over unclaimed funds
Louisiana Gov. John Bel Edwards has prevailed in a lawsuit against the state Treasurer John Schroder over the use of unclaimed property funds.
Judge Richard Moore ruled on May 26 that Schroder improperly withheld the funds from lawmakers for appropriation in the state budget.
Schroder has said he'll appeal Moore's ruling.
Moore ordered Schroder to transfer $32.5 million from the unclaimed property fund to the state general fund. The order specifies that $7.3 million of the total represents the amount Schroder withheld in 2019 and $25.2 million was withheld for 2020.
For Schroder to "stockpile millions of dollars into something akin to a superfund produces no benefit to the public," Moore wrote. "If anything, the treasurer's action could harm the public should the legislature be required to make midyear budget cuts as a result of this loss in revenue."
Schroder, a Republican, has battled with Louisiana's Democratic governor over the funds for the past two years, saying the money belongs to the people of the state and not the Legislature.
Lawmakers have appropriated excess money from the unclaimed property program for 40 years and until last year every state treasurer has complied with the constitutional requirement to transfer the money to the state general fund, Edwards' attorney, Matthew Block, said in a statement.
"Treasurer Schroder's unprecedented action to withhold these funds clearly violates the law and we are grateful for Judge Moore's decision," Block said. "Even after the treasurer complies with Judge Moore's order, there are more than sufficient funds available for unclaimed property claims, as the fund has always had sufficient funds for these obligations."
The Republican-led Legislature may side with Schroder on the issue as it considers House Bill 445, which passed the House by a vote of 98-0 on May 22.
The measure would ask voters statewide to approve a constitutional amendment and create the Louisiana Unclaimed Property Permanent Trust Fund where all unclaimed funds and property would be deposited. It would also prohibit the funds from being appropriated by lawmakers, except when the funds exceed claims.
HB 445 was pending in the Senate on Monday, the last day of regular session. However, at the end of the day a special month-long session was set to begin immediately because lawmakers haven't finished work on the fiscal 2021 budget.
Lawmakers also have a long list of bills to consider as part of the state's economic recovery, and plan to decide where to spend money the state was awarded in the federal CARES Act.
Lawmakers will have difficult decisions to make regarding the spending plan for the upcoming fiscal year that starts July 1.
The state's economist lowered general fund revenue estimates for the current year by $132 million and by $905 million for fiscal 2021, according to a May 22 disclosure about the impacts of COVID-19.
The state's revenues will also be impacted by matching the Internal Revenue Service's deadline extension for filing federal income tax returns, which is now July 15. Louisiana also pushed back the filing dates for state income and corporate tax returns to July 15.