Louisiana sues state treasurer over unclaimed fund dispute
A dispute between Louisiana’s governor and treasurer landed in court Friday.
Gov. John Bel Edwards, a Democrat, filed a lawsuit against Treasurer John Schroder, because he has refused to transfer money from the unclaimed property fund to the state’s general fund despite the fact that the Legislature approved the appropriation.
Edwards had threatened to take legal action if Schroder, who is a Republican, failed to make the funds available for the most recent Revenue Estimating Conference on the budget, which was Jan. 31. Before a Dec. 9 REC budget conference, Schroder sent a letter to the panel stating that it was his intent not to make the funds available at the end of each fiscal year.
“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 Interstate 49 transportation projects,” Matthew Block, the governor’s executive counsel, said in a statement Friday.
Block said excess money from the unclaimed property fund was appropriated by the Legislature and signed into law by the governor in House Bill 105 on June 18, 2019. HB 105, the 2020 state budget, appropriated $15 million for debt service and $15 million to support the spending plan.
Schroder has said he intends to continue paying debt service but he won’t comply with any other appropriation.
A portion of the unclaimed revenue backs $111.7 million of special revenue bonds issued in 2013 and $73.8 million issued in 2015 to finance a portion two widening projects on Interstate 49. The final maturity date on the debt is in 2036.
In fiscal 2019, Schroder paid debt service but failed to transfer the remaining $15 million. Edwards didn’t contest that move because he said the state had a large budget surplus that could absorb the loss but the suit is seeking to claim that money.
“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,” Block said. “The law is clear [that] excess revenues in the unclaimed property fund are to benefit the public.”
The lawsuit, filed in the 19th Judicial District Court in the Parish of East Baton Rouge, says Schroder’s refusal to transfer the funds is contrary to law and “creates a potential budget shortfall” because the state’s spending plan is based on the availability" of the unclaimed revenue.
From 2005 to 2018, the state general fund has received $372.5 million of the unclaimed funds.
The suit is seeking a writ of mandamus, an order from the court that would compel Schroder to “perform his ministerial duty” to transfer the money for fiscal years 2019, 2020 and all future fiscal years to support the state budget.
"Gov. Edwards is suing me because I won't let him spend unclaimed property in a state budget that tops $32 billion," Schroder said. "Actions like this make it hard for the public to have faith in the government process."
Although Schroder said unclaimed property isn't the state's money, the Legislature has appropriated it for decades, including while Schroder was a member of the House of Representatives from 2008 to 2017. He became state treasurer in November 2017.
In December, Schroder said he was infuriated that “big government" would decide what does and doesn't belong to Louisiana citizens.
“Clearly this money belongs to the rightful owners, and it's my job to return it,” he said at the time.
The state, per the lawsuit, said it has not defaulted on any claim from the property fund and will not default on any obligation to return claimed property.