Now that a judge has ruled the Louisiana Legislature shouldn’t have taken dollars from dedicated funds to help balance the budget, state regulators want the money back.
“Our goal should be to recover those monies, if they are available, and return those monies to the ratepayer,” said Louisiana Public Service Commission Chairman Eric Skrmetta, a Republican from Metairie.
Though they rarely agree on much of anything, Democratic PSC Commissioner Foster Campbell, the senior of the five elected members, echoed Skrmetta, saying: “The people paid that money. They should get it back.”
Moments before the 19th Judicial District Courthouse closed Wednesday, District Judge Don Johnson, of Baton Rouge, filed an order that found the Legislature in 2009 and 2010 improperly took money from three funds filled with fees and fines that the PSC could only legally use to pay for inspections and other regulatory activities. The money was diverted into the state budget to cover general government expenses.
A Baton Rouge judge ruled unconstitutional late Wednesday the practice called “fund sweeps” that legislators routinely used to balance state budgets.
His order can be appealed directly to the Louisiana Supreme Court.
The Louisiana Attorney General’s Office, which represented the Legislature, did not comment on the verdict or any plans to appeal.
Johnson’s order said nothing about what to do with the money taken. Another lawsuit, this one specifically asking for the return of money, is on deck now that Johnson ruled that “fund sweeps” are unconstitutional.
During the administration of Gov. Bobby Jindal, legislators routinely approved sweeping surplus dollars from dedicated state agency funds to help balance the budget without raising revenues or cutting spending.
“Nobody wanted to say anything about it back then because they didn’t want to buck Jindal,” said Campbell, of Bossier Parish. But the commissioners felt they had no choice but to file a lawsuit challenging the constitutionality of the fund sweeps.
The PSC, which uses the fees and fines to pay for their work, had to borrow money to operate because of the fund sweeps, Campbell said.
It took seven years of dealing with technical legal issues before the court could rule on the constitutionality issue. The almost $9 million swept during those two years belongs to the people who paid the fees and they are the ones legally bound to seek restitution, he said.
So, Campbell and retired PSC Chairman Jimmy Field, R-Baton Rouge, acting as individuals rather than commissioners, filed a class action seeking return of the money. A handful of other ratepayers around the state have joined the lawsuit.
Lawyers and class members are meeting to decide the next step and within a week or two will file the appropriate motions, said Glen Petersen, the Baton Rouge lawyer handling the case.
“I’m going to ask the court to issue an order that the Legislature to pay back the money that they illegally took,” Petersen said.
The regulatory agency is not directly involved in the legal action seeking the return of the money to the ratepayers who paid the fees, said Interim PSC Secretary Brandon Frey.
“What I have is a piece of paper to take to the State Capitol saying they can’t the next time they try to sweep PSC funds,” Frey said.
The PSC regulates the utilities, most truckers, and telecommunications companies throughout most of the state, but not in New Orleans, Lafayette and a handful other municipalities. Only companies the PSC directly regulated had to pay the fees.
Fund sweeping gave those not subject to the fees benefits paid for by others, Frey said.
Converting fees essentially into taxes that support education, hospitals and other state services also denied the companies any way to challenge the amounts paid or to have any say so in the imposition of the taxes in the first place, Frey said.
The Legislature argued in court that it has the constitutional authority to decide how to spend state money. And legislators can change provisions of various laws after public hearings and votes. Lawmakers did just that when they redirected dedicated surplus monies in Act 226 of 2009 and Act 633 in 2010.
Gov. John Bel Edwards and his aides often point to fund sweeps as evidence of Jindal administration “smoke and mirrors” budget maneuvering. While the governor has said he won’t sweep funds to balance the budget, the technique to do so is still available.