Gov. John Bel Edwards' administration and Treasurer John Schroder said Wednesday they have struck an agreement ending a three-year dispute over Louisiana's unclaimed property money that has tied up millions of dollars earmarked for government programs in litigation.
The resolution is contained in Senate Bills 12 and 18 by Houma Republican Sen. Mike Fesi, which won easy support Wednesday from the House Appropriations Committee and is only steps from final passage. The plan will free up millions to spend in the upcoming budget as Edwards wants, but keep the unclaimed property dollars locked up in a trust fund in the future as Schroder wants.
"This resolves the dispute we have," Edwards' chief lawyer Matthew Block told the committee.
Schroder agreed, saying: "This is a good thing for Louisiana."
Louisiana collects unclaimed dollars from old savings accounts, payroll checks, stocks and dividends, insurance proceeds 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.
Governors and lawmakers for decades have used some of the money to pay for state operating expenses, noting that new money continues to flow into the account each year even as unclaimed property is returned to its owners.
But Schroder stopped the fund transfers, arguing he doesn't believe Louisiana law permits money owed to individuals for pay for programs and services. The Republican treasurer has refused to transfer $32.5 million over multiple budget years.
Edwards, a Democrat, sued over the blocked fund transfers, arguing the treasurer was exceeding his legal authority and meddling in the Legislature's constitutional authority to appropriate money.
Last month, a state district judge sided with the governor. Judge Richard "Chip" Moore said Schroder improperly kept the money from the state general fund and ordered him to transfer the $32.5 million he's withheld.
Schroder vowed to appeal — a move that would continue blocking the money from operating expense use, even as lawmakers are looking for ways to close budget gaps caused by the coronavirus pandemic.
Under the deal reached this week in the Senate, lawmakers will agree to create a trust fund to collect the unclaimed property dollars — and keep lawmakers and the governor from spending it on general government expenses. The move will require approval from voters in the Nov. 3 election.
In exchange for creating the trust fund, the $32.5 million withheld by Schroder and another $25 million in unclaimed property the Edwards administration wanted to use in the upcoming budget year will be available to spend on government programs and services. The trust fund provisions wouldn't kick in until July 1, 2021.
Block explained the agreement to the Appropriations Committee, saying it will end the lawsuit.
"My intent is when everything's passed and signed, to settle the lawsuit," Schroder agreed. "I consider it done."
Lawmakers said they're glad to end the arguments.
"I'm just excited that you all have come to some resolution," said Rep. C. Denise Marcelle, a Baton Rouge Democrat.