Gov. John Bel Edwards’ proposal to redirect Gulf oil spill recovery money to rebalance this year’s budget appears to conflict with a legal settlement the state struck two years ago, aimed at ending a lawsuit over Louisiana’s “rainy day” fund.
As The Associated Press reports, Edwards wants to steer $200 million Louisiana is receiving this year from BP, compensation for economic damages from the massive 2010 oil spill, to help plug a $700 million-plus hole in the state’s $25 billion budget. The gap must be closed by June 30.
But lawmakers earmarked those oil spill dollars to repay trust funds that had been raided in earlier budget balancing efforts, including the rainy day fund. Passage of that legislation helped former Gov. Bobby Jindal settle a 2010 lawsuit claiming Louisiana hadn’t properly refilled the rainy day fund after its use several years ago.
Redirecting the money as Edwards proposes “would clearly violate the state’s agreement,” says lawyer Kyle Keegan, who represented the men who sued the state, former state Rep. Ron Gomez and tea party activist Bob Reid.
The rainy day fund agreement was completed in November 2014 and signed by Jindal lawyer Thomas Enright, according to a copy Keegan provided to The Associated Press. It contains a provision that says any “material change” to the rainy day fund earmark will make the agreement “null and void.”
“The settlement expressly states that any modification of the terms of that statute which has an adverse effect on the refilling of that fund would be a breach of the agreement,” Keegan says.
When the Edwards administration announced its budget rebalancing plans Tuesday, the governor’s chief financial adviser, Commissioner of Administration Jay Dardenne, said redirecting oil spill money would help the state avoid “devastating cuts.”
“Things have changed, and we need that money now to deal with the severe short-term problems we’re facing in the budget,” Dardenne said.
At the time, Dardenne said he didn’t think there was a settlement agreement filed in court. Dardenne didn’t immediately return a call today about the documents obtained by the AP, which has the full story.
