Governor, treasurer clash over financing

Gov. John Bel Edwards and State Treasurer John Schroder are entering the new year locked in a continuing financial fight over the use of unclaimed property dollars to pay for ongoing government expenses, with the threat of litigation looming to settle the dispute.

Schroder is refusing to transfer $20 million-plus each year from Louisiana’s unclaimed property account that Edwards and lawmakers intended to spend on programs and services in the state’s $30 billion-plus operating budget. 

While Schroder’s decision hasn’t caused budget problems so far, the Edwards administration and some lawmakers are raising concerns that Schroder’s unilateral decision violates the constitutional separation of powers by undermining the Legislature’s authority over state purse strings.

Louisiana collects unclaimed dollars from old savings accounts, payroll checks, stocks and dividends, insurance proceeds, oil royalty payments and utility deposits on behalf of residents who are owed the cash. The treasurer’s office, designated as the custodian of the unclaimed property, tries to locate people and return the money.

Though governors and lawmakers for decades have spent money from the unclaimed property escrow account on programs and services, Schroder says he and his office’s lawyers don’t believe Louisiana law permits the transfers. 

“It is very clear that Treasury is required to maintain the funds for safekeeping on the behalf of claimants. In order to ensure that the unclaimed monies are available when a Louisiana citizen comes to claim it, I made the decision not to transfer the unclaimed property receipts,” Schroder wrote in a letter to the state’s income forecasting panel, which includes Edwards’ chief financial officer, the Senate president and House speaker.

Schroder refused to make the transfer last year, but that didn’t cause budget gaps because Louisiana had a surplus. He’s again blocking the transfer this budget year. And he wrote to the Revenue Estimating Conference that he won’t make similar transfers during “any year in which I am the state treasurer.” Read the full story.