Sunday, May 26, 2024

Constitutional amendment to stop spending unclaimed money falls short

by BIZ Magazine

By David Jacobs | The Center Square

The Louisiana House of Representatives on Thursday waded into a legal fight between the state’s governor and treasurer, though the proposed resolution stalled on the House floor.

The dispute involves what to do about unclaimed assets held the treasurer holds that haven’t been claimed by the rightful owner, such as old checking accounts, insurance payouts and securities. Lawmakers historically have spent money not claimed by the end of the fiscal year, but State Treasurer John Schroder wants to end the practice.

Schroder argues it isn’t the state’s money to spend, and says he wants to ensure there is always enough money on hand to pay justified claims. Schroder says he was $20 million short in 2018 and had to delay paying claims, though enough money eventually came in.

Gov. John Bel Edwards’ administration says it isn’t Schroder’s decision, since the state constitution gives the legislature authority over spending. Not everyone will try to claim their money at the same time, and the state has never failed to pay a rightful claim, the administration says.

Edwards has sued Schroder over his refusal to release the money, and the question may eventually be settled by the Louisiana Supreme Court.

House Bill 536 would create a trust fund for unclaimed property, which state lawmakers could not spend the principal unless the total exceeds the state’s total liability, though any interest earned would go to the state general fund.

“This is not our money,” said Rep. John Stefanski, the Crowley Republican who carried the bill. He said the state’s accumulated liability is more than $800 million.

That bill setting up the state statute passed 96-1. But the change also would take a constitutional amendment, which requires approval from two-thirds of the members of both the House and Senate and a majority of voters.

The constitutional amendment garnered 67 votes in the House, a healthy majority but still short of the 70 needed for passage. It could be reconsidered, though the regular session must end by June 1.

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