Monday, April 15, 2024

Edwards to propose spending new federal stimulus on infrastructure, tourism, unemployment fund

by BIZ Magazine

By David Jacobs | The Center Square

 Gov. John Bel Edwards will propose using portions of Louisiana’s share of the $350 billion in government aid called for in the American Rescue Plan Act to pay for infrastructure improvements, promote tourism and replenish the fund that pays for state unemployment benefits, his top budget official said Monday.

Louisiana’s share of the aid is expected to be almost $5.2 billion, including about $3.2 billion to state government, not counting $180 million reserved for construction projects. The rest will go to local governments.  

Louisiana Commissioner of Administration Jay Dardenne said the federal government has not issued the rules governing how the money can be spent. He said administration officials just had their first discussion about how to do so Monday morning. The Louisiana Legislature would have to approve a bill to spend the money, and Edwards has not begun to meet with legislative leaders about his proposal, Dardenne said.

So the administration’s plan is a work in progress, but putting “hundreds of millions of dollars” into the state’s unemployment insurance trust fund, as Dardenne put it, is one priority Edwards shares with many legislators.  

The fund, which had a balance of more than $1 billion before the COVID-19 pandemic, has been tapped out by unprecedented demand, forcing state officials to borrow money from the federal government to pay legally required benefits. The Legislature suspended laws last year that otherwise call for tax increases on businesses and reduced benefits for unemployed workers when the fund balance gets low.

Responding to the pandemic and replacing lost government revenue are two of the allowed uses of the state’s allocation, and Dardenne said replenishing the fund falls into both categories. States also can use the money to pay for water, sewer and broadband infrastructure, and the administration plans to propose spending a “significant amount of money in those areas,” Dardenne said.  

Tourism also will be a focus, Dardenne said, noting that local tourism boards and major assets such as the Superdome, which the state owns, have seen steep revenue declines. As the pandemic lifts and people begin traveling again, Dardenne wants Louisiana to benefit from the pent-up demand, he said.

A dozen cities in Louisiana are receiving allocations directly from the federal government, Dardenne said. Those cities are Alexandria, Baton Rouge, Bossier City, Houma, Kenner, Lafayette, Lake Charles, Monroe, New Orleans, Shreveport, Slidell and Thibodaux.

Dardenne expects parishes also will be getting money directly from the federal government, but the state likely will be responsible to distributing money to smaller municipalities.

Dardenne expects to release the administration’s plan before the legislative session begins April 12. He expects official federal guidance to be available soon, noting the first half of the state allocation is supposed to be made within 60 days.

“The real trick in proper utilization of these dollars is going to be to make certain that there’s a meshing of the various sources of funding that’s available,” he said.

Jim Patterson with the Louisiana Association of Business and Industry said he would like to see enough of the federal money put into the unemployment fund to at least cover the state’s debt to the federal government, which is anticipated to be between $180 million and $200 million. He said an additional $400 million to $500 million would keep taxes and benefits at their current level under the laws that were suspended last year.

There also will be calls to increase unemployment benefits for workers and improve the distribution system that has been severely tested by the high demand. Louisiana’s maximum weekly benefit (not counting federal pandemic relief) is $247 per week, which is the second-lowest payout in the nation.

“But the rush to refill the trust fund obscures bigger problems with the state’s unemployment system, which pays paltry benefits and erects too many barriers for people who’ve lost their job through no fault of their own,” the Louisiana Budget Project, which advocates for policies it believes will benefit low- and middle-income residents, said in response to business leaders’ calls for “bailing out” the fund.

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