BATON ROUGE, LA (WAFB) - Louisiana lawmakers are spending unclaimed money that isn’t theirs to spend, State Treasurer John Schroder said in an interview with WAFB Thursday, Mar. 14.
Schroder said between $30 and $40 million in unclaimed money has been kicked into the state’s general fund for spending each year “for a long time,” but few people, if any, were aware it was happening.
“I happened upon that when we didn’t have the money to pay out some claims,” Schroder said. He said those particular claims, worth $20 million, came when the Department of Revenue and his office cross-referenced some data and found people whom the state had not been able to identify or reach before.
He said the state “lucked out” and was able to repay those claims because of good timing and an influx of new unclaimed property money that replenished the pot.
Each year, Louisiana accumulates about $90 million in unclaimed property debt, which is essentially an IOU from the state. When Louisiana residents do not cash refund checks, for example, the state is supposed to hold that money for safekeeping until those taxpayers decide to claim their money.
In other cases, a landlord may owe a tenant a utility deposit when he or she moves out, but if that former tenant does not disclose their new address to the old landlord, the deposit can be lost in the mail and eventually returned to the treasurer’s unclaimed property fund.
To date, Louisiana is holding as much as $855 million for Louisiana residents. Some of that money is formally dedicated to pay off I-49 bonds.
The treasurer’s office said there are thousands of Louisianans who are owed some amount of money and may not know it, which is why they’ve created a database where residents can look to see if they have any unclaimed property. In one extreme case last year, the state returned $2.3 million in unclaimed oil royalties to a north Louisiana man.
“The law is pretty specific that it belongs to you, the owner,” Schroder said. “It doesn’t belong to state government. Government has a real misunderstanding in this case."
During the legislative session, which begins in April, Schroder said he will push a package of bills to stop the practice. House Speaker Rep. Taylor Barras, R-New Iberia, is expected to carry one of the bills.
Schroder said he wants the remaining unclaimed money to go to a trust fund that collects interest instead of diverting to the state general fund. That interest could then be loaned to local governments for construction projects that don’t qualify for capital outlay funding because they cost less than $50,000.
He would not say what mechanisms or dedications are currently diverting the money to the SGF, adding he needs to do more research to determine how and when the practice started.
“You don’t get very many other opportunities in government where you have a pot of money that you can save and create something long-lasting, I’m talking 25 to 30 years from now,” Schroder said. “This fund could have $1 billion in it then, if we kick off [and invest] with $35 million each year."
Gov. John Bel Edwards vetoed a similar concept in 2018, calling it “premature” because it did not include accompanying legislation that would be required to enact the change. Schroder said this year’s version is substantively different and should include the necessary components.
If the legislature passes the package this year and Edwards approves, Louisianans would have to finalize the law with a constitutional amendment.
“This is a great opportunity, with a little vision, to create something that lasts a long time,” Schroder said.