BATON ROUGE, La. (WAFB) - Louisiana lawmakers again budgeted with unclaimed money that isn’t theirs to spend, State Treasurer John Schroder said in an interview with WAFB Friday, July 5.
But Schroder will not release the money, meaning there may be a small hole in this year’s recently-signed budget. The Republican treasurer says he’s willing to take the governor’s office to court to protect the money.
“If I had to turn it over today, it’d be about $7 million,” Schroder said. “I’m not giving it to them.”
The total amount may grow to as much as $25 million.
Schroder says 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 in a March interview. He says 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 says 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 says 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.
“This was born to be a service to the citizens of Louisiana,” he said. “It was not supposed to be a government program where government took your money - or your heir’s money - to run government.”
During the legislative session, Schroder pushed a bill that would have stopped the practice. It would have put the remaining unclaimed money in a trust fund that collects loan-able interest, instead of diverting to the state general fund.
The bill failed in committee, largely because of concerns over the loan process. Schroder blames the governor, who vetoed a similar concept in 2018. Then, Governor John Bel Edwards called it “premature” because it did not include accompanying legislation that would be required to enact the change.
Schroder says he’s withholding money because it’s “the right thing to do,” not because it’s an election year and a budget deficit could embarrass Edwards. Schroder rightfully noted he has campaigned against budgeting with unclaimed property since he took office.
“Election year politics often take a weird turn, and this is an unusual turn,” WAFB political analyst, Jim Engster, said. “For years, the state has relied on this money as a kind of source to balance the budget and John Schroder said the worst case scenario would be a big mess. It would, but the worst case scenario, of course, never happens.”
Engster noted the unclaimed property fund works like a bank, with nearly $1 billion in debt that would only default if every person with unclaimed property made a simultaneous claim for their money.
Schroder says there’s around $11 million left in the fund.
“It appears this is not a real threat, as far as the state running out of money for this program, but it will create a problem the governor has to deal with and we’re 14 weeks away from an election,” Engster said.