Louisiana Treasurer John Schroder said Wednesday the fund to pay unclaimed property claims is temporarily running low on cash and will have to delay sending out some payments until late October because dollars from the fund were diverted to balance the state budget.
Gov. John Bel Edwards and lawmakers used $37 million from the fund to help pay for newly passed tax breaks and to keep dollars flowing to government operations.
Schroder said that created the temporary shortfall for paying claims, similar to a shortfall that happened in September 2018. The Republican treasurer’s office said businesses traditionally turn over unclaimed dollars to the state in late October, which will refill the fund so it can resume paying claims.
Louisiana collects unclaimed dollars from old savings accounts, payroll checks, stocks and dividends, insurance proceeds and utility deposits on behalf of residents. The treasurer’s office, designated as custodian of the property, tries to locate people owed the cash and return the money.
Governors and lawmakers for decades have used some of the money to pay for state operating expenses, noting that new money continues to flow into the account each year even as unclaimed property is returned to its owners.
At one point, Schroder stopped the fund transfers, arguing he didn’t believe Louisiana law permits money owed to individuals to pay for programs and services. Edwards sued over the blocked fund transfers, and a state district judge sided with the Democratic governor.
Rather than continue the litigation in the courts, Edwards and Schroder struck a deal earlier this year.
Edwards and lawmakers were able to use unclaimed property money on operating expenses in this year’s budget as Edwards wanted. Meanwhile, lawmakers approved a constitutional amendment that would keep the unclaimed property dollars locked up in a trust fund in the future as Schroder wants. Voters will decide whether to adopt the constitutional amendment on the Nov. 3 ballot.