(The Center Square) – Louisiana’s Revenue Estimating Conference on Thursday officially freed up $37 million that lawmakers plan to use to pay for business tax breaks, a move made possible by the end of a fight between the governor and the treasurer.
State Treasurer John Schroder had refused to allow state government to spend part of the state’s unclaimed property fund, which had been standard practice for many years. Schroder argued the state is only the caretaker of the money until the rightful owner shows up to claim it and has no right to spend it.
Gov. John Bel Edwards sued to make Schroder release the money, saying the legislature, not the treasurer, has the constitutional right to make spending decisions. Edwards won in district court, and Schroder vowed to appeal.
But this week, Schroder and the Edwards administration reached an agreement to end the litigation. Schroder is releasing a total of $52 million from the unclaimed property fund, and Edwards is backing a potential constitutional amendment that, if approved by voters, would make the fund off-limits for state government operations in future years.
Legislators this week amended the legislation to protect funding for the I-49 road project and make an accounting tweak that is considered important for the state’s credit rating, which made the proposals more palatable to the administration and state senators who previously had blocked passage.
Senators on Monday unanimously approved the proposed constitutional amendment and a corresponding measure to create a new interest-earning fund for unclaimed property money. State government would be allowed to spend the interest but not the principal.
On Thursday, the state House of Representatives approved both measures with only three dissenting votes, sending it back to the Senate to review House committee amendments.
The Senate Finance Committee on Wednesday advanced a state budget that includes $37 million of the additional dollars REC recognized in its official forecast Thursday. The other $15 million will go toward debt associated with the I-49 project.
Numerous tax breaks and incentives are pending in this month’s special session. The leaders of a business task force that legislative leaders created to come up with ideas to jump-start the state’s economy are lobbying for many of those changes.
Supporters have said small businesses hurt by the COVID-19 pandemic and the government’s response need help to survive. But some lawmakers worry about the accumulated costs of all the tax cuts and subsidies, which could harm the state’s bottom line while in many cases only providing minor benefits to the affected businesses.
In other discussions at Thursday’s REC meeting, Department of Revenue Secretary Kimberly Robinson reported paying out $438 million in state incentives so far this fiscal year. She said more incentive expenditures are pending in the closing days of the fiscal year that ends Tuesday and expects the total to be between $525 million and $550 million.