Judge: Sweeping dedicated fund into general coffers not allowed
A Baton Rouge judge ruled Tuesday that the Jindal administration and legislators should not have balanced the state’s operating budget by grabbing dollars from a retirement fund for probation and parole officers.
Within hours of state District Judge William Morvant’s ruling, Commissioner of Administration Kristy Nichols vowed to appeal. Nichols, the governor’s chief budget adviser, expressed confidence in the Louisiana Supreme Court overturning the judge’s decision.
“There is no immediate budget impact to the state,” Nichols said in a prepared statement.
However, House Speaker Alfred “Butch” Speer listened to the ruling and fired off an email to legislative leaders warning about the ripple effect, if other agencies who lost dollars for the sake of the state budget decided to seek judicial relief.
“Even though this ruling is limited to the contested provision dealing with the probation and parole officers, if the Judge is correct in his analysis AND if his analysis is adopted by his colleagues, this ruling could well ripple into other fund sweeps,” Speer wrote.
At issue is what is known in state government as a fund sweep.
The funds exist because legislators set them up years ago. An example would be allowing farmers to collect dollars for eradicating pests that threaten crops. Another would be for drivers to offer up extra money for speciality license plates. The collections add up, generating millions of dollars that are appealing when the state lacks sufficient money to pay for health care, education and other public expenses. Legislators and governors have access to the funds and often take money from them to fill gaps in the general budget, which pays for state workers and services.
The Louisiana Probation and Parole Officers Association sued after $3.7 million was swept last year into the state’s general fund from a fund that takes a portion of probation and parole fees to enhance retirement benefits for the officers who supervised offenders. The association’s attorney, Walter Smith III, said in July that the sweep drained the fund. Smith did not return a call seeking comment Tuesday.
The suit was filed in Baton Rouge’s 19th Judicial District, where Morvant presides over civil matters.
The association’s argument in the lawsuit was complicated. Basically, the association maintained that the fees paid into the fund were used as state revenue as if from a tax, making the conversion unconstitutional.
“The citizens of Louisiana should not be misled into believing that fees paid into a certain fund are for a dedicated and specific purpose when in fact those statutorily dedicated fees are being converted into general fund revenue dollars,” adds the suit, which was filed against the state Legislature.
Morvant made an oral ruling after hearing arguments Tuesday. A copy of the ruling was not yet in the court file Tuesday night. However, Speer outlined the judge’s reasoning in his email to legislative leaders.
“(Morvant) declared that the sweeps bill of 2012 ... changed the purpose of the levy from a regulatory fee to a revenues raising levy thus creating the swept funds as tax levies,” Speer wrote. “The Judge declared (part of the bill) unconstitutional in violation of the prohibition of levying taxes in even numbered years.”
The Public Service Commission also is suing over the state taking money from rollover accounts to balance the budget.
A faction of House Republicans known as the fiscal hawks have quarreled with Gov. Bobby Jindal over using money from one-time sources such as fund sweeps to pay expenses that must be met year after year. The hawks’ leader, state Rep. Brett Geymann, applauded Morvant’s ruling.
“I am very pleased with the court decision that the sweeping of fee driven funds is unconstitutional ... Our position on fiscal issues have always been centered around what we believe the law clearly says and to ignore the law to avoid tough decisions is irresponsible,” said Geymann, R-Lake Charles.
Another legislator who has clashed with the Jindal administration over the construction of the state budget said the state constitution needs to be followed.
“Many members of the House had previously expressed their concern about the administration’s continued use of these types of funds to plug budget holes. I would hope the administration would not waste any more taxpayer dollars by fighting this ruling,” said state Rep. Cameron Henry, R-New Orleans.
Mark Ballard of the Capitol news bureau contributed to this report.