When Louisiana deposited $95 million in an escrow account to pay victims of a 1983 flood, the state wrote off another debt from its books and continued a recent and notable trend of settling an arrears of obligations that spanned years.
Gov. John Bel Edwards and lawmakers used an influx of short-term cash to pay off hurricane recovery and flood protection debt and to process a list of pending judgments against the state.
These payments are a wise use of the temporary budget boom and will leave their successors who take office in 2024 on a stronger financial footing. Clearing a long list of debts will free up state dollars to spend in other areas, while demonstrating to rating agencies and lenders that Louisiana is paying what it owes.
It couldn’t come at a better time as financial headwinds loom on the horizon. Fiscal largesse appears to be waning, widespread economic uncertainty is in the forecast, federal pandemic aid is drying up and a temporary state sales tax that generates hundreds of millions of dollars a year is set to expire in mid -2025. The next governor and lawmakers will need every dollar going into the treasury to continue the programs and services provided by the state.
By paying flood victims in Tangipahoa Parish, Edwards and lawmakers fulfilled not only an important obligation of the state, but also a moral obligation to families who owed money for decades.
Courts found that poor engineering during the construction of Interstate 12 through the floodplain of the Tangipahoa River near the town of Robert blocked water drainage during an April 1983 flood caused by heavy rains. The highway diverted water and forced it into homes and businesses that had never experienced such problems before.
More than 1,280 people whose homes and businesses were damaged have sued the state Department of Transportation and Development, court documents show. The plaintiffs won their case in 1999 and the state was ordered to pay $92 million for the losses.
Although a final judgment was handed down by the Louisiana Supreme Court in 2006, flood victims waited years for lawmakers to allocate the money, as they and several governors ignored that obligation. Many of those who were flooded died waiting for payment, so the money will go to their heirs instead.
The state received a settlement by paying the flood lawsuit judgment. With interest, the debt had ballooned to about $340 million, according to a plaintiffs’ attorney. But under a settlement agreement reached between Edwards, lawmakers and flood victims, the state instead paid $101.5 million — the $95 million recently allocated by lawmakers and deposited in the escrow account. and $6.5 million that had been directed to an account for payment years earlier.
Before the dollars reach the flood victims, a judge must approve the settlement, and then the court must determine how to distribute the money among those whose homes and businesses were devastated.
Yet the commitment of this Governor, the House and the Senate to repaying the debts of the State deserves recognition.
During the last regular legislative session, they directed the money to all of the final judgments pending against the state at the time. They allocated $201 million for payments to the Federal Emergency Management Agency to cover Louisiana’s share of disaster-related expenses that, in some cases, occurred years earlier.
And over the past two years, lawmakers have spent $800 million in tax recoveries that exceed state expectations to pay off much of a more than $1.1 billion debt owed to the federal government. for the upgrade of the flood protection system built in the New Orleans area after Hurricane Katrina. . This effort saves billions of dollars in interest charges that would otherwise be owed to the federal government if the state fails to meet the 2023 deadline set by Congress to eliminate the debt.
Many debts remain, including gaps that need to be filled in state pension systems. But Edwards and lawmakers deserve credit for tackling a long list of unpaid obligations when Louisiana leaders have so often made shorter-term decisions during fiscal booms.
Steven Procopio is president of the Public Affairs Research Council of Louisiana. Melinda Deslatte is PAR’s Research Director.