Republican Attorney General Jeff Landry sued Democratic Gov. John Bel Edwards in April, accusing the administration of improperly withholding the money the attorney general's office says is needed to finance its operations.
The agreement brokered by Republican Sen. Bret Allain, vice chairman of the Senate Finance Committee, involves a complex transfer of funds that would wipe out the $5.3 million sitting in the contested escrow account in exchange for giving the attorney general's office $2.7 million in other state financing.
Legislation containing the agreement still must win approval from lawmakers before the regular session ends Thursday, but legislative leaders in the House and Senate said they were confident the deal would win passage.
"My understanding from talking to all parties is this would clear up all the problems between the attorney general and Gov. Edwards over the escrow fund," said House Appropriations Chairman Cameron Henry, a Republican allied with Landry. "Hopefully, this will negate the lawsuit that has been filed, and we can move on."
Finance Chairman Eric LaFleur, a Democrat, spoke similarly as he described the financial arrangement to senators: "Hopefully this resolves almost all the issues with the attorney general."
Edwards' chief lawyer Matthew Block said the governor's office was part of the discussions with senators who brokered the compromise and would sign the deal if it reaches his desk. He described it as a "fair resolution," and pointed out that Landry's office would get less than the full amount that had been disputed.
Block said he expected the deal could end the legal dispute.
"We haven't had a discussion about that, but it would seem hard to understand how they would choose to continue that litigation," he said. "At the end of the day, they are the plaintiffs and will have to decide how to handle that."
Landry's office wouldn't comment on the agreement.
The lawsuit over the escrow account is the latest in a string of feuds between Edwards and Landry since the two men took office last year. Landry is considered a possible challenger to Edwards in the 2019 governor's race.
The attorney general says Edwards' Division of Administration has refused to transfer money in the escrow account that belongs to the attorney general's office, causing problems running the agency. He accuses the governor of refusing to move the money for political reasons.
The dollars at issue in the lawsuit are from a 2014 pharmaceutical settlement, and the Edwards administration said they are not legally Landry's dollars to spend. The Edwards administration says under state law, the attorney general is required to turn over the money in escrow to the state treasury. Landry's predecessor, Buddy Caldwell, never remitted the money as required, according to the Edwards administration.