BATON ROUGE, La. (AP) -- A $35 million slice of cash shoring up next year's Louisiana budget was available for spending only because poor employment performance forced a shipbuilding company to return state economic incentive dollars.
Northrop Grumman Corp. didn't keep the number of workers it had pledged as part of an eight-year-old $56 million upgrade deal with former Gov. Mike Foster's administration. Because its employment lapsed below its promised level at the Avondale shipyard near New Orleans, Northrop Grumman repaid $35 million to the state.
Other state agencies will benefit because workers didn't keep their jobs at Avondale.
In August 2003, Northrop Grumman and the Foster administration agreed to split the price tag for a $112 million upgrade of the Avondale shipyard, which was then Louisiana's largest manufacturing employer. The state would put up $56 million in its cash. In exchange, Northrop agreed to employ 5,200 full-time workers and to create a shipbuilding program to train new skilled craftsmen.
Louisiana Economic Development Secretary Stephen Moret said Northrop Grumman Ship Systems was required to have 5,200 workers at the shipyard in 16 different quarters from January 2003 through December 2010.
Moret said the company reached that benchmark for only 12 quarters, the last time in 2005.
So, the company quietly reimbursed the state $34.6 million in March. Another $4.4 million also was required to be repaid, but that had remained an unspent balance, so the state just reclaimed that balance.
The nearly $35 million is plugged into next year's 2011-12 state budget for general operating expenses, part of a sweep of one-time money from set-aside funds to help patch holes in state agencies. The spending for the new year that begins July 1 has received approval from the House and awaits debate in the state Senate.
A spokesman for Northrop Grumman didn't immediately return a call for comment Friday.
Northrop Grumman has announced it will close the Avondale shipbuilding facility in early 2013.