California state officials may have a conflict of interest – or at least the perception of one – when it comes to reuniting people with their unclaimed bank account balances and other property, the Legislature’s non-partisan budget analyst finds in a new report.
The report, released Tuesday, calls on the state to step up efforts to find owners of unclaimed property.
Dating from the 19th century, the state’s unclaimed property laws have two main purposes: to put the state, instead of banks, insurance companies and other entities, in charge of unclaimed property; and to help reunite the property with its rightful owners.
But the “competing goals” create tensions, the Legislative Analyst’s Office reported, and fiscal considerations “have often dominated decision-making regarding how the program is administered.” State law, for instance, limits the amount the state can spend to find owners of unclaimed property.
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“Reuniting more property with owners means that the state receives less revenue and that the state budget is worse off,” the LAO writes. “The opposite is true as well. The state has an incentive to reunite less property with owners, thereby increasing General Fund revenue.”
Unclaimed property, once a drop in the state’s budgetary bucket, has become the state’s fifth-largest source of revenue, generating an estimated $442 million through June and $452 million in 2015-16, the LAO said. All but $50,000 of unclaimed money is swept monthly into the general fund, where it is available for any purpose.
The State Controller’s Office, meanwhile, is in charge of reuniting unclaimed property and the owners. About $4 of every $10 in unclaimed property in state hands goes back to its rightful owner. Recent annual budget bills, though, have capped what the controller’s office can spend on informing owners about the program.
The analyst’s office offered multiple recommendations to improve the state’s program. The controller’s office should expand its use of detailed databases to locate more owners of unclaimed property and spread the word on TV, radio and social media.
The state also should create a mobile unit that visits county fairs and other large events to publicize the program, the LAO recommends. And California could try to duplicate Wisconsin’s program in which the state returns unclaimed property to tax filers, without the person having to file a claim.
“We believe a greater emphasis on reuniting property is appropriate,” the LAO said.
Call Jim Miller, Bee Capitol Bureau, (916) 326-5521. Follow him on Twitter @jimmiller2.