BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 954 HEARING: 3/21/12
AUTHOR: Liu FISCAL: Yes
VERSION: 3/1/12 TAX LEVY: No
CONSULTANT: Phan
CONTROLLER'S OFFSET PAYMENTS
Allows the State Controller to offset debts owed to cities
and counties against payments from the Unclaimed Property
Program.
Background and Existing Law
If a person owes money to a city or county, the State
Controller may withhold (offset) money from the person's
state tax refunds and winnings from the California State
Lottery to settle local debts. The Controller can withhold
money only when the amount is a judgment, a court order, or
a lien for delinquent unsecured property taxes, and must
withhold money when the amount is a bench warrant for
payment of a fine, penalty, or assessment (AB 6, Farr,
1992).
Cities and counties give the Controller lists of debtors
and amounts owed. The Controller matches those cities' and
counties' lists against the names of people due state tax
refunds and lottery payments. When there are matches, the
Controller withholds the amount owed and pays the city or
county.
The Controller also runs the Unclaimed Property Program.
California's Unclaimed Property Law requires corporations,
businesses, associations, financial institutions, and
insurance companies to refer accounts of property that have
been inactive for a specified number of years (usually
three) to the State Controller. Unclaimed property
commonly includes: bank accounts, safe deposit box
contents, stocks, mutual funds, bonds, dividends, cashier's
checks, money orders, certificates of deposit, estates,
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trust funds, and escrow accounts. Oftentimes, owners of
these properties forget the account exists, move but do not
leave a forwarding address, or die and the heirs have no
knowledge of the property. The Controller safeguards all
unclaimed property until its owner claims it. After
receiving a claim, the Controller evaluates the validity of
those claims and authorizes payments to the rightful
owners.
State law does not explicitly authorize the Controller to
place an offset on the monies being returned through the
Unclaimed Property Program to an owner who owes money to a
city or county.
Proposed Law
Senate Bill 954 allows the State Controller to offset any
amount a person or entity owes to a city or county against
any amount owing the person or entity on a claim for
payment of money from unclaimed property held by the state.
State Revenue Impact
No estimate.
Comments
Purpose of the bill . SB 954 expands an authority that the
Controller already uses to recover debts. Existing law
ensures that offset occurs only in cases where debtors have
an outstanding judgment, court order, lien, or bench
warrant. This bill would authorize the Controller to apply
an unclaimed property payment towards an outstanding city
or county debt only when that unclaimed property is claimed
and matched with someone owing city or county debt. If the
claimant feels he or she was wrongfully billed, he or she
can appeal to the authority issuing the judgment, court
order, lien, or bench warrant, and if successful, repossess
the property. The Controller's office and the Franchise
Tax Board can recoup any costs associated with implementing
this program. In a feasibility study, the Controller's
Office found that had this bill been in place, it would
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have recovered $2.3 million for cities and counties in FY
2009-10 and $3.5 million in FY 2010-11. The Controller's
assistance will help cities and counties save on the 50%
collection fee that they would have had to pay to hire
private collection agencies. With their current budget
constraints, cities and counties need as much help as
possible in recovering outstanding debts.
Support and Opposition (3/15/11)
Support : California State Controller's Office.
Opposition : Unknown.