BILL ANALYSIS �
SB 954
Page 1
Date of Hearing: June 13, 2012
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
SB 954 (Liu) - As Amended: March 1, 2012
SENATE VOTE : 35-0
SUBJECT : Controller: offset payments.
SUMMARY : Authorizes the State Controller's Office (SCO) to
offset unclaimed property held by the state against debts owed
to cities and counties.
EXISTING LAW :
1)Authorizes the SCO to offset or deduct certain amounts due a
city or county to satisfy specified state claims.
2)Requires the SCO, at the request of the city or county, to
offset any amount due a city or county against any amount owed
to the person or entity by a state agency on a claim for a
refund from the Franchise Tax Board or for a refund from the
State Board of Equalization, under specified provisions of
law, or winnings from the California State Lottery.
FISCAL EFFECT : According to the Senate Floor Analysis, this
bill was referred from the Committee on Appropriations to the
Senate Floor without a vote pursuant to Senate Rule 28.8, which
permits such referral in circumstances where any additional
state costs are not significant and the bill would cause no
significant reduction in revenues.
COMMENTS :
1)This bill would authorize the SCO to withhold unclaimed
property held by the state to satisfy certain debts owed to
cities and counties. According to the author, this bill
"gives cities or counties more chances to collect money owed
and provide needed revenue to agency budgets." The measure is
sponsored by the SCO.
2)Under current law, if a person owes money to a city or county,
the SCO may, upon request
of that city or county, offset money from the person's state tax
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refunds and California State Lottery winnings to satisfy those
debts. The Controller may only withhold money under this
offset authority for debts specified in a formal judgment, a
court order, bench warrant, or lien for delinquent unsecured
property taxes.
This bill would expand the reach of that offset authority to
satisfy debts owed to cities and counties from unclaimed
property held by the SCO.
In practice, a city or county would first need to demonstrate
to the SCO that both the debt and the unclaimed property apply
to the same individual. Then the available unclaimed
property would be transferred until the debt was paid or the
property is exhausted.
A property owner could dispute the transfer by appealing to
the authority that originally issued the judgment, court
order, lien or bench warrant, and if successful, repossess the
property.
3)The SCO currently operates a program to allow persons to
identify and claim property in the possession of the state.
Pursuant to California's Unclaimed Property Law (Chapter 7,
Title 10, Part 3, Code of Civil Procedure), entities such as
corporations, businesses, associations, financial
institutions, and insurance companies holding accounts that
are inactive for at least three years must annually report and
turn over that property to the SCO.
Unclaimed property commonly includes: bank accounts, safe
deposit box contents, stocks, mutual funds, bonds, dividends,
cashier's checks, money orders, certificates of deposit,
matured or terminated insurance policies, estates, mineral
interests, royalty payments, trust funds, and escrow accounts.
Physical property would generally be liquidated by auction
prior to disbursement. Property often goes unclaimed because
the owner forgets about the account, moves without leaving a
forwarding address, or dies without alerting his or her heirs
that the property exists.
The SCO holds all received unclaimed property until the owner
claims it. After receiving a claim, the Controller will
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evaluate its validity and authorize payment to a rightful
owner. The State of California currently holds more than $6.1
billion in unclaimed property belonging to approximately 17.6
million individuals and organizations.
4)According to the sponsor, had this bill been in place sooner,
these provisions would have recovered an estimated $2.3
million for cities and counties in FY 2009-10 and $3.5 million
in FY 2010-11. This measure may also permit local entities to
save money on debt collection, as private collection agencies
can charge very high collection fees.
5)Support arguments : According to the California State
Association of Counties, "�t]his authority already exists for
offsetting tax refunds and lottery winnings...SB 954 extends a
proven, efficient system for recovery of money due to local
agencies, and in doing so will ensure millions of dollars owed
to counties and cities are paid."
Opposition arguments : None received.
REGISTERED SUPPORT / OPPOSITION :
Support
State Controller's Office �SPONSOR]
California State Association of Counties
League of California Cities
Opposition
None on file
Analysis Prepared by : Hank Dempsey / L. GOV. / (916) 319-3958