BILL ANALYSIS �
SB 954
Page 1
SENATE THIRD READING
SB 954 (Liu)
As Amended March 1, 2012
Majority vote
SENATE VOTE :35-0
LOCAL GOVERNMENT 9-0 APPROPRIATIONS 16-1
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|Ayes:|Smyth, Alejo, Bradford, |Ayes:|Fuentes, Harkey, |
| |Campos, | |Blumenfield, Bradford, |
| |Davis, Gordon, Hueso, | |Charles Calderon, Campos, |
| |Knight, Norby | |Davis, Gatto, Hall, Hill, |
| | | |Lara, Mitchell, Nielsen, |
| | | |Norby, Solorio, Wagner |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Donnelly |
| | | | |
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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 the State Board of
Equalization, under specified provisions of law, or winnings
from the California State Lottery.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, negligible fiscal impact to the Controller.
COMMENTS : 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
SB 954
Page 2
"gives cities or counties more chances to collect money owed and
provide needed revenue to agency budgets." The measure is
sponsored by the SCO.
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
refunds or 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.
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
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.
In practice, a city or county would first need to demonstrate to
the SCO that both the debt and the unclaimed property apply to
SB 954
Page 3
the same individual. Then the available unclaimed property
could 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. If the appeal is
successful, the property owner could repossess the property.
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 fiscal year (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 high collection fees.
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.
Analysis Prepared by : Hank Dempsey / L. GOV. / (916) 319-3958
FN: 0004730