Most of the U.S. states are eyeing the unclaimed money lying in their coffers to fix their budget deficits. States are always on the lookout for the sources of additional revenue generation, and unclaimed property is quickly becoming one of the few sources of filling the void in the budget.
The center on Budget and Policy Priorities estimates that the combined state budget deficit over the next two and a half years is likely to be about $350 billion. This will account for about 20% of the state budget.
This deficit has set the states’ economists thinking. They advocate that the unclaimed funds can be effectively utilized to fill in the budgetary deficits. This idea is finding support; in spite of the aggressive efforts taken up by the states to return the unclaimed cash, only one third of it actually finds the rightful owners. It is likely that the remaining portion will remain dormant for long.
It will not make good economic sense to let the unclaimed cash idle without any hopes of finding the rightful claimants, especially while the states struggle to make ends meet.
States are Pushing the Issue
Though most of the states were paying little heed to the unclaimed property until now, many states are pushing this issue to the forefront. Unclaimed property is lying with the states not only in the form of unclaimed cash from individuals’ accounts but also from many business and corporate accounts, estates and properties. It includes unpaid customer payments, customer credits, voided payments, duplicate customer remittances, utility deposits, and more. Unclaimed property also results from third party business transactions with customers, vendors, shareholders, bondholders, contractors and employees.
While the economic data and budget statistics differ from state to state, one thing is certain: that the states are targeting this huge dormant cache of unclaimed property, and it is quickly becoming one of the readily available sources of additional revenue for the states. As per the National Association of Unclaimed Property Administrators (NAUPA), state treasurers are presently safeguarding $32.877 billion of unclaimed cash and property.
Potential Revenue Source for the States
Unclaimed property has helped to fill Delaware’s state revenues by 10%. In 2008, the state’s unclaimed property added over $325 million to the state coffers. Delaware State currently estimates that unclaimed funds will provide approximately $374 million in revenue for the fiscal 2010. California Governor Arnold Schwarzenegger and Alabama’s democratic candidate for Treasurer Jeremy Sherer has offered this solution to tap unclaimed funds till the economy of the states improves.
In April 2010, monthly budget deficit of U.S. has reached an alarming $82.69 billion. Earlier, National Conference of State Legislatures, have expressed concern that the state budget deficits are expected to exceed $55.5 billion for the fiscal year beginning on July 1. Their estimate has already surpassed and they are looking at unclaimed cash as a rich source of cash to fill this deficit. It will not be a surprise if states undertake legal amends to grab the unclaimed property.