Using Unclaimed Property to Balance the Budget
The Detroit News has a very interesting editorial which is quite critical of Michigan's proposal to shorten unclaimed property dormancy periods to balance the budget. As we've discussed, states holding unclaimed property generally only keep a small amount in trust to pay owner claims, and use the rest as general revenue. Accordingly, states faced with budget deficits - such as Michigan - are tempted to tighten unclaimed property laws in order to increase the amount of money brought in.
As the editorial points out, however, this is really only a temporary measure. Unclaimed property brought in earlier is unclaimed property not brought in later. According to the Michigan House Fiscal Agency, although the shortening of dormancy to 3 years (from 5) will increase the amount of money brought in over the next two years, it will decrease that amount for the following three years. Moreover, this money does not belong to the state, but is rather money that it is holding in custody for the rightful owner, and is subject to claim by that owner at any time.
Thus, while unclaimed property can be used in a pinch to cover state budget gaps, it is not a long term solution.
As the editorial points out, however, this is really only a temporary measure. Unclaimed property brought in earlier is unclaimed property not brought in later. According to the Michigan House Fiscal Agency, although the shortening of dormancy to 3 years (from 5) will increase the amount of money brought in over the next two years, it will decrease that amount for the following three years. Moreover, this money does not belong to the state, but is rather money that it is holding in custody for the rightful owner, and is subject to claim by that owner at any time.
Thus, while unclaimed property can be used in a pinch to cover state budget gaps, it is not a long term solution.