Like many Kansans, I listened to the January 12th State of the State speech by the Governor with great anticipation in the hope of hearing a solution to address the fiscal crisis that Kansas is currently facing. After listening to the speech, I was reminded of something my father used to say to us growing up on the farm, "the devil is in the details."
One of my duties as your State Treasurer is to return unclaimed property to the citizens of Kansas. Unclaimed property includes a number of things such as uncashed payroll checks, life insurance proceeds, shares of stock and safe deposit box contents, just to name a few. Last year alone, we assisted nearly 64,000 individuals by successfully returning over $8 million back to its rightful owner(s) or their heirs.
In addition to returning millions of dollars to Kansans, our office was asked to become self-funded last year to help alleviate the burden on the State General Fund (SGF). In order to accomplish this, the Governor proposed a significant new tax on every unclaimed property dollar that was returned to Kansans. The Legislature, however, joined me in opposing this proposal - opting instead to begin charging cash management (bank) fees to state agencies that utilize our services. This "business model" has been utilized in other states for years and after great effort, we introduced the system to Kansas last July. The result was a direct savings of over $1.5 million to the SGF.
However, the Governor, in her current budget proposal, has asked us to abandon our new funding system after investing a substantial sum of money and resources to develop it. Instead, she has once again proposed charging a tax on unclaimed property. What makes this so alarming is that the state already keeps the interest earned on the unclaimed property fund and uses it to pay for things like the renovation of the State Capitol. The rightful owners never see any interest-earnings from their unclaimed property.
Constructing a budget based on a fluid revenue stream is dangerous. The amount of unclaimed property that is returned to Kansans changes from year to year. If we were to follow the Administration's tax plan it would look something like this: In a good year, with a high rate of return, history provides that a 23% tax would need to be charged. But in a bad year, with a low rate of return, history shows that this number could skyrocket to over 77%. This means if the state was holding a $100 utility deposit of yours, you could end up only getting $23 back and the $77 balance would go toward subsidizing state government. As you can see, this proposed tax by the Administration is unfair. Kansans, many of whom are elderly, should not be asked to shoulder the responsibility for the operation of this particular state agency. In fact, the property being returned in most cases has already been taxed as income and property.
As your State Treasurer, I am charged with looking after the money that you have entrusted to me. I cannot in good conscience stand and allow the government to take your hard-earned dollars. This is wrong and I strongly oppose any effort to charge a tax to return unclaimed property.
My position on this issue does not prevent me from being empathetic to the budget challenges before our policy makers. In fact, I have diligently pursued ways that my office can help be part of the budget solution. To that end I have identified $10 million in additional money for the state that would boost the State General Fund next year and have introduced legislation to accelerate its collection. There are no easy answers to the economic challenges facing our state but any money that I can identify to help bridge the gap toward funding school for our children or improving the business climate for economic development is a positive step forward.
Last month my January column listed a number of tips for staying connected with your legislators. This month, I am asking you to stand with me and defend your rights against double taxation. Please contact your legislator and let them know how you feel about this important issue. Additionally, I would encourage you to contact the Governor's office toll-free at 1-877-579-6757 and ask them to rethink their position on this harmful tax.
An efficient government should be responsible and I will do my best to ensure that your voice and the voice of all Kansans is heard here in Topeka.
It is a pleasure to serve as your State Treasurer but I need your help, now more than ever, to protect your hard earned money. Please consider taking a few minutes and making this important call.
Editor's note: If you have any questions, comments or would like to set-up an interview, please e-mail Jenalea Linn at jenalea@treasurer.state.ks.us or call (785) 296-3342.
