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Lawmakers aim to stabilize ‘volatile’ unclaimed property revenue with trust fund • South Dakota Searchlight [1]
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Date: 2025-02-18
South Dakota lawmakers, the Governor’s Office and the state Treasurer’s Office hope to bring more predictability to a volatile revenue source and protect the state from a large liability by creating a trust fund for unclaimed property.
Senate Bill 155, advanced by the Senate Appropriations Committee on Tuesday at the Capitol in Pierre, would limit the amount of unclaimed property funds that could be used in the state’s general fund budget. The bill would also create an interest-bearing trust fund to pay claims and accrue interest on the rest of the money. That interest could then be used as a revenue stream.
Unclaimed property consists of an array of abandoned or forgotten private assets, including money from bank accounts, PayPal accounts, stocks, life insurance payouts, uncashed checks, unused refunds, and even the contents of safe deposit boxes. Holders of the money or items, such as banks, try to find the owners. The property reverts to the state after three years.
Unclaimed property revenue surged to record levels during the past few years as people left assets behind during pandemic-motivated relocations, and because of Bancorp’s relocation of its national headquarters to Sioux Falls.
The state typically spends much of the revenue, while setting aside only a portion of it for people who come forward to claim their property. Yet rightful owners can claim their assets from the state at any time, which has so far created a $1.2 billion perpetual and unfunded liability for the state, said Sen. Taffy Howard, R-Rapid City, who introduced the bill.
Much of the money is never claimed. Last year, as the state took in about $175 million of unclaimed property, it paid out $38 million in claims to 6,768 claimants. South Dakota has received $310 million worth of unclaimed property so far this year.
“It’s been a benefit for our citizens, but I hope you’ll agree that the time is now to create this trust fund and alleviate the burden that has also been placed on our citizens because of this,” Howard said.
Unclaimed property “is fine in some ways,” Lt. Gov. Tony Venhuizen told lawmakers, but it’s problematic, volatile and unpredictable as well, he said.
“Even though we know that a lot of these unclaimed property items will never be claimed, they could be and they stay on our books as a claim against the state,” Venhuizen said.
Under SB 155, lawmakers would only be able to use $61.4 million of unclaimed property money for the general fund in fiscal year 2026. The rest of the funds would be placed into a trust fund used to pay out claims and accrue interest.
The amount of unclaimed property that could be used for general fund expenses would gradually decrease to $25 million in fiscal year 2035 and would remain there. The state would begin drawing 4% of the market value of the trust fund to use as general fund revenue by 2031, while still retaining the rest of the trust fund to pay potential claims.
“There’s concern that we may not have some one-time money or we’re going to slowly reduce our ongoing revenue,” said state Treasurer Josh Haeder, “but you’re going to make it up from that interest earned at the end of the day.”
The Senate Appropriations Committee unanimously approved the bill, sending it to the Senate.
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https://southdakotasearchlight.com/2025/02/18/lawmakers-stabilize-volatile-unclaimed-property-revenue-trust-fund/
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