That’s the conclusion of a new report by Legislative Analyst Mac Taylor. He reviewed the state program for returning unclaimed property to its rightful owners. At the end of 2014, the state held more than 28.4 million unclaimed properties worth an estimated $7.2 billion. Ninety-five percent of unclaimed property held by the state is cash assets.

Taylor said the state could do a better job of finding owners, instead of passively waiting for the cash to be claimed. His report also raised the question of whether the state has a conflict of interest in managing the program.

“In particular, because property not reunited with owners becomes state General Fund revenue, the unclaimed property law creates an incentive for the state to reunite less property with owners,” according to the report. “Now generating over $400 million in annual revenue, unclaimed property is the state General Fund’s fifth-largest revenue source. This has created tension between two opposing program identities — unclaimed property as a consumer protection program and as a source of General Fund revenue.”

Public unaware

Under state law, when there’s been no activity on an account for three years, financial institutions are obliged to report this unclaimed property to the California Controller’s Office. In turn, the controller holds the funds, commonly money from a forgotten bank account or insurance settlement, until it is claimed by the owner.

Controller Betty Yee has a special web page to help find lost property. It urges, “You may be one of millions of Californians owed money by the State!” The search engine is here.

Among the biggest problems facing the state’s unclaimed property program is a lack of public awareness about where people can find their old property.

“To begin with, the name itself — unclaimed property — is not very user-friendly,” the report said. “It likely prevents potential claimants from quickly understanding the program. The poor branding is likely made worse by limited state efforts to increase public awareness of the program.”

Even state leaders aware of the program’s existence, such as former controller candidate and Fresno Mayor Ashley Swearengin, don’t bother to routinely check and then collect small sums held by the state.

A search by CalWatchdog.com of the unclaimed property database showed prominent state political leaders with unclaimed property.

Gov. Jerry Brown has $61.26 in cash from the sale of shares formerly held by US Bancorp. The address for Brown in the database matches an Oakland address for his “We The People” organization.

There are also unclaimed cashier’s checks for “Kamala Harris” and “Gavin Newsom.” But, without any addresses listed, it’s unclear whether the $200 and $40, respectively, are owed to the attorney general and lieutenant governor by the same names.

Database problems

Missing addresses are only the beginning of the problems with the state’s unclaimed property database. Inaccurate information, such as misspelled city names, can prevent owners from finding their properties in the database. For example, the city of “San Bernardino” has at least 18 different spelling variations.

In addition to allowing the controller’s office the authority to clean the database, the Legislative Analyst’s office recommends the Legislature approve an upgrade to enhance search capabilities. Other states’ databases, such as Virginia’s unclaimed property database, include an address suggestion feature.

“Virginia’s database seems more effective than California’s, particularly for users living in large cities, who have common names, or who have lived at many addresses,” the report noted.

Other website upgrades could include an automated email, similar to a Google Alert, to notify Californians when new property is reported to the state.

Other recommendations for improving the program include:

• Maintaining communication with users by performing database searches on behalf of users;
• Publicizing a list of top unclaimed properties by region;
• Increasing the incentives for third-party investigators beyond the current maximum fee of 10 percent of the claim.

Praise for Chiang’s eClaim feature

Although the report dished out plenty of criticism, it also praised the controller’s office for its new eClaim feature. The new streamlined process for accounts valued at less than $500 was the product of John Chiang when he was controller from 2007 to 2015. He now is the state treasurer.

Roughly 90 percent of the 28.4 million properties held by the state are valued at less than $500.

In a statement, Chiang welcomed the report’s recommendations:

“The LAO has detailed many of the innovations and reforms which fueled an 8-year revival that wrestled away from past lawmakers a program that was hijacked to pay for their own spending priorities and, importantly, restored its original purpose of reuniting property with their rightful owners,” Chiang said. “I strongly support the LAO’s overarching message urging lawmakers to fight the instinct to oppose changes and investments which benefit consumers, even if those changes reduce money from California’s 5th largest revenue source.”

Yee, who has only been on the job a few weeks, hasn’t neglected the unclaimed property program. Earlier this month, she announced a new agreement with Charles Schwab & Company Inc. to return accounts to Californians via the unclaimed property program.

By Wayne Lusvardi

The value of 393,000 trees in the City of Long Beach in the state’s Cap and Trade pollution credit market dropped from about $1.7 million to zero on Aug. 24.

The reason: the California Legislative Analyst issued a letter saying a Cap and Trade “allowance auction is not necessary to meet the Assembly Bill 32 goal of reducing GHG (Greenhouse Gas) emissions statewide to 1990 levels by 2020.”

The city of Long Beach had been taking steps to determine the feasibility of using its trees to sell air pollution credits in the newly created California carbon market to start in November.

According to the U.S. Forest Service, each tree offsets about 0.09 of a ton of air pollution (4.5 million metric tons of air pollutants divided by 50 million trees = 0.09/ton per year).

Carbon credits are expected to sell for $50/ton in California.  So Long Beach’s 393,000 trees conceivably could generate about $1,768,500 in the state’s carbon market each year (393,000 x 0.09 x $50).

It costs Long Beach about $2.5 million per year to maintain the 93,000 street and park trees located on public property.

With all the hoopla and money spent on preparations to create a trading market in pollution credits in California, it has come down to being not necessary.  The four-page letter issued by the LAO was in response to an inquiry by California State Assemblyman Henry Perea, D-Fresno, who asked, “Is a cap and trade allowance auction necessary? What are the advantages and disadvantages? What are the steps the California legislature would have to take to stop the November auction?”

Political Grandstanding

However, Perea’s letter is pure political grandstanding. The California Air Resources Board had already planned to issue pollution credits at no cost.  It is not necessary to get the state Legislature to enact a bill to reduce the price of pollution credits.

Perea’s letter is just a way for him to appear to be pro-business while his political party is the main force behind California’s Cap and Trade Law in imposing $1 billion in taxes on large industries during a prolonged managed economic depression.

Perea’s duplicitous letter declared,  “Cap and Trade 100 Percent Free Allowance Auction Could Benefit Business and Environment.” With political friends like Assemblyman Perea, who needs enemies?

The whole scheme to impose Cap and Trade taxes is like a Rube Goldberg cartoon contraption.   Beginning in 2014, public utilities such as local municipal water departments and electric companies would also have to start paying pollution taxes or reduce air pollution.  So homeowners in Long Beach would be paying higher water and electricity bills to pay their share of pollution taxes.  But the city’s annual cost to maintain street trees might be greatly reduced by about $10 per housing unit per year ($1.768 million/176,032 housing units in Long Beach).

The California Manufacturers and Technology Association has estimated the higher cost of energy and transportation due to Cap and Trade taxes as $3,400 per average family per year.

As can be plainly seen, Cap and Trade is a taxing system as much as it is a way to reduce air pollution.  However, this question remains: Will imposing Cap and Trade taxes on industries and utilities be worth it if industries flee and those taxes are just passed through to utility ratepayers, consumers and those who commute to work by automobile through higher gasoline prices?