Colorado calls its unclaimed-property program the Great Colorado Payback. But on June 30, it began looking like the Great Colorado Takeaway.
That is the day the state treasurer moved $75 million from the Unclaimed Property Trust Fund, including $72.8 million into the General Fund and $2.2 million into a housing grant fund. This money is not tax revenue and was not intended to fund the government.
It comes from forgotten bank accounts, uncashed checks, insurance proceeds, utility refunds, stock payments and other property belonging to people Colorado has not found. The owners of this money do not lose their claims. Colorado says the money always belongs to them and can be reclaimed at any time.
But the state gets to use it first.
How convenient.
Colorado is holding as much as $2.5 billion in unclaimed property. Officials say roughly one in seven Coloradans may have money waiting.
The state deserves credit for returning money through the annual Great Colorado Payback. But moving $75 million out of the trust fund exposes the system鈥檚 backward incentives.
The arrangement gives Colorado a financial benefit when money stays unclaimed. Owners must know the database exists. They must search the right spelling, recognize an old address, submit documents and wait.
If the owner died, heirs may need death certificates, probate records and proof connecting a relative to an address from years ago. Many people never know the money exists. Others give up. The state keeps using it.
Colorado insists it is only the custodian. Fine. A custodian鈥檚 job is to safeguard property and return it, not treat it as a convenient budget reserve.
Lawmakers faced a tight budget and saw a large pot of cash. They reached for it. That may be legal. It is still a bad habit.
Every dollar transferred into the General Fund is a dollar the state can spend before locating the person who owns it. Colorado should reverse the incentive.
Before lawmakers tap the fund again, they should require the Treasury to make a far more aggressive effort to identify owners and automatically return straightforward claims. Colorado already has tax records, motor vehicle records, business filings and other government data. It uses that information when residents owe the state. It should use the same muscle when the state owes them.
When a name, address and government record clearly match, mail the check. No search. No claim. No scavenger hunt through old paperwork. Start with smaller, single-owner claims. Expand the program as fraud protections prove effective.
Complicated estates and disputed accounts will still require documentation. Fraudsters must be stopped. But those exceptions are no excuse for forcing everyone to chase money Colorado can confidently identify. The state should also publish clear annual figures showing how much unclaimed property comes in, how much is returned, how much is transferred elsewhere and how long the money sits.
Coloradans deserve to know whether the Great Colorado Payback is primarily designed to pay them back or help balance the books. On June 30, Colorado moved $75 million from a fund filled with other people鈥檚 money.
The claims will remain. So should the pressure to find the owners.
Before Colorado takes another dollar from the Payback fund, it should do a much better job paying people back.
Mark Lewyn is founder of UnclaimedMoneyGuy.com and a former staff writer for BusinessWeek and USA Today鈥檚 Money section. He can be reached at mark@unclaimedmoneyguy.com.
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