Mortgage Crisis

A recent article from the Associated Press, summarizing mortgage survey results, noted that four subprime lenders that went out of business last year had targeted minority neighborhoods. These companies' high-risk loans made up 20% of all their loans and were primarily in minority areas, compared to 4% in non-minority areas. Is someone going to investigate the practices of the few companies that operated like this, or is it easier to just ask the government (a.k.a. the taxpayers) to help out?

Isn't it amazing that with all the so-called real estate safeguards in place, many people that purchased subprime mortgages used applications with overstated incomes? Some of them are now upside down with their mortgages, and face foreclosures. Remember, many of those individuals that are now involved in foreclosures are not victims. They are consenting adults that made very bad decisions!

Education Crisis?

What is the relationship, if any, between California's struggling education programs and the increase in home foreclosures? Could it be that with years of educational programs focusing on cultural and social activities - instead of basic math, reading, and other essentials of becoming an adult - that some of our young people today are not fundamentally equipped for adult life in their current environment?

Next Month

Pamela Creedon, Executive Officer for the Central Valley Regional Water Control Board, will talk to us about current and emerging water quality issues facing California today - and in the future. Our next meeting is on March 20th (Thursday) at 12:05pm, at Zigatos Restaurant (2600 Auburn Blvd.) on the corner of Auburn Blvd. and Fulton Ave. Hope to see you there!

State Confiscation of Unclaimed Property Needs Reform

The Law of Unintended Consequences refers to situations where an action results in an outcome that was not foreseen. With regard to the State's Unclaimed Property law, the State Legislature has continually amended the rules regarding unclaimed property over the past few decades and as a result, has created a situation that has begun to threaten due process protections guaranteed in the Bill of Rights.

Unclaimed property can include bank accounts, safe deposit box contents, stocks, mutual funds, bonds, dividends, estates, and trust funds, and it is important to know that you are at risk of the State claiming your property if that property has been left dormant for a period of only three years. Often, citizens are unaware the property even exists as the accounts could have been left dormant for a number of reasons, including relocation and/or the death of a family member.

By law, the businesses holding the property are obligated to report the unclaimed property to the State and eventually turn it over to the State after the three year dormancy period. After this, there is no guarantee that the State will find the legal owners of the property, and in fact, there is little incentive for them to do so.

Recently, I sent out a pamphlet to residents in my district explaining how to access the State's unclaimed property database. I would urge everyone to check the database to see if the State is holding your property. To find out, all you need to do is visit the State Controller's Website at http://www.sco.ca.gov/ or call 1-800-992-4647. In the left column of the website homepage you will find a link to Search for Unclaimed Property.

The Unclaimed Property Law was first enacted in the 1920s as a service to protect the public and assist businesses that held property. The theory was to have the State collect the unclaimed property so that unscrupulous business owners wouldn't take property that was left abandoned for only a short period of time. The State was supposed to also have more resources with which to identify lost owners. Interestingly enough, the State Controller's website still states that they claim this property for your protection. But while that may have been the original intent, it has certainly become more than that.

When lawmakers "discovered" that the property being held could be used in the General Fund, the law was continuously amended to make it easier for the State to control and benefit from the unclaimed property. Initially, bank accounts were required to be dormant for 15 years before the property was claimed. The law has since been amended three times to decrease the length of time before the property is turned over to the State, and now stands at only three years. In addition, the definition of "unclaimed property" has continued to expand to include a wide variety of property. These changes have resulted in the State collecting $400 million in unclaimed property in 2005-06 that became part of the State's general fund. What was once a public service has transformed to a program for State gain.

A court decision last summer prevented the State from seizing more property until more due diligence was taken by the State to find property owners. In response to this, the legislature approved legislation designed to satisfy the court. While the legislation seemed to accomplish this and removed the court injunction, the bill did not go far enough in addressing the need for more major reform to this program.

This year, I plan to introduce legislation to bring about more fundamental reform to the State's Unclaimed Property program. It is not right for the State to rely on the property of others to help balance our State budget. The dormancy period must be returned to a period of time that would allow someone to go on vacation without fear of having their money taken over by the State and reforms must also be made to eliminate the incentives for the State to keep the property. By not allowing property to be folded into the general fund and requiring that interest payments equivalent to what the State collected on the property to be made, it would no longer be desirable for the State to keep the property.

It's unfortunate that a law that was designed with good intentions has morphed into something so insidious. The State must learn to wean itself from the unclaimed property of others once and for all. But it is these good-ideas-gone-bad that remind us of the danger of unintended consequences every time the legislature passes a new law and the reason that some old laws need to be revisited.

LETTERS TO THE LEAGUE

We seek “Letters to the League” from Members concerning projects and issues on which we are working, along with recommendations on those we should look at. Letters may be edited and republished in any format, primarily in the interest of available space. Send letters, faxes, or e-mail to the Sacramento County Taxpayers League. Our e-mail is info@sactax.org, our telephone number is 916 399-5600, and our address is:

1620 35th Ave. Suite K
Sacramento, CA 95822

EXECUTIVE DIRECTOR'S MESSAGE

One of the League goals since last year has been to develop a working infrastructure, and establish relationships, with most of the local public agencies that receive and spend our tax dollars. As of early 2008, most of that goal has been accomplished. The League is either formally involved with a representative, or has a direct connection to the following:

• Sacramento City and County - Budget and fee reviews
• School Bond Oversight Committees - A League representative is on the following; City Unified, Natomas, San Juan and Los Rios Community Colleges
• City Schools - Budget review
• RT - Budget review and long range master plan
• SMUD - Utility rates, fees
• City Utility Rate Advisory Board - A new committee, the League has applied to join

Our next goal is to get additional members, and some college interns, to help us monitor these tax spending activities.

Cheers

To the RT Board for selecting an in-house candidate to fill the G.M. position, instead of bringing in an outsider who would spend a year or more learning the fundamentals and politics of the task. Mike Wiley is a long term RT staffer with experience in local and state politics, labor issues, service planning, and rider concerns. Plus the staff knows him and supports him. Maybe now RT won't be subject to $10-$15 million budget increases (as it has for the last five years), while bus ridership continues to decline.

Jeers

To the Mayor's office for a travel log of trips, but with little to show in benefits (as pointed out in The Sacramento Bee) as a result of the trips. One trip we do support is the Annual Mayors Conference in Washington, DC. Interacting, and learning from your peers, is a useful tool in any top business or political position.

Bob Blymyer

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