Prioritize retrieving Pa. assets
Pennsylvania’s fiscal health was “sickened” by effects of the Great Recession. That can’t be disputed.
However, bad decision-making by lawmakers over the past two decades, such as those involving pensions and maintaining the bloated legislative and state government bureaucracies, are equally, or perhaps more, responsible for the serious financial problems currently dogging the commonwealth.
The General Assembly should avoid making additional costly errors, and it shouldn’t pursue questionable deficit remedies.
One unacceptable budget-help proposal at the state capitol now would involve shortening the time until the state would be permitted to confiscate inactive accounts from banks, insurance companies and other institutions. Currently, the state is permitted to collect inactive assets after an account has been dormant for five years. Some lawmakers are proposing that those assets be confiscated after three years.
If the state could guarantee that the assets could be recovered easily after three years, if the assets’ owners suddenly were to come forward, the new idea might be acceptable to ease Pennsylvania’s budget deficit, now projected to be $1.4 billion.
However, retrieving the assets wouldn’t be easy because of the red tape involved.
Owners of dormant assets should not have to wade through that red tape two years sooner just because state officials have erred in their responsibility to keep the state in good fiscal health.
William Palmer, a California lawyer who took on a class-action lawsuit dealing with unclaimed property, makes a good point: If states can locate people for the purpose of renewing driver’s licenses or collecting on unpaid speeding tickets, they ought to be able to be as efficient in returning assets.
Pennsylvania is regarded as aggressive in trying to return unclaimed assets, but it’s clearly not doing enough, as evidenced by the fact that the commonwealth currently is holding about $2 billion in unclaimed property.
The state shouldn’t consider it necessary to seize others’ property more quickly to help resolve budget crises, especially when other options exist. They include a small income tax increase for a year or two, as well as tax policies more beneficial to the state from the Marcellus Shale gas-drilling industry.
Gov. Tom Corbett and the General Assembly have been wrong in being so lenient regarding Marcellus taxation.
State Budget Secretary Charles Zogby estimates that the state would realize $150 million this year from the proposed unclaimed-property change. Certainly that money would help, but it would enable lawmakers again to avoid making tough decisions necessary to return Pennsylvania to financial sturdiness.
Meanwhile, that could pave the way for the budget deficit to grow.
Rather than turn assets over to the state after three years, banks and others holding unclaimed property should be required to be more aggressive about notifying owners that the state is on the verge of becoming the new holder of the property.
That aggressive attempt-to-notify should begin six months prior to the transfer of assets at the five-year mark.
The proposed change being contemplated in Harrisburg should be shelved. The time spent in pursuing that change would be better spent seeking long-term budget remedies.