JBC signals legislation to change unclaimed-property transfers, explores homestead-exemption reductions

The Joint Budget Committee voted Monday to direct staff to draft legislation exploring two big changes to unclaimed-property policy and related budget mechanics: (1) define an actuarially determined “necessary reserve” in the Unclaimed Property Trust Fund (UPTF) and (2) repeal or redirect an automatic $30 million transfer currently written to go to a housing development grant fund if Colorado is under the TABOR cap.

Mr. Rickman, presenting Treasury staff analysis, said Colorado’s unclaimed-property trust fund has accumulated a large balance after years of receipts and that many other states use time-limited rules or actuarial reserves to free otherwise dormant balances for public purposes. He proposed two options: run legislation to repeal the existing automatic $30 million transfer (HB 191322 triggers an automatic transfer when the state is under the TABOR cap) and create a contingent transfer mechanism or set a time-window after which unclaimed property could be reallocated for public uses.

Committee members were split on the policy tradeoffs. Several expressed concern that these dollars belong to individuals and urged caution; others said a defined reserve and a time limit could allow the state to make transparent choices about using truly dormant funds for housing or general-fund balancing. Vice Chair Bridges objected to the drafting motion but was outvoted 5–1; the committee authorized staff to draft language that would set an actuarially based reserve and eliminate or redirect the $30 million statutory transfer.

Separately, staff reviewed a proposal to reduce the homestead exemption in a contingent way tied to TABOR forecasts. Staff estimated incremental tax burdens for seniors and outlined mitigation possibilities including property-tax deferral or expansion of the property-tax, rent and heat (PTC) rebate program. Several members said they oppose cutting the homestead exemption for seniors, while others urged continued study of targeted mitigations.

What’s next: Staff will draft bill language to define a necessary UPTF reserve, to repeal or reroute the existing $30 million automatic transfer, and to model contingent homestead-exemption options; the drafts will return to the committee for consideration.