Subscribe Now! | Volume 1 - Issue 1 | Fall 2008 |

Contents of This Issue

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Links to Recent Controller's News Releases

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Welcome to Our First Issue of Controller Connection!

As the State’s Chief Fiscal Officer, I want to make the State Controller’s Office the go-to source for reliable, no-nonsense information - a place where individuals and local and State government agencies can find financial guidance that will help strengthen our families, communities and our State. My goal for this new electronic publication is simple: We want to keep you up to date on the many public service programs, activities and exciting new initiatives underway at the California State Controller’s Office.

From returning billions of dollars of unclaimed property to its rightful owners, to protecting our environment through green investment initiatives and wise land use, to providing free tax assistance and small business workshops, to carefully managing State government’s limited fiscal resources, our goal is to bring a brighter future to our great State and new generations of Californians.

We frequently co-host free seminars and other events in a variety of cities and communities, and we offer vast amounts of pertinent information on our rapidly expanding Web site.

I sincerely hope you will take a few minutes out of your busy schedule to check out our new Controller Connection and learn how we are serving you, your family and your community. You can subscribe or unsubscribe at any time simply by using the e-mail subcription link to the right, or you can simply check back to this page located in the "About Us" section of our Web site. Thanks for reading!

  - John Chiang
   California State Controller

Controller Expedites Payments Stalled by Budget Stalemate

State Controller John Chiang has sent a letter to State agencies and departments urging them to prioritize backlogged claims to ensure California nursing homes, day care operators, community colleges, small businesses and others that have suffered during this budget stalemate are first in line to be paid.

"This record-setting budget stalemate has been an enormous burden on so many small businesses and health care providers who care for our most vulnerable Californians – the sick, elderly, disabled, and children," Chiang said. "I will quickly pay all backlogged claims and I am asking State agencies for their assistance to ensure that we get payments into the hands of those who most desperately need them as quickly as possible." Medi-Cal payments that have been withheld from nursing homes, hospitals, clinics and other health providers will be the first to be paid under an agreement finalized today with the California Department of Health Care Services (DHCS). The Controller will pay about $3.6 billion in claims within 48 hours of the budget becoming law. The Governor has indicated he will sign the budget early next week.

In his letter, the Controller said that while the law allows him 15 days to review, process and pay standard claims, he intends to reduce that time to 7-10 days. To accomplish these goals, the Controller has redirected additional employees to assist in processing the estimated 80,000-plus claims that have gone unpaid since July 1.

View of a copy of the Controller’s letter.

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Legislation that May Affect You

Controller-Backed Legislation Seeks to Safeguard Property

The Governor’s recent veto of legislation that would have fixed the State’s ailing Unclaimed Property Program should come as a large disappointment to Californians who place their financial assets and items for safekeeping with a financial institution or bank. The veto of SB 1319 preserves a broken system in which any account may be at risk of being deactivated, assets turned over to the State and property destroyed or sold --all without the account owner’s knowledge.

Since taking office, Controller John Chiang has worked to protect individuals’ property by restoring the Unclaimed Property (UCP) program that has been marred by changes in law to strip it from achieving its key purpose – protecting peoples’ property until the rightful owner is found. Working to reverse this course, the Controller had sponsored legislative reforms and actively advocated for the passage of SB 1319. The bill would have been a comprehensive overhaul of the State’s UCP program and would have reinstated many pro-property owner measures that were once in law.

The Unclaimed Property Law was established in 1959. Each State has laws governing the treatment of individuals’ property by a private business or financial institution. In California, if there has been no account activity by the owner for three years, the business must notify the customer that the property will be transferred to the State. The types of property that can be reported and transferred include contents found in safe deposit boxes, bank accounts, insurance policies, stocks and securities. For a complete list of all types of property, please visit the official California unclaimed property web site at www.ClaimIt.ca.gov.

The Controller has heard many complaints from Californians who were not aware that the financial institution or bank holding their assets and property may, without their consent, deactivate an account and turn the assets over to the State. SB 1319 would have required businesses and financial institutions to clearly notify customers of this practice and the potential risk to the customers' property. SB 1319 would have held businesses accountable for failing to properly notify their customers before the property is reported and transferred.

Current law requires the Controller’s office to destroy or sell items found in safe deposit accounts after 18 months of receipt by the State. The Controller strongly believes that you cannot put a price tag, let alone replace, cherished items such as photographs, memorabilia and other keepsake items that may hold great sentimental value for the owner. SB 1319 would have allowed the Controller to hold these items for up to seven years, which would give owners more time to be reunited with these items.

Lastly, another major change in law that the Controller was seeking in SB 1319 would have restored the payment of interest when owners claim their property. The money collected from the unclaimed property program has been used by the State as an interest-free revolving loan, meaning whatever is collected in the pot is used by the State. Why should the State get away with using other people’s money without paying interest?

Like too many politicians over the years, Governor Schwarzenegger is relying on the UCP program to balance the State’s budget. As long as people are not aware that their property may have been sent to the State, that property is available to fund State programs.

The Controller has spent the past two years working to restore the integrity of the program. Shortly after taking office, he sponored legislation to cut through the red tape and legal restrictions that prevented his office from notifying more than 80 percent of owners that their property had been sent to the State. As a result, the Controller in one year mailed 2.5 million notices – more than double the number of notices sent in the previous decade.

Controller Chiang will continue to make reforming the program a priority of his administration. He will seek new legislation that will require businesses to notify their customers of the UCP law when opening an account, require the State to pay people interest when claiming property, and protect people’s property from being sold or destroyed for up to seven years. Please urge the Governor to make this a priority of his Administration by signing a bill that will enact these reforms.

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The Controller in the Community

Chiang Discusses the Importance of California's Small Businesses

Drawn from remarks made by Controller Chiang at a recent small business seminar in San Luis Obispo:

The message to you today is that I want to support every small business in California in any way we can. In times like these, your contributions to the economy, to your trades, to the jobs you provide, and to your neighborhoods become even more crucial to California’s success.

I have spent a huge part of my professional life getting to know the state and federal tax laws. I served two terms on the Board of Equalization before being elected Controller, and now chair the Franchise Tax Board. I also started my career as a tax law specialist with the Internal Revenue Service.

I think understanding tax law is important because it affects many areas of our lives and nearly every aspect of private enterprise.

So a major goal of today’s event is to help you with the wide-reaching and complicated requirements in the tax code.

Since my very first day on the Board of Equalization, I did my best to:

• Educate taxpayers on their basic responsibilities
• Collaborate with taxpayers to work out the kinks and knots in the tax code, and
• Make sure that tax agencies are responsive to individual and business taxpayer’s needs

I started from the ground floor. I made sure that taxpayers had easy access to publications that would guide them through their finances. I made sure we continued translating languages into Vietnamese, Spanish, Korean and other languages so that entrepreneurs new to this country would have the resources necessary to start their new lives.

I held seminars like this one to give taxpayers direct access to expert help – because I believe that layers of bureaucracy and red tape should not stand between the people who pay taxes from those who collect them.

Experts should be ready to answer the most common questions like:

• Who needs to hold seller’s permit?
• What taxes affect your business?
• When do you need to report?
• What is the best structure for your company?
• And where can you get more help?

Small business owners face a lot of responsibilities: providing for their families, caring for their customers, and supporting their communities.

We can help you with your responsibilities as a business owner and taxpayer in the State of California.

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