Legislature(2003 - 2004)

04/16/2004 09:09 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
     CS FOR SENATE BILL NO. 231(STA)                                                                                            
     "An Act relating to unclaimed property; and providing for an                                                               
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
TOM BOUTIN,  Deputy Commissioner,  Department of Revenue,  testified                                                            
this bill would change  the Alaska Uniform Unclaimed Property Act to                                                            
generally  comply with  other regulations  in  the nation  governing                                                            
unclaimed property.  He specified that this bill would  shorten time                                                            
periods  after  which  ownership  of  unclaimed  property  would  be                                                            
transferred to the State.                                                                                                       
                                                                                                                                
RACHEL LEWIS,  Unclaimed Property Administrator, Treasury  Division,                                                            
Department  of  Revenue,  testified   this  bill  would  reduce  the                                                            
"dormancy periods"  of unclaimed property.  She overviewed  that the                                                            
amount of  time before  which unclaimed property  would transfer  to                                                            
State ownership  would change from either five years  to three years                                                            
or seven years  to five years. She  surmised this legislation  would                                                            
improve chances of locating  the owners of unclaimed property, would                                                            
permit  businesses  to remove  the liabilities  from  accounts,  and                                                            
would transfer  unclaimed property to the State general  fund sooner                                                            
"where it could  be used for everyone  in the state of Alaska."  She                                                            
qualified   this   legislation   does   not   specifically   address                                                            
demutualization,  which is a new practice  began the release  of the                                                            
Uniform Law Commissioners  Draft of 1995, which this  legislation is                                                            
based upon.                                                                                                                     
                                                                                                                                
Senator Bunde  asked for further definition  of the demutualization                                                             
matter.                                                                                                                         
                                                                                                                                
Ms. Lewis deferred to industry representatives.                                                                                 
                                                                                                                                
Senator  Olson asked the  percentage of  property currently  claimed                                                            
after the third year and before five to seven years.                                                                            
                                                                                                                                
Ms. Lewis replied  the incidence of  claims is greatly reduced  over                                                            
time. She  predicted an increase  of claimed  property in the  first                                                            
two years due to the compressed timeframe.                                                                                      
                                                                                                                                
Senator Hoffman  asked what additional measures would  be undertaken                                                            
to identify, locate and notify owners of unclaimed property.                                                                    
                                                                                                                                
Ms.  Lewis  replied  that currently  the  Division  is  required  to                                                            
advertise  in newspapers  unclaimed property  notices annually.  She                                                            
stated  this is expensive,  and that  the Division  has found  other                                                            
more  cost-effective  methods,  including  maintaining  an  Internet                                                            
website, national  television programs  and commercials,  and booths                                                            
at  conferences  and fairs.  She  stressed  that funding  for  these                                                            
efforts is limited  to the $30,000 budget and that  this legislation                                                            
would  allow  the  Division  to  identify  and  implement  the  most                                                            
efficient and successful methods.                                                                                               
                                                                                                                                
Senator Hoffman  asked if the Internet is the most  effective method                                                            
for Alaska.                                                                                                                     
                                                                                                                                
Ms. Lewis  reiterated that  currently, the  Division is required  to                                                            
advertise through  newspapers, although more effective  methods have                                                            
been  identified.  This  legislation  would allow  the  Division  to                                                            
evaluate different  methods. She listed 300 claims  resulting from a                                                            
$30,000 newspaper  advertising campaign the previous  year, compared                                                            
to 1,600  claims resulting  from an Internet  posting at no  cost to                                                            
the State.                                                                                                                      
                                                                                                                                
Senator  Olson  challenged   that  many  rural  residents   are  not                                                            
"property minded" and unlikely to surf the Internet.                                                                            
                                                                                                                                
Ms. Lewis replied  that many people  tend to surf the Internet,  and                                                            
notify neighbors, friends and relatives if information is found.                                                                
                                                                                                                                
Senator  Olson countered  that  rural  areas have  limited  computer                                                            
access and therefore Internet surfing is not possible.                                                                          
                                                                                                                                
Ms. Lewis responded that  this legislation would permit the Division                                                            
to determine the  best way to address the issue of  notifying owners                                                            
of  unclaimed   property.  She  surmised   that  if  the   newspaper                                                            
advertising  were not  required, the  funds could  be utilized  in a                                                            
more effective manner.                                                                                                          
                                                                                                                                
Amendment #1:  This amendment replaces the language  in Section 5 on                                                            
page 3 of the committee substitute to read as follows.                                                                          
                                                                                                                                
     Sec. 5.  AS 34.45 is amended  by adding a new section  to read:                                                            
                                                                                                                                
          Sec. 34.45.175. Certain property distributed in insurance                                                             
     company reorganizations.  Property distributable  in the course                                                            
     of a demutualization  or related reorganization of an insurance                                                            
     company shall be deemed abandoned as follows:                                                                              
          (A) any funds, two years after the date of the                                                                        
     demutualization   or  reorganization,   if  the  funds   remain                                                            
     unclaimed,  and the owner has  not otherwise communicated  with                                                            
     the holder or its  agent regarding the property as evidenced by                                                            
     a memorandum  or other  record on file  with the holder  or its                                                            
     agent;                                                                                                                     
          (B) any stock or other equity interest, two years after                                                               
     the   date  of  the   demutualization   or  reorganization   if                                                            
     instruments  or  statements  reflecting  the  distribution  are                                                            
     either mailed  to the owner and returned by the  post office as                                                            
     undeliverable,   or not  mailed  to  the owner  because  of  an                                                            
     address  on the books and records  of the holder that  is known                                                            
     to be incorrect,  and the owner has not otherwise  communicated                                                            
     with  the  holder  or  its  agent  regarding  the  property  as                                                            
     evidenced  by a  memorandum or  other record  on file with  the                                                            
     holder or its agent.                                                                                                       
          (C) property not subject to (A) or (B) above within two                                                               
     years of  the distribution shall remain reportable  under other                                                            
     sections of this chapter.                                                                                                  
                                                                                                                                
Senator  Bunde  moved  for  adoption  and  objected  for  discussion                                                            
purposes.                                                                                                                       
                                                                                                                                
Mr. Boutin indicated  he has read the amendment and  agreed with the                                                            
concept.  He deferred  to Ms.  Lewis and  the Department  of Law  to                                                            
explain the provisions.                                                                                                         
                                                                                                                                
Ms. Lewis remarked  that the Division  agrees "wholeheartedly"  with                                                            
the amendment,  which was suggested  by industry and she  noted that                                                            
the National Association  of Unclaimed Property Administrators  also                                                            
supports the amendment.                                                                                                         
                                                                                                                                
MARY ELLEN  BEARDSLEY, Assistant Attorney  General, Commercial/Fair                                                             
Business Section,  Civil Division, Department of Law,  testified via                                                            
teleconference  from Anchorage that  she has not had an opportunity                                                             
to adequately  review the  amendment. She  indicated the  Department                                                            
agrees with the concept of the proposed changes.                                                                                
                                                                                                                                
Senator  Bunde   directed  attention   to  a  memorandum   from  the                                                            
legislative Division of  Legal and Research Services [copy on file],                                                            
which also raises concerns with the amendment.                                                                                  
                                                                                                                                
No further action was taken on the amendment or the bill.                                                                       
                                                                                                                                

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