Deal reached to limit state's use of unclaimed property
PIERRE, S.D. (KELO) — A compromise that would gradually reduce the amount of unclaimed property revenue in South Dakota's state government budget and would increase the amount that the state treasurer holds in reserve to pay future claims has cleared a key test in the Legislature.
SD native deals with loss of federal job
The Senate Committee on Appropriations gave a nod of approval on Tuesday to a proposal that originated from one of its members, Republican Sen. Taffy Howard. Appropriators voted 9-0 to recommend the amended version of Senate Bill 155 to the full Senate for debate. That could come as early as Thursday afternoon.
The amended version of Howard's legislation was reached through negotiations involving the office of Gov. Larry Rhoden, Lt. Gov. Tony Venhuizen, State Treasurer Josh Haeder, state Finance Commissioner Jim Terwilliger and several lawmakers including Howard and Republican Rep. Chris Kassin.
South Dakota has an entire chapter of state laws on unclaimed property and defines it as 'money, rights to claim refunds or rebates, postal savings deposits, bonds, United States savings bonds, notes, certificates, policies of insurance, other instruments of value, choses-in-action, obligations whether written or unwritten and anything of value of any nature whatsoever' that has been abandoned or forgotten.
After three years, financial institutions, businesses and others holding unclaimed property must remit it to the state treasurer. The state treasurer must deposit nearly all of it in state government's general fund. However, there's no limit of time for a legitimate claim to be filed. Currently state government has $1.2 billion of liability for unclaimed property revenue that's been spent but could be claimed by its rightful owners at any time.
State government in 2024 received what was then a record amount of unclaimed property totaling $133,617,777, minus $38 million paid in claims. This year, Haeder's office had taken in an estimated $247,259,387 as of February 12.
The amended version of SB 155 calls for using no more than $61,384,827 for state government's general fund expenses in the 2026 budget. That cap would decrease by $4 million annually through 2035, when the amount would reach $25 million. It would remain at $25 million after that.
At the same time, the amended SB 155 calls for placing whatever is left after payments and expenses in what would be known as the unclaimed property trust fund. The legislation calls for state government to then receive 4% of the earnings from the unclaimed trust each year.
Howard has introduced various proposals on unclaimed property in past years but none won acceptance. On Tuesday, Lt. Gov. Venhuizen told appropriators that he's been working with Howard on the latest one, including while he was still in the Legislature. 'It's an idea that in my estimation, its time has come,' he said.
State Treasurer Haeder told the panel there's currently no money set aside for any large future claim. He said establishing an unclaimed trust fund would protect state government and taxpayers and, through the interest-bearing feature, would ensure a long-term stable revenue source. 'We have the opportunity to plant a tree today,' Haeder said.
The amended version had support from South Dakota Retailers Association executive director Nathan Sanderson and from state Finance Commissioner Terwilliger.
'I think this puts a well thought-out process into place over the next several years,' Terwilliger said, noting that establishing a trust would improve state government's annual financial statements by eliminating most of the unfunded liability that unclaimed property represents. 'This is a huge step in the right direction.'
Republican Sen. Glen Vilhauer, a committee member, recalled the struggle from a week ago when appropriators decided how much unclaimed property revenue should be included in revenue estimates for 2025 and 2026. Vilhauer said as an accountant he had been concerned that state government was treating unclaimed property as revenue rather than as a liability.
'It will make our budgeting process easier to grapple with as we go forward,' he said.
Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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