CLEVELAND — On Tuesday, Ohio senators announced their plan to dip into unclaimed funds to provide a $600 million grant to the Cleveland Browns for its new domed stadium in Brook Park, after the release of the Senate's version of the state budget.
Unclaimed funds are essentially other people's money that the state is holding, such as forgotten bank accounts, rent or utility deposits, or uncashed insurance policies. The Ohio Department of Commerce's website says the state is sitting on $4.8 billion in unclaimed funds. Unclaimed funds are reported to the Division of Unclaimed Funds by businesses and banks, usually after three to five years of inactivity.
The Division of Unclaimed Funds holds unclaimed funds until the funds are claimed by the rightful owner.
Senate Finance Chair Jerry Cirino (R-Kirtland), who has been supportive of the Browns' move, said the $600 million grant would be in the form of cash grants over the next 16 years.
"It's going to be cash grants for a program that will last 16 years, and for each of those 16 years, we outline the incremental taxes that the new stadium and mixed-use development associated with that will provide to the state through income taxes, sales tax and CAT," Cirino said.
According to the Department of Commerce, on occasion, the Ohio General Assembly has transferred funds from the Unclaimed Funds Trust Fund to the General Revenue Fund and other state funds for specific purposes through various bills.
News 5 spoke with Case Western Reserve University Professor of Law, Eric Chaffee, about the Senate's proposal and the legality behind utilizing unclaimed funds.
"There's been a lot of controversy in regard to the Browns and a whole bunch of different funding options, and this is the flavor of the week," Chaffee said. "I've not seen it before, but it doesn't mean that it's not happened. It's one of those things where it is a novel risk of unclaimed funds, which are a very common phenomenon."
Chaffee said the potential spending option does pose a risk to the state.
"The unclaimed funds should be available if the people want to claim them. In the event that a bunch of people decide that they want to come for their money, there could be real problems here," Chaffee added. "This particular plan would only use a fraction of that, so there's not that much risk, but there is some risk here."
He added that if the state has a mechanism for returning the money to its rightful owners, then it would be legally defensible.
"As long as you [Ohio] can come up with the money if somebody actually asks for it, the state should be OK," Chaffee said. "But there could be a bunch of people who now come and ask for these funds, which could put the state into a bad position."
We asked the Department of Commerce if people would get their unclaimed funds if the state were to spend them. It's working on tracking down the answer for us.
Following the announcement, Cuyahoga County Executive Chris Ronayne urged Gov. Mike DeWine to line-item veto the use of unclaimed funds for the stadium, saying the Senate is "picking your pocket," in a press conference Tuesday afternoon.
Watch Ronayne's full remarks made at 5 p.m. Tuesday here:
"Frankly, your pocket is being picked to give $600 million to Haslam Sports Group for the sole purpose of their next version of Cleveland Browns stadium," Ronayne said.
The House proposal, by contrast, called for the state to issue $600 million in bonds for the stadium — and pay off that debt using stadium-district tax revenues over 25 years, at a cost of about $1 billion.
RELATED: Ohio Senate GOP budget increases school funding, gives Browns $600M grant, creates flat tax
Governor Mike DeWine's proposal for helping to pay for the new dome stadium is increasing the sports betting tax from 20% to 40%.
Ronayne has been critical of the Browns' plans to leave Downtown Cleveland.
He said that in the budget, there is a proposed $1.7 billion fund for stadiums across Ohio coming directly from unclaimed funds, which would bypass a tax.
"We urge Governor Michael DeWine to line-item veto that portion of the Ohio budget if it comes in with $600 million coming from the unclaimed funds with our Ohio taxpayers' dollars," Ronayne said.
Ronayne claims the Senate's Budget could impact the Cleveland Guardians and Cavaliers due to a proposed adjustment to the sports sin tax allocation.
Additionally, the budget allocates $261 million to public schools in Ohio, representing a $351 million decrease from the previous year.
RELATED: Ohio Senate GOP budget increases school funding, gives Browns $600M grant, creates flat tax
Earlier this year, the Division of Unclaimed Funds unveiled a new system designed to make it easier for Ohioans to search for and recover their unclaimed funds, as well as to facilitate the reporting of these funds by businesses.
In Tuesday's press conference, Ronayne urged residents to look at their unclaimed funds here. Claims are processed in the order they are received.
