HB26-1401 raids $75 million from Colorado’s unclaimed property trust fund

DENVER — If a private trustee pulled $75 million out of a trust fund and dropped it into the household checking account, the next stop would be a grand jury. Colorado lawmakers are doing roughly the same thing by statute.

HB26-1401 orders the Colorado State Treasurer to transfer $72.8 million from the Unclaimed Property Trust Fund into the general fund and another $2.2 million into the Housing Development Grant Fund, both on June 30, 2026. The money belongs, by the state’s own legal admission, to roughly 1.6 million named Coloradans who have not yet come forward to claim it. The bill carries a bipartisan quartet of prime sponsors drawn from the Joint Budget Committee: Democrats Rep. Emily Sirota of Denver and Sen. Jeff Bridges of Greenwood Village, and Republicans Rep. Rick Taggart of Grand Junction and Sen. Barbara Kirkmeyer of Brighton. The sponsorship is bipartisan. The House floor vote was not. Most Republicans opposed the bill despite the two GOP prime sponsors.

Former state senator Kevin Lundberg, appearing on The Kim Monson Show on April 14, 2026, went straight at the frame. “Let me emphasize the word trust because this is literally a trust established by the state of Colorado for the people of Colorado,” Lundberg said. “These are funds that somebody’s lost track of that is some individual’s or some company’s property.”

Then he went further. “If you or I were a trustee for a trust and you took those dollars and used them for some other purpose, you’d go to prison. That’s a serious crime.”

What the statute says, and what the bill does to it

The principal of the Unclaimed Property Trust Fund is not ordinary state money. Under existing law at CRS 38-13-801(1)(b), the fund’s principal “shall not be expended except to pay claims” and “is not subject to appropriation by the general assembly.” That language has been the statutory firewall between general-fund budgeting and money the state holds in custody for private owners.

The reengrossed text of HB26-1401 strikes that firewall and writes in a carve-out. “Notwithstanding any other provision of this section to the contrary, on June 30, 2026, the state treasurer shall transfer seventy-two million eight hundred thousand dollars from the unclaimed property trust fund to the general fund,” the bill reads. A parallel section sends $2.2 million to the Division of Housing for deposit into the Housing Development Grant Fund.

The Colorado Department of the Treasury describes the same fund in language that is hard to square with a general-fund sweep. Through the Great Colorado Payback program, the department says, “the State Treasury holds these funds in perpetuity until a valid claim is made.” The program has returned more than $784 million to its owners since 1987.

The fiscal note’s quiet warning

The nonpartisan Legislative Council Staff fiscal note on HB26-1401 buries a remarkable concession near the bottom. Unclaimed property in the fund “is held in trust indefinitely and returned to individuals who claim their property,” the analyst writes. “To the extent that the net increase in transfers under this bill in FY 2025-26 reduces available moneys in the fund below the amount needed to return property to claimants, this bill may create a liability for the state of Colorado and necessitate General Fund expenditures.”

In plain English, the state’s own budget staff is telling lawmakers that moving this money out of the trust may force the state to cover missing claims out of the general fund later. The bill balances the 2026-27 budget in part by booking a potential future liability as present revenue.

A federal class action is already pending

The timing of the raid is the part no one in the House floor debate addressed. Colorado’s unclaimed property program is already the defendant in a federal takings-clause class action on behalf of an estimated 1.6 million Coloradans.

The case is Knellinger v. Young, No. 1:22-cv-01379, in the U.S. District Court for the District of Colorado. According to the Denver Gazette, the plaintiffs allege the state violated the Fifth Amendment by taking custody of their property “without compensation.” After the U.S. Court of Appeals for the 10th Circuit reinstated the case in April 2025, Judge Allison H. Eid wrote language the bill’s sponsors should have read before filing HB26-1401. “It is reasonable to infer that the property listed on Colorado’s unclaimed property website belongs to Plaintiffs,” Eid wrote. “A property owner’s compliance with state-imposed procedures is immaterial to the determination of whether a taking occurred.”

On February 13, 2026, U.S. District Judge Charlotte N. Sweeney allowed the plaintiffs’ due-process claims to proceed. That ruling landed in the Colorado courts just under seven weeks before the JBC introduced HB26-1401.

A pattern, not a one-off

This is not the first time the legislature has reached into the trust. Current statute at CRS 38-13-801(5)(a), which HB26-1401 preserves, already documents a $43 million transfer from the fund to the general fund that the General Assembly authorized for July 1, 2020. A separate 2019 and 2020 mechanism created a conditional pipeline of up to $30 million per year from the trust to housing programs when state revenue ran under the TABOR cap. The 2026 bill repeals the housing-grant pipeline and the adult-dental transfer effective July 1, 2026, and then refinances the adult-dental program with a $63.5 million general-fund appropriation.

The sequence is a tell. The legislature takes a lump sum out of the trust now, closes the old spigots, and leaves the door open for the next raid.

The vote, the amendments, and the floor quote

The Colorado House passed HB26-1401 on third reading on April 11, 2026, without adopting any floor amendments to the transfer provisions. The reengrossed text the Senate took up on April 14 is substantively identical to the version the JBC introduced.

One amendment did succeed, and it is the most revealing piece of the floor record. Rep. Tammy Story, an Evergreen Democrat, secured bipartisan support to restore $239,506 in cash funds and three full-time employees to the Unclaimed Property Trust Fund program inside the Treasurer’s office. Marianne Goodland of the Denver Gazette reported that House Republicans framed the broader transfer as stealing money from Coloradans. Colorado Politics reported that Taggart, one of the bill’s Republican prime sponsors, was the only House Republican to vote for the overall 2026-27 budget package.

The context matters. HB26-1401 is one tile in a $46.8 billion spending plan for FY 2026-27, as Colorado Politics reported, stitched together under a $1.5 billion shortfall, as the Colorado Sun reported. Sirota, who chairs the JBC, told the Sun, “This has been an extraordinarily difficult process.” Lundberg has a different diagnosis. “It’s not because of an economic downturn,” he said on the April 14 show. “It’s just because they’ve been spending one-time dollars on multiple-year programs and projects.”

Nash Herman, a fiscal policy analyst at the Independence Institute, put a label on the move in an April 10 Complete Colorado analysis. “In a similar (ethically if not legally questionable) vein, the JBC plans to raid the unclaimed property fund, too,” Herman wrote.

The bill now sits in the Senate Committee of the Whole. If it reaches Governor Jared Polis unchanged, the treasurer will hand $75 million of named private property to the general fund on June 30, even as the lawsuit arguing the state cannot lawfully keep that property at all proceeds through federal court.