BILL ANALYSIS                                                                                                                                                                                                    Ó




                     SENATE GOVERNANCE & FINANCE COMMITTEE
                            Senator Lois Wolk, Chair
          

          BILL NO:  AB 188                      HEARING:  7/6/11
          AUTHOR:  Block                        FISCAL:  Yes
          VERSION:  6/29/11                     TAX LEVY:  Yes
          CONSULTANT:  Grinnell                 

                        VETERAN'S PROPERTY TAX EXEMPTION
          

          Provides that the exemption applies when an unmarried 
          surviving spouse is confined to a health care facility.


                           Background and Existing Law  

          The California Constitution (Article XIII, Section One) 
          provides that all property is taxable unless explicitly 
          exempted by the Constitution or federal law.  The 
          Constitution limits the maximum amount of any ad valorem 
          tax on real property at 1% of full cash value, plus any 
          locally-authorized bonded indebtedness.  Assessors 
          reappraise property whenever it is purchased, newly 
          constructed, or when ownership changes.  

          The Constitution (Article XIII, Section Four) additionally 
          allows the Legislature to partially or wholly exempt from 
          property taxes the value of a disabled veteran's home if 
          the veteran has lost one or more limbs, is totally blind, 
          or is totally disabled, as a result of a service-connected 
          injury, known as the "disabled veterans' exemption."  The 
          Constitution allows taxpayers to apply the disabled 
          veterans' exemption, currently provided by statute at the 
          inflation adjusted value of either $115,060 or $172,592 
          depending on the taxpayer's income, but not in addition to 
          the veterans or homeowners' exemption.  The Constitution 
          additionally allows the exemption for unmarried surviving 
          spouses of persons who die while on active duty, or 
          subsequently die as a result of service-connected injuries. 
           

          Generally, when taxpayers no longer use a property as a 
          principal place of residence, they sacrifice any 
          exemptions, including the disabled veterans' exemption; 
          however, taxpayers may continue to receive the disabled 
          veterans' exemption if they are confined to a hospital or 




          AB 188 -- 6/29/11 -- Page 2



          other care facility if that property were to be his or her 
          residence but for the confinement and the property is not 
          rented to a third party that is not a family member.  

          Currently, four sections of the Revenue and Taxation Code 
          detail the relevant time periods for taxpayers to receive 
          the disabled veterans' exemptions: 
                 §75.22 provides 90 days from the date of the change 
               of ownership for the taxpayer to apply for an 
               exemption from supplemental assessments.
                 §205.5 states that the property is eligible for the 
               exemption on the date the taxpayer purchases the 
               property.   
                 §276.1 allows taxpayers to claim the exemption 
               within 30 days of receipt of the disability rating 
               from the United States Department of Veterans' 
               Af-fairs.
                 §279 states that the exemption remains in effect 
               until the title of the property changes, the property 
               is altered to no longer be a dwelling, the veteran-an 
               is no longer disabled, or until the owner no longer 
               occupies the property, subject to certain exceptions.  



                                   Proposed Law  

          Assembly Bill 188 provides that the disabled veterans' 
          exemption continues to apply to unmarried surviving spouses 
          who are confined to a hospital or other care facility if 
          that property were to be his or her residence but for the 
          confinement and the property is not rented to a third party 
          that is not a family member.  The measure takes effect in 
          the 2012-13 fiscal years.

          The bill also imports the appropriate timelines and 
          effective dates from the three other sections into §279, 
          and adds a claimant spouse remarrying to the list of 
          dis-qualifying events


                               State Revenue Impact
           
          The State Board of Equalization estimates a negligible 
          revenue effect.  






          AB 188 -- 6/29/11 -- Page 3




                                     Comments  

          1.   Purpose of the bill  .  According to the author, "AB 188 
          removes an inequity in current law identified by the Board 
          of Equalization.  In 2003, legislation was enacted to 
          ensure that a disabled veteran who must leave his or her 
          home to enter an assisted living facility would continue to 
          receive the exemption, provided the home is not leased out 
          to a third party and would be the principal place of 
          residence for the veteran.  However, inadvertently the 
          original legislation failed to extend these provisions to 
          surviving spouses that haven't remarried.  This bill 
          corrects this error.  This measure will allow a surviving 
          spouse that hasn't remarried who receive the benefit to 
          continue to receive the benefit on their home should they 
          need to enter an assisted living facility.  Spouses of 
          soldiers killed in active duty would be entitled to receive 
          the tax exemption on their home should they need to enter 
          an assisted living facility as well.  It only makes sense 
          to extend this benefit to the spouse entering an assisted 
          living facility."
          2.   Upcoming Features  .  AB 946 (Butler) also contains 
          identical changes to the appropriate timelines and 
          effective dates for the exemption, and adds a claimant 
          spouse remarrying to the list of disqualifying events.  The 
          Committee will also hear this measure at its July 6, 2011 
          hearing.  


                                 Assembly Actions  

          Assembly Revenue and Taxation            9-0
          Assembly Appropriations                 16-0
          Assembly Floor                     60-0


                         Support and Opposition  (6/30/11)

           Support  :  State Board of Equalization; AMVETS-Department of 
          California; California Association of County Veterans 
          Service Officers; California State Commanders Veterans 
          Council; Military Officers Association of 
          America-California Council of Chapters; Vietnam Veterans of 
          America-California State Council; American Federation of 
          State, County and Municipal Employees (AFSCME), AFL-CIO; 





          AB 188 -- 6/29/11 -- Page 4



          California Assessor's Association; California Assisted 
          Living; California State Commanders Veterans Council; 
          Veterans of Foreign Wars (VFW), Department of California.

           Opposition  :  Unknown.