BILL ANALYSIS Ó
AB 1556
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Date of Hearing: May 25, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1556 (Mathis) - As Amended May 16, 2016
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill expands the Disabled Veterans' Exemption, which
exempts a portion of eligible veterans' home from property
taxes. Specifically, this bill:
AB 1556
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1)Increases the amount of a home's value that is exempt from
property taxes $100,000, or $150,000 for low-income
households, to $2.1 million for all eligible households,
regardless of income level. This exemption amount commences
with lien dates for the 2017-18 fiscal year, and is repealed
either by January 1, 2020 or when the Commission on State
mandates determines that there are reimbursable costs that are
payable from the General Fund.
2)Adjusts the exemption amount by inflation starting on January
1, 2018.
3)Modifies the definition of disabled for the purposes of this
tax exemption to include veterans who are blind in both eyes,
have lost the use of two or more limbs, or are unable to move
without the aid of an assistive device.
FISCAL EFFECT:
1)Annual local property tax revenue loss of approximately $66
million for FY 2017-18 and FY 2018-19, resulting in GF costs
of approximately $32.5 million for those two fiscal years as a
result of the Proposition 98 guarantee.
2)Unknown fiscal costs due to the changes in the definition of
disabled.
3)The state does not reimburse local governments for the
property tax revenue loss from the Disabled Veterans'
Exemption. Therefore, this bill will result in revenue losses
for local governments, especially counties that are home to a
greater number of disabled veterans and surviving spouses.
According to the Board of Equalization (BOE), the counties
AB 1556
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with the most disabled veterans' exemptions are: San Diego
(5,391), Riverside (3,732), Sacramento (2,422), Los Angeles
(2,092), Solano (1,764), Orange (1,691), Contra Costa (1,147),
Monterey (990), and Fresno (959).
COMMENTS:
1)Purpose. According to the author, AB 1556 will help ensure
that disabled veterans and their spouses receive the care and
assistance needed to live within California. The high costs of
housing can make disabled veterans financially insecure, and
this bill would provide much-needed property tax relief for
these individuals.
2)Background. The Disabled Veterans' Exemption exempts a
portion of the assessed value of a principal place of
residents from property tax for qualified veterans and their
spouses. In 2016, most qualified veterans will not pay
property taxes on the first $127,510 of their home's value.
Low-income disabled veterans are granted a more generous
exemption: In 2016, disabled veterans and their spouses with a
household income of $57,258 or less will be exempt from
property taxes on the first $191,266 of their principal place
of residence.
3)Definition of disabled. Existing law defines the conditions
under which a disabled veteran may receive the Disabled
Veterans' Exemption. This includes a veteran who is blind in
both eyes, lost use of 2 or more limbs, or has a total
disability, which is a veteran who is designated 100 percent
disabled by the United States Department of Veterans Affairs
or the military service from which he or she was discharged.
This will expand eligibility for the Disabled Veterans'
Exemption, but the revenue impact is unknown.
4)Previous Legislation. There have been a number of similar
efforts to expand the Disabled Veterans' Exemption. These
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bills were either held in policy committee or this committee.
These bills are:
a) SB 764 (Morrow) of 2003 would have increased the
exemptions to $200,000 and $250,000;
b) AB 1845 (Jefferies) of 2007 would have increased the
exemption to $200,000 and $250,000; and,
c) AB 2568 (Houston) of 2008 would have granted a full
exemption to eligible disabled veterans and their spouses.
Analysis Prepared by:Luke Reidenbach / APPR. / (916)
319-2081