BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 2 (Anderson) - Property taxation: exemptions: veterans'
organizations
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|Version: April 6, 2015 |Policy Vote: GOV. & F. 7 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: April 27, 2015 |Consultant: Robert Ingenito |
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This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 2 would allow the veteran's organization
exemption to apply to real property owned by veteran's
organizations that is used for fraternal, lodge or social club
purposes.
Fiscal Impact:
This measure would lower local property tax revenue by
roughly $575,000 annually. Under Proposition 98, this
reduction in local property tax revenues would lead to an
increase in state General Fund support for K-14 education
of approximately 40 to 50 percent, or potentially $288,000
annually. The exact amount would depend on the specific
factors which determine the annual Proposition 98 minimum
funding guarantee.
The Board of Equalization (BOE) would incur annual costs of
up to $150,000 (General Fund) for the first three years to
administer the provisions of the bill. Specifically, BOE
would incur costs primarily to issue organizational
clearance certificates to veterans' organizations applying
SB 2 (Anderson) Page 1 of
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for the exemption under the bill.
Background: Current law provides a property tax exemption on
real property owned by veterans' organizations. However, in
practice, only small portions of most property owned by
veterans' organizations actually receive the property tax
exemption. The majority of veterans organizations' property is
ineligible for exemption because another provision of law
disqualifies property if used for fraternal, lodge, or social
purposes. The application of veterans' organization exemptions
is inconsistent from county to county. Some counties assess the
entire property, others do not assess the property at all, and
still others exempt just the office and facilities that directly
serve veterans, such as counseling rooms used for readjustment
services.
Proposed Law: This bill would provide that a veterans'
organization would not lose its property tax exemption
eligibility when the property is used for fraternal, lodge or
social club purposes. However, the exemption would not apply to
any portion of a property that consists of a bar where alcoholic
beverages are served.
Related Legislation:
This bill is largely identical to SB 1152 (Anderson,
2014). The bill was held on the Assembly Revenue and
Taxation Committee's suspense file.
A prior version of SB 1152 was identical to SB 1469
(Johannessen) from 2002. SB 1469 was never heard in a
committee.
Staff Comments: BOE estimates that 240 properties around the
State are owned by veteran's organizations and would be impacted
by the bill. Available data indicate that the total assessed
value of veterans organizations' affected property (excluding
the bar area) amounts to $57.5 million. At the one-percent
statewide property rate, the annual local property tax loss
would be $575,000. The precise impact on the General Fund would
depend on the specific factors which determine the annual
Proposition 98 minimum funding guarantee.
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