Amended in Senate May 10, 2016

Amended in Senate May 4, 2016

Amended in Senate March 28, 2016

Senate Bill No. 1183

Introduced by Senator Bates

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(Coauthor: Senator Nguyen)

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(Coauthor: Assembly Member Mathis)

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February 18, 2016

An act to amend Section 205.5 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

SB 1183, as amended, Bates. Property taxation: exemptions: disabled veterans.

Existing property tax law provides, pursuant to the authorization of the California Constitution, a disabled veterans’ property tax exemption for the principal place of residence of a veteran or a veteran’s spouse, including an unmarried surviving spouse, if the veteran, because of injury incurred in military service, is blind in both eyes, has lost the use of 2 or more limbs, or is totally disabled, as those terms are defined, or if the veteran has, as a result of a service-connected injury or disease, died while on active duty in military service. Existing law exempts that part of the full value of the residence that does not exceed $100,000, or $150,000, if the veteran’s household income does not exceed $40,000, adjusted for inflation, as specified.

This begin delete bill end delete begin insert bill, for property tax lien dates for the 2017- end insert begin insert 18 fiscal year and for each fiscal year thereafter, end insert would instead exempt begin insert that portion of end insert the full value of the principal place of residence of a veteran or veteran’s begin delete spouse. end delete begin insert spouse that does not exceed $1,000,000, adjusted annually for inflation, as specified. end insert The bill would also define the term “blind in both eyes” to mean that the veteran is a blind person, as defined in a specific statute. The bill would also specify that a “totally disabled” veteran includes a veteran so severely disabled as to be unable to move without the aid of an assistive device. The bill would make other technical and conforming changes to the disabled veterans’ property tax exemption.

By changing the manner in which local tax officials administer the disabled veterans’ property tax exemption, this bill would impose a state-mandated local program.

Section 2229 of the Revenue and Taxation Code requires the Legislature to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.

This bill would provide that, notwithstanding Section 2229 of the Revenue and Taxation Code, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

This bill would take effect immediately as a tax levy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 205.5 of the Revenue and Taxation Code
is amended to read:

205.5.  

(a) Property that constitutes the principal place of
residence of a veteran and that is owned by the veteran, the
veteran’s spouse, or the veteran and the veteran’s spouse begin delete jointly, end delete
begin insert jointly end insert is exempted from taxation begin insert on that part of the full value of
the residence that does not exceed one million dollars ($1,000,000),
as adjusted for the relevant assessment year as provided in
subdivision (g), end insert if the veteran is blind in both eyes, has lost the use
of two or more limbs, or if the veteran is totally disabled as a result
of injury or disease incurred in military service.

(b) (1) For purposes of this section, “veteran” means either of
the following:

(A) A veteran as specified in subdivision (o) of Section 3 of
Article XIII of the California Constitution, except for the limitation
on the value of property owned by the veteran or the veteran’s
spouse.

(B) A person who would qualify as a veteran pursuant to
paragraph (1) except that he or she has, as a result of a
service-connected injury or disease, as determined by the United
States Department of Veterans Affairs, died while on active duty
in military service.

(2) For purposes of this section, property is deemed to be the
principal place of residence of a veteran, disabled as described in
subdivision (a), who is confined to a hospital or other care facility,
if that property would be that veteran’s principal place of residence
were it not for his or her confinement to a hospital or other care
facility, provided that the residence is not rented or leased to a
third party. For the purposes of this paragraph, a family member
that resides at the residence is not a third party.

(c) (1) Property that is owned by, and that constitutes the
principal place of residence of, the unmarried surviving spouse of
a deceased veteran is exempt from taxation begin insert on that part of the full
value of the residence that does not exceed one million dollars
($1,000,000), as adjusted for the relevant assessment year as
provided in subdivision (g), end insert if the deceased veteran was blind in
both eyes, had lost the use of two or more limbs, or was totally
disabled, provided that either of the following conditions is met:

(A) The deceased veteran during his or her lifetime qualified
for the exemption pursuant to subdivision (a), or would have
qualified for the exemption under the laws effective on January 1,
1977, except that the veteran died prior to January 1, 1977.

(B) The veteran died from a disease that was service-connected,
as determined by the United States Department of Veterans Affairs.

(2) Property that is owned by, and that constitutes the principal
place of residence of, the unmarried surviving spouse of a veteran
described in subparagraph (B) of paragraph (1) of subdivision (b)
is exempt from begin delete taxation. end delete begin insert taxation on that part of the full value of
the residence that does not exceed one million dollars ($1,000,000),
as adjusted for the relevant assessment year as provided in
subdivision (g). end insert

(3) Property is deemed to be the principal place of residence of
the unmarried surviving spouse of a deceased veteran, who is
confined to a hospital or other care facility, if that property would
be the unmarried surviving spouse’s principal place of residence
were it not for his or her confinement to a hospital or other care
facility, provided that the residence is not rented or leased to a
third party. For purposes of this paragraph, a family member who
resides at the residence is not a third party.

(d) As used in this section, “property that is owned by a veteran”
or “property that is owned by the veteran’s unmarried surviving
spouse” includes all of the following:

(1) Property owned by the veteran with the veteran’s spouse as
a joint tenancy, tenancy in common, or as community property.

(2) Property owned by the veteran or the veteran’s spouse as
separate property.

(3) Property owned with one or more other persons to the extent
of the interest owned by the veteran, the veteran’s spouse, or both
the veteran and the veteran’s spouse.

(4) Property owned by the veteran’s unmarried surviving spouse
with one or more other persons to the extent of the interest owned
by the veteran’s unmarried surviving spouse.

(5) That portion of the property of a corporation that constitutes
the principal place of residence of a veteran or a veteran’s
unmarried surviving spouse when the veteran, the veteran’s spouse,
or the veteran’s unmarried surviving spouse is a shareholder of
the corporation and the rights of shareholding entitle one to the
possession of property, legal title to which is owned by the
corporation. The exemption provided by this paragraph shall be
shown on the local roll and shall reduce the full value of the
corporate property. Notwithstanding any law or articles of
incorporation or bylaws of a corporation described in this
paragraph, any reduction of property taxes paid by the corporation
shall reflect an equal reduction in any charges by the corporation
to the person who, by reason of qualifying for the exemption, made
possible the reduction for the corporation.

(e) For purposes of this section, the following definitions shall
apply:

(1) “Being blind in both eyes” means that the veteran is a blind
person, as that term is defined in Section 19153 of the Welfare
and Institutions Code as that section read on January 1, 2016.

(2) “Lost the use of two or more limbs” means that the limb has
been amputated or its use has been lost by reason of ankylosis,
progressive muscular dystrophies, or paralysis.

(3) “Totally disabled” means any of the following:

(A) The veteran has a disability which the United States
Department of Veterans Affairs or the military service from which
the veteran was discharged has rated at 100 percent.

(B) The veteran has disability compensation which the United
States Department of Veterans Affairs or the military service from
which the veteran was discharged has rated at 100 percent by
reason of the veteran being unable to secure or follow a
substantially gainful occupation.

(C) The veteran is so severely disabled as to be unable to move
without the aid of an assistive device.

(f) An exemption granted to a claimant pursuant to this section
shall be in lieu of the veteran’s exemption provided by subdivisions
(o), (p), (q), and (r) of Section 3 of Article XIII of the California
Constitution and any other real property tax exemption to which
the claimant may be entitled. No other real property tax exemption
may be granted to any other person with respect to the same
residence for which an exemption has been granted pursuant to
this section; provided, that if two or more veterans qualified
pursuant to this section coown a property in which they reside,
each is entitled to the exemption to the extent of his or her interest.

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(g) Commencing on January 1, 2018, and for each assessment
year thereafter, the exemption amounts set forth in subdivisions
(a) and (c) shall be compounded annually by an inflation factor
that is the annual percentage change, measured from February to
February of the two previous assessment years, rounded to the
nearest one-thousandth of 1 percent, in the California Consumer
Price Index for all items, as determined by the Department of
Industrial Relations.

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(g)

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begin insert (h) end insert  The amendments made to this section by Senate Bill 1183
of the 2015-16 Regular Session of the Legislature shall apply for
property tax lien dates for the 2017-18 fiscal year and for each
fiscal year thereafter.

SEC. 2.  

Notwithstanding Section 2229 of the Revenue and
Taxation Code, no appropriation is made by this act and the state
shall not reimburse any local agency for any property tax revenues
lost by it pursuant to this act.

SEC. 3.  

If the Commission on State Mandates determines that
this act contains costs mandated by the state, reimbursement to
local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division
4 of Title 2 of the Government Code.

SEC. 4.  

This act provides for a tax levy within the meaning of
Article IV of the California Constitution and shall go into
immediate effect.