BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1458|
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THIRD READING
Bill No: SB 1458
Author: Bates (R)
Amended: 4/6/16
Vote: 21
SENATE VETERANS AFFAIRS COMMITTEE: 4-0, 4/12/16
AYES: Nielsen, Hueso, Allen, Roth
NO VOTE RECORDED: Nguyen
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/27/16
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach,
Pavley
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/27/16
AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen
SUBJECT: Property taxation: exemptions: disabled veterans
SOURCE: Hon. George Runner, Member, State Board of
Equalization
DIGEST: This bill expands eligibility for the disabled veterans
property tax exemption to include persons, who were discharged
from military service under "other than dishonorable
conditions."
ANALYSIS:
Existing law:
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1)Authorizes the Legislature to exempt partially or fully from
property tax, the home of a disabled veteran - or the
veteran's spouse, including an unmarried surviving spouse - if
the veteran's disabling injury incurred in military service;
and the veteran is blind in both eyes; lost the use of two or
more limbs; or is totally disabled.
a) Applies also to the veteran's spouse, including an
unmarried surviving spouse, if the veteran has, as a result
of a service-connected injury or disease, died while on
active duty in military service.
b) Does not apply if the home is receiving another real
property exemption.
1)Provides a partial exemption for eligible disabled veterans.
2)Defines an eligible veteran as a person who, among other
things, is serving in or has served in and has been discharged
under honorable conditions from service in the United States
Army, Navy, Air Force, Marine Corps, or Coast Guard.
This bill:
1)Modifies the military discharge standard, regarding
eligibility for the disabled veterans property tax exemption,
to include both of the following criteria:
a) Discharged from military service "under other than
dishonorable conditions"; and
b) Determined by the United States Department of Veterans
Affairs (USDVA) to be eligible for federal veterans' health
and medical benefits.
2) Provides that no appropriation is made and the state shall
not reimburse local agencies for property tax revenues lost by
them pursuant to this bill.
Background
Disabled Veterans Property Tax Exemption. California provides
qualified disabled veterans and their unmarried surviving
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spouses with a property tax exemption that applies to their
home's assessed value. Eligibility provisions require that the
claimant demonstrate award of disability rating from the USDVA
that:
1)Rates the veteran's disability at 100%; or
2)Rates the veteran's disability compensation at 100% because
the veteran is unable to secure and maintain gainful
employment.
The law allows surviving spouses to receive the exemption if the
spouse's death was service-connected. To be eligible for the
exemption, surviving spouses must receive a USDVA determination
that the spouse's death was service-connected. A USDVA
determination is necessary for (1) active duty personnel deaths
(i.e., the service person was not a "veteran") and (2) veterans
without a 100% rating when alive, but whose cause of death is
deemed service-connected. Surviving spouses of veterans with a
100% disability rating during their lifetime continue to receive
the exemption after the veteran's death so long as they do not
remarry.
The exemption amount depends upon the claimant's income.
According to the State Board of Equalization (BOE), Fiscal Year
2016-17, the basic exemption adjusted for inflation will be
$127,510. If the claimant's income is less than $57,258, the
exemption amount will be $191,266. For Fiscal Year 2015-16,
37,653 disabled veterans or their unmarried surviving spouses
were granted the exemption.
Types of Military Discharges. The military separates its
personnel from active service by formally discharging them.
Discharges may be either administrative or punitive. Each of the
five different discharge statuses is determined by the
characterization of an individual's service. The character of
service slides along a scale with "honorable" at the high end
and "dishonorable" at the low end.
The types of discharges fall under one of two categories:
"Administrative" or "punitive." Punitive discharges are reserved
for the most negative cases and imposed only by special and
general courts martial. Administrative separations cannot be
awarded by a court-martial and are not punitive in nature.
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Enlisted personnel may be administratively separated with a
characterization of service or a description of separation.
Administrative discharges include:
1)Honorable. The most common discharge status, it presumes
creditable service and good behavior. All service members earn
an Honorable Discharge unless they experience significant
problems and receive a lower type of discharge,
2)General (under honorable conditions). Sometimes referred to as
a "General Discharge," it is granted if an individual's
commander determines that service has been generally honest
and faithful, even if the person ran into some trouble.
General Discharges are given for a various reasons, including
failure to progress in training; failure to maintain military
standards in appearance, weight, or fitness; or disciplinary
infractions, including drug or alcohol abuse.
3)Other than Honorable. An "OTH" discharge usually is given
when an individual's service represents a broader pattern of
departure from the conduct and performance expected of all
military members. It can result from notable drug or alcohol
problems, but also can be based on other misconduct, such as
abuse of authority, fraternization, or a pattern of continued
misconduct. OTH discharges bar the individual from reenlisting
into any component of the Armed Forces, including the federal
reserves and National Guard.
Punitive discharges are authorized punishments of courts-martial
and can only be imposed as an approved court-martial sentence
following an individual's conviction for violating the Uniform
Code of Military Justice. There are two types of punitive
discharges:
1)Bad Conduct Discharge. This can be imposed by both special and
general courts-martial. This discharge is usually given for
convictions of crimes such as absent without leave, drunk on
duty, driving while under the influence, adultery, writing bad
checks, and disorderly conduct.
2)Dishonorable Discharge. The worst type of military discharge,
it can be imposed only by a general court-martial. In most
cases, a Dishonorable Discharge also involves being sentenced
to serve time in a military prison.
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Discharge Requirements for Veterans Benefits. Basic eligibility
for federal veterans benefits depends upon the type of military
service performed, duration of service, and character of
discharge or separation. The discharging military branch makes
those determinations; the USDVA reviews the military's
description of the "character of discharge" to determine whether
a person meets the basic eligibility requirements for receipt of
VA benefits under Title 38 of the United States Code.
A discharge characterized by a military service as "under
honorable conditions" is binding on the USDVA and requires it to
provide benefits if other eligibility requirements are met. A
Dishonorable Discharge explicitly bars the USDVA from providing
benefits.
The OTH and Bad Conduct discharges bar an individual from
presumptive eligibility for federal benefits. In these cases,
however, the USDVA, as administering agency of benefits, may be
asked to make an independent assessment of the character of
service. The USDVA reviews facts and circumstances surrounding
the incident(s) that led to the discharge, as reported by the
military, as well as any supporting evidence from the claimant
or third parties. On a case-by-case basis, VA determines whether
the incidents that led to the OTH or Bad Conduct discharge may
be found to have been "under conditions other than
dishonorable," and thus whether basic eligibility for VA
benefits can be established.
Therefore, while recipients of OTH and Bad Conduct discharges
were not separated "under honorable conditions," for the
purposes of determining benefit eligibility, they may be found
to have been separated "under other than dishonorable
conditions."
Related/Prior Legislation
SB 1104 (Stone, 2016) fully exempts the home of a disabled
veteran from property tax and prohibits any future Proposition
13-related inflation adjustments to the assessed value of homes
of honorably discharged veterans over the age of 65. Pending in
Senate Committee on Appropriations.
SB 1183 (Bates, 2016) fully exempts from property tax the home
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of any person eligible for the disabled veterans' exemption.
Pending in Senate Committee on Appropriations.
AB 1556 (Mathis/Weber, 2016) is almost identical to SB 1183
(Bates, 2016). Pending in Assembly Committee on Appropriations.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
The BOE indicates that this bill will result in an annual
property tax revenue loss of $127,000 for every 100
newly-qualified disabled veterans. Lower local property tax
revenues lead to increased General Fund Proposition 98
spending by up to roughly 50 percent (the exact amount depends
on the specific amount of the annual Proposition 98 guarantee,
which in turns depends upon a variety of economic, demographic
and budgetary factors).
The BOE would incur minor implementation costs.
SUPPORT: (Verified 5/27/16)
Hon. George Runner, Member, State Board of Equalization (source)
American G.I. Forum of California
American Legion - Department of California
AMVETS - Department of California
California Association of County Veterans Service Officers
California State Commanders Veteran Council
Military Officers Association of America - California Council of
Chapters
State Board of Equalization
Veterans of Foreign Wars - Department of California
Vietnam Veterans of American - California State Council
OPPOSITION: (Verified5/27/16)
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None received
Prepared by:Wade Cooper Teasdale / V.A. / (916) 651-1503
5/28/16 16:46:15
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