BILL ANALYSIS Ó SB 1458 Page 1 Date of Hearing: August 3, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 1458 (Bates) - As Amended June 29, 2016 ----------------------------------------------------------------- |Policy |Veterans Affairs |Vote:|7 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Revenue and Taxation | |9 - 0 | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: Yes SUMMARY: This bill expands eligibility for the Disabled Veteran's Property Tax Exemption (Disabled Veteran's Exemption) to include a person who has been discharged under the "other than SB 1458 Page 2 dishonorable conditions" but who is otherwise eligible for federal veterans' health and medical benefits, as determined by the U.S. Department of Veterans Affairs (USDVA). The bill also contains technical provisions that clarify how the Board of Equalization (BOE) can process corrections related to the Disabled Veteran's Exemption. FISCAL EFFECT: 1)Minor and absorbable administrative costs to BOE. 2)Modest GF costs as a result of expanded eligibility for the Disabled Veteran's Exemption. Annual property tax revenue loss is approximately $127,000 for every 100 newly-qualified disabled veterans, resulting in GF costs of approximately $63,500 as a result of the Proposition 98 guarantee. The exact number of newly eligible veterans is unknown, but likely small. COMMENTS: 1)Purpose. According to the author, SB 1458 will make any veterans receiving federal service-connected disability benefits eligible for the Disabled Veteran's Exemption. The author argues that this bill will ensure 100% disabled veterans receive the benefits that they deserve. 2)Background. The Disabled Veteran's Exemption exempts a portion of the assessed value of a principal place of residence 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 SB 1458 Page 3 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. This exemption is also only available to those disabled veterans who received an Honorable discharge from military service. 3)Federal health and medical benefits. Under federal law, USDVA benefits and services provided to a veteran depend on the veteran's character of discharge from military service. A veteran with an Honorable or General (under honorable conditions) discharge is eligible for benefits. However, a veteran with an Other Than Honorable (OTH), or Bad Conduct discharge, may be eligible for benefits on a case by case basis after an USDVA investigation; the circumstances surrounding those discharges may leave the door open for the USDVA to make its own character of discharge determination. 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 furnished by the claimant or obtained from third parties. On a case-by-case basis, USDVA determines whether the incidents that led to the discharge may be found to have been "under conditions other than dishonorable," and thus whether basic eligibility for USDVA benefits can be established. 4)Recent amendments. The author amended the bill on June 29, 2016 to allow counties to process corrections beyond four years, consistent with recent legislation. SB 1113 (Knight), Chapter 656, Statutes of 2014, expanded from four years to eight the time period in which disabled veterans otherwise SB 1458 Page 4 eligible to receive the exemption could be refunded property taxes previously paid. However, SB 1113 lacked provisions to allow counties to use their existing correction process as the administrative mechanism to provide these additional refunds. The most recent amendments give counties the authority to use their existing correction procedures to provide disabled veterans' exemption refunds for additional prior tax years as authorized by 2014's SB 1113, and supporters of the bill argue these technical amendments will make implementing the Disabled Veteran's Exemption less complex. Analysis Prepared by:Luke Reidenbach / APPR. / (916) 319-2081