BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    SB 1458


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          SENATE THIRD READING


          SB  
          1458 (Bates)


          As Amended  June 29, 2016


          Majority vote.  Urgency


          SENATE VOTE:  39-0


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Veterans        |7-0  |Irwin, Achadjian,     |                    |
          |Affairs         |     |Alejo, Brown, Daly,   |                    |
          |                |     |Frazier, Salas        |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Revenue &       |9-0  |Ridley-Thomas,        |                    |
          |Taxation        |     |Brough, Dababneh,     |                    |
          |                |     |Gipson, Mullin,       |                    |
          |                |     |O'Donnell, Patterson, |                    |
          |                |     |Quirk, Wagner         |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |20-0 |Gonzalez, Bigelow,    |                    |
          |                |     |Bloom, Bonilla,       |                    |
          |                |     |Bonta, Calderon,      |                    |
          |                |     |Chang, Daly, Eggman,  |                    |
          |                |     |Gallagher, Eduardo    |                    |








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          |                |     |Garcia, Holden,       |                    |
          |                |     |Jones, Obernolte,     |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Wagner, Weber, Wood,  |                    |
          |                |     |Chau                  |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 


          SUMMARY:  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  
          dishonorable conditions" but who is otherwise eligible for  
          federal veterans' health and medical benefits, as determined by  
          the United States Department of Veterans Affairs (USDVA).  The  
          bill also contains technical provisions that allow county  
          assessors to process assessment roll corrections beyond four  
          years related to the Disabled Veteran's Exemption.


          FISCAL EFFECT: According to the Assembly Appropriations  
          Committee:


            Minor and absorbable administrative costs to the Board of  
            Equalization (BOE).


            Modest General Fund (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:








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          Purpose: According to the author:


               Senate Bill 1458 makes California law consistent with  
               federal law so that any veteran receiving service-connected  
               disability benefits at 100% will be eligible to receive the  
               state's disabled veterans' property tax exemption on their  
               home.  Currently, veterans who have the 100% disability  
               rating are unable to receive the property tax exemption  
               unless they are Honorably Discharged.  It is unknown how  
               many veterans fall under the other types of discharge  
               allowed by this bill (General Discharge Under Honorable  
               Conditions, Discharge Other than Honorable Conditions),  
               however it is expected to be a small amount.


               A veteran should qualify for the state property tax  
               exemption if he/she received a 100% disability rating, did  
               not receive a dishonorable or bad conduct discharge, and if  
               they qualify for existing USDVA disability compensation  
               benefits.


               SB 1458 necessarily helps California veterans returning  
               from war receive a well-deserved property tax exemption, as  
               long as they meet the appropriate discharge eligibility  
               from the service.


          It is not clear that there is a problem that the bill will  
          solve, in that no evidence has been provided that veterans are  
          generally more challenged by property taxes than other  
          subpopulations.  However, the basis for this bill seems rooted  
          in the recognition of the service and sacrifice of veterans,  
          particularly those with 100% service connected disabilities.   
          Recognition of such service and sacrifice is a well-established  
          policy foundation in California.  








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          The bill does generally conform the state code to the federal  
          standard.  According to the USDVA:


               Generally, in order to receive VA [Veterans Affairs]  
               benefits and services, the Veteran's character of discharge  
               or service must be under other than dishonorable conditions  
               (e.g., honorable, under honorable conditions, general).   
               However, individuals receiving undesirable, bad conduct,  
               and other types of dishonorable discharges may qualify for  
               VA benefits depending on a determination made by VA.


          But it must be noted that there are fairly complex permutations  
          that arise depending on the  particular veterans benefit and the  
          particular character of discharge.  For example, according to  
          the USDVA some of the benefit/discharge requirements are:


               Discharge Requirements for [disability] Compensation  
               Benefits


               ? other than dishonorable conditions ?


               Discharge Requirements for Education Benefits


               ?honorable...


               Discharge Requirements for Home Loan Benefits 


               ? other than dishonorable conditions...









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          Newly eligible veterans included by this bill will have received  
          a discharge characterization which is something less than  
          honorable.  However, the bill does not alter the existing 100%  
          service connected disability requirement and does not abandon a  
          character of discharge requirement altogether at the negative  
          end of the spectrum.  In summary, the newly eligible were  
          irrevocably severely disabled in service to the United States  
          but for innumerable reasons received something less than a  
          perfect character of discharge and more than a very bad one.   
          Placing in the balance on one hand an extreme service connected  
          sacrifice and on the other a broad spectrum of reasons for a  
          less than perfect discharge, this bill finds the weight of these  
          to be in favor, for this benefit, of including additional  
          veterans.  


          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  
            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. 


          Recent amendments.  According to the Assembly Appropriations  
          Committee:









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            [T]he author amended the bill on June 29, 2016 to allow  
            counties to process assessment roll 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  
            eligible to receive the exemption could be refunded property  
            taxes previously paid.  However, SB 1113 lacked provisions to  
            allow counties to use their existing roll correction process  
            as the administrative mechanism to provide these additional  
            refunds.  The most recent amendments give counties the  
            authority to use their existing roll 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.


          Related Legislation:


          SB 1113 (Knight, 2014), Chapter 656 - Property taxation:   
          disabled veterans' exemption:  statute of limitations.




          Analysis Prepared by:                                             
                          John Spangler / V.A. / (916) 319-3550  FN:  
          0003967
















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