BILL ANALYSIS Ó SB 1458 Page 1 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 | | SB 1458 Page 2 | | |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: SB 1458 Page 3 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. SB 1458 Page 4 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... SB 1458 Page 5 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: SB 1458 Page 6 [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 SB 1458 Page 7