BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 188 HEARING: 7/6/11
AUTHOR: Block FISCAL: Yes
VERSION: 6/29/11 TAX LEVY: Yes
CONSULTANT: Grinnell
VETERAN'S PROPERTY TAX EXEMPTION
Provides that the exemption applies when an unmarried
surviving spouse is confined to a health care facility.
Background and Existing Law
The California Constitution (Article XIII, Section One)
provides that all property is taxable unless explicitly
exempted by the Constitution or federal law. The
Constitution limits the maximum amount of any ad valorem
tax on real property at 1% of full cash value, plus any
locally-authorized bonded indebtedness. Assessors
reappraise property whenever it is purchased, newly
constructed, or when ownership changes.
The Constitution (Article XIII, Section Four) additionally
allows the Legislature to partially or wholly exempt from
property taxes the value of a disabled veteran's home if
the veteran has lost one or more limbs, is totally blind,
or is totally disabled, as a result of a service-connected
injury, known as the "disabled veterans' exemption." The
Constitution allows taxpayers to apply the disabled
veterans' exemption, currently provided by statute at the
inflation adjusted value of either $115,060 or $172,592
depending on the taxpayer's income, but not in addition to
the veterans or homeowners' exemption. The Constitution
additionally allows the exemption for unmarried surviving
spouses of persons who die while on active duty, or
subsequently die as a result of service-connected injuries.
Generally, when taxpayers no longer use a property as a
principal place of residence, they sacrifice any
exemptions, including the disabled veterans' exemption;
however, taxpayers may continue to receive the disabled
veterans' exemption if they are confined to a hospital or
AB 188 -- 6/29/11 -- Page 2
other care facility if that property were to be his or her
residence but for the confinement and the property is not
rented to a third party that is not a family member.
Currently, four sections of the Revenue and Taxation Code
detail the relevant time periods for taxpayers to receive
the disabled veterans' exemptions:
�75.22 provides 90 days from the date of the change
of ownership for the taxpayer to apply for an
exemption from supplemental assessments.
�205.5 states that the property is eligible for the
exemption on the date the taxpayer purchases the
property.
�276.1 allows taxpayers to claim the exemption
within 30 days of receipt of the disability rating
from the United States Department of Veterans'
Af-fairs.
�279 states that the exemption remains in effect
until the title of the property changes, the property
is altered to no longer be a dwelling, the veteran-an
is no longer disabled, or until the owner no longer
occupies the property, subject to certain exceptions.
Proposed Law
Assembly Bill 188 provides that the disabled veterans'
exemption continues to apply to unmarried surviving spouses
who are confined to a hospital or other care facility if
that property were to be his or her residence but for the
confinement and the property is not rented to a third party
that is not a family member. The measure takes effect in
the 2012-13 fiscal years.
The bill also imports the appropriate timelines and
effective dates from the three other sections into �279,
and adds a claimant spouse remarrying to the list of
dis-qualifying events
State Revenue Impact
The State Board of Equalization estimates a negligible
revenue effect.
AB 188 -- 6/29/11 -- Page 3
Comments
1. Purpose of the bill . According to the author, "AB 188
removes an inequity in current law identified by the Board
of Equalization. In 2003, legislation was enacted to
ensure that a disabled veteran who must leave his or her
home to enter an assisted living facility would continue to
receive the exemption, provided the home is not leased out
to a third party and would be the principal place of
residence for the veteran. However, inadvertently the
original legislation failed to extend these provisions to
surviving spouses that haven't remarried. This bill
corrects this error. This measure will allow a surviving
spouse that hasn't remarried who receive the benefit to
continue to receive the benefit on their home should they
need to enter an assisted living facility. Spouses of
soldiers killed in active duty would be entitled to receive
the tax exemption on their home should they need to enter
an assisted living facility as well. It only makes sense
to extend this benefit to the spouse entering an assisted
living facility."
2. Upcoming Features . AB 946 (Butler) also contains
identical changes to the appropriate timelines and
effective dates for the exemption, and adds a claimant
spouse remarrying to the list of disqualifying events. The
Committee will also hear this measure at its July 6, 2011
hearing.
Assembly Actions
Assembly Revenue and Taxation 9-0
Assembly Appropriations 16-0
Assembly Floor 60-0
Support and Opposition (6/30/11)
Support : State Board of Equalization; AMVETS-Department of
California; California Association of County Veterans
Service Officers; California State Commanders Veterans
Council; Military Officers Association of
America-California Council of Chapters; Vietnam Veterans of
America-California State Council; American Federation of
State, County and Municipal Employees (AFSCME), AFL-CIO;
AB 188 -- 6/29/11 -- Page 4
California Assessor's Association; California Assisted
Living; California State Commanders Veterans Council;
Veterans of Foreign Wars (VFW), Department of California.
Opposition : Unknown.