BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1152 (Anderson) - Property Taxation: Exemptions: Veterans'
Organizations
Amended: May 15, 2014 Policy Vote: G&F 6-0
Urgency: No Mandate: No
Hearing Date: May 23, 2014 Consultant: Robert Ingenito
SUSPENSE FILE.
Bill Summary: SB 1152 would provide that a veterans'
organization would not lose its property tax exemption
eligibility when renting its facilities to the public, as
specified.
Fiscal Impact:
This measure would lower local property tax revenue by
roughly $500,000 annually. Under Proposition 98, this
reduction in local property tax revenues would lead to an
increase in state General Fund support for K-14 education
of approximately 40 to 50 percent, or potentially $250,000
annually. The exact amount would depend on the specific
factors which determine the annual Proposition 98 minimum
funding guarantee.
BOE would incur minor costs, likely less than $10,000 per
year, to inform and advise county assessors, the public and
staff of the change to current law, and update documents.
Background: Current law provides a property tax exemption on
real property owned by veterans' organizations. However, in
practice, only small portions of most property owned by
veterans' organizations actually receive the property tax
exemption. The majority of veterans organizations' property is
ineligible for exemption because another provision of law
disqualifies property if used for fraternal, lodge, or social
purposes. The application of veterans' organization exemptions
is inconsistent from county to county. Some counties assess the
entire property, others do not assess the property at all, and
still others exempt just the office and facilities that directly
SB 1152 (Anderson)
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serve veterans, such as counseling rooms used for readjustment
services.
Proposed Law: This bill would, among other things, do the
following:
Provide that property owned by an organization that
satisfies the requirements for the veterans' organization
exemption may not be denied the exemption if the property
is occasionally made available for private rentals as a
service to the community.
Specify that (1) the amount of the rental fee charged
must be limited to reimburse the veterans' organization for
its costs, and (2) that the rental proceeds are used
exclusively for the organization's charitable purposes.
Provide that the exemption would not apply to a veterans
organization's portion of property that consists of a bar
where alcoholic beverages are served. The portion of the
property ineligible for exemption shall be that area
primarily used to prepare and serve alcoholic beverages.
Related Legislation: A prior version of SB 1152 was identical to
SB 1469 (Johannessen) from 2002. SB 1469 was never heard in a
committee.
Staff Comments: Available data indicate that the total assessed
value of veterans organizations' affected property amounts to
$64 million. Assuming all of these parcels are currently not
receiving the property tax exemption, this bill would lead to an
annual reduction in property tax revenues of $640,000. However,
the bill's tax treatment of the portion of the properties
related to bars would reduce the magnitude of the annual local
property tax loss to roughly $500,000. The precise impact on the
General Fund would depend on the specific factors which
determine the annual Proposition 98 minimum funding guarantee.