BILL ANALYSIS �
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THIRD READING
Bill No: SB 1152
Author: Anderson (R)
Amended: 5/15/14
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 6-0, 5/14/14
AYES: Wolk, Beall, DeSaulnier, Hernandez, Liu, Walters
NO VOTE RECORDED: Knight
SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/23/14
AYES: De Le�n, Walters, Gaines, Hill, Lara, Padilla, Steinberg
SUBJECT : Property taxation: exemptions: veterans
organizations
SOURCE : American Legion-Department of California
DIGEST : This bill expands the application of the veterans
organization exemption to lodge, fraternal, and social club
uses, and provides that the exemption shall not apply to any
portion of property that consist of a bar where alcoholic
beverages are served.
ANALYSIS : California Constitution Section 1 of Article XIII
provides that all property is taxable unless explicitly exempted
by the Constitution or federal law, but allows the Legislature
to exempt property used for religious, hospital, or charitable
purposes, so long as its owned by nonprofit entities organized
and operated for charitable purposes, none of whose income
inures to the benefit of any private shareholder or individual.
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SB 1152
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The Legislature enacted this exemption in law, commonly known as
the "welfare exemption." To be eligible, the Legislature
required the owner and property to meet the standards in the
Constitution, in addition to other requirements.
This bill provides that a veterans' organization not lose its
property tax exemption eligibility when the property is used for
fraternal, lodge or social club purposes. This bill provides
that the exemption does 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.
This bill states legislative findings and declarations regarding
the qualitative distinction between the activities of veterans'
organizations and other nonprofit entities that use property for
fraternal, lodge, or social club purposes, and that in light of
this distinction, the property is central to the organization's
exempt purpose and activities.
Comments
Property owned by a veterans' organization chartered by the U.S.
Congress is eligible for the welfare exemption, so long as the
organization complies with specified requirements, is tax-exempt
under federal and state law, and has a "veterans' organization
exemption" certificate of compliance on file with the county
assessor. However, this exemption conflicts with the limitation
on fraternal, lodge, or social club purposes because buildings
owned by Veterans of Foreign Wars (VFW) and the American Legion
often have many uses, some of which are social in nature. As a
result, the application of the veterans' organization exemption
can vary across counties, where independent, elected assessors
enforce property tax law. Some counties assess the whole
property, others exempt just the office and facilities that
directly serve veterans, while others do not assess the property
at all. Veterans' groups seek clarity that property owned by
VFW and American Legion that serve veterans' unique need should
be eligible for the welfare exemption from property tax.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
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According to the Senate Appropriations Committee:
This bill lowers local property tax revenue by roughly
$500,000 annually. Under Proposition 98, this reduction in
local property tax revenues will lead to an increase in state
General Fund support for K-14 education of approximately 40%
to 50%, or potentially $250,000 annually. The exact amount
will depend on the specific factors which determine the annual
Proposition 98 minimum funding guarantee.
The Board of Equalization incurs 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.
SUPPORT : (Verified 5/23/14)
American Legion-Department of California (source)
AMVETS - Department of California
Assessors Association of California
California Association of County Veterans Service Officers
California State Commanders Veterans Council
Military Officers Association of America, California Council of
Chapters
Veterans of Foreign Wars, Department of California
Vietnam Veterans of America-California State Council
ARGUMENTS IN SUPPORT : According to the author, "This bill
would ensure that as non-profit organizations, existing property
tax exemptions for veteran halls are preserved so that they can
continue to provide high quality and important services to the
heroes who have served our country." He also states, "For
generations, veteran halls in communities across our country
have been an invaluable resource for active military and
veterans. This bill would preserve the important property tax
exemptions by aligning state statute to reflect the unique
nature of these Congressionally chartered, non-profit veterans'
service organizations."
AB:k 5/25/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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