(1)The California Constitution generally limits ad valorem taxes on real property to 1% of the full cash value, as defined, of that property, and provides that the full cash value base may be adjusted each year by the inflationary rate not to exceed 2% for any given year.

Existing property tax law implementing this constitutional authority provides that the taxable value of real property is the lesser of its base year value compounded annually by an inflation factor not to exceed 2%, as provided, or its full cash value. Existing property tax law also provides that the taxable value of a manufactured home is the lesser of its base year value compounded annually by an inflation factor not to exceed 2% or its full cash value.

This bill, for any assessment year commencing on or after January 1, 2018, would provide that the inflation factor shall not apply to the principal place of residence, including a manufactured home, of a qualified veteran, as defined, who is 65 years of age or older on the lien date, was honorably discharged from military service, and meets specified requirements.

By changing the manner in which local tax officials calculate the taxable value of real property owned by senior veterans, this bill would impose a state-mandated local program.

(2)Existing property tax law provides, pursuant to the authorization of the California Constitution, a disabled veterans property tax exemption for the principal place of residence of a veteran or a veterans spouse, including an unmarried surviving spouse, if the veteran, because of injury incurred in military service, is blind in both eyes, has lost the use of 2 or more limbs, or is totally disabled, as those terms are defined, or if the veteran has, as a result of a service-connected injury or disease, died while on active duty in military service. Existing law exempts that part of the full value of the residence that does not exceed $100,000, or $150,000, if the veterans household income does not exceed $40,000, adjusted for inflation, as specified.

This bill, commencing with the lien date for the 201819 fiscal year and for each fiscal year thereafter, would instead exempt the full value of the principal place of residence of a veteran or veterans spouse. The bill would also make technical and conforming changes to the disabled veterans property tax exemption.

By changing the manner in which local tax officials administer the disabled veterans property tax exemption, this bill would impose a state-mandated local program.

(3)Existing law requires the state to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.

This bill would provide that, notwithstanding those provisions, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.

(4)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

(5)This bill would take effect immediately as a tax levy.

(1)The California Constitution generally limits ad valorem taxes on real property to 1% of the full cash value, as defined, of that property, and provides that the full cash value base may be adjusted each year by the inflationary rate not to exceed 2% for any given year.

Existing property tax law implementing this constitutional authority provides that the taxable value of real property is the lesser of its base year value compounded annually by an inflation factor not to exceed 2%, as provided, or its full cash value. Existing property tax law also provides that the taxable value of a manufactured home is the lesser of its base year value compounded annually by an inflation factor not to exceed 2% or its full cash value.

This bill, for any assessment year commencing on or after January 1, 2018, would provide that the inflation factor shall not apply to the principal place of residence, including a manufactured home, of a qualified veteran, as defined, who is 65 years of age or older on the lien date, was honorably discharged from military service, and meets specified requirements.

By changing the manner in which local tax officials calculate the taxable value of real property owned by senior veterans, this bill would impose a state-mandated local program.

(2)Existing property tax law provides, pursuant to the authorization of the California Constitution, a disabled veterans property tax exemption for the principal place of residence of a veteran or a veterans spouse, including an unmarried surviving spouse, if the veteran, because of injury incurred in military service, is blind in both eyes, has lost the use of 2 or more limbs, or is totally disabled, as those terms are defined, or if the veteran has, as a result of a service-connected injury or disease, died while on active duty in military service. Existing law exempts that part of the full value of the residence that does not exceed $100,000, or $150,000, if the veterans household income does not exceed $40,000, adjusted for inflation, as specified.

This bill, commencing with the lien date for the 201819 fiscal year and for each fiscal year thereafter, would instead exempt the full value of the principal place of residence of a veteran or veterans spouse. The bill would also make technical and conforming changes to the disabled veterans property tax exemption.

By changing the manner in which local tax officials administer the disabled veterans property tax exemption, this bill would impose a state-mandated local program.

(3)Existing law requires the state to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.

This bill would provide that, notwithstanding those provisions, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.

(4)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

(5)This bill would take effect immediately as a tax levy.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

SB 404 (Stone) - Property taxation: senior and disabled veterans

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

SB 404 would (1) eliminate the inflation adjustment for the principal place of residence of income-eligible veteran taxpayers over the age of 65, and (2) expand to a full exemption the current partial disabled veterans’ property tax exemption.

Fiscal Impact:

The Board of Equalization (BOE) indicates that the bill would result in annual property tax revenue losses of $74 million. Reductions in local property tax revenues, in turn, increase General Fund Proposition 98 spending by up to roughly 50 percent (the exact amount depends on the specific amount of the annual Proposition 98 guarantee, which in turns depends upon a variety of economic, demographic and budgetary factors). Additionally, the bill could result in unknown, but likely minor, costs to reimburse local governments related to changes in property tax administration

Background:

The California Constitution provides that all property is taxable unless explicitly exempted by either the Constitution or federal law. The Constitution (1) limits the maximum amount of any ad valorem tax on real property at one percent of full cash value, plus any locally-authorized bonded indebtedness, and (2) provides that assessors can only reappraise property whenever it is purchased, newly constructed, or when ownership changes (Proposition 13, 1978). Proposition 13 also limits on the inflationary growth of real property value to two percent per year.

Thus, when real property is purchased, the county assessor assigns it an assessed value that is equal to its purchase price (known as its “acquisition value”). Each year thereafter, the property’s assessed value increases by either two percent or the rate of inflation (as measured by the California Consumer Price Index), whichever is lower. This process continues until the property is sold, at which point the county assessor again assigns it an assessed value equal to its most recent purchase price. In other words, a property’s assessed value resets to market value (what a willing buyer would pay for it) when it is sold. In most years, under this assessment practice, a property’s market value is greater than its assessed value. This occurs because assessed values increase by a maximum of two percent per year, whereas market values tend to increase more rapidly. Therefore, as long as a property does not change ownership, its assessed value increases predictably from one year to the next and is unaffected by higher annual increases in market value.

For example, a home purchased in 2012 for $300,000, has a maximum taxable base year value of $306,000 in 2013, $312,200 in 2014, $318,440 in 2015, $325,808 in 2016, and $337,324 in 2017. This base year value is then multiplied by the appropriate rate (usually one percent, but can be slightly more) to determine tax due.

Reassessment limits and capped inflation growth ensure a predictable, slowly growing tax obligation for the taxpayer, and predictable revenue for local agencies; however, these provisions may also result in a taxable base year value below the property’s fair market value, which grows in magnitude the longer the assessor hasn’t reassessed the property. In most cases, this system results in shifting the cost of public services from incumbent homeowners onto individuals who recently purchased property.

The Constitution permits the Legislature to partially or wholly exempt from property tax the value of a disabled veteran’s principal place of residence if the veteran has lost one or more limbs, is totally blind, or is totally disabled as a result of a service-connected injury. This is known as the “disabled veterans’ exemption.” The Constitution provides that disabled veteran taxpayers, or unmarried surviving spouses of persons who die while on active duty, must apply for the exemption instead of, but not in combination with, other real property exemptions. BOE indicates that the number of taxpayers claiming the disabled veterans’ exemption has increased by 344 percent between 1990 and 2015. Unlike the homeowners’ property tax exemption, the State does not backfill local property tax revenue losses resulting from taxpayers applying the disabled veterans’ exemption.

State law implementing the exemption doesn’t fully exclude property value; instead, it enacts a partial exemption of $100,000 for disabled veteran taxpayers with household income of more than $40,000, or $150,000 for income lower than that amount, with each threshold adjusted for inflation (as measured by the California Consumer Price Index). The current inflation adjusted value is $130,841 for disabled veterans with income of more than $58,754, and $196,262 for those with less than that amount.

Proposed Law:

This bill would make two changes to property tax law:

• Growth limitation. The bill would eliminate annual inflation factor-related assessed value increases on homes owned by income-qualifying veterans 65 years and older for assessment years beginning in 2018. To be eligible, a veteran homeowner must meet specified criteria.

• Disabled veterans’ exemption. The bill would exempt from property tax the home of any person eligible for the disabled veterans' exemption, commencing with lien date for the 2018-19 fiscal year.

Related Legislation:

SB 1104 (Stone, 2016) was substantially similar to this bill, and was held under submission on the Suspense File of this Committee.

Staff Comments:

BOE indicates that the bill would result in annual property tax revenue losses of $74 million. Of this amount, the disabled veterans’ exemption accounts for $66 million, while the other $8 million is related to the assessment freeze.

To develop the revenue estimate for the disabled veterans’ exemption, BOE used 2015-16 data (the most recent period for which all necessary information is available). Specifically, BOE staff estimated the number of disabled veteran-owned homes currently receiving the exemption to be 37,653: 33,196 at the basic level and 4,457 at the lower income level. Based on a survey of several counties, BOE estimates that this bill would not impact 21 percent of homes receiving the basic exemption (6,971 homes), or 24 percent of homes receiving the lower income exemption (1,070 homes). These homes are already fully exempt because they have an assessed value below the requisite levels in existing law. Thus, BOE estimates that the bill would exempt 29,612 homes: 26,225 currently receiving the basic exemption, and 3,387 homes receiving the lower income exemption.

Using the average 2015-16 assessed value of $356,370, and the basic one percent property tax rate, BOE calculates that the bill would result in an annual property tax reduction of $66 million.

-- END --

SENATE COMMITTEE ON VETERANS AFFAIRS

Senator Josh Newman, Chair

2017 - 2018 Regular

Bill No: SB 404 Hearing Date: 4/25/17

Subject: Property taxation: senior and disabled veterans

DESCRIPTION

Summary:

This bill provides veteran-related property tax benefits under two separate programs:

Under the disabled veterans' property tax exemption, it exempts the full value of the principal residence of any person eligible for the exemption. Under the standard property tax program for all homeowners, it eliminates annual inflation factor-related assessed value increases on homes owned by income-qualifying veterans aged 65 years and older.

Existing law:

1. Authorizes the Legislature to exempt partially or fully from property tax, the home of a disabled veteran if the veteran’s disabling injury incurred in military service; and the veteran is blind in both eyes; lost the use of two or more limbs; or is totally disabled. (California Constitution)

• 1. Applies also to the veteran’s spouse, including an unmarried surviving spouse, if the veteran has, as a result of a service-connected injury or disease, died while on active duty in military service.
  2. Does not apply if the home is receiving another real property exemption.

1. Provides a partial exemption for eligible disabled veterans.
2. Sets, generally, a property’s assessed value as its price when purchased or when ownership is changed, plus an annual inflation factor, calculated as specified.

This bill:

1. Regarding the disabled veterans property tax exemption, provides a full exemption for the principal residence of any qualified disabled veteran home owner –taking effect with the lien date for the 2018-19 fiscal year.
2. Regarding the standard property tax program, eliminates inflation-based increases in a home’s assessed valuation for qualified veteran homeowners.
   1. Takes effect on January 1, 2018.
   2. To be eligible, a veteran home owner must meet the following criteria:
      1. Received an honorable discharge.
      2. Be at least age 65 on the lien date (January 1).
      3. Have a household income less than $50,000 (if single) or $100,000 (if married).
   3. Applies only to the qualified veteran’s principal place of residence.

BACKGROUND

Disabled Veterans Property Tax Exemption. California provides qualified disabled veterans and their unmarried surviving spouses with a property tax exemption that applies to their home’s assessed value. Eligibility provisions require that the claimant demonstrate award of a disability rating from the United States Department of Veterans Affairs (USDVA) that:

1. Rates the veteran’s disability at 100%; or
2. Rates the veteran’s disability compensation at 100% because the veteran is unable to secure and maintain gainful employment.

The law allows surviving spouses to receive the exemption if the spouse's death was service-connected. To be eligible for the exemption, surviving spouses must receive a USDVA determination that the spouse’s death was service-connected. A USDVA determination is necessary for (1) active duty personnel deaths (i.e., the service person was not a “veteran”) and (2) veterans without a 100% rating when alive, but whose cause of death is deemed service-connected. Surviving spouses of veterans with a 100% disability rating during their lifetime continue to receive the exemption after the veteran’s death so long as they do not remarry.

The exemption amount depends upon the claimant’s income. According to the State Board of Equalization, for Fiscal Year 2017-18, the basic exemption adjusted for inflation will be $130,841. If the claimant’s income is less than $58,754, the exemption amount will be $196,262. In 1990, 8,483 disabled veterans' exemptions were provided to eligible homeowners. For 2015, there were 37,653 eligible homeowners. Over the last 25 years, there has been a 344% increase.

General Veterans’ Exemption. Existing law implementing Proposition 13 generally sets a property’s value as its price when purchased or when ownership changed, plus an annual inflation factor, calculated by the Department of Industrial Relations using the California Consumer Price Index for all items. The most recent purchase price establishes a base year value, which then is multiplied by the appropriate rate (generally 1%, but can be more if voters approved local general obligation bonds) to determine tax due.

According to the State Board of Equalization:

“The California Constitution provides a Veterans' Exemption that applies to any property owned by a person who serves or has served in the military. However, this exemption has become effectively obsolete. For any veteran who owns a home, the homeowners' exemption provides greater tax savings. Veterans who do not own homes, but own other taxable property (i.e., a boat or business personal property) are disqualified if they own property worth more than $5,000 (if single) or $10,000 (if married). Thus, only two veterans in California currently qualify.”

COMMENT

Committee Comments:

1. This double-referral cleared Senate Governance & Finance Committee, 7-0.
2. This measure is a reintroduction of last year’s SB 1104 (Stone), which was held on suspense in Senate Appropriations Committee. It also is similar to several other bills introduced, but not enacted, in recent years.

Related/Prior Legislation:

SB 1104 (Stone, 2016), regarding the disabled veterans' exemption, exempts from property tax the home of any person eligible for the disabled veterans' exemption; and, regarding, the annual inflation factor-related assessed value increases on homes, eliminates the increases on homes owned by income-qualifying veterans 65 years and older. (Held in Senate Appropriations Committee)

AB 1458 (Bates, Chapter 871, Statutes of 2016) expands eligibility for the disabled veterans property tax exemption to include a person who has been discharged under "other than dishonorable conditions" – but who is otherwise eligible for federal veterans' health and medical benefits, as determined by USDVA.

SB 1183 (Bates, 2016) (1) exempts from property tax the home of any person eligible for the disabled veterans’ exemption, with a $1 million cap in assessed value that would be adjusted annually for inflation, and (2) expands eligibility for the exemption. (Held in Senate Appropriations Committee)

AB 1556 (Mathis/Weber, 2016) exempts fully from property tax the home of a totally disabled veteran, as defined, or his/her unmarried surviving spouse, by repealing the limitations imposed on the assessed value of the disabled veteran's principal residence eligible for the exemption and the amount of his/her household income. (Held in Assembly Revenue and Taxation Committee)

AB 2568 (Houston, 2008) exempts fully from property tax the personal residence of a disabled veteran and his/her spouse. (Held in Senate Revenue and Taxation Committee)

AB 1485 (Jeffries, 2007) increases the property tax exemption currently provided to disabled veterans and their surviving spouses beginning in 2008-09. Specifically, 1) increases the exemptions for households with income of up to $48,825, from $161,420 to $250,000; 2) increases the exemption for households with incomes over $48,825, from $107,613 to $200,000; 3) provides that future exemption amounts will continue to be indexed for inflation. (Held in Senate Appropriations Committee)

SB 1005 (Florez, 2005) fully exempts from property taxation the principal residence of the unmarried surviving spouse of a veteran who died as a result of a service-connected disease or injury. Also, fully exempts from property taxation the principal residence of the unmarried surviving spouse of a qualified public safety officer who died in the line of duty. (Held in Senate Revenue and Taxation Committee)

SB 764 (Morrow, Chapter 544, Statutes of 2004), for assessment years beginning on and after January 1, 2006, increases these exemption amounts by a specified inflation factor. Also imposes a state-mandated local program by requiring local tax officials to annually adjust these increased exemption amounts in accordance with a specified inflation factor.

POSITIONS

Sponsor: Author.

Support:

American G.I. Forum of California

AMVETS-Department of California

California Association of County Veteran Service Officers

Military Officers Association of California, California Council of Chapters.

Oppose:

California Tax Reform Association

-- END --

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Mike McGuire, Chair

2017 - 2018 Regular

Property taxation: senior and disabled veterans

Eliminates the inflation adjustment for the principal place of residence of an income-eligible veteran taxpayer over the age of 65; Expands to a full exemption the current partial disabled veterans’ property tax exemption.

Background

The California Constitution 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, and provides that assessors can only reappraise property whenever it is purchased, newly constructed, or when ownership changes (Proposition 13, 1978).

Growth limitation. State law implementing Proposition 13 generally sets a property’s value as its price when purchased or when ownership changed, plus an annual inflation factor, calculated by the Department of Industrial Relations using the California Consumer Price Index for all items. For example, a home purchased in 2012 for $300,000, has a maximum taxable base year value of $306,000 in 2013, $312,200 in 2014, $318,440 in 2015, $325,808 in 2016, and $332,324 in 2017. This base year value is then multiplied by the appropriate rate (generally 1%, but can be more if voters approved local general obligation bonds) to determine tax due. Reassessment limits and capped inflation growth ensure a predictable, slowly growing tax obligation for the taxpayer, and predictable revenue for local agencies; however, these limits may also result in a taxable base year value below the property’s fair market value, which grows in magnitude the longer the assessor hasn’t revalued the property. In most cases, this system shifts the cost of public services from incumbent homeowners onto individuals who recently purchased property.

Disabled Veterans’ Exemption. The Constitution allows the Legislature to partially or wholly exempt from property tax the value of a disabled veteran’s principal place of residence if the veteran has lost one or more limbs, is totally blind, or is totally disabled, as a result of a service-connected injury. This is known as the “disabled veterans’ exemption.” The Constitution provides that disabled veteran taxpayers, or unmarried surviving spouses of persons who die while on active duty, must apply the exemption instead of, but not in combination with, other real property exemptions. Statute allows the exemption for any claimant who obtains a United States Department of Veterans Affairs disability rating that either rates his or her disability at 100%, or rates compensation at 100% because the veteran is unable to obtain gainful employment.

Unlike the homeowners’ exemption, the state does not backfill property tax revenue losses resulting from taxpayers applying the exemption. According to the Board of Equalization (BOE), the number of taxpayers claiming the exemption has increased from 8,483 to 37,653 between 1990 and 2015, an increase of 344%. San Diego (5,391), San Bernardino (3,732), and Sacramento (2,422) are the counties with the most taxpayers claiming the exemption.

State law implementing the exemption doesn’t fully exclude the property value from property tax, instead it allows a partial exemption of $100,000 for disabled veteran taxpayers with household income of more than $40,000, or $150,000 for income lower than that amount, with each threshold adjusted for inflation by the Department of Industrial Relations using the California Consumer Price Index for all items. The current inflation adjusted value is $130,841 for disabled veterans with income of more than $58,754, and $196,262 for those with less than that amount.

The author wants to grant additional property tax benefits by disconnecting the inflation factor for taxpayers qualifying for the veterans’ exemption in the California Constitution with annual income below specified amounts, and expand the current partial disabled veterans’ exemption conditioned on income into a full exemption.

Proposed Law

Senate Bill 404 makes two changes to property tax law:

Growth limitation. SB 404 disconnects the inflation factor for the principal place of residence of income-eligible taxpayers over the age of 65 who were honorably discharged from military service for any assessment year on or after either January 1, 2018, or the taxpayer’s 65^th birthday, whichever is later. The bill would allow the benefit solely for veterans with household combined annual income of less than $100,000, or if single, annual income of less than $50,000 using the definitions for income in the Senior Citizens and Disabled Citizens Property Tax Postponement Law. To claim the benefit, the veteran taxpayer must complete an affidavit furnished by the assessor providing all information required and answering any questions to determine qualification. The assessor may require additional proof of the information or answers in the affidavit before allowing the benefit, which only applies to land necessary for the use of the property as a home – any additional land would continue to grow in taxable value pursuant to current law. If the assessor grants the claim, the measure would freeze the veteran taxpayer’s base year value at its current amount until new construction or a change in ownership occurs.

Disabled veterans’ exemption. SB 404 enacts a full exemption from property tax for the principal place of residence of qualifying disabled veterans to replace the current partial exemption, commencing with lien date for the 2018-19 fiscal year.

The bill also makes technical and conforming changes

State Revenue Impact

According to BOE, the measure’s growth limitation provisions result in annual property tax revenue losses of $8 million, while its disabled veteran exemption expansion results in potential annual property tax revenue losses of $65.9 million.

Comments

1. Purpose of the bill. According to the author, “An issue that is currently plaguing California is the issue of veterans who are homeless. Veterans have sacrificed much for their country, and in return, local, state and federal governments need to do everything in their power to help them succeed. According to the National Coalition for Homeless Veterans, homeless veterans are younger on average than the total veteran population. Approximately 9% are between the ages of 18 and 30, and 41% are between the ages of 31 and 50. On top of that, about 1.4 million other veterans are considered at risk of homelessness. There is no single solution that will solve this crisis. Reasons for the large number of homeless veterans are complex and numerous. Two of the biggest factors are the extreme shortage of affordable housing and livable income. SB 404 attempts to address the affordable housing issue for veterans by capping the property taxes on any primary residence of an honorably discharged veteran over the age of 65, and exempting the property tax of all disabled veterans living in their primary residence. By making these two changes, it will go a long way to helping veterans stay in their homes by making their living situation more affordable.”

2. Too many benefits? California already uses acquisition-cost valuation, applies one of the lowest property tax rates in the nation, and limits reassessment only when property is newly constructed or changes ownership, thereby providing significant benefits to property owners, especially those that have been in their homes for many years. SB 404 expands those benefits to freeze base year values for income-eligible veteran taxpayers over the age of 65 at current amounts, and in the future for veterans when they turn 65. The Committee may wish to consider whether this tax benefit is necessary given those already afforded under current law.

3. Different treatment. Proposition 13’s cap on assessed value growth currently benefits all taxpayers regardless of age, income, or other variable. SB 404 sets a precedent by freezing a veteran over the age of 65’s property tax base at its amount today, as well as for other qualifying veterans when they turn 65, while all other taxpayers would be subject to annual inflation adjustments.

4. No income test. Generally, property tax exemptions don’t depend on the taxpayer’s income; however, the different disabled veterans’ exemption amounts based on income were first enacted by the Legislature when it allowed a greater exemption ($15,000 at the time) for disabled veterans with income sufficiently low to qualify for the Property Tax Postponement program (AB 955, Mangers, 1978). The Legislature maintained the distinction when it fixed the current exemption amounts (SB 320, Royce, 1989), and applied the inflation adjustment (SB 1362, Poochigian, 2000). SB 404 would end this distinction by granting a full exemption for all taxpayers regardless of income. Increasing the disabled veterans’ exemption reduces taxes for those who have sacrificed greatly for their country, and would be easier for assessors to administer, as they would no longer have to verify the taxpayer’s income. However, the bill would grant a full exemption from property tax to all disabled veterans, thereby potentially providing a benefit for individuals who have income sufficient to meet current tax obligations despite their disability. The Committee may wish to consider whether the bill’s tax benefits should depend on the taxpayer’s income.

5. Related legislation. SB 404 is identical to last year’s SB 1104 (Stone), which this Committee approved unanimously, but did not advance from the Senate Appropriations Committee’s suspense file. As introduced, SB 1104 would have frozen the base year value for all veteran taxpayers; however, the author accepted amendments in this Committee limiting this benefit solely to veterans with incomes below specified a limit and applying its changes to mobile and manufactured homes.

6. Related legislation, part two. SB 404 expands the current partial disabled veterans’ exemption to a full one, which used to apply only to disabled veterans honorably discharged from military service. However, the Legislature enacted SB 1458 (Bates) last year in response to some veterans being denied the exemption because they were discharged under other than honorable conditions, but served with sufficient distinction to receive United States Department of Veterans Affairs benefits. As a result, SB 404 would apply to a broader population of disabled veterans than when the Committee heard SB 1104 last year. This change isn’t relevant to SB 404’s base year value freeze, which applies to all veterans honorably discharged as required in the California Constitution’s definition.

7. Mandate. The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs. Because SB 404 changes the manner in which assessors value real property, Legislative Counsel says that it imposes a new state mandate. The measure provides that the state shall not reimburse local agencies for property tax revenue losses, instead stating that should the Commission on State Mandates determine that the bill imposes a reimbursable mandate, reimbursement must be made pursuant to existing statutory provisions.

8. Technicals. BOE and Committee staff recommend striking “annual” and replacing with “household” on P.4, L.5 and 9.

9. Double-referred. The Senate Rules Committee referred SB 404 to both the Committees on Governance and Finance, which considers bills affecting property taxation, and Veterans Affairs.

Support and Opposition

(3/30/17)

Support: American G.I. Forum of California; AMVETS-Department of California; the California Association of County Veteran Service Officers, Military Officers Association of California, California Council of Chapters.

Opposition: California Tax Reform Association

-- END --