Title: An act relating to property tax exemptions for persons with disabilities related to the performance of military duties.

Brief Description: Modifying property tax exemptions for persons with disabilities related to the performance of military duties.

Sponsors: Representatives Campbell, Morrell, McCune, McCoy, Appleton, Talcott, Linville, Conway, Sump, Springer, Green, Ericks, Dunn and Sells.

Brief History:

Finance: 1/27/06, 1/30/06 [DPS].

HOUSE COMMITTEE ON FINANCE

Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. Signed by 11 members: Representatives McIntire, Chair; Hunter, Vice Chair; Orcutt, Ranking Minority Member; Roach, Assistant Ranking Minority Member; Ahern, Condotta, Conway, Ericks, Hasegawa, Santos and Shabro.

Staff: Rick Peterson (786-7150).

Background:

Some senior citizens and persons retired due to disability are entitled to property tax relief on their principal residences. To qualify, a person must be 61 in the year of application or retired from employment because of a disability, own his or her principle residence, and have a disposable income of less than $35,000 a year. Persons meeting these criteria are entitled to partial property tax exemptions and a valuation freeze.

Disposable income is defined as the sum of federally defined adjusted gross income plus the following, if not already included: capital gains; deductions for loss; depreciation; pensions and annuities; military pay and benefits; veterans' benefits except attendant-care and medical-aid payments; Social Security and federal railroad retirement benefits; dividends; and interest income. Payments for the care of either spouse received in the home, a nursing home, boarding home or adult family home; payments for medicare insurance premiums; and payments for prescription drugs are deducted in determining disposable income.

Partial exemptions for senior citizens and persons retired due to disability are provided as follows:

• If the income level is $30,001 to $35,000, all excess levies are exempted.
• If the income level is $25,001 to $30,000, all excess levies and regular levies on the       greater of $50,000 or 35 percent of assessed valuation ($70,000 maximum) are exempted.
• If the income level is $25,000 or less, all excess levies and regular levies on the greater of    $60,000 or 60 percent of assessed valuation are exempted.

In addition to the partial exemptions listed above, the valuation of the residence of an eligible senior citizen or disabled person is frozen at the assessed value of the residence on the later of January 1, 1995, or January 1 of the assessment year the person first qualifies for the program.

Veterans of the U.S. Armed Forces with 100 percent service-connected disability are eligible for the same property tax relief as senior citizens based on their income.

Summary of Substitute Bill:

Veterans of the U.S. Armed Forces with 100 percent service-connected disability and combined disposable income less than or equal to $70,000 are eligible for the same property tax relief on their homes as provided to senior citizens with income below $25,000. They are exempt on all excess levies. The assessed value of their home is frozen and they are exempt on regular levies on the greater of $60,000 or 60 percent of assessed valuation.

Military disability income and special monthly compensation payments are no longer included in combined disposable income when determining eligibility for the senior citizen and disabled persons property tax relief program.

Substitute Bill Compared to Original Bill:

The substitute limits the tax relief for 100 percent disabled veterans to those with combined disposable income equal to or less than $70,000. The substitute allows special monthly compensation payments to be subtracted from combined disposable income.

Appropriation: None.

Fiscal Note: Available.

Effective Date of Substitute Bill: The bill takes effect 90 days after adjournment of session in which bill is passed.

Testimony For: The measure restores the bill as it passed the House last year. It is clear and appropriate tax relief. It is not a lot but is significant to the taxpayers. This bill will level the playing field for veterans. Military disability income is an entitlement it is not income. Home values has risen dramatically and these veterans are under stress.

Testimony Against: None.

Persons Testifying: Representative Campbell, prime sponsor; and Dennis Primoli, Veterans Legislative Coalition.

Persons Signed In To Testify But Not Testifying: None.