Committee backs substitute for House Bill 47 to clarify veteran property tax exemptions

The House Government, Elections and Indian Affairs Committee voted to recommend passage of the committee substitute for House Bill 47 and to recommend a “do not pass” on the original bill, after members questioned how the measure defines eligible survivors, how disability percentages will be documented and how the exemption will affect local revenues.

Committee members said the substitute sets the exemption at $10,000 for tax year 2025 and ties future increases to the Consumer Price Index. “The constitutional amendment provides that the amount of the $10,000 exemption shall be adjusted for CPI inflation in future years,” the Secretary, Taxation and Revenue Department said during the hearing.

The substitute clarifies who may receive the disabled-veteran exemption and how local officials will verify eligibility. “The allusion to the federal law is the veterans go through a claim process and that it is adjudicated by the Veterans Affairs,” the Secretary of Veterans Services said, adding that documentation from the VA is used to determine disability percentages and that the VA’s decision is the source document counties will accept.

Lawmakers pressed for specifics on several points. Representative Block asked whether the surviving-spouse language applies to domestic partnerships or only to married spouses; the Secretary, Taxation and Revenue Department responded that, under the property tax code as applied here, the individuals must have been married. On whether exemptions are stackable, the Secretary said cohabiting eligible veterans could each receive exemptions but the taxable value cannot go below zero: “If they're both eligible veterans, they shall get this tax relief. It's if this is their primary residence,” the Secretary, Taxation and Revenue Department said.

Committee members also asked whether the disability-based exemption would be prorated during a tax year if eligibility begins midyear. The Secretary of Veterans Services said the VA issues adjudication documents to veterans by mail and that those documents are available on VA.gov; local Veteran Service Officers can help veterans obtain the paperwork. How assessors apply exemptions midyear — including any proration — is a matter for county assessors and for rulemaking, the agency witnesses said.

Several members focused on the fiscal impact. The Secretary, Taxation and Revenue Department explained the state’s “yield control” mechanism, which limits how much taxing authorities can raise rates to offset a narrowed tax base. The secretary noted a maximum mill rate of 11.85 percent and said some counties and special districts could still face revenue shortfalls if taxable value falls and they hit statutory limits. Representatives cited estimates from local officials, including one county that told a member it expected to lose about $63,000 if the change were adopted.

Representative Borrego and others praised the policy goal of expanding veteran relief while urging attention to local budget effects. Members raised whether the state’s reserves could be used to offset local losses; agency witnesses said appropriations from the Legislature, not this bill, would be required to provide direct supplements to local governments.

At the end of the hearing Representative Anya Narnu moved the combined motion — do not pass the original House Bill 47 and do pass the committee substitute — and Vice Chair Little seconded. The committee called the roll and recorded unanimous support for the committee substitute (roll-call “yes” votes recorded in committee minutes). The chair announced the substitute is reported favorably and asked members to remain for housekeeping.

The record shows the hearing included public commenters (Larry Sontag; Joshua Riley) and multiple representatives and agency officials, but the committee did not adopt additional changes during the session recorded in the transcript.