You want to (1) get background information on veterans' property tax exemptions and (2) know whether the state reimburses towns for the tax revenue they lose as a result of the exemptions. You also want to know (1) if a 1990 act required towns to double veterans' exemptions when their grand list doubles and (2) how much the state reimburses towns when they increase exemption amounts for this reason.

SUMMARY

State law provides a basic $ 1,000 property tax exemption for qualified veterans. It also provides for an additional mandatory exemption and an additional optional exemption for veterans who qualify for the basic exemption and meet certain income limits. The exemption amount is a reduction in the property's assessed value on which taxes are owned, not a credit against the amount of the tax.

A veteran is eligible for an exemption if he served at least 90 days during wartime as defined by state law and received an honorable discharge. Veterans still in the service are eligible if they meet the 90-day requirement, and those who retired after 30 years are also eligible. Exemption amounts vary depending on income, disability, and other factors.

To get an exemption, a veteran must document his eligibility to his local town clerk. The veteran must reestablish his eligibility for income-based exemptions every two years. If he is no longer in service, he must establish eligibility only once to receive the basic exemption; if he is still serving, he must send the town clerk a written statement every year signed by his commanding or other appropriate officer attesting to his service.

No 1990 act required towns to double veterans' property tax exemptions when their grand lists double. Rather, PA 88-342 required towns to increase state-mandated and local-option veterans' exemptions after a revaluation implemented on and after October 1, 1990, if the grand list increased. As a matter of practice, towns must increase the exemptions if the grand list increases by at least 150% over the previous year.

Of the 97 towns that implemented revaluations from 1990 through the 1996 assessment years, 78 of them either doubled or tripled their veterans' exemptions (Handbook of Connecticut Assessors, sponsored by Connecticut Association of Assessing Officers, Office of Policy & Management, State of Connecticut Institute of Public Service, and the University of Connecticut's Institute of Public Service, 1999 Revision. ) We have no current compliance information.

The state reimburses towns for the revenue loss from all the state-mandated veterans' income-based exemptions, including increased exemptions resulting from increases in the grand list. It does not reimburse them for revenue they lose as a result of granting the other veterans' exemptions.

ELIGIBILITY FOR VETERANS' PROPERTY TAX EXEMPTIONS

By law, veterans are eligible if they served during the dates and actions specified in Table 1 below in the (1) U. S. Army, Navy, Marines, Air Force, and Coast Guard or (2) the armed forces of any government associated with the United States. For World War II, veterans with certain Merchant Marine service and military service with allied armies also qualify. A veteran's spouse is ordinarily entitled to the property tax exemption for which the deceased veteran qualified. A sole surviving parent and the minor child of a veteran (who died while serving in the armed forces or after receiving an honorable discharge) is also entitled to an exemption.

Table 1: Wartime Military Service* for Veterans Property Tax Exemption

* Must have served at least 90 days unless the war or campaign ended earlier or the veteran was separated from service earlier because of a Veterans' Administration-rated disability.

** Ending date specified in CGS § 12-86

*** Service must have been in a combat or combat-support role

_ Active duty service personnel became eligible for an exemption while Desert Shield/Desert Storm was in progress. Veterans who do not meet the 90-day service requirement remain eligible for an exemption if the exemption is based on their receiving an Armed Forces Expeditionary Medal for Operation Desert Shield/Desert Storm Service.

BASIC PROPERTY TAX EXEMPTION PROGRAM

Exemption Amounts

State-Mandated Exemptions. Qualified veterans are eligible for a minimum $ 1,500 property tax exemption. The exemption is granted through two statutes. CGS § 12-81(19) requires towns to give a basic $ 1,000 exemption (see Increasing Exemptions After Revaluations below). CGS § 12-81g requires them to give an additional exemption equal to (1) half the basic one (i. e. , $ 500) if the veteran's income is above a certain limit or (2) double the basic exemption (i. e. , $ 2,000) if the veteran's income is below a certain limit. (Disabled and severely disabled veterans are eligible for a minimum exemption of more than $ 1,500 under CGS §§ 12-81(20) or 12-81(22) and 12-81g. Qualified surviving dependents of veterans are also eligible for a minimum exemption, which may be more than $ 1,500, under CGS §§ 12-81(22), (23), (24), (25), or (26), and 12-81g. These are not discussed in detail in this report but are shown in Attachments 1 and 2. )

Local-Option Exemption. With the approval of its legislative body, a town can give an additional $ 1,000 exemption to a veteran whose income is below a certain level (CGS § 12-81f).

Reimbursable vs. Non-Reimbursable Exemptions

The state reimburses towns for the revenue loss from the mandatory income-based exemption (CGS § 12-81g(c)). It does not reimburse them for the local-option income-based exemption under CGS § 12-81f or the basic exemptions under CGS § 12-81(19), (20), (21), (22), (23), (24), (25), and (26).

To qualify for income-based property tax exemptions, a veteran's maximum (total taxable and nontaxable) income in 2001 must be $ 24,500 if single or $ 31,100 if married. By law, OPM updates the income limits annually to reflect the amount of the Social Security Administration's cost-of-living adjustment (CGS §§ 12-81l and 12-170aa(b)(2)). For veterans with a 100% U. S. Veteran's Administration-rated disability, only taxable income (i. e. , adjusted gross income) is used to determine eligibility, and the qualifying maximum income in any year is $ 18,000 if single or $ 21,000 if married.

Increasing Exemptions After Revaluations

Although CGS § 12-81(19) gives a basic $ 1,000 exemption, the actual exemption granted in several towns is greater. The actual amount of the basic exemption provided to certain survivors and disabled and seriously disabled veterans under CGS §§ 12-81(2), (21), (22), (23), (24), (25), and (26) is also greater in several towns (Attachment 3). This is because CGS § 12-62g requires towns to increase state-mandated and local-option exemptions if a revaluation done on and after October 1, 1990 results in a grant list (all taxable and non-taxable property) increase.

As a matter of practice, towns must increase their veterans' exemptions if the grand list increases by at least 150% over the previous year. PA 00-229 tied the increase to an increase in the net grand list (taxable property less exemptions granted to individuals and certain companies), thus precluding big increases in the exemptions attributable solely to the addition of a large tax-exempt property to a town's grand list. Before this act became effective, all exempt property (such as property owned by religious or charitable organizations) was included in the grand list calculation.

Of the 97 towns that implemented revaluations during 1990, 1991, 1992, 1993, 1994, 1995, and 1996 assessment years, 78 of them either doubled or tripled their veterans' exemptions.

Application Procedure

Basic Exemption. A veteran must claim his exemption before October 1 for the current and following assessment years by notifying the town clerk in the town where he lives. He must show the original or a certified copy of his honorable discharge. If he has no copy, he may appear before the local assessor and swear to his eligibility. In the latter case, he must bring affidavits from two disinterested people attesting to his service and his honorable discharge. The law also contains an alternate procedure for military members currently serving in active war theaters. Town clerks must keep a list and record of eligible claimants for exemption and, if the veteran moves to another town, must forward the documentation to the new town clerk (CGS § 12-93).

Income-Based Exemption. Applicants for the income-based exemption must file an application every two years with the local assessor's office between February 1 and October 1 of any year for exemption on the grand list for that October 1.

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