It's great that the DMV of CA is doing this but for honoring the veterans that served our country why not waive the fee?

Get rid of the $5 Veteran fee.

New Veteran Designation
Effective November 12, 2015, eligible veterans have the opportunity to add the word “VETERAN” to the front of their DL/ID card to indicate that they have served in the U.S. Military.  It can also play a critical role in enabling access to certain privileges, benefits, or compensation associated with being a veteran without having to carry and produce a Certificate of Release or Discharge from Active Duty.

To apply for the veteran designation on your DL/ID card, you will need to: 

Obtain a Veteran Status Verification Form (VSD-001) which will be issued by the County Veteran Service Office. This form is not available from DMV. 
Bring the completed VSD-001 to a DMV field office. For faster service, make sure to make an appointment to visit a DMV field office.  
Complete and pay the application fee for the Driver License or Identification Card Application/Commercial Driver License Application (DL 44/44C).
Pay an additional $5 fee to add the veteran designation to your DL/ID card.