Briefing Package – Problems with Colorado's Disabled Veteran Property Tax Exemption, & Recommended Solutions

Background & source documents

We have summed up the issues with HB07-1251, Referendum E, and Article X Section 3.5 of the Colorado Constitution...CLICK to download the complete briefing packet.

Also quite informative is the legislative history for HB07-1251. CLICK to download that 33-page resource.

Colorado will fix the problems surrounding Article X Section 3.5...but when? Will it be too late?

Correct the property tax exemption!

Colorado's legislative leadership needs to carefully consider approving a "late bill" this session. This year, not next! Next year is too late for too many of us. Too late for our widows also!

There's pressure against any such late bills introduced after Senate and House deadlines unless the proposed statute addresses issues serious problems that must be corrected without delay.

I contend that's us. Having had our Constitutional rights denied for eight years since Referendum E was approved in 2006, unless legislation is approved this year it will be 2018 before the property tax exemption is of any benefit. If House or Senate leaders insist on postponing introduction of legislation fixing the problem, a bill passed next year will be approved too late for 2017 taxes and veterans won't have use of the exemption until the following year.

Because a totally disabled veteran is not just a veteran, but one with grievous, life-changing military injuries or illnesses. Only one percent of all disabled veterans are 100% service-connected. These injuries or illnesses drastically reduce our remaining years. Our families are hit hard, especially kids as we try to live going forward on a VA disability check...hard to look forward to high school and college.

Cancer, paralysis, loss of arms or legs, ALS...it takes a very serious issue for VA to rate a veteran at 100% disabled and thus, eligible for the disabled veteran property tax exemption. Colorado's mistakes in the 2007 legislation passed to implement Resolution E (Article X Section 3.5) have denied property tax relief for eight years and we just can't wait too much longer. Further, our widows are forever denied the property tax exemption unless, before our deaths, we'd been receiving the benefit.

We don't have years to wait. There's real meaning behind the phrase "Constitutional Rights Delayed are Constitutional Rights Denied." Don't make us wait past our deaths for Colorado to finally resolve the problem caused by the Legislature in 2007 with its lawed statutes on Referendum E. Too many of our fellow veterans have passed during these last eight years when they should have been receiving the property tax exemption – and every one of their widows is now denied the exemption supposedly guaranteed in Article X, Section 3.5 of the Colorado Constitution.

This can and should be fixed by advancing the late bills now with the President of the Senate and the Speaker of the House.

DISCOVERED – A 2010 DOLA Reference to "Unemployability"

DOLA brochure           

Days and days have been spent trying to pin down how the state's basis for its current barrier to VA permanent and total disabled unemployability (TDIU) ratings and just how it grew into policy. Perhaps one such source document was found this evening, published in 2010 by the Department of Legislative Analysis (DOLA.) But nothing so far any earlier than 2010.

We learned that the 2006 Referendum E voter summary specifically described unemployability issues for the electorate to approve in this constitutional amendment. ("Veterans are rated 100-percent permanently disabled when a mental or physical injury makes it impossible for the average person to hold a job and the disability is lifelong.") That's what the voters were asked to consider. They approved, but the Legislature dropped from statutes along with military 100% disability retirements. Ge3.5t the point? The Legislature in effect changed the Constitution by statues which failed to encompass the full range of Article X Section, leaving CMDVA unable to follow the Constitution's provisions and stuck with the flawed statute instead.

Article X Section 3.5 simply mentioned "permanent, 100% service connected, total disability" VA ratings with nothing at all to eliminate or somehow disqualify TDIU. We learned that CDMVA said the department had "legislative guidance" to exclude VA TDIU, despite the Constitution and the subsequent enabling legislation passed in 2007. In the 2006 ballot information, voters were told Referendum E was to address vets who were "100-percent permanently disabled when a mental or physical injury makes it impossible for the average person to hold a job." The voters did not vote to bar unemployability ratings but specifically to include that rating for property tax exemption.

Did the legislators decide to override the electorate after Article X Section 3.5 was added to the Constitution? Why did CMDVA end up with its rules being 180º away from what voters approved? How did the Constitution's provision for CDMVA to recognize military service total disability retirements disappear from subsequent statute ?

Exemption application forms, county web pages and various unofficial sources mention that VA unemployability awards were unacceptable to CMDVA, but nothing on a state form. CallinguCMDVA yields the same negative answer - "not acceptable." We found nothing else from the State Until this evening, discovered on the Colorado Legislative Council web page.

Tonight, the earliest info we've been able to dig up is a 2010 DOLA-published two-page flyer titled "PROPERTY TAX EXEMPTION FOR DISABLED VETERANS IN COLORADO." Now, there's nothing official about this and it is an information-only type document, and it came out four years after the Constitution's change.

DOLA wrote, "VA employability awards do not meet the eligibility requirements." This 2010 brochure is the earliest document we can find addressing unemployability, and the only state document. We've found nothing more official on which CMDVA policy was based.

Colorado's Legislative Council – did they let veterans down on Referendum E?

I'm learning so much as I follow the trail of Colorado's disabled veteran property tax exemption, the 2006 Referendum E.

What I've learned about is Colorado's legislative process. Reading about it I've got a better picture about the history of our disabled vet property tax exemption and problems now surfacing.

The steps begin with the Legislature sending the language of a referendum to the Legislative Council to insure its legality, compliance with style and format. That means the property tax exemption was carefully worded by the Legislative Council for the specific words by which the Constitution would be amended, and also the words by which the electorate would be guided to an understanding of the referendum adequate to have an informed opinion when voting.

You can see what they did below in the referendum's plain-language description. Attention is drawn to the highlighted words in the "who qualifies for the tax deduction" section. Consider...this was written by the Legislature's "experts"??

"Who qualifies for the tax reduction? Homeowners who have served on active duty in the U.S. Armed Forces and are rated 100-percent permanently disabled by the federal government due to a service-connected disability qualify for the tax reduction in Referendum E. Colorado National Guard members injured while serving in the U.S. Armed Forces also qualify. Veterans are rated 100-percent permanently disabled when a mental or physical injury makes it impossible for the average person to hold a job and the disability is lifelong. Nationally, less than one percent of veterans have a 100-percent permanent disability rating. About 2,200 veterans are expected to qualify for the property tax reduction in Colorado."

After the voters approved Referendum E by 78% and by it, created Article X Section 3.5 of the Colorado Constitution, it became the job of the Legislature to craft enabling legislation. Once done, that headed over to the Colorado Legislative Council for the same reasons...legal clarity, compliance with the Constitution, form and style. This is where serious problems popped up. Legislation did not match the newly-amended Constitution! The electorate was duped.

What the Legislative Council approved for the Referendum E'/Article X Section 3.5 enabling statute drifted far from what the electorate were told they'd voted for. Struck from the statute was a very important group of veterans the state now cites statute to deny the exemption, even though this category of disabled vet is spelled out in tht Cinstitution. Vets whose injuries leave them unable to work are termed "permanent and total service connected unemployability" ratings. That's bad because the Legislative Council blocked about half of the veterans the electorate voted to help! From the 2006 Blue Book:

"Veterans are rated 100-percent permanently disabled when a mental or physical injury makes it impossible for the average person to hold a job and the disability is lifelong."

Disabled veterans with VA's unemployability disability rating were specified as what the voters were helping, became in the administration of the statute by CMDVA a group specified as unqualified.

That's a complete 180º shift away from the Constitution, enough to disappoint this veteran! 

Our Colorado Constitution – Why isn't it followed?

They all swore to uphold it.

The Colorado Constitution specifies in Article X Section 3.5 that total disability military service retirements qualify veterans for the state's disabled veteran property tax exemption. Colorado's Department of Military and Veterans Affairs has a policy against that ever since the Constitution was amended by Referendum E in 2006 and denies the benefit of the exemption to qualified disabled veterans.

Article XII Section 8.  Oath of civil officers. Every civil officer, except members of the general assembly and such inferior officers as may be by law exempted, shall, before he enters upon the duties of his office, take and subscribe an oath or affirmation to support the constitution of the United States and of the state of Colorado, and to faithfully perform the duties of the office upon which he shall be about to enter. 

Article X Section 3.5 (ignored part in red, abused part in blue)(1.5) For purposes of this section, "disabled veteran" means an individual who has served on active duty in the United States armed forces, including a member of the Colorado national guard who has been ordered into the active military service of the United States, has been separated therefrom under honorable conditions, and has established a service-connected disability that has been rated by the federal department of veterans affairs as one hundred percent permanent disability through disability retirement benefits or a pension pursuant to a law or regulation administered by the department, the department of homeland security, or the department of the army, navy, or air force. 

Not only have the last fifteen words in the Constitution's definition of eligible veteran been dropped in the 2007 statute, CMDVA imperfectly follows the requirement to extend the exemption to vets "rated by the federal department of veterans affairs as one hundred percent permanent disability benefits...pursuant to a law or regulation administered by the department." 

This partial state failure is their denial of claims from veterans holding VA's 100% permanent and total service connected disability for unemployment rating. The Constitution and subsequent legislation make no mention of "unemployability" ratings being barred.

Thus, one of two VA total service-connected disability ratings is abused, even though it complies word-for-word with the Colorado Constitution.

Code of Federal Regulations on Unemployability

Following is the Code of Federal Regulations governance of VA unemployability ratings. Note that VA considers Permanent and Total Unemployability awards (TDIU) to be "a rating of 100 percent service-connected disability based on individual unemployability"

§3.340   Total and permanent total ratings and unemployability.

(a) Total disability ratings—(1) General. Total disability will be considered to exist when there is present any impairment of mind or body which is sufficient to render it impossible for the average person to follow a substantially gainful occupation. Total disability may or may not be permanent. Total ratings will not be assigned, generally, for temporary exacerbations or acute infectious diseases except where specifically prescribed by the schedule.

(2) Schedule for rating disabilities. Total ratings are authorized for any disability or combination of disabilities for which the Schedule for Rating Disabilities prescribes a 100 percent evaluation or, with less disability, where the requirements of paragraph 16, page 5 of the rating schedule are present or where, in pension cases, the requirements of paragraph 17, page 5 of the schedule are met.

(3) Ratings of total disability on history. In the case of disabilities which have undergone some recent improvement, a rating of total disability may be made, provided:

(i) That the disability must in the past have been of sufficient severity to warrant a total disability rating;

(ii) That it must have required extended, continuous, or intermittent hospitalization, or have produced total industrial incapacity for at least 1 year, or be subject to recurring, severe, frequent, or prolonged exacerbations; and

(iii) That it must be the opinion of the rating agency that despite the recent improvement of the physical condition, the veteran will be unable to effect an adjustment into a substantially gainful occupation. Due consideration will be given to the frequency and duration of totally incapacitating exacerbations since incurrence of the original disease or injury, and to periods of hospitalization for treatment in determining whether the average person could have reestablished himself or herself in a substantially gainful occupation.

(b) Permanent total disability. Permanence of total disability will be taken to exist when such impairment is reasonably certain to continue throughout the life of the disabled person. The permanent loss or loss of use of both hands, or of both feet, or of one hand and one foot, or of the sight of both eyes, or becoming permanently helpless or bedridden constitutes permanent total disability. Diseases and injuries of long standing which are actually totally incapacitating will be regarded as permanently and totally disabling when the probability of permanent improvement under treatment is remote. Permanent total disability ratings may not be granted as a result of any incapacity from acute infectious disease, accident, or injury, unless there is present one of the recognized combinations or permanent loss of use of extremities or sight, or the person is in the strict sense permanently helpless or bedridden, or when it is reasonably certain that a subsidence of the acute or temporary symptoms will be followed by irreducible totality of disability by way of residuals. The age of the disabled person may be considered in determining permanence.

(c) Insurance ratings. A rating of permanent and total disability for insurance purposes will have no effect on ratings for compensation or pension.

[26 FR 1585, Feb. 24, 1961, as amended at 46 FR 47541, Sept. 29, 1981]

§3.341   Total disability ratings for compensation purposes.

(a) General. Subject to the limitation in paragraph (b) of this section, total-disability compensation ratings may be assigned under the provisions of §3.340. However, if the total rating is based on a disability or combination of disabilities for which the Schedule for Rating Disabilities provides an evaluation of less than 100 percent, it must be determined that the service-connected disabilities are sufficient to produce unemployability without regard to advancing age.

(Authority: 38 U.S.C. 1155)

(b) Incarcerated veterans. A total rating for compensation purposes based on individual unemployability which would first become effective while a veteran is incarcerated in a Federal, State or local penal institution for conviction of a felony, shall not be assigned during such period of incarceration. However, where a rating for individual unemployability exists prior to incarceration for a felony and routine review is required, the case will be reconsidered to determine if continued eligibility for such rating exists.

(Authority: 38 U.S.C. 5313(c))

(c) Program for vocational rehabilitation. Each time a veteran is rated totally disabled on the basis of individual unemployability during the period beginning after January 31, 1985, the Vocational Rehabilitation and Employment Service will be notified so that an evaluation may be offered to determine whether the achievement of a vocational goal by the veteran is reasonably feasible.

(Authority: 38 U.S.C. 1163)

[46 FR 47541, Sept. 29, 1981, as amended at 50 FR 52774, Dec. 26, 1985; 55 FR 17271, Apr. 24, 1990l; 58 FR 32445, June 10, 1993; 68 FR 34542, June 10, 2003]

Some Legislative History of the Disabled Veteran Property Tax Exemption

The problem: Colorado's voters defined "qualified disabled veteran via a Constitutional amendment (Referendum E). Presently the Colorado Division of Veterans Affairs unfairly excludes from the benefit qualified veterans with permanent "unemployability" VA awards, and also excludes veterans directly retired by the military services per permanent and total disability.

Military disability retired property tax relief for Colorado's totally disabled military veterans is based on the 2006 amendment to the state Constitution. The wording of the title of Referendum E is inclusive of any "United States Military veteran who is 100% permanently disabled due to a service-connected disability." 

Nowhere in the Constitution nor other legislation does the "unemployability"appear. It was added as an exemption only by extra-legal preference of the CDMVA, contrary to the Constitution.

Here is the full title, approved by the voters:

AN AMENDMENT TO SECTION 3.5 OF ARTICLE X OF THE CONSTITUTION OF THE STATE OF COLORADO, CONCERNING THE EXTENSION OF THE EXISTING PROPERTY TAX EXEMPTION FOR QUALIFYING SENIORS TO ANY UNITED STATES MILITARY VETERAN WHO IS ONE HUNDRED PERCENT PERMANENTLY DISABLED DUE TO A SERVICE-CONNECTED DISABILITY Here's the text of Referendum E's definition of "disabled veteran:"

(1.5) FOR PURPOSES OF THIS SECTION, "DISABLED VETERAN" MEANS AN INDIVIDUAL WHO HAS SERVED ON ACTIVE DUTY IN THE UNITED STATES ARMED FORCES, INCLUDING A MEMBER OF THE COLORADO NATIONAL yGUARD WHO HAS BEEN ORDERED INTO THE ACTIVE MILITARY SERVICE OF THE UNITED STATES, HAS BEEN SEPARATED THEREFROM UNDER HONORABLE CONDITIONS, AND HAS ESTABLISHED A SERVICE-CONNECTED DISABILITY THAT HAS BEEN RATED BY THE FEDERAL DEPARTMENT OF VETERANS AFFAIRS AS ONE HUNDRED PERCENT PERMANENT DISABILITY THROUGH DISABILITY RETIREMENT BENEFITS OR A PENSION PURSUANT TO A LAW OR REGULATION ADMINISTERED BY THE DEPARTMENT, OR THE DEPARTMENT OF THE ARMY, NAVY, AIR FORCE, OR HOMELAND SECURITY. 

(note: There is a minor conflict between the referendum's pension language and its requirement that disabilities be service-connected – the VA pension program is based on low-income and need, not service-connected disabilities. There is no such thing as 100% service-connected disability pensions.)

The 2007 Legislature "fine tuned" Section 3.5 of Article X from the 2006 Constitutional amendment. It bypassed the voter-approved "any veteran," dropped the pension, but  very improperly redefined and restricted the definition of "qualifying veteran" by failure to adhere to the broad and inclusive language of the voter-approved referendum.

"(3.5) "Qualifying disabled veteran" means an individual who has served on active duty in the United States armed forces, including a member of the Colorado National Guard who has been ordered into the active military service of the United States, has been separated therefrom under honorable conditions, and has established a service-connected disability that has been rated by the United States department of veterans affairs as one hundred percent permanent and total disability pursuant to a law or regulation administered by the department. "

The 2007 Legislature errored in its modification of the definition of "qualifying veteran" away from that approved by the electorate and per the Constitution. This amounted to an ex post facto law depriving many formerly qualified disabled veterans from the Constitution's protection regarding property tax. Further, this violates the US Constitution by depriving the affected veterans of their property (the tax benefit) without due process. From the Colorado Constitution's Bill of Rights:

"Section 11. Ex post facto laws. No ex post facto law, nor law impairing the obligation of contracts, or retrospective in its operation, or making any irrevocable grant of special privileges, franchises or immunities, shall be passed by the general assembly."