Colorado's abandoned 100% disabled veterans – those rated "Total Disability for Individual Unemployability (TDIU)"

Voters approved Referendum E in 2006. We were asked whether a partial property tax exemption should be offered totally and permanently disabled veterans. We approved. But we didn't get what we voted for, not by half.

VA has two kinds of total disability awards – "TDIU" for total disability for individual unemployability, and 100% service connected permanent and total.

VA may increase certain veterans' disability compensation to the 100 percent level, even though VA has not rated their service-connected disabilities at that level. To receive the supplement, termed an Individual Unemployability (IU) payment, disabled veterans must apply for the benefit and meet two criteria. First, veterans generally must be rated between 60 percent and 90 percent disabled. Second, VA must determine that veterans' disabilities prevent them from maintaining substantially gainful employment—for instance, if their employment earnings would keep them below the poverty threshold for one person. 

Unhappily, our legislators really tightened up qualifications and locked out every single TDIU veteran. TDIU vets are carefully evaluated by VA, have at least one 60% permanent disability and a combination of factors making it physically impossible for them to work. Ever. Both vets are referred to as 100% VA disabled, but TDIU veterans have been refused the Colorado disabled veteran property tax exemption.

Consider the leeway given the legislature in the tax code. Clearly, the legislators had/have the power to follow Referendum E "in a manner that gives its words their natural and obvious significance." Must we suppose that totally and permanently disabled aren't "natural and obvious" enough words for TDIU?

Colorado Revised Statutes 2016, Title 39-3-202

TITLE 39(c) In enacting legislation to implement section 3.5 of article X of the state constitution the general assembly has attempted to interpret the provisions of section 3.5 of article X of the state constitution in a manner that gives its words their natural and obvious significance;

VA OIG 19-00227-226, Page ii, September 10, 2020

"Veterans are considered to have total disability when they have a 100 percent disability rating due to service-connected disabilities or if their service-connected disabilities make them unemployable. For the total disability to be permanent, the law requires the disability to be “based upon an impairment reasonably certain to continue throughout life."

"The Veterans Benefits Administration Inadequately Supported Permanent and Total Disability Decisions",

   

LEGISLATIVE ACTION: Two possible changes to Article X Section 3.5 to add Gold Star Wives' property tax exemption

Perhaps adding Gold Star Wives to the Disabled Veteran's Survivor Property Tax Exemption can be done in a couple different ways. A constitutional amendment is much harder than in earlier years, but legislation or regulatory action might be easier. It bears looking into!

Here are two possible legislative actions, easy-to-use keys we might use by hacking the definition of "disabled veteran" to encompass an active duty death of a soldier, sailor airman or Marine, or a Colorado National Guard member ordered to active state duty:

SECTION 1. In Colorado Revised Statutes, 39-3-202, amend 3 (3.5) as follows: 4 39-3-202. Definitions. As used in this part 2, unless the context 5 otherwise requires:

(FIRST possible revision)

(b)  The owner-occupier is the spouse or surviving spouse of an owner-occupier who previously qualified for a property tax exemption for the same residential real property under paragraph (a) of this subsection OR THE SURVIVING SPOUSE OF AN INDIVIDUAL WHO DIED IN THE LINE OF DUTY IN THE UNITED STATES ARMED FORCES OR IN THE COLORADO NATIONAL GUARD WHILE ACTIVATED FOR STATE CONTINGENCIES

SECOND possible revision)

(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. FOR PURPOSES OF THIS SECTION, AN INDIVIDUAL WHO DIES IN THE LINE OF DUTY WHILE IN THE UNITED STATES ARMED FORCES OR THE COLORADO NATIONAL GUARD WHEN ACTIVATED FOR STATE CONTINGENCIES IS DEEMED A DISABLED VETERAN PREVIOUSLY QUALIFIED FOR A PROPERTY TAX EXEMPTION

 

"New" 2019 Data on Gold Star Wives: from Colorado's Legislative Council Staff

 Just uncovered in our effort to protect survivors of active-duty line-of-duty deaths: Acting on the request from a Colorado state representative, the Legislative Council Staff (LCS) researched the addition of Gold Star Wives to our Disabled Veteran Survivor Property Tax Exemption and it is nowhere near the big numbers first anticipated.

LCS calculated around 150 potential widows/widowers might be made eligible, for a cost to the state budget of just $95,000. This is much more doable than the earlier estimate of nearly 1000 exemptions with the cost of just under $1 million. I think the number is higher, perhaps a couple hundred.

This is much more doable than the earlier estimate of nearly a thousand exemptions with the cost of just under $1 million. Still, it is a cost that must be matched by a reduction somewhere.

Other stats from the Colorado Fiscal Institute and other sources have been identified that help clarify things:

-addition of Gold Star Wives is just a 0.0006 fraction of the overall homestead exemption, or 150 compared to 450,000, and a similarly small portion of the vets/survivors' population of 5500 souls.

-veterans and survivors exemptions are only 2% of the overall homestead exemption
-disabled veterans; survivors include the only under 65 years of age population eligible for exemption

-52% of active duty troops are married and thus, potentially 52% of active duty deaths leave Gold Star Spouses. Overwhelmingly, and sadly, deaths are heaviest among younger troops, averaging age 30. This is always the case in war

-Nationally, around 27% of homeowners are age 35 or younger with an even lower percentage for active-duty military.

These numbers should help calm the "sticker shock" otherwise expected from legislators and state budget officials, and they also help move this project along as we firm up specifics. Thank you, LCS and the state representative who raised the issue with them in 2019. This really helps!

Some more statistics:

-Active-duty servicemembers have lower homeownership rates (mean 43%) at younger ages than veterans (78%) and the population as a whole (68%,) but they have the highest homeownership rates (71%) in the 55-up age group

-Home ownership by veterans is greatly benefited by VA loans, and by the steady disability or retirement income many have.

-Home ownership by active duty servicemembers is also benefited by VA loans, and steady, easily verified income. Ownership is made much more difficult due to frequent transfers, and there is a significant initial home ownership surge at retirement age

-As homeownership is an important wealth-building tool (Goodman and Mayer 2018), smaller
homeownership gaps by race or ethnicity also means smaller wealth gaps. According to the Panel Study
of Income Dynamics, the black-white housing wealth gap in 2017 was $48,500 for households with veterans and active-duty servicemembers ages 35 and 54, but the gap was $71,500 for nonmilitary households. Too many younger totally disabled veterans never have the opportunity to acquire wealth or home ownership due to income limitations, even with the VA loans.

-Veteran households (non-disabled) and active-duty military households have higher median household incomes than nonmilitary households, $70,000/yr vs. $60,000, with communities of color having lower race disparities than the general population.Household income also varies by military status, age and length of service. 

-The average income is $90,800 (with benefits' value included) for active-duty military households, $87,600 fo non-disabled veteran households, and $85,000 for nonmilitary households. Spousal income is lower for active-duty military than for veterans and the general population.

-

A possible solution: redefine "disabled veteran" to include deceased active duty servicemenbers?

 Perhaps this approach can work. I've found House Bill 14-1737 which added surviving spouses to the exemption for totally disabled veterans. Apparently this was done under the umbrella of the state constitution's Article X Section 3.5 which made no mention of survivors – the legislature just did it.

Can the legislature do it again? Can't the legislature define an active duty servicemember who dies in the line of duty as a disabled veteran? That might work to pack into Article X Section 3.5 our few Gold Star Wives. The new text is in red

Colorado Owes Our Gold Star Widows the Property Tax Exemption Given Disabled Veterans' Widows

 

Colorado's Curious Management of its Disabled Veteran Property Tax Exemption, & the "Unemployability" Disqualification (updated May 12, 2021)

Five years ago I wrote about the curious sleight of hand employed to sell the voters on a worthy Colorado constitutional amendment but then the enabling legislation delivered a greatly watered-down statute. 

I backed off the subject after the United Veterans Committee (now United Veterans Coalition) made clear its nonsupport at that time. Understandably, it was best to avoid conflict and not mess up the carefully-crafted UVC legislative agenda. Happily, I understand that UVC has a related bill to increase the exemption as one of the 2021 objectives. Unhappily, I feel its cost of over $19M leaves no chance of success and UVC and the bill's sponsor might instead have pushed for Gold Star Wives and/or TDIU disabled veterans.

I refer here to Referendum E from back in 2006. Our legislature generously proposed a constitutional amendment (Article X Section 3.5) to provide a small partial property tax exemption to totally disabled veterans. Note the wording: "totally disabled veterans." Let's follow that bouncing ball of how definitions of  "totally disabled veterans" kept a-changing – and to finally covered as few vets as possible:

Here is the full text of Referendum E to amend the state constitution:

"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.”

This is important: Note the "one hundred percent permanently disabled" and the separate phrase, "due to a service-connected disability." Here in Colorado those words are now interpreted to be one kind of totally disabled veteran but could be read to refer to two kinds. That's right. VA has two different types of totally and permanently disabled veterans. "TDIU" for total disability for individual unemployability" and 100% service connected disabled for vets with a disability, or group of disabilities when added together, equalling 100%. 

Here is how the Legislative Council told us via the Blue Book what we were voting for:

"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."

An overwhelming 85% of Colorado voters approved this worthy benefit for those who served our state and nation. But then the lawmakers themselves got involved and took a fire hose to the benefit, watering it down quite a bit.

When Denver finally enacted legislation for the mechanics of Article X section 3.5 to work, Referendum E ended up much less broad than what we approved. The number of qualified recipients of the benefit was cut by more than half to protect budget resources for other projects.

Here is the actual text that finally delivered Referendum E to us as law:

"(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 federal department of veterans affairs as a one hundred percent permanent disability through disability retirement benefits pursuant to a law or regulation administered by the department."

And next, here is the Colorado Department of Military and Veterans Affairs form for applicants, where there are two portions describing "totally disabled veterans."

"A “qualifying disabled veteran” is a person who meets each of the following requirements
- § 39-3-202(3.5), C.R.S . A “qualifying disabled veteran” is a person who meets each of the following requirements - § 39-3-202(3.5), C.R.S.• The veteran sustained a service-connected disability while serving on active duty in the Armed Forces of the United States. This includes members of the National Guard and Reserves who sustained their injury during a period in which they were called to active duty. • The veteran was honorably discharged.• The federal Department of Veterans Affairs has rated the veteran’s service-connected disability as a one hundred percent permanent disability through disability retirement benefits pursuant to a law or regulation administered by the department"

– and from the back page – 

"2. DISABLED VETERAN STATUS: To qualify, both questions must be true and you must attach a copy of your VA award letter verifying that you have been given a permanent disability rating by the VA." 

CDMVA web site:

"The Disabled Veteran Property Tax Exemption is available to applicants who sustained a service-connected disability rated by the Federal Department of Veterans Affairs as a 100 percent permanent disability through disability retirement benefits pursuant to a law or regulation administered by the Department, the United States Department of Homeland Security, or the Department of the Army, Navy or Air Force. VA unemployability awards do not meet the requirement for determining an applicant’s eligibility." 

So, after all this reading, do you see where the disabled veteran property tax exemption got watered down by more than half? It was through the disqualification of veterans rated totally and permanently disabled by VA for "unemployability." Tossed into the program are the words, "VA unemployability awards do not meet the requirement for determining an applicant’s eligibility."  Note that these TDIU people aren't veterans who are out of work, but instead vets who've been evaluated as being physically unable to ever work. And are monitored to make sure that remains the case.

Side note: the constitution included as eligible veterans those who were medically retired by their service as 100% disabled. The fourteen words describing these vets were left out of the law until 2016, when HB16-1444 brought the tax legislation into accord with the constitution.

(Here is an analysis I prepared in 2016 when I last worked on disabled veteran unemployability tax exemption issues.)

VA "unemployability" is its 100% disability rating for vets with at least one 60% service-connected issue and whose overall disabilities are so severe, so far beyond the scope for which VA assigned the 60%, that any meaningful employment is impossible. VA has other rating of "catastrophically disabled" but even when a vet is rated both unemployable and catastrophically disabled, that doesn't meet CDMVA's redefinition of Referendum E also is awarded to vets with at least a 60% service-connected disability:

"Veterans are considered to be Catastrophically Disabled when they have a severely disabling injury, disorder or disease that permanently compromises their ability to carry out the activities of daily living. The disability must be of such a degree that the Veteran requires personal or mechanical assistance to leave home or bed, or require constant supervision to avoid physical harm to themselves or others."

 Let's note that VA has two kinds of unemployability awards. The first is temporary or "IU," meant for periods of uncertainty about recovery or rehabilitation after surgery or illness, and the second is permanent (TDIU) for exactly that – permanent disability for life. TDIU veterans not only are medically determined to be unable to work, they are also carefully evaluated for that situation by the Veterans Benefit Administration before given the rating. Finally, they are carefully monitored by VA to check that they remain unable to work and both Social Security and IRS records are checked. 

Because Colorado references the VA totally disabled rating everywhere, we should look at how VA itself describes a totally disabled veteran. Read carefully and compare to Colorado's absolute disqualification of TDIU vets from the Disabled Veteran Property Tax Exemption. Here is the VA Office of Inspector General's very appropriate definition:

"Veterans are considered to have total disability when they have a 100 percent disability rating due to service-connected disabilities or if their service-connected disabilities make them unemployable. For the total disability to be permanent, the law requires the disability to be “based upon an impairment reasonably certain to continue throughout life."

"The Veterans Benefits Administration Inadequately Supported Permanent and Total Disability Decisions",

    VA OIG 19-00227-226, Page ii, September 10, 2020

Clearly,  veterans with total disability, including TDIU, is what voters thought they were approving by votes for Referendum E back in 2006. So where did the Colorado prohibition of unemployability for the benefit come from?

I asked CDMVA and they said ask DOLA. I asked DOLA and in 2014 was told "some legislators" wanted that limitation. Legislators. Not the voters. Legislators introduced (snuck in!)  their own idea of
disqualification into what voters more broadly approved as our constitutional amendment.

My view: Veterans with a 100% disability rating, including TDIU, were provided the small tax exemption via Referendum E when we voted approval. TDIU eligibility should be corrected by legislative action. I do not favor broadening the Disabled Veteran Property Tax Exemption below the 100% disability level as the impact would be far too burdensome on taxpayers. 

Further, veterans often have disabilities common among folks their own age group, such as COPD, diabetes, hypertension and hearing loss. It would be unfair to a taxpayer with COPD to pay full property taxes while the veteran neighbor with a 50% COPD disability rating doesn't. The obvious need for tax relief is for survivors and the totally disabled veteran! Full stop.

Conclusion: A few legislators hijacked Referendum E and Article X Section 3.5 of the constitution, doing decades of harm to a large number of otherwise qualified Colorado totally disabled veterans and their survivors.

Time to set this right! What say you – Is 2022 too soon?

Colorado’s Disabled Veterans’ Property Tax Exemption – The “Missing in Action” Law

by Wes Carter, National Chairperson, The C-123 Veterans Association

It’s hard to believe. Over this last decade state officials simply ignored property tax provisions spelled out in Colorado’s constitution to provide a small exemption to totally disabled troops retired by the military for line-of-duty injuries. It’s like the law simply went missing in action.

Back in 2006 voters amended our constitution, approving by a four-to-one margin to provide a small, partial property tax exemption. Only about $480 on average, the exemption is for two categories of injured servicemembers: Troops retired by the military as totally and permanently, and second, veterans rated 100% totally and permanently disabled by the Department of Veterans Affairs. 

Referendum E carefully addressed both of the above categories because there are three differences between them:
1. Not all disabled military retirees also seek a VA disability rating – ratings must be applied for
2. Although based on similar laws, often military retirees face years of delays with claims and appeals to receive VA ratings, but military disability retirements are effective immediately upon leaving active duty
3. The military views a disability as medically unable, through line-of-duty illness or injury, to perform one's military specialty or be retrained in another; VA views disability as the percentage of loss of capacity to work in meaningful employment, somewhat similar to Social Security disability rules

(real example: Northern Colorado resident Vietnam-era veteran medically retired as 100% by the military in 1991 because of Gulf War injuries. Filed VA claims for numerous 100% disabling injuries and Agent Orange illnesses in 1992-1994 but not finally approved for 100% VA disability rating until 2015. Per our constitution's Article X Section 3.5, this veteran was eligible for Colorado's disabled veteran tax exemption in 2007. As of December 2017, still no state web site instructions or forms permit his application because only federal VA 100% disability ratings are mentioned, not his 100% military medical retirement.)

Problem: Through an oversight when the 2007 statute was drafted, the category of totally disabled military retirees was simply not mentioned…language about them is in the constitution, but was absent from the text of the law.

In 2015 concerned citizens discovered this missing language issue and asked the legislature to align the constitution with the statute. Both houses approved HB-1444 unanimously and it was signed into law in May 2016.

And it has been simply ignored since then.

Here's the law describing the partial tax exemption. The bold type was left out of the enabling statute:

Colorado 39-3-202C.R.S.

 “(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 federal department of veterans affairs as one hundred percent permanent disability through disability retirement benefits pursuant to a law or regulation administered by the department, the United States departments of homeland security, Army, Navy, or Air Force.”

May 2016. Governor signs HB16-1444. I'm on right.

Now the statute has been repaired, the missing words added to comply with the constitution. However, there's a problem with the way the law finally gets administered: Colorado officials simply haven't gotten around to its section addressing totally and permanently disabled military retirees so they’re still denied their property tax exemption. Officials never changed the application forms, the rules or the instructions.

The governor signed HB16-1444, an act unanimously approved by both houses of the legislature in May 2016 and placed those missing words from the constitution into the law, effective June 2016. His signature has been ignored, and without any constitutional or legal authority at all, totally disabled military retirees continue to be taxed and their rights abused.

When I've discussed this taxation disconnect with officials there's no disagreement about the problem. They just don’t see ignoring it as a big deal.

This is a big deal! The constitution expresses people’s will. Officials from the governor on down have sworn to protect and defend it. A constitutional provision like this can’t simply be ignored. You may recall that in 1776 unfair taxation led to some disagreement between England and her American colonies. 

Now that this problem has been pointed out to state officials, they’ve indicated rules and application forms might be set right by January 2018. But that’s so very late, especially considering the constitution provided their exemption effective ten years ago.

Few Coloradoans tolerate being wrongfully taxed. We owe these veterans so much more than this small tax exemption they’ve earned through disabling line-of-duty injuries. Colorado has no excuse for failing to provide it.

These veterans have been patient long enough. The constitution has been ignored long enough.