Controversy over the financial backing of Amendments 60 and 61 and Proposition 101 -- anti-tax initiatives that will appear on the November 2 ballot -- has been swirling for months in Colorado. State law requires that any person or group who raises or spends $200 or more on an initiative campaign must register with the secretary of state and file financial disclosure reports. No one registered as a proponent of these three initiatives, even though there is evidence that they qualified for the ballot through the use of professional, paid petition circulators. So who paid for the signature collection effort?
For months, opponents of the three measures pointed the finger at anti-tax activist and former Republican legislator Douglas Bruce. After it became known that the petition circulators had stayed in a property owned by Bruce, opponents filed a campaign finance complaint in January alleging that Bruce was the chief backer of the measures. He managed to evade process servers bearing a subpoena related to that case dozens of times. He was ultimately charged with contempt of court, but a judge dismissed that charge and ordered him to testify in the campaign finance case. A judge in June found that there was sufficient evidence to tie Mr. Bruce to the three initiatives, and ordered the chief sponsor of each (Mr. Bruce's name does not appear in the list of sponsors on any of the three petitions) to pay a $6,000 fine for the campaign finance violations.
The latest twists in the story come from Mr. Bruce himself. In contrast to his strident denials of his involvement in the three measures (he frequently characterizes such accusations as ....), an email he sent to supporters on September 23 claims, "You have no idea how much time and money has been spent to get to the finish line," and writes that he has spent over 1,600 hours of his time on the campaign. He later said that number was a typo, and that he had actually spent only 160 hours.
Today's Denver Post reports that attorneys for the opponents -- a group called Coloradans for Responsible Reform -- have finally deposed Mr. Bruce, and he admitted to them that he had written more than $100,000 in checks to fund the signature drive from the account of his 501(c)(3), Active Citizens Together (ACT). Under Colorado law, ACT should have registered with the secretary of state as soon as it reached the $200 spending threshold. Furthermore, Mr. Bruce has admitted that he received the signed petitions, checked them for accuracy, and stored them at his home before turning them in to state officials for verification. The current complaint goes to an administrative judge, who may order a hearing sometime in the next two weeks.
Mr. Bruce could find himself in trouble with the Internal Revenue Service as a result of this case as well. IRS rules state that a 501(c)(3) cannot have as its chief purpose political activity, and it is unclear based on its recent activities that ACT can meet that standard. Read more about how many non-profit groups are pushing the limits of rules regulating political spending this year in yesterday's New York Times. Another potential legal problem looms in the fact that ACT has not registered as a non-profit with the Colorado secretary of state's office, a step that is required before a group can solicit charitable contributions.
Several of the 24 initiative states have acted in recent years to tighten campaign finance disclosure rules for initiative campaigns, particularly for spending during the signature-gathering phase. The idea behind such disclosure is that the identity of the individuals, groups or corporations that seek to put an initiative before voters is a key fact that voters should be aware of as they decide how to vote on a proposal. Because the opponents have had to rely on the courts to force disclosure in the case of Amendments 60 and 61 and Proposition 101, it is possible that Colorado voters will not know the facts surrounding the financial sponsorship of these three highly controversial initiatives before Election Day.