Nonprofits donating millions of dollars to super PACs, with no ability for voters to learn where the money came from. And an enforcement system that relies on citizen complaints and doesn’t always collect the money owed by candidates and political committees.
The 2018 election laid bare these apparent gaps in Colorado’s campaign finance laws in a year in which record money poured into campaigns.
Now the incoming secretary of state and the new Democratic-majority legislature are poised address the issues and bring changes to a system that received a “D” grade from the Center for Public Integrity in 2015.
“Campaign finance reform is something that I’ve been talking about for almost the last two years,” said Secretary of State-elect Jena Griswold, a Democrat who defeated incumbent Republican Wayne Williams in November. “I think reform is what the people of Colorado want. In a democracy we do need transparency.”
Griswold is convening a working group to advise her on campaign finance reform as she prepares to take office Jan. 8. And her pick for deputy secretary of state is Jenny Flanagan, who most recently served as a vice president at Common Cause, an organization that advocates for tougher disclosure laws.
The new Democratic-majority at the Capitol also plans to reintroduce campaign finance measures blocked by Republican leaders in the state Senate in recent years.
Disclosure loopholes are evident in campaign ads
The disclosure loopholes in the law are at the top of the list.
Sen. Rachel Zenzinger, D-Arvada, remembers her 2016 campaign in which she was attacked by anonymous flyers
“I encountered a door that had a four-page glossy flyer, three pages of which were about how horrible I was,” she said. “And the backpage was about how wonderful my opponent was. And nowhere on that flyer did it say who paid for it.”
Zenzinger figured that must be illegal. But it isn’t. Nor is it uncommon.
In fact, state law doesn’t even require candidates to disclose that they paid for campaign literature. For instance, a letter signed by the sister-in-law of Republican state Sen. Tim Neville and sent a few days before the 2018 election didn’t note who paid for it. A similar robocall, however, said it was paid for by the Neville campaign. He lost his reelection bid to Democrat Tammy Story in a Jefferson County district.
In other instances, literature mentioning candidates falls into a gray area outside required reporting periods. Spending on advertising that doesn’t suggest voting for or against a candidate that’s delivered more than 60 days before the general election doesn’t have to be reported to the secretary of state.
That’s why Zenzinger will introduce a bill to require disclosure of who paid for any sort of campaign advertising.
It would also require disclosure of “electioneering” communications that mention a candidate but don’t specifically advocate voting for or against them during the period 30 days before the primary through the general election. That would eliminate the nearly two-month window between the primary and 60 days before the general election when disclosure isn’t required by current law.
“I believe that people have to stand by their ad, they have to disclose who paid for it,” she said. “Every ad needs to say ‘paid for by.’”
Meanwhile in the House, state Rep. Mike Weissman, D-Aurora, plans to reintroduce legislation that extends disclosure to digital advertising as well as print or broadcast advertising. Colorado committees paid at least $909,000 directly to Facebook, Google and Twitter in 2018, with considerably more than that likely spent via consultants. Currently, the law doesn’t require disclosure on digital advertising, although some platforms do require it.
Weissman also will reintroduce a 2017 bill that would prohibit candidates from creating a super PAC, also known as an independent expenditure committee, that can collect and spend unlimited amounts. That’s a loophole that exists but doesn’t appear to have been used, but the measure is intended to clarify that super PACs must operate entirely separately from candidates.
Tracking dark money remains hard in Colorado
Tightened disclosure laws would require nonprofit groups such as the Colorado Economic Leadership Fund, Colorado Values Project and others who were active in the 2018 election to report what they spend on mailers or TV ads that mention candidates, even if they don’t advocate voting for or against them.
But there’s another gap in the law that makes it hard to know who is paying for those messages because nonprofits aren’t required to disclose their donors.
“When you’re going through a dark money nonprofit entity, if that group doesn’t qualify as a political committee, as in a lot of states, they may have to report the actual expenditure, but there’s no requirement for them to reveal their underlying funding sources,” said Austin Graham, a lawyer with the Campaign Legal Center’s state and local program.
Griswold said she would like to see that change, possibly with a requirement that campaign materials from nonprofits disclose the top three donors to the organization and how much they gave.
“That’s something I’m extremely passionate about,” Griswold said about dark money disclosure.
Some states, such as Rhode Island and Massachusetts, require disclosure by any type of group paying for political ads if donors reach a certain threshold of giving. Massachusetts requires disclosure of the top five contributors, for instance. California also requires disclosure of large donors on many ads.
“That seems to be an increasingly popular mechanism for giving immediate transparency to voters about the source of political advertisements, including the funding sources,” Graham said.
Then there are the large nonprofits donating directly to super PACs or independent spending committees.
In Colorado, the liberal nonprofit Sixteen Thirty Fund gave nearly $10.8 million to various committees, many of them supporting Democrats, in 2018. Workforce Fairness Institute, an anti-union group, donated nearly $4 million to GOP groups. In addition to paying for its own mailers and TV ads mentioning candidates, the Colorado Economic Leadership Fund donated more than $2.7 million to GOP state Senate candidates. In all cases, the actual donors of the money were never disclosed.
“That’s the big problem,” Graham said. “There’s that issue of how do you get to the organizations that are essentially only make making contributions to groups that then run the advertisement?”
Rhode Island, for instance, requires reporting of the sources of such “pass-through” donations unless a nonprofit spends less than 10 percent of its annual expenses or no more than $15,000 on political activity.
And California law notes that a nonprofit may be considered a “major donor committee” required to report the source of its funding under certain circumstances.
Alternative, but unlikely, approaches for finance reforms
Other ideas for changes to the disclosure laws are designed to merely identify big money in politics and limit outside forces.
Former Republican Party Chairman Dick Wadhams is among those who support eliminating all limits on donations to candidates. Colorado overwhelmingly approved the current limits in a 2002 constitutional amendment. Dropping the limits would drive money to candidates and political parties, with disclosure identifying big donors that candidates accept money from, he said.
At least a dozen states don’t limit donations to candidates for governor or state legislature, according to the Campaign Finance Institute.
“That’s the only real campaign finance reform that would start moving money back to the political parties and to the candidates individually,” Wadhams said.
That would also level the playing field when wealthy candidates spend their own money on campaigns, he said, citing Gov.-elect Jared Polis putting more than $23 million of his own money into the campaign.
But in November, Colorado voters overwhelmingly rejected Amendment 75 to allow higher donation limits for candidates when an opponent is self-funded. And the Campaign Legal Center’s Graham said unlimited donations to candidates presents another problem.
“It’s certainly not good for the public’s perception of elected officials if they’re taking six figure checks from special interests with business before the elected official or the state legislature,” Graham said.
Meanwhile, a couple of states have adopted laws that would prevent naming the donors to nonprofits that engage in political activity, said Paul S. Ryan, national vice president for policy and litigation for Common Cause, the nonprofit that advocates for more disclosure.
“Some jurisdictions are going in the wrong direction on this policy question,” Ryan said.
Griswold said she’s interested in improving enforcement efforts by the Secretary of State’s office. That might include auditing campaign finance accounts, and pursuing potential wrongdoing the office notices without a citizen complaint.
In December, The Colorado Sun revealed that political committees owe $2.3 million in fines to the state but the law allows for little to be collected.
“Stay tuned more to come on that side of how we’re going to accomplish that in the Secretary of State’s Office,” Griswold said.
But her initial focus is to improve disclosure laws.
“These transparency ideas affect Republicans, unaffiliated spending, Democratic spending, this affects everybody,” Griswold said. “And the idea is, it’s not punitive to any type of spending. The idea behind it is more transparency is good for our democracy and allows people to make better decisions.”
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