A measure on Colorado’s November ballot asks voters to change the way the state approves spending money from the federal government, legal settlements and other non-state sources.
Amendment 78 would require the Colorado General Assembly to determine how the state uses what it defines as “custodial money,” funding the state receives from outside sources for specific purposes, like federal grant money and private donations.
Supporters say the measure would bring greater accountability and transparency to state spending. But opponents see it as little more than a partisan ploy meant to hobble a Democratic administration.
There’s a catch, though: A pending lawsuit challenging the measure’s placement on the ballot seeks to invalidate any votes cast for or against the measure, effectively blocking it altogether.
The General Assembly currently appropriates state tax revenue through the budget process. But money that comes in from outside of the state government are not typically subject to the legislative appropriation process. For example, Colorado received nearly $1.7 billion last year in federal relief money through the CARES Act that the Polis administration spent according to the governor’s executive order and without legislative approval.
Amendment 78 would change the Colorado Constitution and state law. It would require lawmakers to determine how the state spends that custodial money through a process that includes a public hearing with opportunities for the public to comment. All custodial money would go into a centralized account, with interest from that account flowing into the state’s general fund.
That could affect not just federal emergency relief funding and other federal support, but money from legal settlements, funding for transportation projects that are currently allocated by an independent commission and private gifts and donations, like those often collected by public colleges and universities.
According to nonpartisan legislative staff members, the Legislature and state agencies would be forced to bring on new employees to deal with the new requirements to submit proposed spending of custodial money, amounting to at least $1 million in predicted costs for new staff members. And while the purpose of spending may not change, lawmakers could choose to pay for different programs to achieve a required purpose.
Michael Fields, who brought the measure, heads up a conservative organization called Colorado Rising Action, considered a dark money group because it doesn’t reveal its donors.
Fields previously served as the state director of Americans for Prosperity Colorado, associated with the national group, Americans for Prosperity, founded by wealthy business magnate brothers David and Charles Koch.
Fields said he wants to increase public oversight by having all state spending go through the legislative process with a public hearing.
He cited various examples of the kind of spending he thinks should be subject to legislative scrutiny. The Attorney General’s Office takes in money from legal settlements, settlements with drug companies related to the opioid crisis being a recent case. Fields noted that though settlement money typically comes with strings attached about how to spend it, interest from that money often has fewer restrictions.
Fields also pointed to the practice of the governor’s office taking large contributions from private donors to pay for key staff members.
And Fields referenced all the federal money flowing into the state for pandemic relief as the type of spending for which he wants to see more oversight.
Fields said when it comes to interest accumulating from custodial money, the measure gives state lawmakers the chance “decide what priorities make sense, education or roads or whatever else.”
Fields predicted that should the measure pass, state agencies that have control over these types of custodial funds are “not going to be happy that, what we call the slush funds, are no longer going to be slush funds, they’re going to be a part of the normal process of budgeting.”
The Attorney General’s Office declined to comment about the ballot measure because of the pending litigation.
The Polis administration may be most affected by the measure as it controls state agencies that receive large sums of federal funding. The governor’s office declined to comment about the measure or how it would affect state agencies.
Scott Wasserman, who leads the liberal-leaning Bell Policy Center, told the Sun that besides the legal arguments for why the Secretary of State’s Office shouldn’t have OK’d the question for voters on this year’s ballot, he has grave concerns about the policy implications.
“If it passes, I think it’s going to be a serious disruption to the way the state currently operates,” he said.
He predicted the measure would drastically increase lawmakers’ workload by forcing them to appropriate a large assortment of different types of federal funding as well as funding from other sources that currently don’t require legislative approval.
Democratic state Sen. Chris Hansen of Denver sits on the Joint Budget Committee and said he thinks the measure is unnecessary, noting that the JBC already reviews custodial fund spending each year.
And he echoed Wasserman’s concern that the measure would require a lot more work from lawmakers as such custodial funds can come in throughout the year, not just when the General Assembly is in session.
“The JBC and the Legislature would have to come in and be passing appropriations bills, pretty much all year round if this goes forward,” he said. “So I think there’s a lot of unintended consequences.”
But beyond all of that, Wasserman fears the changes could be used to “create opportunities for political theater,” setting up legislative showdowns over hot-button topics like fetal-tissue research.
“This essentially allows one legislative chamber to veto federal dollars that have already come here from the federal government,” he said.
He also expressed concern that the measure would mean emergency funding from the federal government, such as pandemic relief, could get tied up in legislative red tape that causes delays. And he said those delays could similarly tie up President Joe Biden’s new spending plan that still needs congressional approval.
Hansen also raised that concern.
“It’s going to really slow down the process of getting your emergency funds out the door, and that could have dire consequences,” Hansen said.
Wasserman also highlighted the opaque nature of the organization backing the measure.
“This isn’t something that came up from the grassroots,” he said “This is something that has been financed and put on the ballot for the express purpose of disrupting government and creating more uncertainty.”
He surmised that it’s just a political game “to use this issue to attack the governor.”
Wasserman is challenging the measure’s approval for placement on the November ballot. He and Summit County Commissioner Tamara Pogue are suing to block the measure from appearing on the ballot, and to ensure that if it does appear on the ballot, any votes cast on the question are invalidated.
The lawsuit argues that the measure shouldn’t even be on the ballot this year because Colorado’s odd-year elections are supposed to be reserved for questions that have to do with the Taxpayer’s Bill of Rights, or TABOR.
“There’s no dollars that this measure exempts from the TABOR spending limits that are not already currently exempted from the TABOR spending limits,” Wasserman told the Sun. “And so this is, unfortunately, I think, a real abuse of the off-year TABOR election.”
Fields, meanwhile, called the lawsuit frivolous, arguing it’s too late in the process to challenge the measure as the state has already mailed out overseas and military ballots. He also said “there’s a valid enough hook” to TABOR that it garnered approval from the Secretary of State’s Office.
Barring a court order invalidating the result, voters will have their say on the matter Nov. 2.
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