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Investigation finds campaign finance, ethics, open records areas where Colorado needs to improve

November 9, 2015 Updated: November 9, 2015 at 7:31 am
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Colorado fared better than many states in a measure of how vulnerable to corruptible state government and officials are, but the research compiled by the Center for Public Integrity still found cause for concern - particularly with the state's laws regulating open records, campaign finance and ethics.

The State Integrity Investigation was released Monday by the national nonprofit news group and gave all 50 states a letter grade based on a detailed rubric that scored performances in 13 categories.

Journalists with the organization gave Colorado a "D+," but the highest grade awarded was only a "C." Alaska was the least corruption-friendly state, while Michigan and Wyoming tied for worst with an abysmal score of 51 percent.

Colorado was scored at 67 percent.

Two areas where Colorado scored lowest, ethics policies and campaign finance, are addressed by two amendments to the state Constitution that voters approved in 2002 and 2006 specifically to curb corruption.

Officials with the Secretary of State's Office say Colorado has one of the nation's strictest campaign finance regulatory regimes; it requires regular reporting from a wide variety of political actors and routinely lands the secretary of state in court for claims the laws are overly restrictive.

"There's no way we should get a 'D'" said Lynn Bartels, spokeswoman for the office.

But Amendment 27 and Amendment 41 have left much to be desired in terms of transparency, accountability and oversight, the report found.

One of the largest shortcomings was the state's inability to actively look for campaign finance violations and enforce the law.

"We don't do a job at all," said Luis Toro with Colorado Ethics Watch. "It's basically an honor system, to be honest. We have pretty good laws on the books in terms of requiring disclosure, but the problem is on the enforcement side."

Colorado law allows third parties to file campaign finance complaints, which are then heard before an administrative law judge.

Toro estimates that his organization, a public watchdog group sometimes accused of leaning left, is the third most frequent filer of complaints.

The second are political rivals tattling on opponents.

And the first is Matt Arnold with Campaign Integrity Watchdog, a company (sometimes accused of leaning right) that is the self-proclaimed enforcer of the state's campaign finance laws and is hired by campaigns for advice.

"It's a real weakness of the system," Arnold said. "With any other law, the district attorney will prosecute the case and it's the state enforcing the state's laws."

Campaign finance accusations come down to private individuals acting as the prosecutor.

Arnold said not everyone has the time or expertise to prosecute their own campaign finance complaint, or the money to hire an attorney to do so. Arnold said he risks becoming liable to pay attorney fees on the other side if a judge rules against him.

Not everyone sees that as a bad thing.

"It seems like a fairly efficient system to me," said Jon Anderson, a political law attorney with Holland and Hart. "They are litigated at that level and then once a decision is rendered by the ALJ, it can be taken up to the state court system on appeal."

Anderson said to put that process on the state could be a burden.

"It's a balancing act," he said. "To accomplish that you'd have to really increase government resources by staffing up the Secretary of State's Office with investigators."

Ed Ramey, an attorney with Tierney, Paul, Lawrence, said the city of Boulder randomly audits for campaign finance compliance after municipal elections.

"It's detailed," he said. "I've been through it with them. It's doable."

But Ramey equated enforcement to "a traffic ticket."

Stephen Bouey, campaign and political finance manager with the secretary of state, said there have been 77 complaints in the past two years and ALJs have assessed thousands of dollars in fines and penalties.

But, he said, the checks and balances work.

"I think Colorado has one of the most intensive and detailed campaign finance reporting systems in the entire country," he said.

Almost everyone seems to agree that some of Colorado's strict laws have had unintended effects.

"Colorado, in my opinion, has some of the most draconian campaign finance rules in the country," said Ryan Call, former chairman of the Colorado Republican Party and an attorney with Hale Westfall. "Because of the restrictive limits it's actually pushed more money into outside groups that are not as highly restricted."

Bouey agrees with that assessment.

"A picture is worth a thousand words," he said, referencing a pie chart that illustrates the explosion of funds funneled through entities that aren't tied to a candidate or issue committees.

In 2015, that money accounted for 64 percent of disclosed contributions and loans or $10.1 million.

In 2001 it accounted for less than half.

Ramey said that everyone on both sides of the aisle is concerned about money going into the campaigns that doesn't have to be disclosed

"But that's a problem no state can address on its own," Ramey said.

That's because a part of the explosion in third-party money came from the 2010 Citizens United ruling by the U.S. Supreme Court, which opened the door for corporations and nonprofits to engage in political advertising within 30 days of a primary or 60 days of a general election.

A flood of political action committees have sprung up at the federal, state and even local level in response.

A Super PAC engaging in electioneering involving a Colorado issue or candidate must register as an "independent expenditure committee" and disclose both donors and expenditures. That's not the case in every state.

A Super PAC can receive and spend unlimited funds from virtually anyone on virtually anything.

But that's federal law, and the attorneys interviewed for this article said there is little a state can do about it.

Colorado, however, also got dinged in State Integrity Investigation for having a loophole that allows corporations to donate directly to political parties. That practice is expressly forbidden in state law, as are corporate donations to candidates.

In 2014, Call established a Super PAC (independent expenditure committee) that was considered a campaigning arm of the Republican Party. As a PAC, the group could accept unlimited funds from corporations, even though it was associated with a political party. It was challenged in court and upheld, but is on appeal.

To date, the Colorado Republican Independent Expenditure Committee has received a relatively modest $153,000 in contributions, but some fear if permitted it will open the floodgates of corporate donations to parties in Colorado.

"It's putting political parties on the same playing field as every other organization that wants to play by those rules," Call said.

The truly "dark money," however, exists in Colorado as in other states because of federal nonprofit laws, experts say.

That money is untraceable funds that are peddled through 501(c)4s, or "social welfare" nonprofits that don't engage in express advocacy but skirt the edges of Colorado and other state's campaign finance regulations with educational campaigns that are not coordinated with candidates.

The secretary of state's guidebook on campaign finance simply says "consult internal revenue service regulations" under the column of "527s."

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Contact Megan Schrader: 286-0644

Twitter @CapitolSchrader

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