By Marianne Goodland
THE COLORADO STATESMAN
A bill to require corporations and labor unions to disclose their independent expenditures related to political communications cleared the Senate and will be on the House calendar during the last three days of the 2010 legislative session. But its passage last Friday indicates it will likely fuel partisan battles in the House this week.
Senate Bill 10-203 passed the Senate on April 7 on a 21-14 party-line vote; it passed the Senate State, Veterans and Military Affairs Committee on May 3, also on a 3-2 party-line vote. In the Senate Appropriations the bill picked up two Republican votes and passed that committee 8-2 on May 6.
SB 203 was drafted in response to the January U.S. Supreme Court decision in Citizens United v. FEC, which stated that corporate and labor union funding of independent political broadcasts could not be limited under the First Amendment.
Under SB 203, corporations and labor unions that make independent expenditures exceeding $1,000 must register as an independent expenditure committee and make certain disclosures. In addition, any political communications that are broadcast, printed, mailed or delivered and that are coming from an independent expenditure committee must clearly identify who paid for the communication and the individual who is the registered agent. By definition an independent expenditure committee cannot coordinate with a candidate or issue committee.
Secretary of State Bernie Buescher told the state affairs committee on May 3 that the issue is “terrifically complex” with both federal and state constitutional issues.
SB 203 will cost a little more than $100,000 to implement, primarily in costs to modify the TRACER system, a web-based database that collects and disseminates campaign finance information. Buescher said he was concerned with getting the changes made to TRACER by July 1, the original implementation date of the bill. To address that concern, SB 203 was modified to allow for manual filing of documents related to independent expenditure committees. The bill also was amended to require that information regarding the independent expenditure be filed no more than two days after the $1,000 is spent.
Jenny Flanagan of Colorado Common Cause, which supports SB 203, said the U.S. Supreme Court “stepped out of bounds” when it said money no longer threatened the public interest. While the Court opened the door to corporate and union spending, she said, it did not close the door on disclosure, which she said was what started the Citizens United case. Flanagan pointed out that the Court said that in Citizens United that the public has an interest in knowing who is speaking about candidates.
But the bill stops short of doing all it could do, she said, such as dealing with shell corporations, but that is being addressed through legislation at the federal level.
Ryan Call, legal counsel for the Colorado Republican Party and Denver Republican Party chairman, testified from the perspective of an attorney who will have to deal with the new law, but was not testifying on behalf of the Republican Party.
Call said he believed the bill was overreaching in its scope and onerous in its provisions regarding non-compliance. While he applauded the bill’s attempt to identify and isolate disclosures regarding independent expenditures, Call said he was concerned that the bill language requiring disclosure of all affiliated persons could create confusion, since “affiliated” is not defined in statute and could be overly broad. In addition, it may be difficult for corporations to comply with the language regarding aggregate foreign ownership, since the percentage of ownership may change regularly due to shares that are traded on a daily basis, he said.
Call also brought up concerns regarding the bill’s disclosure and disclaimer requirement, which is related to identifying who pays for a political communication. This provision of the bill mandates speech, Call said; the state previously had similar language in statutes but the courts ruled it unconstitutional.
Carroll responded that similar disclosures and filing requirements are already required for candidate and issue committees.
“Campaign finance is complicated, but the simple version is that we have two new players who can come in with an unlimited legal ability to spend on our elections,” Carroll said. If the state has already decided the public has a compelling interest in knowing who makes $200 and $400 contributions, “why wouldn’t unlimited money be at last as important,” she asked.
During second reading debate on May 6, Carroll told her fellow senators that SB 203 brings in the same disclosure that is required for anyone else in the current campaign finance system. “It’s important that we don’t have unlimited, undisclosed money in our 2010 election,” she added.
But Republicans charged, both in the state affairs committee and on the Senate floor, that the bill would violate an individual’s first amendment rights. Sen. Bill Cadman, R-Colorado Springs, used as an example the recent passage of HB 1351, the payday loan bill. Cadman said the disclosures could prevent someone who owned a payday loan business that went under as a result of HB 1351 from creating a poster that says “I lost my job in the payday loan business, let’s help Senator X lose his.”
Sen. Greg Brophy, R-Wray, said the bill would require a business owner to register as an independent expenditure committee in order to express his or her First Amendment rights. The bill also would not address another problem in campaign finance, Brophy said; that several individuals are able to spend millions of dollars to influence elections.
“Nowhere in the bill is there any requirement to disclose who funds the myriad of organizations that try to influence public opinion,” Brophy said, citing Progress Now, Media Matters and Colorado Ethics Watch.
Carroll disagreed with their assertions, stating that if those organizations do independent expenditures, they’re required to register and make the required disclosures. In addition, anyone contributing $1,000 or more to a political campaign already has to disclose those contributions under current law, Carroll said. “This just adds another layer of complexity and confusion,” according to Senate Minority Leader Josh Penry, R-Grand Junction.
“If we do not close this loophole it makes a mockery of our existing disclosures,” Carroll said, adding that millions of dollars could be spent during the election cycle but only the tiniest fragment of campaign contributions would be disclosed.
SB 203’s next hearing is before the House State, Veterans and Military Affairs Committee on Monday morning.