Hard-to-trace ‘gray money’ raises the stakes in big Colorado races
With the election only a month away and mail ballots due out in less than two weeks, “gray money” groups are pouring millions of dollars into Colorado’s most contentious state House and Senate races.
Four Republican committees have raised $3.5 million in the last two years, and spent more than $700,000 between September 15 and September 30, mostly on advertising. Three Democratic groups raised $6.6 million in the past two years, and between September 15 and September 30 spent $1.6 million, much of it on advertising.
Committees working on behalf of candidates from both parties are far out-raising the campaigns themselves. Even campaigns in the most contested races are raising less than one-tenth the amount that the Super PAC’s are raking in.
The term “Gray money” refers to spending by independent expenditure committees, also known as Super PACs, that are funded by other political action committees. Funding in this way makes it difficult for the public to identify the real donors without tunneling through layers of political action committee disclosures. Unlike “dark money,” which is considered untraceable, it’s possible to track down the sources of gray money — with a lot of leg work.
Two types of groups ran through millions of dollars last month: 527 committees and independent expenditure committees.
A 527 committee is a tax-exempt organization (527 is the section of IRS code under which these committees are registered) set up for the sole purpose of influencing an election. A 527 can raise unlimited amounts of money from individuals, labor unions and corporations, but must disclose donors and expenditures. A 527 committee cannot coordinate with a candidate or candidate’s committee, and cannot directly encourage votes for or against a candidate. Some 527s in Colorado, particularly those involved with the state House and Senate races, pass along their contributions to associated independent expenditure committees.
An independent expenditure committee, or IEC, also can raise unlimited amounts of money, and like a 527 cannot coordinate with candidates or candidate committees. But unlike a 527, an IEC can ask you to vote for or against a candidate. In addition, in the last 60 days before an election, an independent expenditure committee must file a 48-hour notice for any expenditures of $1,000 or more, making it possible to see those expenditures closer to real time instead of waiting two weeks or more for the regular campaign finance filings.
Luis Toro, director of Colorado Ethics Watch, says there’s no real advantage to contributing to a 527 committee, which can’t directly advocate for the election or defeat of a candidate, versus donating to an independent expenditure committee, which can tell you how to vote. Both types have more or less the same disclosure requirements.
The biggest difference between the two is in what’s known as electioneering communications. In the last 60 days before an election, an independent expenditure committee must disclose the candidate(s) targeted in the communications, in addition to how it spends its money.
So who are the big players in the last two weeks of September? And who are they backing?
THE STATE SENATE
The biggest spending by 527 and IECs on both sides of the aisle is directed at the following three state Senate races:
- Senate District 19 – a rematch between Republican Sen. Laura Woods of Westminster and Democrat challenger and former Sen. Rachel Zenzinger of Arvada
- Senate District 26, between Democratic state Rep. Daniel Kagan of Cherry Hills Village and Arapahoe County Commissioner and Republican Nancy Doty
- Senate District 25, between Republican state Rep. Kevin Priola of Henderson Democratic challenger and former state Rep. Jenise May of Aurora
How much has each committee spent in the last two weeks?
The Senate Majority Fund, a 527 that backs Republicans, has spent $82,241 in the past two weeks, mainly to support Doty, Priola and Woods with advertising on Facebook, direct mailers and printed materials that can be handed out door-to-door.
The Senate Majority Fund also made a dozen smaller ad buys on Facebook to support incumbent Republican Sen. Larry Crowder of Alamosa, who faces Trinidad Sheriff and Democrat Jim Casias; and incumbent Republican Sen. Randy Baumgardner of Hot Sulphur Springs, who is in a rematch with Democrat Emily Tracy of Breckenridge. Baumgardner has recently come under fire for allegations that he and his wife used state property for personal gain when he was employed by the Colorado Department of Transportation. Baumgardner also recently sent out a tweet from an interim Water Resources Review Committee meeting that included a photo of a scantily-clad woman.
Waiting in the wings: the Senate Majority Fund IEC, which received $19,438 from the 527 Senate Majority Fund at the end of September but has not yet identified any expenditures. In 2014, that same IEC spent more than $515,000 in the last three weeks before the November election, with its largest expenditures in the races between Woods and Zenzinger and between now-Republican Sen. Tim Neville of Littleton and then-Democratic incumbent Sen. Jeanne Nicholson of Blackhawk.
The Better Jobs Coalition IEC is run by Rick Enstrom of Enstrom Candies and a former Republican House candidate. His gray money group paid out $98,672 between Sept. 21 and Sept. 27 to support Doty, Priola and Woods as well as to back House Republican Rep. J. Paul Brown of Ignacio.
Another Republican 527, Colorado Citizens for Accountable Government, has spent $526,021 in the past two weeks, mostly to oppose Democratic candidates in races for both the House and Senate. The biggest target was Kagan; the committee spent $105,000 on TV ads to oppose his run against Doty. The committee put $100,000 into TV ads opposing May, and $45,000 to oppose Zenzinger.
What’s at stake: who runs the state Senate. Republicans hold a razor-thin 18-17 advantage, and the Senate seat in Arvada, currently held by Woods, is believed to be the seat that will determine which party controls the Senate.
The two biggest committees supporting Democratic candidates are targeting the same three races in the Senate and exclusively through gray money.
For Democrats, the biggest spender in the last two weeks of September was the Colorado Citizens’ Alliance IEC, which registered with the Secretary of State on September 7. The committee is associated with the Democrats’ favorite bookkeeper Julie Wells (subscription required), and has spent $434,826 in the last two weeks of September. All of the expenditures went for advertising either in support of Democrats Kagan, May and Zenzinger or in opposition to Republicans Doty, Priola and Woods. The money paid for advertising on cable and the Internet and for mail pieces.
The committee’s advertising against Priola targets a paid leave issue from January, his donations from special interest groups and a pay raise vote. The Doty ads target her for refusing to accept mail-in ballots while she was Arapahoe County Clerk and Recorder and for which the county was sued, using county funds for personal expenses and opposing abortion rights (Doty is pro-life but believes in exceptions, particularly to save the life of the mother).
The Colorado Conservation Victory Fund, an IEC, has split its targeted advertising between Senate and House races. The committee has spent $195,210 on advertising and other costs in the last half of September, with $15,710 to oppose Woods and Doty or support Zenzinger.
Who were the big contributors?
The Republican-linked Senate Majority Fund 527 has raised $2.1 million in the last two years.
Its largest donors:
- Petroleum Development Corporation of West Virginia ($170,000)
- Noble Energy ($104,000),
- Encana Oil and Gas ($110,000)
- Altria, formerly tobacco giant Phillip Morris* ($40,000)
Colorado Citizens for Accountable Government has raised $1.3 million. Of that, $800,00 came from the Washington, D.C.-based Republican State Leadership Committee, which is funded by the U.S. Chamber of Commerce, Koch Industries, Altria, WalMart and Amway, among others.
The Better Jobs Coalition IEC has one substantial contribution of $100,000 on Sept. 16 from Colorado Citizens Protecting Our Constitution, a pro-Second Amendment group. This group is not registered as a committee within Colorado’s campaign finance system. A business filing with the Secretary of State’s office shows it is a 501(c)4, or social welfare organization under IRS rules, which means it can spent up to 49 percent of its funds on political activities. The group has been tied in the past to EIS Solutions, which is owned by former Republican Senate Minority Leader Josh Penry.
On the Democratic side, all of the funds for the Colorado Citizens’ Alliance IEC came from its 527 committee. The Colorado Citizens’ Alliance 527 has received about $2.7 million in the last two years.
Its biggest contributors:
- national and state teachers’ unions, which have donated $813,000
- Service Employees International Union ($150,000), which is associated with the state employee labor union, Colorado WINS
- America Votes ($185,000), a national organization that coordinates fundraising and voter outreach efforts with progressive groups around the nation
- Conservation Colorado Victory Fund IEC ($100,000)
The Colorado Conservation Victory Fund IEC raised $1 million in the last two years. Its biggest donors:
- Conservation Colorado ($475,000)
- NextGen Climate Action, founded by California billionaire and philanthropist Tom Steyer ($200,000)
- Reuben Munger of Boulder, founder of Securing America’s Future Energy, a group committed to combating the economic and national security threats posed by America’s dependence on oil ($100,000).
Late spending on House races shows where Republicans think they can hang onto seats or even pick up one or two. With Democratic control in the state House at 34-31, Republicans need only pick up two seats to take over.
In addition to Senate targets, Colorado Citizens for Accountable Government has directed ads against Democrat Barbara McLachlan of Durango, who is challenging incumbent Rep. J. Paul Brown. That’s a race that has been competitive from the get-go.
Potentially a more competitive race than was expected: the contest between Democrat Jeff Bridges of Greenwood Village and Republican Katy Brown of Cherry Hills Village. Brown pulled off a surprise endorsement from the Colorado Education Association last month – support that Democrat Kagan, who is term-limited, won in his three elections to the House.
Republicans have not represented the district in at least 30 years, according to Secretary of State election archives. Democrats have 1,000 more voters in the district than Republicans, but unaffiliated voters make up a substantially larger portion of the voters than those from either major party.
How much has each committee spent in the last two weeks?
The Democrats’ Common Sense Values IEC spent $455,212 between September 15 and September 30 on advertising for House races.
Their Republican targets:
- Rep. JoAnn Windholz of Commerce City, House District 30
- Chris Hadsall of Lakewood, House District 23
- Karen Nelson of Broomfield, House District 33
- Jessica Sandgren of Westminster, House District 31
- Katy Brown, House District 3
- Rep. J. Paul Brown, House District 59
Almost $87,000 of the spending went after just one lawmaker – Windholz – and on just one issue: her claims last November that Planned Parenthood instigated the violence at the Colorado Springs clinic that left three dead, including a police officer who was also a pro-life pastor, and nine injured. Windholz’ remarks were first reported by The Colorado Independent.
Common Sense Values IEC also spent in support of Democrats running in those House seats on education and seniors’ issues. The committee is another one of those groups that started up late in the election season (it registered on August 2) and has now spent all of its money, a total of $648,115, with all but $25,000 spent in the month of September.
The Conservation Colorado Victory Fund also spent $29,305 to oppose Rep. J. Paul Brown and/or support McLachlan.
Who were the big contributors?
All of the $935,779 raised by the Common Sense Values IEC came from its 527 committee, which has raised $3 million in the past two years.
The biggest donors to Common Sense Values’ 527 group are national teachers’ unions ($755,000), Conservation Colorado ($100,000) and the Service Employees International Union ($150,000).
By comparison, candidates running for the state House and Senate, even in the most contested races, at best may raise a fraction of the amounts raised by the 527 and gray money committees that advertise on the same races. Candidates for the top two races in Colorado so far this year, in House District 3 (Arapahoe and Denver counties) have collectively raised $273,806 and spent $252,507; in House District 59 (Durango) the fundraising from the two candidates stands at $264,404 and spending collectively at $210,739. Note: this year, HD3 had contested primaries for both major political parties, although the HD3 seat is traditionally one of the most expensive races in the state even without a primary.
Photo: 401(K) 2012, license via Creative Commons, Flickr
Correction: earlier version identified Altria as formerly RJ Reynolds; corrected to Phillip Morris.
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