2021 Election, Ari Armstrong, Exclusives, Gold Dome

Armstrong: Thinking through Amendment 78 and ‘custodial’ funds

When contemplating Amendment 78 on this November’s ballot, ask yourself a simple question: Might the governor or the attorney general ever spend funds over which they have control with an eye toward attracting future votes or rewarding allies? Or might they just be myopic in how they spend money? If you answer yes, then you should probably want the legislature to have a say over how “custodial” funds are spent. That is the aim of 78. If you answer no, then I’d like to welcome you to your new life out from under a rock and encourage you to look around a bit.

Yet we also need to ask a secondary question: Does legislation ever have bad unintended consequences? Again, the answer is unambiguously yes. Sometimes the cure is worse than the disease. Sometimes we should hold out for a better reform. So, even though 78 has a worthy goal, does it offer sensible reforms toward achieving that goal?

First glance

At first glance, I thought 78 was clearly a good idea. But then Scott Wasserman started raising some pretty reasonable concerns about it on Twitter, which prompted me to take a second look. Wasserman is president of the Bell Policy Center, sort of like the leftist Mirror Universe version of the Independence Institute (which is the publisher of Complete Colorado). But that doesn’t mean he’s always wrong. We should strive to support good policy, not play partisan games with the state’s Constitution and statutes. So let’s think seriously about this.

Wasserman and Michael Fields, who through Colorado Rising State Action supports the measure, recently shared their perspectives with the Colorado Sun. By way of background, the Sun lists the following as the sort of thing that would be covered by Amendment 78: “Colorado received nearly $1.7 billion last year in federal relief money through the CARES Act [for pandemic relief] that the Polis administration spent according to the governor’s executive order and without legislative approval.”

Fields reasonably says such funds should be subject to legislative oversight. Wasserman, joined by Senator Chris Hansen, say the measure would gum up the legislature and lead to partisan posturing; that the Joint Budget Committee “already reviews custodial fund spending” (as the Sun summarizes), and that the measure could slow up much-needed emergency funds.

I wanted some additional details, so I contacted both people.

A closer look

Here’s how Fields addressed the concern over emergency funding: “I am not worried about any emergency funds being held up. All this does is resets the playing field and gives authority of state funds back to the legislature. They can pass continuing appropriations or forfeit responsibility to spend money back to the governor if they want. They can set a certain amount of money that the executive branch can spend in emergencies before any emergency happens. This measure provides total flexibility to plan out how they want to deal with it all. Anything that works well now can continue to work well. It’s up to the legislature.”

Wasserman remained concerned: “My understanding is that hundreds of federal, settlement, and grant funds are currently categorized as ‘custodial.’ Looking through the review and comment document generated by legislative Council, they mention medicaid reimbursement dollars, and transportation dollars that currently go straight to the transportation commission. While proponents argue that these dollars could be appropriated under their change as a matter of course, I’m not sure its that easy, especially because they are eliminating [the language] ‘as otherwise authorized by law,’ which to some legal experts takes away continuous appropriation authority. I.e., when federal transportation dollars come in, they’ll need to be approved before they go to the transportation commission. Call me cynical, but that’s an invitation for legislative shenanigans.”

Wasserman also pointed out that “last year . . . the governor and legislature agreed to allow the legislature to appropriate the remaining relief dollars.” However, this seems to me to allow too much executive discretion.

To me, then, the main question is whether the legislature really can grease the spending of emergency funds. Some of the Blue Book comments by Legislative Council shed a bit of light: “Implementation of the measure could require the legislature to establish a new process to allow spending of custodial money outside of the regular legislative session, or to meet for a special session.” So it sounds like in principle the legislature could handle the job.

Is it true that a legislature hostile to the governor (or other official, depending on the funds) could hang up emergency spending and the like? Sure. That shouldn’t be of immediate concern to Democrats, given they control every aspect of Colorado government. But, look, we live in a republican democracy. If people want to vote in a legislature that stupidly hangs up emergency spending, so be it. As Mencken said, “Democracy is the theory that the common people know what they want, and deserve to get it good and hard.” The solution is for people not to vote in partisan obstructionists.

Going with legislative oversight

The existing problem is that an out-of-control governor or attorney general could spend funds in obviously bad ways. I think on net more legislative oversight is the safer course.

The legal language of Amendment 78 is blessedly short (unlike for Proposition 119). The Constitutional change is minor; it adds three words and cuts six. Here is the resulting language: “No moneys in the state treasury, nor custodial moneys, shall be disbursed by the treasurer except upon appropriations made by law. . . .” Currently the phrase immediately following is, “or otherwise authorized by law.” My sense is that Wasserman is overly worried about this. Perhaps safer wording would have been something like, “appropriations made directly or indirectly by the legislature.”

Another bit that worries me is a statutory addition: “Moneys from the custodial funds transparency fund [created by the measure] shall be appropriated in a public hearing with opportunity for public comment.” One reading of this suggests that the legislature would in fact have to meet in special session to appropriate funds received after the regular session ends. Remember, the regular session is only 120 days long (although we can fight about whether the days must be consecutive).

Wasserman worried the measure “certainly could be interpreted that way.” But Fields said, “No, we were asked about this in review and comment and title board—and it’s only referring to the normal public hearing that happens when the legislature passes any bill. For example, if they want to pass a bill to allow the governor to spend any emergency funds we get at any point, there would be a hearing on that bill—and that would suffice. It doesn’t have to happen every time.” But Fields’s reading isn’t the only one possible.

I called Matt Bishop from Legislative Council, and he conceded the potential impact of the measure “is a bit ambiguous,” but he said the legislature “may be able to create a new process for allowing that kind of spending without requiring a special session.” For example, my sense is that perhaps the legislature could authorize a committee to appropriate such funds following a public hearing. So I’m not too worried about potential problems, provided the legislature does its job.

In sum, I think Amendment 78 has a good goal, and I don’t share Wasserman’s concerns about the legislature mucking up the works. I mean, sure, that’s possible, but those are the breaks in republican democracy. I fear an unaccountable executive more. In the worst case, if the measure really does prove to be unworkable, the legislature could just change the statutory language created by the measure (although a Constitutional fix would be much harder). I respect people who conclude that the costs, risks, and uncertainties outweigh the gains. But, even though the matter is more complicated than I first thought, I remain a supporter.

Ari Armstrong writes regularly for Complete Colorado and is the author of books about Ayn Rand, Harry Potter, and classical liberalism.  He can be reached at ari at ariarmstrong dot com.

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