The following true stories illustrate why Coloradans should pass Amendment 78, ensuring legislative control over so-called “custodial” funds.
During the 1990s, California Insurance Commissioner Chuck Quackenbush reportedly used his office to induce insurance companies to contribute money to custodial funds under his control. These funds purchased public service announcements (PSAs) prominently featuring Quackenbush himself. The PSAs were broadcast throughout the state, apparently to increase Quackenbush’s name recognition and “favorability ratings.” The idea was to smooth the way for his future statewide campaigns.
Also in the 1990s, Mark O’Keefe, the Montana state auditor and insurance commissioner, launched several investigations against insurance companies for supposed wrongdoing. Before actually bringing any charges, however, O’Keefe settled with the companies. He agreed not to formally charge them and they agreed to contribute to custodial funds he administered.
O’Keefe used the money in at least two ways. First, in preparation for his impending campaign for governor, he emulated Quackenbush by funding PSAs featuring himself. Second, after the state legislature decided not to participate in a new federal-state health program, he drew cash from his custodial account to match federal grants and drag Montana into the same scheme the legislature had rejected. O’Keefe apparently wanted to (1) create a new class of beneficiaries grateful to him and (2) present the next legislature with a fait accompli, so it would have to no choice but to commit Montana to the program.
As a result of these misdeeds, Quackenbush (being a Republican) was forced to resign under threat of impeachment. O’Keefe (being a Democrat) was rewarded with his party’s 2000 nomination for governor. Fortunately, he lost the general election.
These two stories exemplify the danger of allowing executive branch officials to administer money without legislative oversight.
This is a principle that was very hard won. But some states—not just California and Montana, but Colorado as well—seem to have forgotten it.
There is a long history behind this core principle. Prior to American Independence, the British and their North American colonists suffered through centuries of executive branch officers spending money without legislative oversight. Like Montana’s Mark O’Keefe, British kings deployed private sources of revenue to enable them to disregard decisions made by the people’s legislative representatives.
Some of the greatest events in Anglo-American constitutional history were vindications of legislative control over finance. An English example was the “ship money” controversy of the 17th century. The controversy arose because King Charles I was relying on revenue not authorized by Parliament to operate independently of Parliament. The ship money controversy helped bring on the English Civil War and led to a victory for the core tenet that the legislature controls the purse strings.
A leading cause of the American Revolution consisted of British efforts to fund colonial executive and judicial offices independently of the colonial legislatures. The Declaration of Independence itemized part of the problem by reciting that “[The king] has made judges dependent on his will alone, for . . . the amount and payment of their salaries.”
Our Founders learned well from the lessons of history. That’s why they enshrined in the U.S. Constitution the rule that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law” (Article I, Section 9, Clause 7).
Amendment 78 confirms that rule in the Colorado Constitution. It would amend the document to read, “No moneys in the state treasury, nor custodial moneys, shall be disbursed by the treasurer except upon appropriations made by law, and any amount disbursed shall be substantiated by vouchers signed and approved in the manner prescribed by law.”
The foregoing should be enough to justify Amendment 78. But it is only fair to note that there are other reasons for voting “yes” as well. Ironically, the Blue Book argument against the measure suggests two of them. The anti-78 blurb against Amendment 78 reads in part:
“Further, making grant funding subject to additional steps could jeopardize Colorado’s competitiveness for grant awards, resulting in the state receiving less money.”
The response is obvious: Why should Colorado government, flush with years of record revenues and TABOR-busting measures, need more money? Experience shows that in government, as in business, progress comes mostly when resources are relatively scarce. Excessive revenue is merely a prescription for waste and corruption.
The “con” argument suggests a further reason for Amendment 78:
“Finally, the measure shifts decision-making from program experts and independent commissions to a political process in the state legislature.”
Exactly! We don’t vote for program experts. We don’t vote for independent commissioners. We vote for legislators. And we entrust legislators with making decisions of policy, including financial policy. If we like the results, we re-elect them. If we don’t like the results, we elect others.
Letting “program experts and independent commissions” control public money is called fascism.
Having elected legislators make those decisions is called democracy.
Rob Natelson, a former constitutional law professor and constitutional historian, is Senior Fellow in Constitutional Jurisprudence at the Independence Institute. He is the author of The Original Constitution: What It Actually Said and Meant (3rd ed., 2015).
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