Proponents defend Colorado initiative to bar political spending by 'artificial persons' at review hearing

A review-and-comment hearing on April 3 examined proposed Initiative Measure 2025–2026 No. 413, which would strip state-conferred corporate privileges if an "artificial person" engages in political spending beyond the powers Colorado expressly grants.

Lehi Kelly, Legislative Council Staff, opened the session and recited the statutory role of staff and the Office of Legislative Legal Services to review initiative petitions and offer comments and questions to proponents and the public. Nicole Myers of Legislative Legal Services summarized what staff viewed as the initiative's principal aims: add a new Section 16 to Article XV of the Colorado Constitution to (1) define which powers the state extends to artificial persons, (2) declare political spending outside those powers ultra vires and void, (3) make such ultra vires spending result in withdrawal of charter privileges, (4) require the legislature to enact reinstatement procedures during the first regular session after Jan. 1, 2027, and (5) define key terms such as "artificial person," "artificial person powers," "charter privilege" and "political spending power."

Proponents, identifying themselves on the record as Sherry Stee and Sena Keising, framed the initiative as a limit on the package of privileges the state confers, not as a general restriction on individual speech. "This initiative is about power-granting authority," one proponent said, arguing that "the state isn't regulating anyone's speech; it is deciding what's included in the package of legal privileges it offers." The proponents added that "no court has ever held that the First Amendment requires a state to include political spending power in that package."

Staff pressed a series of constitutional and implementation questions. On enforcement, Kelly asked who would determine that an action was ultra vires and whether a court order would be required or whether an administrative official such as the Secretary of State might act. Proponents responded that the constitutional provision sets the legal consequence and that the legislature should and would supply procedural details. "That is precisely one of the kind of procedure that the legislature is designed to fill in," a proponent said.

On what withdrawing charter privileges would mean in practice, staff asked about the fate of ongoing contracts, property and employees. Proponents said the entity would continue to exist but would lose privileges such as limited liability; the legislature would need to address consequences for contracts and employees as part of reinstatement procedures.

The proponents confirmed the initiative's reinstatement design: an entity would qualify for restoration only if, under legislative procedures enacted in the first regular session following Jan. 1, 2027, it made a full payment to the state treasury "in an amount equal to the amount improperly expended" in the ultra vires activity and certified future compliance. Asked whether that payment was a punitive fine, a proponent said it was not: "It is a condition of reinstatement tied directly to the nature and amount of the ultra vires act" and is remedial because it restores the status quo ante, rather than imposing additional deterrent liability.

Staff also raised scope questions. The initiative's definition of "artificial person" would cover entities that receive limited-liability shields under Colorado law, the proponents said, including political committees and, if applicable, unions, nonprofits and homeowners associations — while noting that federal statutory rights would remain untouched. On political spending, staff asked what "anything of value" includes; proponents relied on established campaign-finance usage to include in-kind goods and services, use of corporate facilities, and directed employee time, while excluding genuinely voluntary activity done on an employee's own initiative.

The measure provides a media exemption. "Bona fide news, commentary or editorial content" would be exempt, proponents said, and the draft tracks the federal campaign-finance definition in 11 CFR 100.73(a), with an added limitation excluding outlets owned or controlled by political parties, political committees or candidates.

Proponents also defended a carve-out for political committees: a political committee organized with a limited-liability shield would be defined as an artificial person but would receive political spending power as an explicit exception. Proponents said an artificial person could not evade the ban by routing funds through a political committee, because "donating to a political committee is itself an exercise of political spending power."

The hearing concluded with proponents noting they had applied technical comments and that they faced a 3:00 p.m. filing deadline that day. Staff adjourned the hearing without on-the-record follow-up questions.

The next formal step is for proponents and staff to finalize any changes ahead of the statutory filing deadline and for the initiative language to be preserved for public review; if adopted by voters, the measure would obligate the legislature to enact the procedural details specified in the initiative during the session following Jan. 1, 2027.