The Taxman

Chapter I-Chapter II- Chapter III
Chapter I-Chapter II

• By
• Nathaniel Minor
• Rachel Estabrook
• Ben Markus

Colorado’s Taxpayer’s Bill of Rights has come to define its creator. The constitutional amendment, which places tight controls on government, is nearly synonymous with Douglas Bruce. And that’s just fine with him.

“One of the reasons that we won is that I was the voice,” Bruce said.

But in 2010, as he returned to the world of citizen petitions, Bruce had to take a different tack. That year, voters were presented with three ballot measures to slash taxes. If they passed, they’d effectively double down on Bruce’s Taxpayer’s Bill of Rights. Only this time, unlike in 1992, he was in the shadows. No press conferences. No getting in fights with politicians.

“I had other people promoting the 2010 issue because I was radioactive in certain circles,” Bruce said. “People say, ‘I hate Doug Bruce. I love TABOR, but I hate Doug Bruce’ because of a constant drumbeat for decades, literally decades, saying that I’m this evil person. I had other people collecting and filing the signatures.”

This is likely Bruce’s first public admission that he was behind Amendments 60, 61 and Proposition 101, which opponents dubbed the “Ugly Three.” (In a later interview, Bruce denied he was involved with the measures. But in 2010, an administrative law judge ruled he was.)

Just like with TABOR, politicians and business groups said they’d spell ruin for Colorado. Voters shot them down by wide margins. By this time, even some Republicans thought, it’s one thing to limit government — it’s another to blow the whole thing up.

Much of the winning strategy in the “Ugly Three” campaign came down to tying Bruce to the measures. His history had come back to bite him. And yet, something else from Bruce’s past meant things were about to get a lot worse for him.

Ever since Bruce was in law school, more than four decades ago, he’s carried around the U.S. Constitution in his shirt pocket. In the 2000s, he decided to distribute miniature copies to every graduating senior in Colorado’s high schools. “They were about to become voters,” Bruce said. “I thought that they should know about their constitutional rights.”

The instrument that would give out the pocket Constitutions and advocate for limited government was Bruce’s very own charity, Active Citizens Together. When Bruce ran for the El Paso County Commission in the mid-2000s, he promised to donate his salary to the charity. And he followed through: He gave away the money and bought pocket Constitutions by the thousands.

But his tax return from 2005 didn’t show a salary, which eventually caught the eye of then-Colorado Attorney General John Suthers.

“Doug had this unique interpretation of the law,” Suthers, a Republican, said from his office in Colorado Springs, where he is now mayor. “He thought that he didn’t have to take his salary and he could just directly donate it to a charity — which happened to be one that he set up.”

Colorado asked for back taxes. Then a state Department of Revenue audit found Bruce had other income he didn’t report. So Suthers charged the most famous anti-tax advocate in the state’s history with three felonies, including tax evasion. Prosecutors gave Bruce the opportunity to pay off the back taxes and avoid prison. But he maintained his innocence and vowed to fight the charges.

“I ridiculed the government’s theory, calling it ‘felony philanthropy,’” Bruce said. “It was all going out to the charity for the charity’s purpose, which was telling people about their constitutional rights. I’ve still got 40,000 copies of pocket Constitutions in my garage that I’ve been interrupted in distributing.”

In April 2011, Bruce was arrested as he left a Colorado Springs post office. A reporter asked him at his arraignment if he thought the state was targeting him, and people like him, because of his years of activism. “There is nobody like me,” Bruce shot back. “They’re going after me, just as they have in all these other cases that they’re piling on, in the hopes that I’m just gonna crack or implode or something.”

In the courthouse that day, even as he was under attack, Bruce found time to defend his constitutional masterwork. In the middle of his arraignment, on his lunch hour, he filed a protest to a marijuana tax measure. It was precisely that commitment to the cause that the state was trying to undermine, Bruce claimed.

Suthers, who as attorney general defended TABOR against a lawsuit, said he has nothing against Bruce. He likes parts of TABOR, and said he handled Bruce’s case like any other. “With Mr. Bruce, it’s never anything he did,” Suthers said. “He totally ignored the tax laws. He totally ignored the process by which he could have resolved this.”

Normally in these types of cases, the accused would settle with the Department of Revenue, agree to pay a fine, and avoid a conviction. But that’s not Douglas Bruce’s style. He doggedly fought every fine or violation over the years from Denver city officials unhappy with run-down properties he owned. He was able to get all but one overturned in the 90s. Turns out you can fight city hall and win — at least if you’re Douglas Bruce.

This time, though, a jury convicted him. He sees that as a direct result of his decades-long fight against government. “They’re trying to use my bloodied body, so to speak, as an example,” Bruce said. “If you disagree with the government, we’re going to send you to prison. That’s the message.”

Bruce initially served three-and-a-half months in Denver County Jail. Disgusted by the jail’s kitchen, he made it a point to only eat hard-boiled eggs and other sealed foods. “I lost 47 pounds,” Bruce said.

He was released early for good behavior, but in 2016 ended up back behind bars — this time in Delta Correctional Center in rural Western Colorado — for about six months after violating terms of his probation. There, he said, the conditions were better. He played chess with other inmates and prepared for his parole hearing.

After Bruce’s embarrassments at the legislature, the tax evasion conviction didn’t come as a big surprise to people who followed his career. It also didn’t do much to tarnish his already-bruised reputation. “It’s not like he’s losing a lot of respect, because the establishment in Colorado didn’t give it to him to begin with,” Jon Caldara, Bruce’s ideological ally told The Denver Post after his conviction.

While the establishment may have turned away from Bruce, they did have to respect the Taxpayer’s Bill of Rights. With Bruce out of the public eye for a while, TABOR had become ever-present for Colorado politicians. Even after it had been weakened by Referendum C and court rulings, it still touched every little decision governments had to make — from when to hire new firefighters to how to deal with wastewater. So frustrated lawmakers and other government officials learned to get creative.

Before TABOR was finally approved by voters 25 years ago, opponents said there’d be “chaos” if it passed. Governments would be so squeezed that Denver wouldn’t be able to pay its police officers. There were worries about how they would keep Pope John Paul II safe on his upcoming visit to the city. Colorado, they said, would be “closed for business.”

That hasn’t happened.

Law enforcement continues to work. The Pope’s visit became a touchstone of Denver’s history. And the state’s businesses haven’t folded up their tents. In fact, looking at Denver today, the skyline is littered with tower cranes. Colorado has one of the lowest unemployment rates in the country. It’s also one of the fastest-growing states.

Those 25-year-old doom-and-gloom predictions look so wrong today partly because, at least at the local level, they underestimated how much voters would be willing to raise their own taxes and let the government spend a little more.

Local politicians started putting tax questions to voters immediately after TABOR passed. More than 2,500 cities, counties, school districts and special districts have successfully asked voters to weaken some parts of the law. Those requests usually ask voters not to raise taxes, but to be able to keep tax revenue beyond the cap. That process came to be known as “de-Brucing” — a reference that Bruce despises, but grudgingly accepts as a “badge of honor.”

Those smaller appeals largely succeed because Coloradans trust local government more than state government, said Sam Mamet, executive director of the Colorado Municipal League. He’s generally critical of the rigidness of Bruce’s magnum opus, but sees some upside. “TABOR has helped us sharpen our skills in talking to citizens about what local governments do, and services they provide,” Mamet said. He also believes some administrations have gotten more efficient — even combining police or building departments when they can’t fund their own.

Some still feel TABOR’s pinch though. Leadville, an impoverished historic mountain mining town about 100 miles west of Denver, did not de-Bruce until November 2017. Mayor Greg Labbe said the city would have had to refund $30,000 to $40,000 had taxpayers voted no. That would have been a big chunk of the city’s $2 million annual budget.

“When we have any kind of prosperity, we have to give some of that money back,” Labbe said prior to the vote. “We really need to be able to keep the money ... I can’t pay competitive wages. I can’t buy new fire equipment. I can’t pave my streets.”

Local voters have proven willing to approve tax increases more often than not, Mamet said. Even Douglas Bruce himself once voted for a tax increase — for the library system in Colorado Springs. “I thought that they had a good use for the money,” Bruce said. It was an uncharacteristic admission, one that didn’t last long. “After the election, I changed my mind about that one.”

Not every locality has been successful in convincing voters to raise taxes. Others only pass an increase after years of campaigning, and are still left with a lot of needs they can’t fund. Take Northern Colorado’s Greeley-Evans School District 6. For at least a decade, the school board has tried to raise property taxes. But voters twice rebuffed the proposal, even though the district is in one of the nation’s fastest-growing counties and located at the heart of the state’s most recent oil and gas boom. The district is also one of the lowest funded in the state.

Superintendent Deirdre Pilch said her district has more than $300 million in deferred maintenance. Schools need new roofs, buses, heating and cooling systems, security systems, and new technology in classrooms. That’s led to difficult decisions.

“Do we patch that roof or do we increase our bus drivers’ salary? Do we patch that roof or do we update technology? Do we patch that roof or do we lower class size?” she said.

Pilch got emotional talking about her students, who are mostly low-income and often need extra help to learn. “I knew the kind of challenges we’d have here,” Pilch said, laughing and crying at the same time. But she chose to move from wealthy Boulder to this district because, “I know deep in my soul that public education is the great equalizer.”

In 2016, Pilch hoped her district would join all the others that have successfully asked taxpayers for more money to improve the schools. She was heartbroken on election night when they said no. But in 2017, voters passed a mill levy override that will raise an additional $14 million annually for the next seven years. “It’s a heck of a start to filling those gaps,” Pilch said on election night. But she acknowledged that it’s not enough money to address major building needs. For those, she said, the district will need to go to voters again.

Money issues are ever-present for some districts on Colorado’s Eastern Plains, as well. In the Buffalo School District for example, Superintendent Rob Sanders is losing workers for a simple reason: He can’t pay very much. “I just lost a custodian this week so she could serve drinks in a bar, because she can make more money,” Sanders told lawmakers during the 2016 legislative session.

TABOR is not solely responsible for these budget crises, but it certainly plays a part. Bruce’s creation and the Gallagher Amendment, which voters passed into the Constitution in 1982, have combined to drive down how much revenue local governments can raise to fund schools. Local taxes used to pay for about two-thirds of the total K-12 bill, with the state picking up the last third. Now that’s flipped, with the state’s general fund covering most of the tab.

The state, though, faces its own fiscal challenges — even though lawmakers figured out a way to sidestep a constitutional amendment that tried to require them to raise K-12 spending every year. As a result, per student spending in Colorado has actually gone down nearly a thousand dollars since 2008. Almost half of school districts have gone to four days a week to save money. Colorado has turned into a patchwork where funding varies widely from district to district.

Despite TABOR, the state’s budget has grown almost every year. Referendum C, passed in 2005, is a big reason: it’s allowed the state to keep more than $17 billion that would have otherwise been refunded. But every year lawmakers find themselves squeezed when they have to balance the checkbook. And the biggest loser is higher education.

In the early 2000s, TABOR forced lawmakers to dramatically cut higher education from the general fund, and support for colleges and universities hasn’t recovered. “Limited state funds and the ability to increase tuition have, together, pushed Colorado and other states toward a funding model in which the share of higher education costs borne by individuals and families has increased dramatically while state funding has declined,” a legislative report from 2016 said.

Colorado is on track to become the first state to zero out higher education from its general fund. It could happen as soon as 2019, according to one study. That’s evidence to how TABOR has gradually restrained the state budget, said Reeves Brown, a Republican who’s been active in state politics for decades.

“Thirty years ago, the most staunch conservative in the state would never have advocated, ‘Well here’s an idea, why don’t we just quit funding higher ed? Why don’t we stop that?’ Nobody would’ve suggested that. And yet that’s exactly the trajectory that we’re on,” Brown said.

In 2015, Brown led a tour around Colorado to ask whether residents were happy with what they get out of state and local government. He had the backing of Dan Ritchie, a Republican and one of Denver’s biggest philanthropists. Brown’s group, Building a Better Colorado, got people to talk about TABOR and other constitutional amendments that tie the state’s finances.

Brown thinks most people who voted for TABOR did so because they heard Bruce’s pitch — “You can vote on taxes.” But he suspects they’re largely unaware of everything else in the law, including the revenue limits and changes to the electoral system. “We are not saying TABOR is a problem,” he said. “We’re just saying people ought to have an honest conversation about, ‘Exactly what does TABOR do and what did you want TABOR to do?’ ”

In some of the most conservative areas of Colorado, they saw something surprising. In anonymous votes, groups of conservatives said there needed to be big changes with TABOR. Some even said they’d get rid of it altogether and start over.

Those meetings didn’t result in any changes to TABOR. But they led to 2016’s Amendment 71, which made it more difficult for citizens to amend the state constitution. These days, it would be much harder for Douglas Bruce to get TABOR on the ballot.

On a recent Friday, Loquita Leverett had just finished one of the dreaded errands of life: a visit to the Department of Motor Vehicles. As she emerged from a DMV office in Denver after registering her new Ford Focus, one thing was on her mind: The $500 fee she paid.

“I wish it was cheaper,” she said, remembering the $38 she used to pay when she lived in New Jersey. “I would be happy with half, if not a fourth of the cost we just paid.”

Those sky-high fees are partly an end run around TABOR. In 2008, a report warned that the state’s transportation system faced a “quiet crisis.” More than 100 bridges were deficient; the report recommended the state raise another $1.5 billion for transportation each year.

Unwilling to go to voters to ask for a tax increase, the legislature instead jacked up vehicle registration fees in 2009 — about $40 for the average car. Those fees have added up to more than $200 million a year since then, and have helped repair roads and bridges across the state. While Bruce was in custody, other TABOR defenders attacked the fees in court, arguing they were unconstitutional.

“They’re stealing hundreds of millions of dollars,” Bruce now says of the fees. “Those are just blatantly illegal.” But the courts sided with the state. Other fee hikes have stood as well, for things like parks and business licenses and hospital stays.

The state’s also figured out ways to take on debt, which TABOR tried to limit, through funding mechanisms called certificates of participation. And it’s converted entire agencies, like Colorado Parks and Wildlife and some colleges, into TABOR-exempt enterprises.

These and other sidesteps have led to a convoluted budgeting process, but they’ve allowed the state government to grow faster and avoid cuts. “We do not have a crisis right now,” said Henry Sobanet, Gov. John Hickenlooper’s budget director. But those workarounds have frustrated some of TABOR biggest defenders in the state Capitol, including Bruce’s friend Sen. Kevin Lundberg. “I’ve been down here for 15 years, and I have watched the process again and again,” Lundberg said. “Political forces have found ways to get around TABOR.”

Opponents say they’re just trying to do what they think the state needs, and complain any workarounds they’ve developed amount to relatively small potatoes. Despite higher car fees, for example, roads have only gotten worse in the last decade. Now, 70 percent are in poor or mediocre condition. The Colorado Department of Transportation said it has a billion-dollar funding gap every year.

Regardless of the need, and despite Colorado’s booming economy, politicians have hesitated to ask voters for more tax revenue. Lawmakers nearly placed a request on the 2016 ballot ask for a sales taxes hike to raise $3.5 billion for the state’s roads. Republicans killed it. One senator said he didn’t want voters to have to defend themselves from a tax increase. That made Democrats seethe.

“I’m beyond frustrated,” Sen. Lois Court, D-Denver, said during debate. “Why are we afraid to ask the people of Colorado to make a decision? Put it out there for the people to vote on, because that’s exactly what TABOR allows and that’s exactly what this bill does.”

One reason for the hesitancy might be the fact that in 25 years statewide voters have only agreed to raise taxes twice: for cigarettes and marijuana.

What, then, is TABOR’s legacy now, 25 years after it became law? Workarounds have allowed lawmakers to more or less keep most government services intact. (Though in doing so they’ve made their budgets even more arcane, an ironic result given that Bruce sought to force government transparency.) TABOR never limited government growth as much as Bruce wanted, especially after Referendum C passed and thousands of local governments de-Bruced. TABOR’s biggest defenders say it’s a shell of itself — an analysis Bruce reluctantly agrees with.

His assessment: “It temporarily scared the pants off of crooked politicians.”

But that’s an understatement. Voters have a big say in how much their governments can grow. Even with the state’s swelling economic success, lawmakers struggle every year to scrape together enough money to balance the budget. It’s “precariously balanced,” according to Phyllis Resnick, lead economist at the Colorado Futures Center at Colorado State University. There certainly isn’t room for a big spending project, like a revamp of Interstate 70 through the mountains or new transit to alleviate Front Range congestion, without first going to the voters or using non-traditional funding models like public-private partnerships.

Many see that as a clear sign of success. The state government has avoided the fiscal problems facing big-spending states like Connecticut, Illinois and California. But Democrats say Colorado needs to spend big on infrastructure now — during the boom times — to head off even larger problems down the road. The question going forward, for both lawmakers and voters, is how bad the problem needs to get first.

Don’t expect a structural change anytime soon. Gov. John Hickenlooper, a Democrat, demurred when former Gov. Roy Romer implored him to lead a movement to repeal TABOR in 2015. His political calculation was simple: TABOR is popular. And why shouldn’t it be? Public officials have proved adept at funding the services people expect, even with Douglas Bruce’s guardrails on the books.

And while persuading Coloradans to give themselves the right to vote on tax increases was a Herculean task, convincing them to take that away would be far more difficult. Since TABOR passed, Coloradans have voted twice to make it harder to amend the state Constitution. In that sense, TABOR’s legacy, and that of Douglas Bruce, goes far beyond taxes and spending. Bruce and his creation have fundamentally changed how Coloradans interact with their government.

In July of 2016, Douglas Bruce went before a parole board. He said that if he were freed, he’d go back to Colorado Springs, pick his real estate business back up and lead a “quiet life.” Then he made a very uncharacteristic admission.

“I accept responsibility for all of my actions,” Bruce said. “I deeply regret them. They’ll never happen again.”

Asked about his apology a year later, Bruce stood by it — sort of. “Those are true statements. That doesn’t mean I did anything wrong,” Bruce said. “I said something in a way that sounds like contrition, but it isn’t contrition. Obviously, I regret their stealing six months out of my life to put me in a hole somewhere… It was disgusting. It wasn’t depressing, because I rose above it mentally. OK? Because I knew I did nothing wrong, and I was going to have to spend my life, when I got back out, climbing out of this hole that these evil, corrupt people had put me in.”

In the audio of Bruce’s hearing, he sounds tired and frustrated for having to ask for his freedom back. But he’s not ready to give up his fight. “I’m not going to let them win,” he said recently, his voice rising. “I did nothing wrong, nothing wrong, nothing wrong.”

Just like every other setback in his life, going to prison hasn’t stopped Bruce. He still owns dozens of rental properties (and owes more than $120,000 in back taxes according to the Colorado Springs Gazette). And he’s often at city council meetings in Colorado Springs these days, waiting for his turn to speak to rows of mostly empty chairs. He’s always at the ready to take on politicians, as he’s done so many times before. At the start of 2017, he called out councilors for a “flagrant” violation of TABOR. The remedy? He handed out copies of the law to every council member — in size 32 font.

But his never-ending battle to defend TABOR isn’t his only fight. He wants to get his tax evasion conviction vacated — not to repair his long-spoiled reputation, but to make a point. It’s about getting back something even more important than friends, or money, or popularity.

“I was deprived of my right to vote,” Bruce said. “I had a perfect voting record since age 21.”

As a felon on parole, he can’t vote now. This is a man who wrote a new Bill of Rights, meant to expand people’s individual freedom and give them new powers. And he doesn’t get to participate.

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Editor’s Note: This story has been updated to clarify why Douglas Bruce is not eligible to vote.