Campaign Finance Complaint Filed Against City of Lone Tree

A campaign complaint was filed on October 13th, 2021 against the City of Lone Tree for the improper use of the City’s website and newsletter.

The complaint states that the City of Lone Tree is using City’s newsletter and website as one-sided platforms to promote the passage of 2E (an increase of Lone Tree sales tax). This is a violation of Colorado campaign laws.

The following notice was sent to the City of Lone Tree’s Mayor and City Council on October 7th. 

Letter of Notice and Demand sent to City of Lone Tree (October 7th, 2021)

Dear City of Lone Tree Council and Mayor Jackie Millet,

Below is paragraph (c) of Lone Tree Municipal Code, Chapter 2, Article 1, Section 2-1-150 Limitations On City Contributions.

“(c) Nothing in this Section shall be construed as prohibiting the City from expending public moneys or making contributions to dispense a factual summary that includes arguments both for and against the proposal on any issue of official concern before the electorate in the City. Such summary shall not contain a conclusion or opinion in favor of or against any particular issue.  As used herein, an issue of official concern shall be limited to issues that will appear on an election ballot in the City. “

Today I am objecting, with respect, to the campaign-style statement in the City’s October 2021 Newsletter as non-compliant with Section 2-1-150 for ballot question 2E.  My comments are in red below.  The City’s newsletter language is offset in italics.

Excerpted from October 2021 City of Lone Tree Newsletter:

Elections are coming up on Tuesday, Nov. 2 and on the ballot is Lone Tree’s Question 2E which asks voters if sales tax should be increased by 1% to maintain vital city services dedicated to repairing, maintaining, and improving City streets and aging infrastructure. Likewise, it will help maintain service and response times for public safety, and maintain and improve parks, trails, and open space.

The “increased by 1%” language is false and misleading.  The Question 2E sales tax increase is not a 1% increase.  The increase in both the tax rate and the sales tax revenue is a 55% increase.  An increase from 1.8% to 2.8% is a 55% increase.  The regulation requires a factual summary.  This statement is non-factual, and erroneous.  This newsletter statement gives the appearance of tricking the voters into believing 2E is 1%, which is a small increase.  The fact is the tax increase is 55%, which is very large.  The City’s language about the size of the tax increase is dishonest and deceptive, and, with respect, I object.

The language “dedicated to repairing, maintaining, and improving City streets and aging infrastructure” is, again, campaign language to trick the voters and non-compliant with Section 2-1-150.  The truth is Question 2E places no legal restriction on the new tax revenue.  The new tax revenue will flow to the Lone Tree General Fund as fungible revenue with all the other General Fund revenue.  The revenue in the General Fund is fungible and homogeneous.  It is not accurate or factual to assert that certain fungible revenue is spent on dedicated targets and other fungible revenue is spent on other spending targets.  Even the official Question 2E ballot language does not say the new tax revenue is “dedicated to.”  Again, this “dedicated to” language is a material misstatement, non-factual, dishonest and deceptive, and I respectfully object.

Last month, Lone Tree City Council adopted a resolution outlining the reasons they support a Yes vote on ballot question 2E, such as ensuring the City is positioned for long-term financial security. The increased online shopping trends, combined with the fact that Lone Tree’s sales tax rate for operations hasn’t increased since the City’s inception in 1995, are projected to result in a financial deficit of over $100M between projected revenues and expenses over the next 15 years. Furthermore, given that approximately 95% of the City’s sales tax revenue is generated from shoppers outside of Lone Tree, this solution would have the least impact on our residents. To learn more about their resolution, click here.

The language “increased online shopping trends” is completely false and erroneous.  The City’s finance team produces a monthly Treasurer’s Report of tax revenue, other revenue, and spending.  In the last seven years of monthly Lone Tree Treasurer’s Reports, the City expressed no concern about lost tax revenue due to online shopping or a $100 million financial deficit.  The reality is the City is not concerned about online sales.  The 2019 CAFR states sales tax revenue declined $112,000 but “some of the larger businesses in the City ended the year with significant increases” in sales tax revenue which offset the decline.

The notation “$100M” is misleading and ambiguous.  In a document for voters and the general public, the correct term is “$100 million”.  The Roman numeral M is 1,000.  If the City is using Roman numerals, then the correct notation would be $100MM.  Maybe bankers, accountants and investors use the term “$100M” in notes or a casual context.  But for a municipal entity selling a projection to voters to approve a tax increase, this term is improper.

The $100 million deficit statement is incomplete and misleading.  The $100 million deficit is caused only by holding revenue constant and escalating expenses.  Any economic enterprise that escalates expenses and holds revenue constant for 14 years will have a deficit.  This result is basic arithmetic.  But the City’s basic arithmetic has no basis in reality, is not honest and has the effect of tricking and deceiving the voters.  The facts are Lone Tree has a healthy retail and restaurant revenue base and a healthy sales tax revenue stream.  Lone Tree and the surrounding communities are projected to continue to grow, especially Douglas County.  The households in Lone Tree and surrounding communities are among the most affluent in the nation.  There is no realistic, or factual scenario for a projection assumption of 0% revenue growth for a community with the demographics and affluence of Lone Tree.  The $100 million deficit projection is a material misrepresentation and false statement by politicians trying to scare voters into voting for a tax increase.  This projection is completely non-factual, non-compliant with Section 2-1-150, is completely improper to include in the City’s newsletter, and, with respect, I object.

The next issue the a misstatement, but not a material misstatement.  The $100 million deficit projection term is 14 years, not 15 years, as the newsletter states.

The final comment on the City’s non-compliance with Section 2-1-150 is requirement that the factual summary includes both arguments for and against.  The arguments against 2E are missing from the newsletter, and, with respect, I object.

To learn more about Lone Tree’s ballot question 2E, click here. To register to vote, click here.

Finally, in my work on this campaign and oversight of the City, other examples of misrepresentation, false statements and erroneous statements have come to my attention.  I have a list of similar objections to the campaign-style web page supporting Question 2E on the City’s website.

Download PDF version of letter

Exhibit A (City of Lone Tree website)

Exhibit B (City of Lone Tree newsletter