Colorado Initiative Targets Churches’ Tax-Exempt Status

FORT COLLINS, Colo. — Nodding to the beat of Irish folk ballads on the tape deck of a motor home plastered with political slogans, John Patrick Michael Murphy plied Colorado’s interstates recently to preach his gospel: Churches and most nonprofit organizations should no longer be exempt from property taxes.

With a personal campaign contribution of $60,000, the Colorado Springs trial lawyer managed the improbable feat of getting a state initiative on the November ballot to end tax exemptions for 8,300 churches and nonprofit groups--including the Boy Scouts, Easter Seals, Moose and Elk lodges, Meals-on-Wheels and Planned Parenthood.

Facing opponents that include every church and nonprofit group in the state and a political coalition that hopes to raise $750,000 for TV advertising time, market research and campaign management, Murphy is fighting a quixotic war.

But he is sponsoring Amendment 11 because, he argues, if churches and nonprofit groups paid taxes, homeowners would pay less and have more money on hand to support community organizations of their choice.

“They want to put horns and hooves on me because I’m acting like an American in a free and equal country exercising my rights,” he said. “My point is simply this: Everyone who uses police and fire protection and other public services should share the costs of paying for those services. It’s only fair.”

Behind the wheel of the hand-painted motor home that he calls “Freddy,” Murphy added: “If this thing passes, the Catholic Church will suffer its biggest hit since the birth of Voltaire.”

Mobilized under the slogan, “Don’t hurt the helpers,” opponents fear what they believe could be a death knell for local community services and a bellwether issue that may resonate nationwide among increasingly tax-conscious, middle-class citizens.

“If this thing gets serious consideration in Colorado, we will see it proposed elsewhere,” said Greg Kail, a spokesman for the Catholic Archdiocese of Denver. “This at a time when the welfare reform bill is asking people, not government, to shoulder the burden of taking care of the most vulnerable populations.”

Recent polls showed the campaign against the initiative leading, 49% to 39%. The good news for Murphy and a handful of financial backers is that at least 7% of respondents said they were undecided.

“My biggest fear is that this initiative is so preposterous and counterintuitive that it will lead to apathy and complacency on election day,” said opponent Chris Paulson, former state House majority leader and chairman of Citizen Action for Colorado Non-Profits. “Murphy is such a slick salesman that he has been able to obscure the watershed issue, which is whether or not society will turn its back on the helpers.”

Jay Sekulow, chief counsel for the American Center for Law and Justice, a public-interest law firm representing churches nationwide, said he will file a lawsuit in federal court challenging the initiative--if it is approved--on grounds it would breach the constitutional church-state separation.

“Tax-exempt status is required by the federal Constitution,” Sekulow said. “The reason government agencies do not tax religious organizations is because the power to tax is the power to destroy.”

But Murphy argues that the barriers between church and state already are blurred. For example, he said: “If a church tries to erect a structure without a building permit, the state intervenes.”

Behind the political battle lies another one: for the preservation of social programs in low-income neighborhoods such as that surrounding Annunciation Church, a 105-year-old red-brick Catholic parish on Denver’s gritty northeast side. Attached to the church is a parochial school for 190 mostly African American and Latino students.

“Annunciation would have to pay about $70,000 a year in property tax for the church and the school,” said Father Jeff Ernst. “Since our annual income in donations and collections is about $73,000, we would have to close the church. Without the church, the school would probably have to close.”

Lost, he said, would be religious services, food and clothing drives for the poor, crisis-management counseling and health care referral services. Moreover, his students would have to be absorbed by the public school system at an annual cost of $5,000 per child--roughly twice the amount spent at the parochial school.

“We are educating our parishioners about this bill through bulletins,” he said, “and sponsoring voter-registration drives after masses for the next two weeks.”

But Daniel Bridges, a retired petroleum geologist who coauthored the initiative, said the plan is designed to preserve tax exemptions for properties that carry out so-called “community duties,” such as schools, orphanages, corrections facilities or housing for the low-income elderly, the disabled, the homeless or abused individuals.

“Churches in some instances will undoubtedly have some problems,” he conceded. “But if the community that supports them gets back some money from lower tax rates, they may choose to contribute money to make up the difference.”

Then again, they may not.

Bridges figures that potential taxes collected from the proposal could be as high as $150 million. The state legislative council’s analysis of ballot proposals, however, indicates that it is unclear what the ultimate impact of the initiative would be on residential and business tax rates.

In the meantime, Murphy and Bridges have hit the road and the debate circuit, trumpeting their plan and belief that there is nothing sacred about tax exemptions for the homes of religious leaders, rarely used mountain religious retreats, soup kitchens, ballet troupes or large nonprofit groups that conduct evangelical work overseas.

Drawing from a war chest of about $5,000, their campaign relies on classified ads in local newspapers and a crew of 60 volunteers, who have been stuffing so many political flyers under windshields lately that “car alarms are going off across the state,” Murphy said.

En route to what he thought would be a debate with opponents at a Lutheran Church in this northern Colorado community, Murphy laughed and said: “I hear some congregations are praying for divine intervention on this issue. That’s OK by me because I think that’s just a useless agitation of air molecules.”

Inside the church, Murphy’s temperature rose when he learned that the format had been changed to a panel discussion featuring representatives of organizations that would be affected by his bill. Moreover, he was not allowed to join the panel and instead was told to sit in the audience.

“I was bait-and-switched,” he fumed, striding back to his motor home. “They are afraid of what I might say. I could have turned that audience to our side. I could have turned them.”

On the road again, Murphy’s spirits soared.

“Even if this campaign fizzles, we haven’t lost because we’re making history,” he said. “For the first time, a state will hold an election to determine whether churches and nonprofits should pay property taxes.”