DENVER – Colorado Secretary of State Scott Gessler is blaming an election bill passed by Democrats for wrecking his budget, but a closer look reveals that it was Gessler’s own choices that largely account for a $5.1 million loss.

Gessler’s office was running a $7 million surplus – so large it violated the law – in June 2012. A year later, it had fallen to less than $2 million, and now legislators are worried his budget will need extra money to keep it afloat.

Most of the shortfall traces back to Gessler’s cuts to business filing fees, according to budget numbers the Herald obtained through the Colorado Open Records Act. He also spent money on website upgrades to make it easier to register a business in Colorado.

Gessler, a Republican, is running for governor, and he touts his cuts to business fees on the campaign trail. But under the Capitol dome, he places blame for his collapsing budget on House Bill 1303, a mail-voting bill that Democrats passed last spring.

“The issue basically with the budget is 1303’s been a budget-buster. It’s blown our budget out of the water,” Gessler said at a Dec. 19 oversight hearing at the Legislature.

Sen. Matt Jones, D-Louisville, disputed Gessler’s argument.

“I don’t think one bill is causing a $5 million deficit,” Jones said.

“I’m sorry that you find that hard to believe,” Gessler answered. “I’m happy to show you the math.”

The math, however, shows the opposite.

On five occasions, Gessler cut business fees, either temporarily or permanently. The biggest one was a three-month fee holiday from December 2012 to February 2013, when fees of up to $125 were reduced to $1. Gessler’s office lost $3 million in revenue those three months.

It was a deliberate strategy on Gessler’s part to reduce a surplus that was so large it violated state law.

“There was strategic thinking that went into this,” said Gary Zimmerman, chief of staff for the Secretary of State’s Office.

State law allows a reserve of 16.5 percent. After the fee cuts, Gessler’s reserve plummeted from 42 percent – well above the allowable level – to 9 percent just after the election bill passed.

Zimmerman said he is “very confident” that the secretary of state’s numbers are accurate and the office’s budget crunchers did not make significant mistakes.

Gessler is correct when he says the election bill is forcing unanticipated costs on his office. But those costs all came after the $5 million plunge occurred.

The bill passed with only Democratic votes. Sponsors and the bipartisan county clerks who supported the bill gave the Secretary of State’s Office a copy only a few days before introduction.

With just hours to prepare a financial analysis, no one in Gessler’s office or the Legislature thought to account for several big-ticket items that exceed the $1.3 million the Legislature already has set aside to pay for the bill.

Among them:

Payments from Gessler’s office to counties will increase by about $600,000 over what was budgeted. The state pays counties 80 to 90 cents for each active voter in an election. But HB 1303 got rid of the “inactive voter” classification, so the number of active voters exploded.

Computer technology costs are $2 million and counting, Gessler’s staff members said. Because the bill allows voters to register on Election Day, the state needs to develop an electronic poll book that works in real time to make sure people don’t vote twice.

The office has pulled computer programmers out of its business section and put them to work on elections, said Gessler spokesman Andrew Cole.

“We’re going to do what we have to do to make it work, but it’s putting us in a tight spot,” Cole said.

The secretary of state oversees elections and business filings. The office is funded almost entirely through business fees, meaning that Colorado businesses subsidize the elections office. Gessler would like to move some of the elections costs to the taxpayer-supported general fund.

But he’s likely to run into opposition at the Legislature.

Jones, the Louisville Democratic senator, said business fees have funded elections for decades, under both Republican and Democratic secretaries of state. “Bailing out” Gessler’s budget with the general fund would leave less for schools.

“I don’t think the (election) bill ruined his budget. It cost him more. But what ruined his budget was the fee holiday,” Jones said.

The debate will bubble up in the next two weeks, when the budget committee is likely to see a request for extra money from Gessler’s office. Gessler’s oversight committees also have a meeting scheduled for Jan. 27 to discuss the office’s budget.

jhanel@durangoherald.com