The money was mind-boggling: more than $200 shelled out for each vote in May's special election. Former New York City Mayor Michael Bloomberg gave nearly $1.5 million to a losing effort to support a sugary-drink tax in Santa Fe. Big Soda poured more than $2 million into a campaign to beat it back.

The spending was far beyond anything local voters had seen in a citywide election, and a harbinger of the kind of money that can be thrown at ballot measures like the so-called soda tax as special interests get more sophisticated about political messaging. If not for the city's disclosure rules for political action committees and campaign communications about the ballot measures, voters might not have known anything about who was behind it.

A political move by a relatively small player in the campaign, though, is poised to force changes to those rules. The Rio Grande Foundation, along with the conservative Goldwater Institute out of Arizona, has sued the city over its determination that the $7,500 production and distribution of a video decrying the proposed tax required disclosure of donors.

The city is faced with the potential of a court battle that city attorneys think they are likely to lose, and officials appear ready to back down. The City Council is set to vote next month on a bill that would completely eliminate the requirement for "independent expenditure groups" to report on contributions that pay for ballot measure advocacy.

"This is a complicated one," City Councilor Carmichael Dominguez tells SFR. "Generally speaking, this body [the City Council] and this community care about transparency, and for the most part our campaign finance law is about transparency."

But Dominguez' bill would eliminate completely the disclosure requirements in ballot measure campaigns for what are broadly referred to as dark money groups. He calls the process that led to the bill he's sponsoring "really, really frustrating."

The city's threshold for disclosure is much lower than what the Rio Grande Foundation spent on the election; just $250 triggers the need to file a report. Depending on how a group like the foundation chooses to follow the law, they argue it could force the disclosure of donors to a nonprofit. That's what the fight is really over.

"Is there a compelling government interest in forcing anyone involved who takes a stand on this issue to have their name put in a government database?" Rio Grande Foundation President Paul Gessing asks rhetorically. He tells SFR that the foundation thinks the burden of disclosing donors who assumed their donations to be private far outweighs the benefit the public gets from knowing who's paying for campaign communications like advertisements, mailers or videos.

"I don't see how disclosing everyone's donors makes a big difference in influencing the debate," he says. Gessing's foundation makes no secret that it favors less government and more individual liberty—and, the thinking goes, that should be enough.

Advocates of disclosure, though, say the public always deserves more information about who is trying to influence their vote. That's especially important, say national advocacy groups like Common Cause, in elections that are not about candidates, but instead focus on ballot measures like the sugary-drink tax.

"There aren't candidates who have character or voting records to judge," says Heather Ferguson, Common Cause's legislative director for New Mexico. "When it comes to ballot measures, the very first thing voters turn to is, 'Who's behind this?'"

She thinks the city's law is mild, and points out that the rules only require the disclosure of people who donated to pay for the campaign communication in question. "The leap that they are making is that they'd have to disclose all their donors," she says.

Tara Malloy, a lawyer and senior director of appellate litigation and strategy at the Campaign Legal Center in Washington, DC, says the city's concerns about losing in court aren't backed up by the federal decisions that tell other courts how to interpret campaign spending laws like Santa Fe's.

"It seems as though the City Council is running for the hills," Malloy tells SFR. "The nature of their response is so overblown."

Santa Fe's law doesn't force dark money groups to register as political action committees, she says. It only asks them to file a disclosure statement when they spend enough to blow past the limit for anonymous spending.

Rather than completely strike a law that sets a $250 threshold for disclosure, Malloy says the city could raise it to $5,000 and "there'd be absolutely zero chance" they would run afoul of an existing court decision.

Assistant City Attorney Marcos Martinez sticks to his guns in a phone call with SFR. He says the CLC and Common Cause are picking the very best cases for their side. He doesn't begrudge them that—he expects it from advocates, he says—but "they've kind of glossed over the adverse authority out there."

The Tenth Circuit Appellate Court has ruled that a $3,500 threshold for disclosure is too burdensome for such groups. Anything above that doesn't mean zero chance of a court challenge, he points out. In fact, the only thing that guarantees no challenge is the bill that's going in front of the council that completely strikes the requirement. Then, the city can go back to the drawing board and see if any pending federal cases set an acceptable threshold.

Martinez says it's a strategy advocates should understand.

"I wonder why Common Cause … didn't talk about the fact that they supported these kinds of arguments in Colorado, but lost the appeal there," he says.

If the City Council does vote in its Dec. 13 meeting to strike the rule for ballot measures, Gessing says the lawsuit would likely go away—"Either way is a win for us," he says—but he can't guarantee it.

"Part of the goal of any lawsuit is not just to impact the specific case you're dealing with, but to have an impact more broadly speaking." That is, he says, establishing case law against the kind of disclosure Santa Fe wants would be a much larger victory.