A Colorado political organization is attacking state Rep. Daniel Kagan (D-Cherry Hills Village), who’s running for state senate, for voting in favor of legislation to classify a hospital fee as an enterprise fund under the Taxpayers’ Bill of Rights (TABOR).

The bill, which was blocked by state senate Republicans, would have freed up over $300 million for highways, schools, and other government projects.

Colorado Citizens for Accountable Government (CCAG) has released a 30-second ad attacking Kagan’s vote in April on the hospital fee, claiming that the legislation would have raised the cost of hospital stays for patients.

In fact, there appears to be no evidence that the reclassification of the existing hospital provider fee (HPF), established in 2009, would have had any impact on hospital charges for patients. CCAG did not return a call seeking documentation for its claim.

Kagan has defended his vote on the measure, saying the reclassification would allow the government to fund public education and infrastructure needs, without a tax increase.

Kagan is battling Arapahoe County Commissioner Nancy Doty to represent Senate District 26, which wraps around Denver on the south and east, and includes a diverse group of voters living the cities of Aurora, Greenwood Village, Cherry Hills Village, Littleton, Englewood, and others.

Prior to an event last night at Las Brisas restaurant in Greenwood Village, Doty declined to comment on the CCAG’s attack on Kagan over the hospital provider fee.

“I haven’t done that, so it’s not my campaign,” Doty said.

Asked if she had a position on the hospital-provider-fee issue, Doty said, “I’m against it.”

A former Arapahoe county clerk and chief financial officer for Gov. Bill Owens, Doty currently sits on the board of the South Metro Chamber of Commerce, which—apparently despite Doty’s opposition—has come out in support of reclassifying the HPF as an enterprise under TABOR.

Opponents of the HPF reclassification see it as a violation of the TABOR, diverting money that, they say, should be rebated to taxpayers, not spent by the government.

But Colorado’s top attorney, Republican Attorney General Cynthia Coffman, has issued a legal opinion stating that defining the HPF as an enterprise would not violate TABOR.

This argument hasn’t persuaded most Republican lawmakers, like outgoing State Senate President Bill Cadman, and some conservative groups, like the Colorado Union of Taxpayers (CUT) and Americans for Prosperity–though most prominent business groups in Colorado align with Kagan’s position.

“The way we see it, it’s a tax, and the pledge would cover that,” said CUT president Greg Golyansky, referring to his organization’s pledge, which Doty signed, to oppose all tax increases.

The Kagan-Doty race is widely seen as one of the most important state contests this year, with Republicans clinging to a one-seat majority in the Colorado senate.

Term-limited SD 26 State Sen. Linda Newell won re-election easily in 2012, but without an incumbent in the race—and with two well-known politicians on the ballot—this year’s outcome is expected to be closer.

And it’s also likely to be one of the most expensive local races in the state. Newell won by a razor-thin margin in 2008, but the redistricting process of 2010 has tilted the district slightly in favor of Democrats.

Republican State Sen. Laura Woods, of Westminster/Arvada, is facing a tough challenge from Democrat Rachel Zenzinger, who lost to Woods by 650 votes during the GOP wave year of 2014.

If Woods and Doty lose, it’s nearly certain that Democrats would take over the state senate, giving them control of Colorado government, according to political analysts.