With enough signatures, people could vote on the issue this fall.
Initiative 52 would allow driver's licenses for anyone showing a state tax return, a federal taxpayer ID, and proof of identity from their country of origin.
Four states, New York, New Mexico, Washington, and Utah, have passed similar measures.
"It's a public safety issue," Initiative 52 supporter Ester Bukevich said.
Bukevich asked for signatures at Saturday's Cinco de Mayo festival in downtown Denver.
She says a driver's license would allow undocumented immigrants to apply for car insurance and take responsibility if they cause a crash.
She says too many people run away from the scene of an accident, or don't have sufficient insurance to cover losses.
"If you get hit by that person, you are stuck," she said.
"Many are driving away because they'll be deported," Initiative 52 supporter Jose Sanchez said. "Getting a driver's license is not a pathway to some kind of amnesty or legalization."
Sanchez says more than 150,000 people in Colorado would be eligible for driver's licenses under the proposal. He did say those with licenses, but without U.S. citizenship, could not vote in Colorado.
Those against illegal immigration say we should not give the same privileges to people as those people here legally.
"If you are here illegally, you shouldn't be driving," former GOP Colorado gubernatorial candidate Tom Tancredo said. "What's wrong with trying to say, 'If you break the law coming into this country, something negative might happen to you?'"
The initiative needs more than 86,000 signatures, and everybody who signs the petition has to be registered to vote in the State of Colorado.
"As of right now, we have collected a little over, 3,500 signatures," Sanchez said.
Sanchez says most donations for the campaign have come from individual donors. He declined to say how much money the campaign had raised so far.
"Immigrants do pay taxes, and immigrants want to get under the law," he said.
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