Statehouses, not Congress, hosting biggest political money fights

There’s almost zero chance Congress will this year seriously consider a single bill aimed at reforming the nation’s weakened money-in-politics laws.

Going local is a different story: State lawmakers this year are engaging in full-throated debate on campaign finance proposals — with some surprising outcomes. 

New Mexico’s secretary of state may have found a way to enact rules that the governor vetoed months before. 

The South Dakota Legislature voided a ballot measure citizens passed — and banned it from being considered again. 

And the governor of Montana vetoed an attempt to raise giving limits to candidates, triggering a court battle. In these three states and others, ideologically driven groups are hammering away at laws to loosen restrictions on campaign money, in order, they say, to protect Americans’ freedom of speech. 

So far this year, lawmakers in at least 18 states have introduced legislation to change the amount of money people can give politicians, according to a Center for Public Integrity analysis of proposed legislation in the nation’s 50 statehouses. 

Half of the bills aim to increase contribution limits in attempts to keep pace with the rising number of outside forces that can spend unlimited amounts of cash. The other half try to decrease the limits to blunt the amount of money in politics. 

Two initiatives have passed. Two have been vetoed. Eight bills are in progress, while six have failed. 

All the while, lobbying forces from Washington, DC — some backed by megadonors such as the billionaire Koch brothers, others supported by national government-transparency organizations — have swarmed statehouses and city halls, sometimes to the suspicion of locals.

These national coalitions are targeting donor-disclosure laws, pay-to-play and lobbyist rules and the role corporations, unions and certain nonprofits may play in elections, in addition to campaign fundraising limits. 

This special-interest influx comes at a time when some statehouses are also struggling to update their statutes to comply with the 2010 US Supreme Court case, Citizens United v. Federal Election Commission.  

The ruling, which upended many state laws on the books, said corporations and labor unions could raise and spend unrestricted amounts of money to advocate for or against political candidates — as long as they did not coordinate their spending with candidates.

When it comes to political money, national-level political organizations also see statehouses and city councils as the real battleground for change. Bills here — unlike at the federal level — sometimes move through chambers with relative ease and bipartisan support. (Check out a related CPI story, Democrats say ‘Citizens United’ should die. Here’s why that won’t happen.)

“It’s vitally important that we build momentum, win victories on reform at the municipal level, at the state level, and doing that increases the likelihood of eventual wins at the federal level,” said Paul S. Ryan, vice president of policy and litigation at Common Cause, a national campaign finance reform group. 

Only two of the 30 bills introduced in Congress that pertain to money in politics — both sponsored by Republicans — have even been formally debated.

At the local and state levels, by contrast, more sweeping money-in-politics experiments, such as public financing of political campaigns, are succeeding.

New York City, for example, has since 1988 slowly increased the amount candidates could earn in its matching-fund system: For any small donation (under $175), the city will give six times that amount to the campaign. So, for every $50 donation, a politician would receive another $300 from public financing. 

Seattle voted in 2015 to give every voter four “democracy vouchers” worth $25 each. Voters can give the vouchers to political candidates who agree to limit their spending. And Portland, Oregon, will in 2019 bring back a matching fund program similar to that of New York City.

Kentucky, a state that hasn’t increased its campaign contribution limits since 1998, saw Gov. Matt Bevin, a Republican, sign a measure in March that increased almost all campaign contribution thresholds. 

Kentuckians may now give $2,000 to candidates per election (double the $1,000 previously allowed) and $5,000 to political party committees (up from $2,500), among other increases.

The law also establishes an account for party committees to buy or maintain their office buildings — money that cannot be used to influence elections. These funds can accept an unlimited amount from any source, including corporations. 

Despite the increases, Kentucky’s limits remain relatively low compared to other U.S. states, said state Sen. Damon Thayer, the Republican floor leader and the sponsor of the bill.

“But at least it’s a step in the right direction to allow campaigns and political parties to raise more money to keep up with the rising costs to run an election and the increased role of super PACs,” he said.

Thayer said he supports Citizens United.

But the decision “diminished the role of campaigns to amplify our message,” he said. “The downside of super PACs is that we can’t coordinate our message with them.” 

National interest in statehouse drama

Amid the various statehouse battles over political money, New Mexico is unique in its theatrics.

In April, Gov. Susana Martinez, a Republican, vetoed legislation that doubled contribution limits but tightened donor-disclosure rules. 

Just two months later, newly elected Democratic Secretary of State Maggie Toulouse Oliver proposed a campaign-finance rule that included elements of the failed bill, though not the increased contribution limits. This angered opponents of increased disclosure requirements.

Burly Cain, state director for Koch-backed Americans for Prosperity, called the process “an unconstitutional power grab” during a public meeting.

“The proposed rule attempts to legislate rather than implement existing law,” Tyler Martinez, an attorney with the conservative Center for Competitive Politics and no relation to New Mexico’s governor, wrote in public testimony to the secretary of state. 

Toulouse Oliver disagrees. She said in an interview that she’s not overstepping her authority because she is not creating new law — only clarifying it — in the wake of court decisions, such as Citizens United. 

“We’re just trying to take this cloudy, confusing, and in some cases unconstitutional state statute and apply clarity for groups to follow,” Toulouse Oliver said.

Another Koch-connected group, Concerned Veterans for America, launched an ad campaign, sending out mailers and circulated a letter calling the measure “an attempt to circumvent the legislative process and silence citizens through executive rulemaking.” 

Former New Mexico governor and 2016 Libertarian presidential candidate Gary Johnson signed onto the letter. 

“Gov. Johnson is generally and pretty aggressively an advocate of transparency, but this goes too far,” Johnson spokesman Joe Hunter said. “This is something Gov. Martinez had vetoed, and might have a chilling effect on the nonprofits across the spectrum.”

The effort shocked rulemaking proponents, who note that the two conservative groups don’t voluntarily disclose their donors. 

“I’ve never seen mailers for a rulemaking!” Viki Harrison of Common Cause New Mexico said. 

Michael Daly, a Gallup, New Mexico, resident, was more blunt. After receiving one of the mailers, he presented it at a public hearing, where he called the lack of disclosure “the penicillin-resistant syphilis destroying the American democracy.” 

This debate stemmed from a bill state Sen. Peter Wirth, now the Democratic floor leader, has introduced in one form or another every session since 2011. This session, he was finally gaining momentum: The legislation was fast-tracked through the House, and sent to Martinez to sign or veto in February. 

“I’ve been trying to do the one thing we can do after Citizens United, which is require disclosure,” Wirth said. “Over the years, the bill unanimously passed the Senate three times, but we just couldn't ever get through to the House floor for debate.”

The bill would have doubled — to $5,000 — the maximum contribution to state lawmakers. This served as a compromise between lawmakers who wanted no limits and those who wanted to tighten them. It also included new donor disclosure rules for groups spending money to influence elections. 

But Martinez vetoed the legislation. 

“The requirements in this bill would likely discourage charities and other groups that are primarily non-political from advocating for their cause and could also discourage individuals from giving to charities,” Martinez wrote in her April veto.

Toulouse Oliver, New Mexico’s secretary of state, has recently conducted public hearings on the rules and aims to have the final rules go into effect in October. On Wednesday, she vowed to go to court, if necessary, to defend the rules. 

New Mexico could serve as a model for other secretaries of state who want to update campaign finance rules when lawmakers are unwilling to do so, some reformers say.

“I mean, nothing is going to happen on the federal level in terms of campaign-finance reform, and you have these secretaries of state that could single-handedly get in there and try to reshape these rules,” said Craig Mauger, executive director of the Michigan Campaign Finance Network. 

Michigan’s secretary of state, Ruth Johnson, did just that. 

In 2013, she proposed a rulemaking that would require reporting of the donors behind “issue ads” — political commercials that don’t specifically support or denounce a candidate. These ads, however, often come within a micrometer of overtly advocating for or against a candidate. Often, the ads cast a politician in a decidedly negative light and urge voters to do something along the lines of, “Call lawmaker X and tell them you don’t support bill Y.”  

Michigan lawmakers didn’t respond kindly. Instead of letting Johnson have her way, they passed legislation that in part lets “issue ad” funders keep their identities secret. Gov. Rick Snyder, a Republican, signed the bill. 

"Our democracy thrives and our government is at its best when there is openness and accountability, all while our freedoms of speech and association are protected," Snyder said in a statement. 

Snyder was referring to a part of the bill that requires groups airing ads or paying for robocalls to add an “authorized by” disclaimer. They do not, however, need to name their donors, as Johnson attempted to require. 

Michigan is considering a bill that essentially renders the state’s political contribution limits moot, according to Mauger and the Campaign Legal Center. Candidates would be allowed to solicit unlimited contributions on behalf of a super PAC, and can use the same vendors or lawyers or strategists as the outside groups that support them. 

“When they first introduced this bill, supporters said we’re finally putting Citizens United into state law, but what they’re doing is also coloring in all these things that doesn’t match federal law,” Mauger said.

‘What is the point of voting?’

Things didn’t go as expected for South Dakota voters who thought they had scored a victory for limiting the influence of money in politics.

In November, almost 52 percent of South Dakotans voted yes on IM 22, a ballot measure that lowered contribution limits, established an ethics commission and set up public financing in elections, among other measures. 

This was a win for Massachusetts-based Represent.Us, which had been pushing the initiative, against Americans for Prosperity, which tried to kill it. 

“If supporters of IM 22 had their way, taxpayers would be paying for expensive political ads for politicians, instead of prioritizing funding for necessary budget items like education, public safety, and infrastructure improvements,” Americans for Prosperity said in a statement. 

But the majority’s victory was short-lived. 

Lobbying group South Dakota Family Heritage Alliance Action and 24 state legislators filed a lawsuit, arguing the measure is unconstitutional and limits free speech. The judge stopped the law from being implemented from taking effect as he considered the case.

Then came the real legislative blow: South Dakota lawmakers repealed the overhaul less than three months after the measure passed and included a clause preventing voters from putting it back on the ballot.  

“It’s not responsible to use taxpayer money to fund political campaigns at the cost of education. And I’m certain that voters of this state did not support that," Gov. Dennis Daugaard, a Republican, said of the public financing proposal during a budget address in December, two months before he signed the repeal bill. “They were hoodwinked by scam artists who grossly misrepresented these proposed measures." 

Daugaard signed nine bills in March as replacement bills that watchdogs decry as “toothless,” none of which changes any of the campaign contribution limits or donor disclosure rules. 

Some voters sensed a pattern: Lawmakers were not respecting their decisions at the ballot box.  In 2014, South Dakotans passed an initiative that increased the minimum wage. A year later, the governor signed a bill that watered down the rule, exempting workers under 18 from earning the $8.50 wage. 

“That feeling that we were being ignored, weren’t being listened to, was prevalent across the state,” said Doug Kronaizl, organizer with Represent South Dakota, a local branch of Represent.Us. He spent the spring putting thousands of miles on his 1999 Ford Contour driving across the state organizing events with locals. 

Howard Swenson, 65, a retired teacher who grew up in northeast South Dakota, is one such voter who feels frustrated. Swenson attends as many legislative town halls as possible each year (“probably the most painful thing I do to myself,” he said.)

“Twice we have voted for certain things and the Legislature has taken them away from us with power they seem to think they have,” Swenson said. “The vote, in my opinion, is about as strong a position as a citizen can have, so them taking it away from us upsets me a great deal.”

After the Legislature overturned IM 22 and prevented it from being reintroduced, Swenson took a microphone at a town hall-style meeting at Northern State University in Aberdeen, South Dakota.

“What is the point of voting if our vote doesn’t stand?” he asked. 

He took out his wallet and held up his voter registration card. 

“Who do I give this to, since it doesn’t mean anything to us?”

A legislative task force is meeting to discuss campaign finance law, and more bills will likely be introduced in 2018. Represent South Dakota is gathering signatures for a constitutional amendment that would further restrict lobbyist gifts and contribution limits.

Statehouse and courthouse

Raising campaign contribution limits, not naming donors, led Montana Gov. Steve Bullock, a Democrat, to veto the campaign finance bill lawmakers sent to his desk earlier this year. 

“The increases in contribution limits are far above what Montanans believe to be acceptable,” Bullock wrote in his veto.

Montana’s allowable campaign donations have been fluctuating since 2012.

That year, a US District Court judge ruled the 1994 limits enacted in a ballot measure violated First Amendment protections because the limits were so low. The US Court of Appeals for the 9th Circuit reversed the ruling and sent the case back to District Court in 2015, where the limits were again struck down, yet again, in May 2016. The case, Lair v. Motl, is back on appeal. 

As Montanans wait to hear the latest ruling, the state is using pre-1994 campaign finance limits adjusted for inflation, according to Montana’s office of the commissioner of political practices. The vetoed bill would have at least allowed individuals to give $2,640 to gubernatorial candidates (up from $1,990) and $700 to state lawmaker candidates (up from $330 for House and $530 to Senate candidates.). 

The courthouse is another avenue for groups to enact campaign finance changes, or comply with Citizens United. 

At the time of the ruling, 24 states had bans or restrictions on corporate spending in elections that had to be overturned or rewritten, according to the National Conference of State Legislators.

At least six recent court cases involve a tug-of-war over contribution caps. (See another CPI story: Campaign regulation foes targeting state-level restrictions.)

The 9th Circuit is also handling an appeal on the constitutionality of Alaska’s limits for state candidates. Alaska’s law includes a cap on out-of-state donations, upheld by a district court last November. 

David Thompson filed suit after he tried to give $100 to his brother-in-law, former Alaska state Rep. Wes Keller, a Republican from Wasilla, in 2015. The Keller campaign had to return the money because it already received the maximum amount of out-of-state money the law allowed.

“I can see that being a larger battle we see more of, because of libertarian objections to these laws and a number of reformers interested in passing more such requirements,” said Daniel Weiner, senior counsel at the Brennan Center. “If you could limit money from out of state, they argue you could to some degree restore sovereignty of state citizens.”

Illinois, Kentucky, South Dakota and the city of Austin, Texas, have recently faced or are currently facing challenges to their campaign contribution limits. 

“There has been a concerted effort … to try to find every vulnerability in existing limits,” said Tara Malloy of the Campaign Legal Center. “And they’ve had success.”

And not all statehouses are done debating political money this year: At least eight states still have campaign finance bills they’re considering. 

Iowa, which has no contribution limits, will discuss a $1,000 cap for statewide candidates. 

Tennessee’s House and Senate could not agree on a final bill to send the governor after the Senate passed an amendment to adjust campaign limits every two years, benefiting senators, who serve four-year terms. Lawmakers will continue to debate the bill in 2018.

“It’s the wins that we’re achieving at the municipal and state level that get me out of bed in the morning, [that] get me excited to come to work and inspire me to stay late and work hard,” said Paul S. Ryan at Common Cause. “And those wins keep coming. We are not losing any momentum in recent years on that front.”

Sarah Kleiner contributed to this report.

This story is from the Center for Public Integrity, a nonprofit, nonpartisan investigative media organization in Washington, DC.