Analysis of new Missouri campaign disclosure law

The legislature passed, and Gov. Matt Blunt says he will sign, HB 1900, which revises Missouri’s campaign finance disclosure law. The major media and the major parties have focused on the bill’s elimination of the dollar limits that can be given to candidates and the imposition of a new ban on monetary contributions to candidates by party committees. An examination of what the bill does and doesn’t do indicates that there is more – and less – than meets the eye.

The first thing to note is something the bill doesn’t do, and that’s have any impact whatsoever on this year’s election. It’s not a Republican plot to reelect Sen. Jim Talent. It does not apply to this year’s U.S. Senate or congressional contests because it doesn’t (and couldn’t legally) apply to federal elections. And it doesn’t apply to state and local contests on this November’s ballot (including the race for State Auditor) because the law’s provisions don’t take effect until January 1, 2007.

HB 1900 does indeed eliminate the dollar limits that can be given to candidates, consistent with the current absence of limits on contributions to political parties, ballot measure campaign committees and political action committees. This will increase the sums that candidates receive directly to run their campaigns.

Who benefits?

Historically, the contests that draw the big bucks are for governor and state treasurer. When Missouri courts finally cleared the way for the limits to apply in 1999, the last-minute push for legal over-the-limit contributions primarily benefitted Democratic gubernatorial candidate Bob Holden and his Republican counterpart Jim Talent. Banking interests historically invested heavily in campaigns for state treasurer.

Conventional wisdom has it that these higher limits will benefit Republicans, because of the perception that Republican contributors have deeper pockets. That perception is based on the class-based party alignments initiated by the election of President Franklin Roosevelt. But those New Deal coalitions have gradually collapsed in both major parties, and today the monied financial interests are nearly as likely to support Democrats as Republicans. In addition, “bandwagon” contributors who like to back perceived winners flock to Democrats in a year that is expected to favor that party. Democrats probably wish the changes took effect this year.

Looking ahead to 2008, the biggest beneficiary of this action by the Republican legislature will likely be Attorney General Jay Nixon, the frontrunner for the Democratic gubernatorial nomination. Trial lawyers (primarily those representing plaintiffs in personal injury cases) rival organized labor as the single most important source of Democratic campaign cash, and Nixon made millionaires of many of them in outsourcing representation of the state in the class action against big tobacco companies. Prior to this legislation, the lawyers could “thank” Nixon with no more than $2,550 per election cycle ($1,275 each for the primary and general elections). But now Nixon can expect “thanks” more commensurate with the benefit received. The lawyers may up the anne even further by trying to one-up one another in currying favor with the possible new guv.

Supporters of the legislation claimed that big money was getting to candidates anyway by funneling unlimited contributions to political party district committees, which then used their larger limits to pass the money on to the candidates. Those limits were meaningless because of the hundreds of possible party committees who could each use those higher limits. One example of how these committees were used was the large donations of Holcim executives to Democratic Party committees, who passed the funds on to then-Governor Holden’s unsuccessful 2004 reelection bid. Holcim was appreciative of Holden’s Department of Natural Resources rolling over and approving its environmentally toxic new cement plant near Ste. Genevieve. Similar abuses benefitted Democrats and Republicans alike. Bill supporters say the money would be easier to trace if the donors could just give all of it to the candidate directly.

Well, yes and no. Lazy donors will do it that way, but those who hope not to be noticed will still be tempted to use the party committees. While easily discovered, checking the campaign filings of the party committees is an extra step that reporters and opposition researchers have to take. Party committees, while prohibited from making any monetary contributions to candidates, will still be able to make in-kind contributions, and without any limits whatsoever. The legislation does not change the definition of “in-kind” contribution, so the candidate can fully coordinate her/his campaign expenses with the party committees, without any “independent expenditure” charade. All the candidate needs to do is contract for whatever campaign work or supplies is desired and then have the friendly party committee pay for it directly. Elimination of the ceilings means that the candidate only needs to coordinate with one party committee. A candidate seeking to hide her/his financial strength from an unsuspecting opponent can simply have donors give to an unlikely party committee (or a PAC, which is unrestricted by the new law). A suitably positioned candidate can even form and control that party committee (but not the PAC), because a party committee (but not a PAC) is exempt from the law’s purported prohibition of candidate sponsorship or control of a “continuing committee.”

The impact on campaigns in small districts (like state representative and alderman) will be mixed. On one hand, monied special interests with a high-priority interest in the outcome of the election will be able to finance their candidate single-handedly if need be. An official elected under such circumstances will clearly be owned lock, stock and barrel by the donor. On the other hand, some other contributors may reduce their contributions, which will hurt candidates who lack a major benefactor. Under the present law, the ceiling often becomes the rule for the amount of a contribution. When you can be a big shot for just $325 (the current limit), why not? But when the sky’s the limit, many of those contributors (especially new ones not accustomed to the $325 rule of thumb) will only give $100 or $250.

Other major beneficiaries of the new law are prominent citizens who have felt compelled to risk their reputations conducting charades designed to skirt the present limits. For example, the limits caused companies to “suggest” that its executives make their own separate contributions to campaigns supported by the company. The law prohibits company reimbursement of such contributions, but compensation was often “adjusted” to accommodate. Now this uncomfortable charade will no longer be necessary.

In another context, informal slates of candidates running for multi-member board positions will now be able to get coordinated support from a single continuing committee that isn’t limited to a ceiling on in-kind contributions. Prominent people on such committees will no longer have to worry about having to pretend to make “independent expenditures” that aren’t coordinated with their candidates. All candidates for the St. Louis Board of Education and supporters such as Mayor Francis Slay and the Teachers Union will be able to breathe a sigh of relief next time around. One also wonders whether the Missouri Ethics Commission will become even more lenient (if that’s possible) with violators of the current law, when the prohibited activity is about to become legal.

Other provisions in the bill:

Candidates for statewide office and the legislature will be required to file campaign reports electronically, regardless of funding level. This is good for public disclosure of information and will eliminate the abusive practice of filing campaign reports on dark paper that is difficult to copy legibly. However, the provision may be a hardship for computer-unsavvy candidates, which has class and racial implications, and may also discourage recruitment of token candidates in districts where chances of election are minimal. On balance, requiring candidates for state rep to file electronically is probably a bad idea.

One specific exemption to the prohibition against monetary contributions by party committees (which seems redundant under the definitions) allows candidate committees to donate to other committees, including other candidate committees. This reaffirms that the long-standing practice of powerful candidates who raise more than needed funding the campaigns of fellow party members who don’t appeal to those contributors.

The law doubles the advance time (from 30 days to 60) that a “continuing committee” must be formed prior to an election in which it makes contributions or expenditures. This worsens a law which the Oracle has always thought to be an unconstitutional infringement of freedom of speech.

The bill clumsily attempts to reduce the threshold for the special filing requirement disclosing last minute independent expenditures by Missouri PACs from $500 to $250 (the threshold that already applies to out-of-state committees). The reduction in threshold is meaningless because the change in amount was made only to clause describing the report and not the clause defining the circumstances for which the report is required. However, the clause did successfully shorten the filing period from 48 hours to 24 hours.

Last minute “hit and run” ethics complaints are addressed by another poorly worded provision prohibiting the Missouri Ethics Commission from accepting complaints within 15 days before the election at which “such candidate” is running for office. It is unclear whether the term “such candidate” refers to the filer or target of the complaint. (For example, does the prohibition apply to a complaint against a candidate filed by a citizen who isn’t a candidate, and does it apply to a candidate filing a complaint concerning a ballot measure at the same election?) The provision also mysteriously seems not to apply to special elections.