Gail Gibson stories from The Center for Public Integrity

Now You Don’t

2012-05-30T15:48:45-04:00

While they’re supposed to be an exercise in citizen-driven democracy, ballot initiatives — like the “regulatory takings” measures that voters will decide today in four Western states — have instead become vehicles for big-spending special interests to steer around the regular legislative process.

Voters still get the last word. Increasingly, however, they must make their decisions with little information about the motivations or financial backing of the individuals and organizations pushing the measures.

Organizations behind many ballot initiatives have avoided disclosing their donors or detailed activities by operating through a dizzying array of interconnected, tax-exempt entities that two prominent political scientists describe as “resembling Russian matryoshka dolls, where each layer is removed only to find another layer obscuring the real source of money.”

In Tuesday’s elections, the effort to push new land-use regulations through ballot initiatives in Arizona, California, Idaho, and Washington offers a case in point.

Of the $7.2 million raised to push the measures, $5.7 million – 79 percent of the total – has come from tax-exempt organizations and other entitites connected to Howard Rich, a New York real estate investor and political activist, according to state campaign finance reports available through November 2.

The most prominent of the tax-exempt benefactors is Americans for Limited Government, a Chicago-based organization that Rich chairs. The group reported total revenue of just $120,577 on its federal tax return for 2004.

But this year the organization rocketed onto the political-spending stratosphere. An analysis by the Center for Public Integrity shows that Americans for Limited Government has contributed more than $8 million across the country to organizations backing property-rights measures and state-spending limits that are billed as “Taxpayer Bill of Rights,” or TABOR, initiatives.

In some cases Americans for Limited Government has contributed directly to those causes; in others it has given millions of dollars to related tax-exempt organizations that subsequently made contributions to the same efforts.

The group America At Its Best, for instance, has received at least $3.6 million in contributions from Americans for Limited Government, according to campaign finance reports filed in Nebraska. In turn, state records show, it has contributed $575,000 (as of November 2) to the organization backing a takings initiatives in Idaho.

Voters can’t find out, though, who’s really bankrolling Americans for Limited Government. Because it’s registered with the Internal Revenue Service as a 501(c)(4) nonprofit advocacy organization, it is not required to public disclose the identities of its donors, as political candidates and committees are.

Americans for Limited Government could voluntarily disclose its donor list. But the group has consistently refused to do so, arguing that publicity could lead to retaliation against its donors from the powerful government interests it has challenged on issues ranging from land use to term limits.

Explaining its nondisclosure policy on its Web site, the organization says that because “legislatures routinely find ways to jab at those who stand for more limited, accountable government, it is common – even traditional – for individuals to contribute privately to such causes.”

The group also invokes the U.S. Supreme Court’s 1958 decision in NAACP v. Alabama, in which the court held that forced disclosure of the organization’s membership list, particularly given the documented history of reprisals against known members, would be an unconstitutional violation of its members’ free-association rights.

“There certainly are cases where that’s true, but this is not one of them,” Daniel A. Smith, a political science professor at the University of Florida, said in an interview with the Center. “This is using the tax code to skirt disclosure. I certainly have real problems with that when you have absolutely nothing else to regulate the process.”

In a 2005 article for the Election Law Journal that likened such “veiled political actors” to Russian nesting dolls, Smith and Elizabeth Garrett, a political science professor at the University of Southern California, argued that greater disclosure is needed for politically active nonprofit organizations to make it clear to voters who is behind the often folksy, grass-roots-sounding groups that organize petition drives and run well-heeled campaigns.

Such efforts to bankroll ballot initiatives have accelerated in recent years as Congress moved to curb unlimited soft-money contributions to national and state political parties and to enforce stricter disclosure requirements on so-called 527 political advocacy groups.

Some states, in trying to regulate political advocacy by nonprofit advocacy organizations, have bumped up against First Amendment issues. In 2000, the nonprofit California Pro-Life Council sued the state of California, arguing that the state could not force disclosure about any contribution or expenditure in support of ballot-measure advocacy.

In a May 2003 decision, a three-judge panel of the 9th U.S. Circuit Court of Appeals rejected the organization’s argument. The appellate judges noted that state ballot measures in recent years have decided major issues and operated with major budgets – nearly $200 million was spent on campaigns for 12 California ballot measures in the 1998 general election alone.

“All this money produces a cacophony of political communications through which California voters must pick out meaningful and accurate messages,” the 9th Circuit panel said in its decision. “Given the complexity of the issues and the unwillingness of much of the electorate to independently study the propriety of individual ballot measures, we think being able to evaluate who is doing the talking is of great importance.”

After further proceedings in the trial court, another appeal in the same case is now pending before the 9th Circuit.

John G. Matsusaka, the president of the University of Southern California’s Initiative and Referendum Institute, told the Center that he has mixed feelings about the consequences of greater disclosure for nonprofit advocacy.

“On the one side, the text of the measure stands on its own,” he said. “So, in some sense, the law is what the law is regardless of who funded it – and that’s what the voters need to know.

“The other side is, we know from quite a bit of research that the way voters make decisions on these things is they pay some attention to who’s endorsing it, because they don’t have the time to read the measure. So, I think the inability to figure out who’s actually funding it makes it difficult for voters to make informed decisions.”

Déjà Vu All Over Again?

2012-05-30T15:58:05-04:00

Fourteen years after his signature organization, U.S. Term Limits, began deploying millions of dollars to tap widespread voter frustration with career politicians, political activist Howard Rich is using the same playbook to try to overhaul land-use laws in this week’s elections.

The wave of successful term-limits campaigns in the 1990s was marked by two key factors: an unhappy electorate and large infusions of cash from U.S. Term Limits and a few other big donors. For voters facing regulatory-takings ballot measures on Tuesday, that past could prove instructive.

Just as voters were disenchanted in the early 1990s with politicians who stayed in office too long, many voters are livid over a 2005 decision by the U.S. Supreme Court in Kelo v. City of New London that affirmed the power of government to seize private property for non-governmental uses in the name of economic development.

On Tuesday, voters in eight states will decide relatively non-controversial ballot measures that would curb the use of eminent domain for private development. In four Western states, voters will weigh ballot initiatives that would go further, requiring government to pay landowners when regulatory actions — new zoning rules or building restrictions, for example — reduce property values.

As with term limits more than a decade ago, Rich has mobilized a dizzying array of interconnected tax-exempt organizations — chief among them Chicago-based Americans for Limited Government, which he chairs — to try to turn grass-roots grumblings into radical change. The Rich-affiliated organizations have poured nearly $5.7 million — 79 percent of the total $7.2 million raised — into pushing takings initiatives in Arizona, California, Idaho, and Washington, according to state campaign finance records available through November 2.

The same funding patterns appeared in term-limits campaigns during the past decade. In 1992, when voters in 14 states approved ballot measures limiting how long their U.S. senators and representatives could stay in Washington, Rich’s U.S. Term Limits contributed $1.8 million of the total $5.9 million raised by term-limits committees, according to a 1993 analysis by Common Cause.

Later, Rich-backed organizations became even more prominent. In nine state campaigns for term limits in 1994, U.S. Term Limits provided more than 70 percent of the funding, the Associated Press reported in 1995. And in 2002, an opposition campaign that helped to stop an effort to extend the length of terms for California legislators was bankrolled entirely by individuals or organizations connected to Rich, according to state records reviewed by the Center for Public Integrity.

In that 2002 campaign against California’s Proposition 45, the opposition committee Stop the Politicians reported raising $1,032,719. Almost all of the money — $1,024,219, as well as a loan of $500,000 — came from Americans for Limited Terms, which Delaware incorporation records show renamed itself that year to become Americans for Limited Government, which is now the driving force behind the takings initiatives.

The only other contributions to Stop the Politicians in 2002 were a $2,500 donation from Rich’s wife, Andrea Millen Rich, and $6,000 from Council for Responsible Government, an organization based at the Fairfax, Virginia, home of William A. Wilson, a director of Americans for Limited Government.

Like the property rights measures now, the state-by-state campaigns for term limits in the 1990s also relied on professional signature-gatherers to get initiatives on the ballot and the involvement of a cadre of like-minded, libertarian activists.

But unlike with term limits, the push on regulatory takings has met a more organized and better funded opposition, say analysts such as Gary F. Moncrief, a political science professor at Boise State University. Moncrief has studied the term-limits movement and is watching one of the takings initiatives play out in his state.

“Almost everybody in the state understands that Howard Rich is the person who has funded most of this — and he’s a New Yorker, which is a terrible thing to hang on somebody’s neck when you’re in Idaho,” Moncrief said in an interview with the Center.

“For years, it was unclear who was behind the term-limits initiative. I was constantly asked in those days, ‘Who’s actually behind this? Who’s putting up the money?’ Nobody was very clear on it.”

Rich did not respond to a November 3 e-mail from the Center seeking comment for this story.

Beginning in 1990, 21 states adopted term limits for state legislators. But the movement has had setbacks. In 1995 the U.S. Supreme Court ruled that term limits for members of Congress were unconstitutional (23 states had them on the books), and in six states local term-limits laws also have been struck down or repealed.

Still, Rich’s term-limits strategy is far from dead. Colorado At Its Best, a tax-exempt organization that lists Rich as a director, had spent more than $1.1 million as of October 24 to push a measure that would limit the terms of appellate court judges in Colorado, state election records show.

And in Oregon, where voters on Tuesday will decide whether to restore term limits for state lawmakers, U.S. Term Limits had contributed $1.24 million to that effort as of October 25 — roughly 95 percent of the campaign’s funding.

Following The Money (Part 3)

2012-05-30T16:16:52-04:00

Before it emerged this year as a major financial backer of ballot initiatives on issues ranging from land use to end-of-life decisions, America At Its Best barely registered on the political landscape.

Until February 2006, America At Its Best operated under the name Virginia At Its Best. Formed in 2003 as a tax-exempt lobbying organization, it has never filed a federal income tax return, apparently because — until now — it had never collected more than $25,000 in a single year.

This year is a different story. Public records show that America At Its Best has collected more than $4 million in contributions – the vast majority of it from Americans for Limited Government, a tax-exempt organization in Chicago that’s chaired by Howard Rich, a libertarian political activist who lives in New York City.

The money, in turn, has gone to support two of Rich’s pet political projects: takings initiatives and state spending limits that are typically billed as “Taxpayer Bill of Rights,” or TABOR, initiatives.

State campaign finance records show that America At Its Best has spent more than $2 million to push such measures in Idaho, Missouri, Michigan, and Nebraska.

In Nebraska, America At Its Best also spent $915,000 this year pushing a ballot initiative that would have generally required Nebraska patients to be given water and nutrition until death, campaign finance records show. But backers of the measure, which echoed the emotional 2005 debate over end-of-life decisions surrounding the Terri Schiavo case in Florida, failed to collect enough valid signatures to get it on the ballot in Nebraska this year.

In most of the states where America At Its Best has bankrolled initiative efforts, its sources of funds have been a mystery. Its Web site features a photo of a dusty country road and an American flag and states that the organization is “supported by donors from America,” adding: “We raise funds by using direct mail campaigns, website marketing, and personal outreach campaigns.”

But in Nebraska, which requires any out-of-state committees that give more than $10,000 to political campaigns to disclose their contributors, state campaign finance records show that America At Its Best has collected all of its funds this year from four sources:

more than $3.6 million from Americans for Limited Government.
$400,000 from the Fund for Democracy, a non-incorporated intermediary that shares Rich’s New York City address and describes itself as “a revocable trust dedicated to assisting citizens assert their constitutional rights.”
$50,000 from the Club for Growth State Action, a tax-exempt organization headed by Rich that, according to financial statements, “shares common management” with Americans for Limited Government and its affiliated foundation.
$100,000 from the National Taxpayers Union, a tax-exempt organization in Alexandria, Virginia, that lobbies for tax reform and repeal efforts.
The official address of America At Its Best, according to IRS and business records, is the home, in Fairfax, Virginia, of William A. Wilson. Wilson launched Virginia At Its Best in 2003 and is a director of Americans for Limited Government.

At least two other “At Its Best” groups have ties to Rich and his organizations. Colorado At Its Best, which this year has spent $812,000 on a judicial term-limit initiative in that state and given another $50,000 to California’s Protect Our Homes Coalition in support of a takings initiative there, lists Rich as a director. Another group, Arizona At Its Best, lists Rich as its chairman.

In state campaign finance records, America At Its Best lists a mailing address in Kalispell, Montana. Its Web site, however, lists an address in Boise, Idaho, that’s shared by This House is MY Home, which is leading the push in Idaho for Proposition 2, a ballot measure that would restrict eminent domain and regulatory takings.

Laird Maxwell, who is listed in public records as the chairman of America At Its Best, is the executive director of This House Is MY Home. He declined to discuss the activities of America At Its Best with the Center for Public Integrity.

In a telephone interview with the Center earlier this month, Maxwell called Proposition 2 a “citizens’ initiative.”

According to Idaho campaign finance records through October 10, however, America At Its Best and Rich’s Fund for Democracy have poured $412,000 into This House Is MY Home, accounting for more than 99 percent of its receipts.

This House Is MY Home reported $1,804 in other donations, including $50 from Maxwell.