State bans on soft money

Conn. is only state with campaign finance law similar to Bipartisan Campaign Reform Act

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Among the 50 states, only Connecticut has a campaign finance law that prevents the national parties from flooding its elections with transfers of unregulated, soft money donations.

Like the Bipartisan Campaign Reform Act, which will take effect after the November 2002 elections, Connecticut's law bans all corporate and union contributions and limits the amount individuals and political actions committees (PACs) can give. Connecticut's law explicitly bans soft money transfers to state parties under the guise of "party building activities" from the "nonfederal accounts" (that is, the accounts that fall outside the regulatory authority of the Federal Election Commission) maintained by the half-dozen party committees of the national Democratic and Republican parties.

While the Bipartisan Campaign Reform Act closes the soft money loophole at the federal level, without state laws like Connecticut's that bar transfers into states from non-federal accounts, money will still be able to move across state lines.

Alaska is a case in point.

A group called Campaign Finance Reform Now! gathered signatures from more than 32,000 Alaska voters for a ballot initiative that threatened to cut politicians off from most of their campaign cash sources. Unless the legislature passed a similar reform measure, Alaskans would have decided the issue for themselves in the voting booth.

In 1996—two years before the Connecticut bill was enacted—the Alaska state legislature passed a campaign finance reform measure that was the strictest in the nation, and imposed a complete ban on direct corporate and union contributions to parties and candidates. Moreover, it lowered from $1,000 to $500 the annual limit on contributions from an individual or PAC to a candidate, and placed a $5,000 limit on individual contributions to political parties.

In addition, the law banned fundraising in non-election years, prohibited personal use of campaign funds, imposed an aggregate limit on contributions from non-residents, placed a limit on contributions from parties to candidates, and prohibited registered lobbyists from contributing to legislative candidates other than those in the lobbyist's district.

The restriction on out-of-state residents limited soft money contributions from groups such as national parties but did not impose a complete ban, as does the Connecticut campaign finance law. Instead, contributions to the governor, state senators and state representatives were capped at $20,000, $5,000 and $3,000, respectively, and PACs and political parties were limited to collecting no more than 10 percent of their total contributions from these out-of-state groups.

In 2001, a federal court judge removed all caps on individual, corporate and union contributions to the state political parties. (The court did not strike down contribution restrictions to candidates or the contributions restrictions from parties to candidates). U.S. District Judge James K. Singleton Jr. ruled that because there is no appearance of corruption associated with "party building contributions"—which are made for "get out the vote" drives and other expenses unrelated to the election of a specific candidate—they are constitutionally protected and not subject to any limitation.

His decision gave the state legislature free reign to effectively gut the state's soft money ban. In its wake, out-of-state soft money contributions poured into the state, ostensibly to influence the general primary for governor in August, according to Chris Ellingson, assistant director of the Alaska Public Office Commission. A slew of issue advertisements sponsored by Americans For Job Security that blast the governor and lieutenant governor saturated the airwaves in the past month. In February, a fundraiser attended by President George W. Bush raised almost a million dollars for Sen. Frank Murkowski's gubernatorial campaign. None of that money has to be reported.

"It's ugly. It's real ugly," Ellingson said. "We don't regulate soft money at all any more. You could put $1 million into the state party today and we wouldn't even know it."

Martin Schultz, an assistant attorney general, expects the Ninth Circuit Court of Appeals to reverse Singleton's decision based on a correct reading of Buckley v. Valeo and subsequent decisions, which held contribution limits a constitutionally permissible means of deterring corruption and set the framework for the federal campaign finance system.

"It's mistaken analysis," said Brenda Wright, managing attorney for the National Voting Rights Institute, whose amicus brief argued that the judge incorrectly equated contribution restrictions with expenditure restrictions.

Moreover, the Supreme Court's ruling in FEC v. Colorado Republican Federal Campaign Committee ("Colorado Republican ii") decided that political parties are not entitled to more constitutional protection from campaign finance regulations than are individuals and PACs. Indeed, the court accepted the notion that parties can be "conduits for contributions meant to place candidates under obligation."

Meanwhile, Alaska state Rep. Andrew Halcro, a campaign finance reform advocate, said he is frustrated. One of only 28 Republicans to vote against the repeal of the contribution limits, the two-term Anchorage legislator said he's been blackballed by his party and will be stepping down at the end of his term later this year.

"Big money equals bad politics," he said. "In this state I've seen consistently elected official after elected official funnel all types of cash under the guise of party building. The party doesn't do any grass roots work...they turn to corporations and unions to generate cash...

"It's just the wrong message to send."

In contrast to Alaska, Connecticut's legislation—prompted by the revelation that the Democratic National Committee pumped $1 million of soft money into the state in support of then-President Bill Clinton's 1996 reelection campaign—remains unchallenged.

The 1998 law explicitly banned soft money by limiting the national parties to transfers from their federal FEC-regulated, or hard money, accounts. Thus, Connecticut became the first state to ban the use of the unregulated donations to the national political parties, preceding McCain-Feingold by more than four years.

Under Connecticut law, individuals are limited to annual contributions of $5,000 to the state party committees and $1,000 to local party committees. Direct corporate and union contributions are banned, but unions can contribute treasury funds to PACs and there are no caps on corporate PAC contributions to the parties. Party expenditures are subject to disclosure and must comply with the state's issue advertisement law that prohibits express candidate advocacy within 90 days prior to an election.

This was the compromise struck between Connecticut's parties when they passed their post-Watergate campaign finance reform bill in 1975, according to Jeffrey Garfield, executive director of Connecticut's State Election Enforcement Division. Garfield helped draft the 1998 soft money law. "It was one of the finer things we were able to accomplish," Garfield said. "Because there was overwhelming acceptance of the restrictions, both parties have accepted and lived by the rules."

The state's soft money ban remains unchallenged and continues to receive bipartisan support.

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