Spotlight on state campaign finance and ethics reform
As federal agencies struggle to keep track of the growing list of conflicts of interest in the federal government, efforts in the states to drain the local swamps, so to speak, are getting mixed results. On the same day that Americans ushered President Trump into office, many also took to the polls on various ethics-related ballot measures. In late November 2016, CREW published a review of important state ballot measure victories relating to ethics and transparency. Now, half a year later, it’s time to look at how those reforms have fared, as well as other strides states have taken in the name of ethics reform.
On November 8, 2016, 70 percent of Missouri voters supported the proposed Amendment 2 to the Missouri Constitution, which added Section 23 to Article VIII of the Missouri Constitution establishing new campaign finance regulations and restrictions. Section 23 imposed limits on state-level contributions, including $2,600 for contributions to candidates and $25,000 for contributions to political parties. It also restricted the sources of some contributions, barring corporations or labor unions from contributing directly to campaigns. Finally, it attempted to prevent evasion of its restrictions by prohibiting the transfer of funds between political action committees (PACs) and banning out-of-state contributions unless they come from a committee registered in the state.
In December, a pair of lawsuits were filed against the state of Missouri, the Missouri Ethics Commission (MEC), and its Commissioners by the Association of Missouri Electric Cooperatives (AMEC), the Free and Fair Election Fund (FFEF), and others, alleging that Section 23’s prohibitions on contributions violated the plaintiffs’ free speech, assembly, and equal protection rights. The cases were consolidated and heard together.
On May 5, Judge Ortie Smith struck down parts of Section 23 while keeping the $2,600 individual contribution limit in place. In deciding whether Section 23’s restrictions were necessary in upholding the state’s interest in preventing political corruption, Judge Smith held that most of them were not necessary in light of the aforementioned contribution limit and due to the consideration of PACs as independent actors. Citing the Supreme Court’s McCutcheon v. FEC ruling, Judge Smith argued the restrictions unnecessarily restricted the plaintiffs’ associational free speech rights. Judge Smith also created a potential loophole to the $2,600 individual contribution limit in ruling that the MEC will not enforce the $2,600 limit on contributions to PACs that make independent expenditures unless contributions are earmarked for a specific candidate. The law is therefore likely to do little in the way of limiting big political spenders given it is unlikely that donors will designate their PAC contributions for specific candidates.
Following this decision, deep-pocketed donors inside and outside of Missouri can continue to easily set up multiple political action committees and funnel money through them, relying on unofficial understandings to ensure their donations go to support their candidates of choice. On May 30, Missouri’s attorney general Josh Hawley announced that he would appeal the decision.
In November 2016, South Dakota voters opted to revise campaign finance and lobbying laws through Initiated Measure 22, which among other things, “include[d] a major overhaul of the state’s campaign finance system, including new contribution limits, disclosure rules, and reporting requirements…[and] create[d] an appointed ethics commission to administer the credit program and to enforce campaign finance and lobbying laws, including new reporting requirements.”
On November 23, several Republican legislators and the South Dakota Family Heritage Alliance challenged the constitutionality of the measure in a lawsuit. A South Dakota circuit court judge issued a preliminary injunction on December 8 to keep the law from going into effect. The measure was scrapped on February 2, when South Dakota governor Dennis Daugaard (R) signed House Bill 1069 into law. The bill contained an emergency clause, meaning it went into effect immediately and prevented voters from reintroducing it as a ballot measure in the next election. Opponents of the repeal quickly rallied, however, and the non-profit citizen advocacy group Represent South Dakota filed a proposal with the state legislature in early April for an anti-corruption constitutional amendment. The group will need to collect 28,000 signatures before the question can be put to voters in 2018.
In an attempt to appease South Dakotans who supported Initiated Measure 22’s proposed ethics commission, Governor Daugaard signed a law in March that created a new South Dakota government accountability board, which would, according to the Argus Leader, “exist as a place for South Dakotans to bring concerns about government fraud, conflicts of interest and other potential wrongdoing.” In a follow-up report the paper found the board is relatively toothless, and can do little beyond accept whistleblower reports of wrongdoing and decide whether to issue a public or private reprimand. It does not have the obligation to disclose investigations or outcomes, nor can it refer cases directly to local prosecutors. The law takes effect on July 1.
Like South Dakota, New Mexico does not have an independent ethics commission. It is one of only nine states without one, the others being Arizona, Idaho, New Hampshire, North Dakota, Vermont, Virginia and Wyoming. In mid-March, the New Mexico legislature managed to pass House Joint Resolution 8, which would introduce a 2018 ballot initiative to establish an independent seven-member ethics board. However, efforts to institute some kind of state ethical oversight prior to the 2018 elections floundered: in March, the New Mexico House of Representatives passed Senate Bill 96, which, according to the Santa Fe New Mexican, “would require any independent-expenditure group — such as a corporation, union or dark money group — that spends more than $1,000 campaigning during an election cycle to report expenditures and provide information about certain contributors.” Senate Bill 97, which would set up a public financing system and curtail spending for unopposed candidates, was also sent to Governor Susana Martinez (R) for her signature. Governor Martinez vetoed both bills in April.
Ultimately, the state that passed some of the most comprehensive ethics legislation during its 2017 legislative period was Maryland. Plagued by a series of corruption scandals involving Democratic legislators, on April 8 the General Assembly passed the Public Integrity Act of 2017, which, according to the Associated Press, “increases financial disclosure requirements for state elected officials, state public officials and lobbyists…[while] also expand[ing] the definition of a conflict of interest.” Governor Larry Hogan (R) signed it into law on April 11, calling the act “the first meaningful ethics reform in 15 years.” Common Cause Maryland praised the bill as “a good step forward,” and the reform should be a welcome change for Maryland voters, who indicated that corruption was a major problem in state government when polled in March.