The rules, written by Commissioner of Political Practices Jonathan Motl and currently open for public comment, are meant to strengthen campaign disclosure requirements after the high court threw out Montana’s Corrupt Practices Act, a 1912 law that banned corporate political spending. The justices said such spending is a constitutionally protected form of speech.
After the ruling, “social welfare” corporations, known by their IRS tax-exempt status 501(c)4, which don’t disclose their donors, began to hammer Montana candidates using “issue ads.”
Unfettered by contribution limits, the nonprofits would buy negative campaign ads in the mail or on TV and radio stations, usually in the week before the election. The ads mostly targeted Democrats and moderate Republicans who refused to sign ideological pledges. Sen. Duane Ankney, R-Colstrip, described the experience as getting “bushwhacked.”
Those political ambushes motivated the Republicans who survived them to ally with Democratic lawmakers to pass Senate Bill 289, the Disclose Act, during the 2015 session.
That law gave the commissioner rule-making authority, and before his rules can become law, the public can comment, a process that started Aug. 13 and includes public meetings in Helena on Sept. 2 and Sept. 3.
Perhaps the most powerful new rule, and one which addresses the 501(c)4 groups, defines how the commissioner can determine the “primary purpose” of an organization involved in political activities in Montana.
No clear test exists in the U.S. to decide what an organization’s primary purpose is, but under federal rules, a social welfare corporation that claims tax-exempt status cannot have elections as its primary purpose.
The IRS can examine their political expenditures to see if they exceed some percentage of the total budget. If that percentage is relatively large, say 50 percent or more, the IRS could revoke the organization’s tax-exempt status. But it rarely does.
Last month, while writing the rules, Motl rejected a percentage-based test in favor of a “totality of circumstances” test for determining primary purpose.
That means even if the group is spending less than half its money on political activity, the commissioner can examine the organization’s budget, staff activities, history, bylaws, fundraising and number of election expenditures.
If the commissioner decides the primary purpose involves candidates or issues on the ballot, the commissioner can force the nonprofit to file disclosure reports as an independent committee, ballot issue committee or political party.
Jenn Hensley is a government affairs and political consultant in Helena. She’s also a former commissioner of political practices. She said the new definition of primary purpose “removes a lot of the gray area,” but she wonders how commissioners will apply the law. “If it’s one expenditure for a statewide mailing, will it trigger reporting?” she asked.
The answer is: maybe.
As drafted, the commissioner will determine whether an organization has crossed the boundary and must begin reporting as a political committee. If the organization disagrees, it can appeal to district court.
Motl went this route “because election activity varies from cycle to cycle and is infinitely varied over time.” He said he decided against a rule forcing corporations formed within six months of an election to report as an independent committee because he wanted to balance the public’s interest in disclosure with an organization’s right to privacy.
Anthony Johnstone is an associate professor of law at the University of Montana who teaches and writes about election rules. He said groups can still sidestep the rules.
“National campaign groups, including political parties, can avoid disclosure of their donors by funding a state subsidiary that reports only the national parent group as a donor,” Johnstone said in an email. “But the parent spends most of its money on campaigns in other states, so it may disclaim any primary purpose of campaigning in Montana and may even claim that its activity in Montana is so small relative to its overall funding that it is protected from disclosing its donors.”
For example, the Republican State Leadership Committee is a national campaign group that in 2014 raised $38 million nationally but spent about half a million in Montana, mostly on behalf of Montana Supreme Court candidate Lawrence VanDyke, Johnstone said.
The Republican State Leadership Committee spent that money in Montana by forming a subsidiary PAC that disclosed it as the major donor but did not disclose who the major donors were.
If Montana’s “primary purpose” is to disclose campaign spending of a national group on a national scale, Johnstone said, the Republican State Leadership Committee and similar groups would publish the donors who fund Montana campaigns according to Montana law, not just to the IRS according to federal law.
Sounds good for those who support disclosure. But even before the rule goes into effect, it’s being challenged in court on constitutional grounds.
Montanans for Community Development, a Helena corporation that spends money on elections, has filed a federal lawsuit. Its attorney, James Bopp of Indiana, who won the Citizens United case and in 2012 told PBS’ “Frontline” that only “left-wing nut jobs” care who finances political ads, deposed Motl in the case last month.
NYC Wins When Everyone Can Vote! Michael H. Drucker
No comments:
Post a Comment