Editorial | Open the Campaign Books Wider

January 24, 2013 

When Greg Hembree accepted $8,000 in the waning days of his state Senate campaign last year, he managed to simultaneously illustrate two shortcomings of the state’s current campaign finance rules.

First is the basic issue that voters didn’t know about this $8,000 – and more than $17,000 in other contributions Hembree took in – until Jan. 6, two months after the election that put Hembree in office.

Second, despite state law that limits contributions to $1,000 per individual per election cycle, all $8,000 came from the same source: school choice proponent Howard Rich, a New York millionaire who donated more than $150,000 to candidates in the latest election. Rich easily worked around the donation limits by funneling his contributions through multiple companies, all of which share the same address in Philadelphia.

To be clear, the shortcoming is in state campaign rules, not due to any illicit action by Hembree, who was simply following the laws in place and whose integrity we have no reason to doubt. Nevertheless, both concerns deserve to be addressed as legislators debate election and ethics rules this year.

The first issue should be simple enough to address if lawmakers have the fortitude to do so. Current state rules governing campaign finance reports require candidates to disclose before an election all donations received more than 20 days before the election. But the next campaign report is not due until the beginning of the next quarter – Jan. 10 – meaning that candidates have up to three weeks before Election Day in which they can take in donations without informing voters of the source of their funds, or at least until after the race has been decided.

In most cases, the donations received in this period are innocuous enough, the same individual contributions received the rest of the year from politically active residents. But this period can also be used – and is used at times – to hide controversial donations that might raise eyebrows if they were more widely known before an election. Hembree agreed Tuesday that most last-minute donations aren’t being scheduled to avoid public scrutiny, but in some cases, he admitted, “you certainly wonder about it.”

Simply put, there’s no longer any reason for this extended period when campaign reporting goes dark. In years past, when the law was written, it could be justified, barely, as candidates were still submitting hand-written reports or sending in information by mail that had to be copied into the state’s system. Today, however, reports are required to be filed online and are available almost immediately. Candidates should be able to inform voters who their backers are within a much shorter period of time.

Legislators have already had the chance to change this practice. The 2010 law that made online filing of campaign reports mandatory also originally required public reporting within 48 hours of any donation of $100 or more within the last weeks of a campaign. The idea, however, was stripped out of the final bill, to the detriment of public accountability. We supported the idea in 2010, and we still do. It should be revived.

The second issue – donations from multiple, related companies, often consisting of nothing more than an address on a piece of paper – is a bit more complicated. We can all agree that forming and using multiple LLCs to steer donations to a single candidate is a bald-faced strategy to avoid state campaign finance rules. But it’s frustratingly unclear how to fix that loophole.

The easiest method would be to ban all contributions from businesses. That’s the tactic that virulent racist and generally despicable S.C. politician Ben Tillman adopted when he sponsored the first federal campaign finance rules in 1907. The idea has the advantage of being clear, easy to understand and easy to follow. However, there truly are companies that would like to support candidates who support their industry or aims, and it’s hard to say that all of their donations should be banned outright. Further, it’s easy to predict that if business donations were banned, large donors would simply move toward creating multiple, related political action committees and funneling money through those entities instead.

House Democrats did attempt one fix in 2010, seeking to ban multiple contributions from business entities that share a common majority ownership. It was an interesting proposal, but it was easily defeated. And in truth the idea suffered from being too complicated to be practical. Whose responsibility would it be to find out the majority interest of companies? The candidate? The State Ethics Commission?

We don’t have a good solution of our own to offer, except to encourage more transparency so that voters can judge for themselves whether a politician’s funding sources pass the proverbial smell test. And a big step toward that transparency would be eliminating the dark period at the end of a campaign.

Voters are generally smart folks, and if they notice that a candidate suddenly received an inordinate amount of money from one source, they’ll rightfully ask the tough questions about who’s trying to influence that candidate and how much they should take that information into account at the ballot box. What’s unfair to voters is hiding that information until it’s too late for them to change their minds.

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