Non profit disclosure bill moves forward in House, despite Senate “recall”

Posted in 83rd Legislature, Around The State, Corruption, Money In Politics, The Lege at 10:13 am by wcnews

A bill to force more disclosure from, as the bills caption states, “..certain persons who do not meet the definition of political committee”, is causing quite a stir in The Lege. Not just intra-party, but inner party squabbles as well. Which is a plus. But in cases like this I think it’s better to err on the side of too much disclosure, as opposed to too little disclosure.

Jay Root has a good synopsis of the situation, Campaign Finance Loophole Targeted.

Politically active nonprofits, which are playing an increasingly important role in state elections, would no longer be able to hide the identity of their major donors under a bill making its way through the Texas Legislature.

Rep. Charlie Geren, R-Fort Worth, says he plans to push Senate Bill 346 through a House committee this week without any changes. Since it has already passed the Senate, the bill would go straight to Gov. Rick Perry if the full House subsequently approves the legislation without amendment.

“My intention is to get the bill out of committee exactly like it came over and take it to the floor, and fight off all amendments and then send it to the governor,” Geren said. A public hearing is set for Wednesday.

Geren and the Senate sponsor, Sen. Kel Seliger, R-Amarillo, say they are targeting nonprofits organized under 501(c)(4) of the tax code, which the IRS says are supposed to be “social welfare” organizations but are allowed to engage in political activity as long as that’s not not their primary activity. The bill would trigger disclosure of donors who give more than $1,000 to a group that engages in more than $25,000 of political activity intended to influence an election. The disclosure only applies to political donations.

On the federal level, politically active groups that don’t disclose their donors, most of which are 501(c)(4) nonprofits, have had an outsized impact in recent elections, giving a whopping $300 million in the 2012 elections, according to the Center for Responsive Politics.


According to state figures compiled by Texans for Public Justice (TPJ), a liberal campaign finance watchdog group based in Austin, one politically active nonprofit, the conservative Texans for Fiscal Responsibility, spent about $350,000 in the 2012 elections, most of it in the Republican primaries. (Spending is reported, but contributions are not.)

On the left, the Texas Organizing Project, a 501(c)(4) that advocates for moderate- and low-income Texans, spent about $240,000 over the same period, TPJ figures indicate. A column in the San Antonio Express News last year also identified a 501(c)(4), South Texas Alliance For Progress, behind an effort to torpedo an initiative to fund pre-K education with a small sales tax increase.

Proponents of SB 346 say if the Legislature doesn’t require donor transparency for 501(c)(4)’s this year, elections in 2014 and beyond will be awash with secret money.

“This bill will close down a loophole that is about to become the size of the Grand Canyon,” said Fred Lewis, a lawyer and campaign finance activist who recently registered his approval of the bill during a Senate hearing.

Capitol whisperers say the bill was primarily designed to smoke out the donors behind Texans for Fiscal Responsibility, which is run by conservative activist Michael Quinn Sullivan.

Seliger said fellow GOP senators cited Sullivan’s opposition to the bill when they voted to undo their vote last week approving the bill.

And there certainly is no love lost between House Speaker Joe Straus and Sullivan, who has made the San Antonio Republican a frequent target of his Tea Party infused ire. The group’s largest expenditure in the last election cycle, $82,169, went to support Straus’ primary opponent Matt Beebe, according to TPJ figures.

Sullivan calls the Seliger-Geren bill an attack on the First Amendment and notes that labor unions are not covered by the legislation.

“I find it difficult to see where the state of Texas has a compelling interest in regulating the First Amendment right of non-union corporate political speakers differently than others who engage in political speech,” Sullivan said. A call to the Texas Organizing Project was not immediately returned.

Sullivan’s opposition isn’t the only hurdle for the legislation. Democrats are also expressing concerns about it and could band together in an unlikely union with their Republican counterparts to kill it.

Several Senate Democrats already joined Republicans in an attempt to “recall” the legislation back from the House after they initially voted to approve it. But the recall effort failed because the bill had already arrived in the House, which treated it like a fumbled football. Senators said they didn’t fully understand what the bill did when they approved it the first time.

One of the vote-switchers, Sen. Kirk Watson, D-Austin, said he was afraid there could be “unintended consequences” from the bill and wanted a chance to more fully vet it. He held open the possibility that he could support the legislation once he got a better look at it.

After the Democrats flipped their votes, word spread that Democratic mega-donor Steve Mostyn was behind the move. Mostyn spokesman Jeff Rotkoff acknowledged that the wealthy trial lawyer had concerns about the bill but said he is not working against it.

Rotkoff said the legislation does not specifically mention 501(c)(4)’s and might require the reporting of donations from groups the sponsors weren’t intending to cover.

“Steve agrees with the goal of the bill,” Rotkoff said. “But campaign finance counsel we have spoken with believes the bill could have significant unintended consequences. This is not something Steve is actively working on, but our opinion is that this bill may attempt to do the right thing in the wrong way.”

Other then these general, vague, and non-specific reasons for why this bill is “bad”, the only real concrete reason anyone has put forward for not supporting this bill comes from Sen. Brian Birdwell (R-Granbury) in the Senate Journal:

Today I cast my vote in opposition to Senate Bill 346. The bill was primarily captioned to address transparency–”Relating to reporting requirements of certain persons who do not meet the definition of a political committee”–and while I am certainly a strong proponent for such open government and transparency, I had constitutional concerns on the bill. First, the bill establishes separate reporting requirements for corporations. Some corporations like labor unions are exempt, while other corporations like 501(c)(4) entitiesiare not. In 1990, the Supreme Court determined in Austinivs.iMichigan Chamber of Commerce that different restrictions on speech related to spending based upon corporate identity were constitutional. Had
SBi346 been passed while that 1990 case had still been the prevailing precedent, I believe it would have been constitutional. However, in 2010 the Supreme Court decision in the Citizens Unitedivs.iFederal Election Commission case determined that
theiFirst Amendment to the U.S. Constitution prohibited the government from restricting independent political expenditures by corporations, associations, or labor unions. The court also found that the First Amendment protects associations or individuals in additional to individual speakers. Corporations, as associations of individuals, therefore have First Amendment rights. Second, SB 346 treats corporations differently from labor unions and associations in what they must report. SB 346 requires that corporations which spend less than $25,000 must report expenditures, while those corporations which spend more than $25,000 must not only report expenditures, but report their donors. Again, this is a disparate treatment not only among corporations based upon their spending levels, but corporations as they are treated in relation to labor unions and associations. The reporting requirement of donors also begs another constitutional question. In 1995, in McIntyre vs. Ohio Election Commission, the Supreme Court determined that citizens had the right to engage in anonymous political speech. Since corporations now have the same First Amendment rights as individuals to anonymous political speech, requiring the
reporting of donors strikes me as a violation of the First Amendment. For these reasons and concerns I voted against SB 346 today.

The old corporations are people and have First Amendment rights defense. Citizens United is the gift that just keeps on giving. Despite the recal the bill sailed through the House State Affairs Committee yesterday. And Committee Chair Rep. Charlie Geren thinks it is constitutional, Disclosure Bill Clears House Committee.

The bill came to the House after an unusual episode in which the Senate passed the measure 23-6 before attempting to recall it, by an equally lopsided vote, a day later. The bill, though, had already been sent to the House, where it was taken up by the House State Affairs Committee. Now, the bill must pass through the House unamended if it is to avoid returning to the Senate. The bill passed out of committee, unaltered, with a 12-0 vote. It will now go to the full House for consideration.

At Wednesday’s committee hearing, the bill’s House sponsor, Rep. Charlie Geren, R-Fort Worth, said that the disclosure requirements – similar to ones lawmakers are subjected to – were common sense.

“If it’s good enough for us, it should be good enough for them,” he said. “And if you’re embarrassed about where you’re getting your money, you ought to not take it.

Geren stressed that disclosure requirements had been repeatedly ruled constitutional by the U.S. Supreme Court – even in the court case that recently helped unleash a torrent of money into the American political system, Citizens United v. Federal Election Commission.

Fred Lewis, a lawyer and campaign finance activist, testified that transparency was the sole safeguard of the state’s election system.

“In Texas, we do not have public financing of campaigns, and we do not have contribution limits,” he said. “All we have is disclosure.”

The vote on the Senate recall can be found here (SCR 33), where 9 Democratic senators changed their votes, (Davis, Ellis, Garcia, Hinojosa, Rodriguez, Uresti, Watson, West, and Whitmire).

Keep in mind the bill must pass the house without amendment to avoid going back to the Senate where it would likely die. And it would still need to be signed by Gov. Perry to become law. So this bill still has a long way to go before it’s becomes law. Unfortunately this kind of nonsense will continue until we reform how political campaigns are financed.

Rootstrikers has a great FAQ on the issue of our corrupt campaign finance systems. Suffice it to say that it will be hard for real people, not corporate people, to regain control of our government until this system is fundamentally changed. And the only way it will change is if an overwhelming amount of people start working to change it.

Further Reading:
Senate Republicans beef over political disclosure bill.
Political disclosure bill moves to the full House.

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