The state Democratic Party’s ability to raise money, especially from state contractors, has not gone unnoticed.
Late Tuesday, the State Elections Enforcement Commission adopted an unsolicited advisory opinion outlining when it’s appropriate for a state campaign or candidate to receive money from a federal account, either directly or indirectly.
Without accusing the Democratic Party of doing anything wrong, the agency that regulates elections sought to clarify questions raised by the news media and state contractors, who are banned from giving money directly to a party’s state account.
“Of most concern is the fact that much of the reported fundraising has involved Connecticut state contractors, who are prohibited from making contributions to party committees registered with the SEEC,” regulators wrote in their opinion.
Connecticut’s Democratic Party raised a total of $2.1 million last year in its federal account. About a quarter of that money came from $10,000 donors, some of whom do business with the state and its agencies. The Connecticut Republican Party raised about $528,503 last year in its federal account.
The question about how this money sitting in a party’s federal account can be used in a state campaign in 2014 or by a candidate who is using Connecticut’s clean elections system has been a hot topic of debate.
“The issue then is the extent to which expenditures can be made from the federal account that benefit Connecticut candidates, directly or indirectly, and who ultimately must pay for them,” the SEEC opinion says.
Earlier this year, the Democratic Party returned $40,000 in donations made to its state account. The party declined to say why the donations were returned, but at least three of the four came from state contractors.
The opinion states early on that “a lack of clarity seems to have arisen due to the intersection of federal law and state law.”
In general, “the federal account cannot spend its funds to make expenditures with the state account for Connecticut candidates for statewide office or the General Assembly,” the opinion says. “The overarching principle to be followed is simple: Connecticut committees pay for their expenses with money raised within the Connecticut campaign finance system, i.e. from permissible contributions or public financing grants, properly reported under Connecticut law.”
However, there are some ways in which federal and state committees can share expenses.
When it comes to how the party uses its staff, “if the staff paid by the federal account were working with state committees to support and benefit state candidates, those candidates would be required to reimburse the federal committee for such time.”
However, “if the federal committee may not accept such funds, then the arrangement would result in an impermissible contribution. The staffing must be structured to accommodate both state and federal law.”
The cost of sharing overhead, like office space or voter lists, come with their own rules, too.
When it comes to voter lists, a state campaign can purchase a list from a federal campaign or party committee, “so long as the sale was for fair market value.”
But when it comes to headquarter space, petition drives, utilities, or other overhead, those costs “could be allocated between federal committees and state committees as joint expenditures, if a state candidate or committee obtained a benefit.”
James Hallinan, a spokesman for the Connecticut Democratic Party, declined comment for this report.
Democratic Gov. Dannel P. Malloy, Connecticut’s first governor elected under public campaign financing, has not said whether he will seek another term. At the same time, he has not been bashful about his fundraising efforts for the party and other organizations like the Democratic Governors Association, which could spend money independently of the party in support of a gubernatorial re-election campaign.
State election regulators concluded that “federal law does not create a loophole in the Citizens’ Election Program and other Connecticut campaign finance laws that would allow federal committees to make expenditures that are also contributions regarding Connecticut candidates.”
Regulators said this remains true even after passage of last year’s changes to the campaign finance law, which allowed individuals to contribute more money to parties and parties to contribute unlimited amounts of money back to clean election candidates.
But Republican Party Chairman Jerry Labriola Jr. said the advisory opinion supports what Republicans have been saying all along.
“From the start, it’s been obvious that Dan Malloy plans to extort campaign cash from state contractors in a pay-to-play shakedown — and that the State Democrats plan to use that money to support his re-election,” Labriola said Wednesday. “Now, even the State Election Enforcement Commission is taking notice of the Democrat’s strategy of obfuscating state election law to boost Dan Malloy’s chances at a second term.”
Labriola pointed out that there’s no U.S. Senate race in Connecticut this year, and Connecticut’s five Democratic members of Congress have sufficient money in their campaign coffers to wage their re-election bids without the help of the state party.
“With no U.S. Senate race and five entrenched incumbent candidates for Congress who are already awash with special interest and big union money, where else does the State Democratic Party have to spend their ill-gotten contributions?” Labriola wondered.
Tom Foley, the Republican who lost to Malloy in 2010 by just 6,404 votes, said he’s glad election regulators have taken notice of the fundraising pattern of the Democratic Party.
“The very unusual State Elections Enforcement Commission warning to Governor Malloy for his shaking down state contractors for contributions to the state party is a welcome confirmation that this practice is unacceptable and undermines the intent of our state election laws,” Foley, who is running again in 2014, said in a statement.
While Hallinan declined comment on the SEEC opinion he wanted to comment on Foley’s statement.
“I’m a little incredulous that someone who was just fined by the SEEC would issue the kind of ridiculous statement Tom Foley just issued,” Hallinan said. “Axel Foley has more credibility on SEEC related matters than Tom Foley.”
The SEEC determined Foley was a candidate for governor and was no longer exploring after he paid for a poll released last April.
