April 08, 2016

Democracy faced off against big money in the Office of Campaign and Political Finance’s decision to allow the Republican State Committee to use federally raised money to support Governor Charlie Baker’s state campaign. As usual in such contests, democracy was battered to its knees. It was another big win for Governor Baker's burgeoning Campaign Finance Innovation District.

The Boston Globe’s Frank Phillips reports today that the OCPF’s decision could, in the estimation of the head of Common Cause and Secretary of State Bill Galvin, cripple the commonwealth’s ability to regulate campaign finance. Galvin, whose office is responsible for regulating elections, stated the ruling “neuters the state campaign finance laws.”

The decision considered payments from federal accounts by the MRSC to three staffers, and the payment of rent for offices in Shrewsbury and Boston. I’ll focus on the rent payments. Keep in mind that while state campaign finance law limits contributions to $1,000, a party can raise up to $10,000 under federal guidelines. The innovation by the GOP here is that the federal money, previously restricted to spending on candidates for federal office, has been used in support of state candidates.

The OCPF says that when federal and state laws conflict, federal law prevails. So here are the important passages from the OCPF decision. “The FEC requires that a state political party pay all rent and salary expenses either entirely with funds from its federal account, or with an allocated mix of federal and nonfederal funds” (p. 10); and “The federal allocation regulation requires that a political party’s expenditures for rent must either be paid entirely from a party’s federal account, or may be allocated between federal and non-federal accounts. 11 C.F.R. sec. 106.7(c)(2). In other words, as OCPF noted in M-08-01, ‘Federal regulations require that administrative costs such as rent, utilities, office equipment, postage, etc. may be paid entirely from the federal account, or the cost may be allocated between federal and state accounts in accordance with federal rules.’” (p. 11, emphasis in original).

And here’s the conflict with state regulation 970 C.M.R. sec. 2.16: “all state committee expenditures made primarily for the purpose of aiding, promoting or preventing the nomination or election of any person to a state or local public office must be made from the state account, unless such expenditure is required to be made out of the federal account of the state committee by the Federal Election Campaign Act or regulations promulgated under its authority.” (p. 11, boldface emphasis in original, italicized emphasis mine).

But federal law does not require the state committee to pay rent entirely out of the federal account, it gives the state committee the option of doing that or allocating between state and federal accounts. State regulations say the rent must be paid out of the state account if it is primarily spent for state political purposes. So the essence of the OCPF decision is not to regulate spending but to leave it to the Republican State Committee to choose how (or whether) it would like to be regulated.

How much federal campaign activity was conducted at these locations, you might ask? Let’s see what the OCPF’s decision has to say about that.

Para. 24 The party began renting the Shrewsbury office on August 15, 2014 and paid rent out of the federal account, into 2015.

Para. 25 Shrewsbury was used for various state party activities including as a satellite storage facility to store printers, phone systems and other equipment, and campaign materials like yard signs. “Some of the material stored in the office was used to support federal candidates.” (I’m not making this up).

Para. 26 Shrewsbury was used to support the campaign activities of special election state representative candidate Hannah Kane in early 2015 and to prepare for 2016. “The Party anticipates that the office will also be used by other Republican candidates, including candidates for federal office.” (I’m not making that up either).

That’s about it for federal activity. Paragraphs 27 and 28 make conclusory statements that the party is allowed to make expenditures from its federal account and for activities like recruiting volunteers and candidates for state and federal office in 2016 and polling on federal issues in 2016. That applies to the Shrewsbury and Boston offices.

But if you want the sum total of federal campaign activity by the Republican State Committee in the period actually covered by the rent period, it’s storage of surplus communication equipment and campaign materials in Shrewsbury.

Also on the federal side, the FEC requires that the party allocate at least 28% of administrative spending to the federal account on the determination that even in off years the state party is doing some federal activity. (P. 12).

The OCPF’s findings didn’t rely on the 28% regulation though, it found that “The offices were used, in part, for federal election activity and activities in connection with federal elections.” (p. 15). Then OCPF got all Father Knows Best with the GOP and gently scolded “Although it may have been a preferable policy decision to allocate part of the office cost from the Party’s state account, the decision to pay entirely from the Party’s federal account was consistent with federal regulations.” (p. 15).

In the wake of Citizens United, IRS 501(c)(4) social welfare organizations openly functioning as unregulated political committees, and clever methods to evade limits on fund raising and spending, the walls that protect our democracy from unlimited influence by wealthy oligarchs are tumbling down. The OCPF’s disposition agreement with the Massachusetts Republican State Committee suggests that our chief regulatory agency won’t fight to buttress those walls.

Just another day in our campaign finance farce-ocracy.

OCPF, Massachusetts Republican Party, Charlie Baker, Office of Campaign and Political Finance

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