BCRA Cuts Into State Committee Coffers

Posted May 25, 2005 at 6:44pm

A new report shows that federal campaign finance reforms enacted in 2002 dramatically cut into state parties’ bottom lines, causing them to largely abandon broadcast ads in favor of increased direct contact with voters.

By analyzing disclosure reports from more than 200 state party committees over three election cycles, the nonpartisan Center for Public Integrity found that state committees spent far less on television and radio advertising in the 2004 cycle than before the Bipartisan Campaign Reform Act took effect at the end of 2002.

The culprit: the statute’s prohibition on large, soft-money transfers from the national party committees, which previously accounted for about 40 percent of funds that went into state party coffers and largely went to broadcast ad buys. Under BCRA, the parties can still transfer hard money to the state committees, but dollar for dollar, the numbers just didn’t add up to what they did in previous cycles.

“National party transfers dropped off a lot, a whole lot,” said Agustin Armendariz, the project’s database developer.

The study represents the first comprehensive look at how BCRA affected the state parties and is almost certain to become fodder for discussion as Congress once again ponders various proposals to reshape the campaign finance system.

Perhaps the most fervent debate recently has been whether BCRA strengthened or weakened the party structure. To that end, various pieces of the center’s report will likely be extracted by both sides.

For example, augmenting the suppositions of those who believe the parties were weakened by BCRA, the total amount state party treasuries took in fell from $821 million in the 2002 cycle to $735 in 2003-2004.

Weaned from the million-dollar infusions from their national counterparts, the state parties were pushed to further develop their own fundraising machines.

Although the report found that some were more successful than others, overall, the state parties collected $128 million more in campaign cash directly from donors in the 2004 cycle than they did for the 2000 elections. The total raised directly from contributors in 2004 was $445 million, an amount that exceeded 2002 figures, as well.

Viewed from that vantage point, the state parties — infused with soft money from their respective national committees — never had to develop as robust organizations within their states.

The state committees, prior to BCRA, were often merely a conduit for soft-money ad buys aimed at helping federal candidates and directed by the national parties. The transfers were orchestrated to get around Federal Election Committee regulations that put greater restriction on the proportion of soft money that the national committees could use to finance “issue ads,” which mentioned federal candidates without explicitly endorsing or opposing their election. The states could finance those ad buys with a larger ratio of soft to hard money.

“The state parties were basically being used as a vehicle to game the law,” said Don Simon, counsel to Democracy 21, a group that supports increased restrictions on campaign financing. “It had nothing to do with any kind of independent state party activity. It wasn’t, in any meaningful sense, their money.”

Without the national party transfers, the 2004 cycle saw a 74 percent decline in the amount state parties spent on TV and radio ads — from $180 million in the 2002 elections to $46 million in 2004, according to the study.

The monies collected by the states in 2004 instead went to bigger payrolls. As get-out-the-vote efforts became more central to their efforts, the state parties spent much more on staff than they had previously.

Not surprisingly, the analysis found that in 2004 GOTV efforts were most intense in presidential battleground states such as Florida, Pennsylvania, Wisconsin and Ohio. Buckeye State Democrats spent twice as much on voter-turnout efforts as the committee did on broadcast advertising.

“We actually had 250 people on the payroll,” Denny White, the Ohio Democratic chairman, told the center. “Media buys don’t really drive people to the polls. We had offices set up all around the state.”

If state party committees decided that broadcast ads were not the most efficacious use of their funds, independent political groups overwhelmingly came to a different conclusion. The Center for Public Integrity previously found that so-called 527s committees accounted for more than $140 million in political advertising last cycle, an amount roughly corresponding to the drop-off by state parties.

Those ads were largely funded by soft money, and the 527 groups that put them on the air have become the subject of legislation introduced in both chambers designed to prevent independent political organizations from raising unregulated funds from unions, corporations and wealthy individuals. Named for the section of the tax code under which they are regulated, 527s filled the void left when BCRA outlawed the national parties and federal candidates from raising soft money.

What most interested the authors of the report was that for the most part state party committees didn’t get in the soft money game, as some had predicted in the aftermath of BCRA.

“That didn’t pan out,” Armendariz said. The state committees, he added, found the federal regulations involving how they could do so “downright Byzantine.”

The ever-growing presence of federal regulations in state party activities was another theme of the Center for Public Integrity’s report. Although BCRA made them much more independent from the national parties — financially and otherwise — the state committees increasingly found themselves operating from their so-called federal accounts.

The report found that during the previous two elections cycles, state committees routed less than $1 out of every $4, or 25 percent, they raised into their federal accounts. During the most recent cycle, that figure jumped to 40 percent.

More of the money going directly to the state committees is conforming to federal election laws, regardless of the state regulations. The report states: “This is rather remarkable considering that Florida and twelve other states do not limit the source or amount of contributions at the state level.”

That, GOP campaign lawyer Cleta Mitchell says, was the intended result of BCRA.

Even though the study allowed the center to discern many immediate ramifications of BCRA on the state parties, the report’s authors acknowledged that it will take at least another election cycle — without a presidential candidate on ballots — to fully understand the patterns.

“This next round of mid term elections will tell a lot,” Armendariz said.

That’s precisely what concerns opponents of BCRA, such as Mitchell. “They had no idea what the impact was going to be on these state parties.”