Loophole makes it tough to follow money in Oregon campaigns
SALEM, Ore. (AP) — Oregon’s campaign finance law was built around a tradeoff.
Any donor — whether in-state, out-of-state, special interest or corporate — can give unlimited amounts of cash to any state candidate as long as there is complete transparency. This keeps citizens informed and candidates aware their actions are public.
But there’s a hole in the system.
The public can only see single transactions on the state’s website and in public records. If a candidate passes contributions to another candidate, or to a re-election fund for fellow party members, the public can no longer see the money’s original donor.
These transactions are known as pass-throughs — contributions that are essentially donations from one legislator to another, allowed in unlimited quantity under Oregon law.
Critics, including past and present lawmakers, say this allows a loophole in transparency.
Consider one example. In April 2016, Citizen Action for Political Education, an election-focused division of the public employees union SEIU, donated $10,000 to House Speaker Tina Kotek’s campaign fund. In August 2016, Kotek moved $30,000 to Future PAC House Builders, a pool fund designed to help elect Democrat candidates. It fulfilled this duty in late October by sending $8,500 to Ray Lister in a last-ditch effort to help him overcome Republican Richard Vial.
The public can see each individual transaction on the Secretary of State’s website, but they can’t see the web that connects them. There’s no way to tell whether it was CAPE money that funded Lister’s campaign, some of Kotek’s, or both.
The finance database doesn’t track money once it moves through more than one committee or campaign fund, and candidates aren’t required to disclose original sources for pass-through contributions.
“That would be a really difficult thing to do,” said Jennifer Hertel, a compliance specialist and lead worker on the campaign finance team at the Secretary of State’s office.
Hertel said the Legislature has a strong hand in what her office is working on. So, until regulation requires they expand to that level of transparency, it’s unlikely to happen.
“Until you have something like that as a mechanism to require it, the resources are going to be used for other things,” she said.
Transactions between legislators, or between legislators and re-election funds, are commonplace and have been for decades.
Statesman Journal analysis of campaign finance shows that legislative officeholders and candidates have utilized this system of pass-throughs more than 2,800 times in the last three election cycles alone, transferring $18.7 million dollars between themselves.
Based on the total amount contributed to legislators during that time, this means that more than a quarter of all money involved in legislative campaigns has seen more than one lawmaker as it moves through the system.
Legislators point out this collecting and distributing of funds is legal under Oregon’s campaign finance laws. They say it helps strengthen their party, and thereby its financial supporters.
Critics argue that pass-throughs hide the original source of funds from Oregon citizens, centralize power within the legislative leadership, and prevent donors from knowing whether their money actually went toward their intended cause.
Not all the critics are outside the capitol.
“I’ve known about that practice for a long time, although I do not engage in it,” said Sen. Betsy Johnson, D-Scappoose, who has served in the Legislature for more than 15 years. “What surprises me is the amount. When I learned the aggregate amount it was jaw-dropping.”
Leaders of the PAC
Although nearly every Oregon legislator utilizes pass-throughs during election season, party leaders do the heavy lifting.
In the Statesman Journal analysis, House Speaker Tina Kotek, D-Portland, and House Minority Leader Mike McLane, R-Powell Butte, each accounted for $1.4 million of pass-throughs. Senate leadership followed suit, with Senate President Peter Courtney, D-Salem, and Senate Republican Leader Ted Ferrioli, R-John Day, each passing through more than $700,000.
All told, these four legislators accounted for 23 percent of all funds passed through since 2011. If you factor in the Political Action Committees these leaders control, their total rises further.
Four major PACs, called caucus or leadership committees, collect funds from donors as well as other legislators and disperse the money to candidates during campaign season. A committee exists for each party in the House and the Senate.
The same four legislators — Courtney, Ferrioli, Kotek and McLane — are in charge of the committees.
This isn’t surprising to those who understand one of the major purposes of pass-throughs — to consolidate and disperse influence.
“The subterfuge creates an environment where the power becomes more and more concentrated,” said Edwin Bender, executive director of the nonpartisan National Institute on Money in Politics, a nonprofit which compiles and makes available campaign finance data from around the country. “The power dynamic shifts more toward the incumbents, more towards the lobbyists and away from people.”
When asked about the practice, legislative leaders declined to discuss it. McLane didn’t respond to nine requests for comment. Kotek, Courtney and Ferrioli all declined to answer questions, but their offices provided written statements.
Kotek’s office defended the practice as legal. “I’m invested in the effort to recruit and elect strong local leaders to the Oregon House of Representatives,” Kotek’s statement read. “My supporters know that, and all campaign transactions are posted online and fully available to the public.”
In Courtney’s statement, he said passing campaign cash from his account to other candidates is part of his job as a legislative leader.
“When people give to my campaign committee, they know it’s possible their donation will be used for that purpose and it is permitted under Oregon law,” the statement said.
Ferrioli’s office called the issue a “distraction” during the legislative session and declined to discuss it. Ferrioli also did not respond to a request for comment after the session ended in July.
Pass-throughs help legislative leaders centralize power, Bender said. Lawmakers with the most clout can distribute money to the candidates they choose. In turn, those candidates are indebted to the party and its leadership. This can make a difference when it comes time to cast a vote. Because pass-throughs make the money trail invisible to citizens, there’s no way to tell what alliances may exist.
Phil Keisling, a former Oregon secretary of state and state representative, said consolidation of influence contributes to a larger problem with unlimited campaign contributions: Voters lose their voice when candidates can turn to a select few for their money.
“I think there is something in citizens that want their elected officials to have a sense of independence,” he said. “Candidates, when they get overly beholden to anybody — whether it’s a lobbyist, a private individual or a legislative leader — it makes it more difficult to exercise true independence.”
A history without limits
Oregon has a long history of reaffirming unlimited contributions, based on the idea that transparency protects citizens from being misled about whose money is powering an election campaign.
Only six states in the country don’t limit contributions.
Campaign reform activists have made several attempts to pass contribution limits. In 1996, a bill passed and limits were enforced. But the following year, the Oregon Supreme Court declared that campaign contributions fall under the category of protected free speech, due to the Oregon Constitution’s loose language on the subject.
In 2006, there was another attempt to limit contributions. The election ballot that year presented voters with two measures on campaign finance: one would amend the language of the constitution to allow for contribution limits, the second would institute them. The latter passed, the former did not, again making limits unenforceable under the Oregon Constitution.
Still, the movement for reform isn’t dead.
Hertel, at the Secretary of State’s office, believes the mood around campaign finance has changed in a way that could make a difference for future attempts.
“I do think that we hear a lot more talk over at the legislative assembly with the members and their desire to make some changes to campaign finance reporting than I have in the past,” said Hertel.
A joint task force was formed in 2015 to make recommendations to the Legislature on finance reform. One recommendation was amending the state constitution to allow contribution limits, saying limits are “necessary to address the concerns of the public.”
The proposal was presented to the Legislature in 2016, but there was no change.
Petitioners plan to try again in 2018. A ballot initiative was created to amend the Constitution and allow the 2006 laws, still on the books, to be enforced.
That initiative was stalled by the Secretary of State’s office, which declared that the initiative sought to make too many constitutional changes to be wrapped under one measure. It was redrafted as Get Big Money Out of Oregon Elections II, and petitioners are seeking the 1,000 signatures necessary to get it back in front of Secretary of State Dennis Richardson.
But Bender, director of Money in Politics, isn’t optimistic about the odds of success. He said it’s always difficult to overturn practices that benefit those with the ability to change them.
“It’s one of those inside baseball kind of things. If you’re the party in control, you want to try to figure out a way to manipulate the rules to stay in control,” said Bender. “The idea of outlawing (pass-throughs and unlimited contributions) is a way of breaking that cycle.”