National:

Often-Secret Donors Spend Big to Push Elected Officials’ Pet Projects
USA Today – Fredreka Schouten and Mary Troyan | Published: 4/5/2016

Nonprofit groups have become a fixture in federal politics, allowing secret donors to pump unlimited sums into advertising and get-out-the-vote efforts in elections. But their use has spread rapidly to statehouses and city halls as another source of cash that elected officials of both parties can tap to help shape public policy. Elected officials defend their use, saying nonprofits can move more nimbly than government agencies to advance civic initiatives and are less likely to draw the public’s ire over using taxpayer funds for pet projects or quasi-political expenses, such as polling. Campaign finance watchdogs, however, said they are just another way for unregulated money to seep into the political process and give big donors a covert method to curry favor with decision makers.

Stricter Rules for Voter IDs Reshape Races
New York Times – Michael Wines and Manuel Fernandez | Published: 5/1/2016

Since their inception a decade ago, voter identification laws have been the focus of fierce political and social debate. Proponents, largely Republican, argue the regulations are essential tools to combat election fraud, while critics contend they are mainly intended to suppress turnout of Democratic-leaning constituencies like minorities and students. As the general election nears, in which new or strengthened voter ID laws will be in place in 15 states for the first time in a presidential election, recent academic research indicates the requirements restrict turnout and disproportionately affect voting by minorities. The laws are also reshaping how many campaigns are run, with candidates not only spending time to secure votes, but also time to ensure those votes can be cast.

Federal:

Clinton Fundraising Leaves Little for State Parties
Politico – Kenneth Vogel and Isaac Arnsdorf | Published: 5/2/2016

The Hillary Victory Fund is a joint fundraising committee comprised of Hillary Clinton’s presidential campaign, the Democratic National Committee, and 32 state party committees. The set-up allows Clinton to solicit checks of $350,000 or more from her wealthy supporters. In the days before Clinton launched the unprecedented fundraising vehicle, she proclaimed “when our state parties are strong, we win. That’s what will happen.” But less than one percent of the $61 million raised by that effort has stayed in the state parties’ coffers. The arrangement has sparked concerns among watchdogs, who see it as a circumvention of contribution limits by a national party apparatus intent on doing whatever it takes to help Clinton win the Democratic nomination and then the White House.

Now, Dennis Hastert Seems an Architect of Dysfunction as Speaker
New York Times – Carl Hulse | Published: 5/2/2016

Dennis Hastert’s admission in federal court that he sexually molested wrestlers on the Illinois high school team he coached years before setting foot on Capitol Hill is provoking a re-evaluation of his tenure as the longest-serving Republican House speaker. Hastert emerges as a deeply flawed figure who contributed significantly to the dysfunction that defines Congress today. Even his namesake Hastert rule, the informal standard that no legislation should be brought to a vote without the support of a majority of the majority, has come to be seen as a structural barrier to compromise.

With Donald Trump in Charge, Republicans Have a Day of Reckoning
New York Times – Patrick Healy, Jonathan Martin, and Maggie Haberman | Published: 5/4/2016

For a Republican Party that usually rallies around its presumptive presidential nominee quickly, the brutal primary campaign and the questions about Donald Trump’s substance and style have fueled a remarkable level of dissatisfaction, antipathy that will not fade simply because Ted Cruz and John Kasich have ceded the race. The journey from denial and resistance to grudging acceptance, and even peace, with the Trump nomination may never be complete for some Republicans. But leaders hope to change that quickly, to save the party from splintering and to have a real shot at winning in November.

From the States and Municipalities:

California – Legislature Passes Bill to Disclose Lobbying on State Contracts
KQED – Guy Marzorati | Published: 5/3/2016

Communicating with government officials to try to win state contracts would be considered lobbying under legislation the California Assembly sent to Gov. Jerry Brown despite opposition from the Fair Political Practices Commission. If Brown signs the Assembly Bill 1200, people who communicate with government officials about contracts enough to earn $2,000 or more a month for their efforts would have to register as lobbyists. It would apply only to people working on contracts worth at least $250,000.

California – State Senator Calls for a Ban on Private Meetings with Coastal Commissioners to ‘Level the Playing Field’
Los Angeles Times – Dan Weikel and Kim Christensen | Published: 5/3/2016

Ex-parte communications between individual members of the California Coastal Commission and developers, lobbyists, environmentalists, and other interested parties have become a major element in the way the commission presides over land use, public access, and environment protection. Sen. Hannah-Beth Jackson has introduced legislation to ban those communications, a move that has raised questions about who gets access to individual commissioners and the fairness of the panel’s quasi-judicial process that weighs both sides before rendering a decision.

Kentucky – FBI Agent: Illegal donations went to campaigns of Andy Beshear, Jack Conway
Lexington Herald-Leader – John Cheves | Published: 5/3/2016

Newly released court documents show former Kentucky Personnel Cabinet Secretary Tim Longmeyer, who pleaded guilty to a federal bribery charge, arranged for illegal campaign donations to Andy Beshear, who was elected attorney general, and Jack Conway, who lost his bid to become governor. An affidavit states there is no indication the candidates were aware of the scheme. Court documents indicate the money came from a scheme Longmeyer had with MC Squared Consulting, which gave him kickbacks in exchange for help securing contracts with two insurers.

New York – Executive Chamber Receives Subpoena; Percoco Said to Be Under Federal Gaze
Albany Times Union – Casey Seiler | Published: 4/29/2016

The federal investigation into one of Gov. Andrew Cuomo’s signature economic development programs has come to focus on one of his former top aides, Joseph Percoco. The inquiry is also focused on several other men and a company linked to the program, called the Buffalo Billion. The governor’s office was served with a federal grand jury subpoena for documents related to the investigation. “The state has reason to believe that in certain programs and regulatory approvals they may have been defrauded by improper bidding and failures to disclose potential conflicts-of-interest by lobbyists and former state employees,” the governor’s office said in a statement.

New York – From Albany to Prison: Ex-lawmakers on life behind bars
New York Times – Vivian Yee | Published: 4/30/2016

In interviews, four former New York lawmakers that were convicted on corruption charges tell of spiritual awakenings, physical survival, and mental toughening. But what figures largest in these personal narratives – what they say has sustained them throughout – is the belief they were wrongly prosecuted. With onetime Assembly Speaker Sheldon Silver being sentenced to 12 years recently, along with the expected arrivals of convicted ex-Sens. Dean Skelos and John Sampson, there will be at least nine former members of the Legislature in the federal prison system. Nine more were released over the last few years.

New York – Sheldon Silver, Ex-New York Assembly Speaker, Gets 12-Year Prison Sentence
New York Times – Benjamin Weiser and Vivian Yee | Published: 5/3/2016

A federal judge sentenced former New York Assembly Speaker Sheldon Silver to 12 years in prison after he was convicted of corruption charges. The judge also ordered him to forfeit more than $5 million in proceeds from his crimes and pay a $1.75 million fine. Silver was found guilty of fraud, extortion, and money laundering in dealings with real estate developers and a Columbia University cancer researcher. Prosecutors also alleged he found jobs for two women with whom he had extramarital affairs. “Silver’s crimes corrupted the institution that he led for more than 20 years,” prosecutors wrote in their sentencing recommendation. “As a fixture in the legislative leadership, an entire generation of New York legislators served in an institution framed by his corrupt example.”

Pennsylvania – Guilty: Aide to former PA Gov. Rendell pleas to wire fraud
Binghamton Press & Bulletin – Marc Levy (Associated Press) | Published: 5/1/2016

An ex-chief of staff to former Pennsylvania Gov. Ed Rendell pleaded guilty to federal wire fraud charges in connection with an FBI undercover investigation into lobbying activities in Harrisburg. John Estey is accused of taking $20,000 from an undercover business created by the FBI five years ago. He agreed to make campaign contributions that would influence state lawmakers and to distribute the money in a way that would hide the company’s role. State law bans campaign donations from corporations. But Estey only gave $7,000 to legislators, secretly keep the rest for himself.

Utah – Donor Speed-Dating with Guv Doesn’t Sit Well with Some
Salt Lake Tribune – Robert Gehrke | Published: 4/28/2016

Utah Gov. Gary Herbert’s campaign is pitching a novel fundraising approach, granting one-on-one meetings with the governor in a speed-dating-style format for donors who give generously to his re-election efforts. The tactic, presented by the governor’s campaign staff at a meeting at the Alta Club in Salt Lake City to more than two dozen lobbyists and supporters, was alarming to several in attendance. “I think everyone who was there was like, ‘Too much,'” said one of several lobbyists who spoke on condition of anonymity in order to not upset the governor or his staff. “It made people cringe.”

Virginia – Fla. Businessman Paid $10K for Va. Senator’s Trip to Meet Syrian President Assad
Washington Post – Laura Vozzella | Published: 5/3/2016

A businessperson paid $10,000 for the cost of Virginia Sen. Richard Black’s recent trip to Syria, where he met with President Bashar al Assad. State ethics officials signed off on the gift, finding it complied with state ethics laws. Black will be required to report the free business-class air travel and accommodations on his financial disclosure form. But he is not sure how to put a dollar figure on something the Syrian government lavished on him during his visit: security. “When we went to Palmyra, as we were traveling some of the roads, they had a very large assault jet flying in at treetop level with ear-splitting roars, and on the other side were four assault helicopters,” Black said. Accounting for largesse of that sort will be a new one in Richmond, even after three rounds of ethics reform.

State and Federal Communications produces a weekly summary of national news, offering more than 60 articles per week focused on ethics, lobbying, and campaign finance.

Rep. Steve McLaughlin is seeking bipartisan support for a package of ethics reform bills. The bills seek reform on multiple fronts by lowering the permissible amount individuals, unions, corporations, lobby groups, or businesses can donate to a PAC; increasing disclosure requirements for pay-to-play lobbying; placing eight-year term limits on legislative leaders; and stripping pensions from those convicted of public corruption offenses.

The proposed bills come in response to former Assembly Speaker Sheldon Silver’s recent 12-year prison sentence for conviction on multiple corruption charges.

Photo of Rep. Steve McLaughlin courtesy of the New York State Assembly website.

The Legislature adjourned sine die late Wednesday, May 4, 2016.

Lawmakers started the impeachment process of Gov. Robert Bentley and passed an education budget. The general fund added $15 million to Medicaid, but left an $85 million deficit. Bentley is expected to call for a special session to address the deficit.

Q. My employer is a wholly owned subsidiary of a parent corporation.  Does a parent corporation, a subsidiary, or other affiliated entity have its own contribution limit or must the contributions be aggregated and have a shared limit?

A. This is a very important question that must be addressed when making a contribution, particularly when there is a hierarchy to the corporate structure.  If a limit is shared, the parent, subsidiary, or other affiliated entity must have an open line of communication when it comes to making political contributions.

In New York, each affiliated or subsidiary corporation, if a separate legal entity, has its own limit.

In California, contributions made by certain combinations of affiliated individuals, entities, and committees must be aggregated.  It all comes down to a matter of control:

• The contributions of an entity whose contributions are directed and controlled by any individual must be aggregated with contributions made by that individual and any other entity whose contributions are directed and controlled by the same individual.
• If two or more entities make contributions directed and controlled by a majority of the same persons, the contributions of those entities must be aggregated.
• Contributions made by entities majority-owned by any person must be aggregated with the contributions of the majority owner and all other entities majority-owned by that person, unless those entities act independently in their decision to make contributions.

So in California, a parent and subsidiary share a contribution limit if the decision to make a contribution is directed and controlled by a majority of the same persons.  If the parent and subsidiary act wholly independently of each other in deciding to make a contribution, the parent and subsidiary each have their own limit.

In New Jersey, if a corporation has subsidiaries, affiliates, branches, or locals, then the contributions of these organizations cannot exceed the applicable contribution limit in the aggregate.  Two or more corporations will be conclusively deemed to be affiliated if:

• Any individual, corporation, partnership, company, association, or other entity owns, directly or indirectly, more than a 30 percent interest in each of such corporations; or
• One such corporation owns, directly or indirectly, more than a 30 percent interest in the other such corporation.

These are just a few examples of aggregation of limits.  As we always advise, verify the rules in your state before making political contributions.

You can directly submit questions for this feature, and we will select those most appropriate and answer them here. Send your questions to: experts@stateandfed.com.

(We are always available to answer questions from clients that are specific to your needs, and we encourage you to continue to call or e-mail us with questions about your particular company or organization. As always, we will confidentially and directly provide answers or information you need.) Our replies to your questions are not legal advice. Instead, these replies represent our analysis of laws, rules, and regulations.

The Connecticut General Assembly adjourned its regular session yesterday, May 4, 2016, without reaching a deal on the state budget.

As time ran out on the session, constitutionally mandated to end at midnight, Democratic leaders postponed a vote on the budget and will return next week for a special session. The Senate announced the special session will begin on May 12.

The Hawaii State Ethics Commission is currently accepting applications for Executive Director to replace former executive director and chief legal counsel, Leslie Kondo. The Legislature appointed Kondo as the new state auditor in April; his eight-year term began May 1.

Kondo spent the last five years cracking down on certain activities by lawmakers and issuing strict interpretations of the state ethics code. While no longer monitoring legislative ethics, Kondo believes his new position will allow him to continue to promote public confidence in state government.

Gov. Larry Hogan signed a pay-to-play bill, amending campaign finance reporting requirements for filers doing public business. House Bill 112 requires filers disclosing contributions to also include contributions of any subsidiary entity the filer owns or controls by 30 percent or more, regardless of whether the subsidiary is doing public business in Maryland.

A limited exception exists for publically-traded banking institutions not owned or controlled by anyone in excess of 10 percent if they are not contracted with Maryland in connection with public business.

The law takes effect October 1, 2016.

The San Francisco Ethics Commission has announced two interested persons meetings on May 11 and May 16 to discuss a proposed November 2016 ballot measure that would ask San Francisco voters to place new restrictions on lobbyist contributions, bundling of contributions by lobbyists, and gifts from lobbyists.

The feedback from these meetings will be used in the analysis and recommendations on the proposed ballot measure presented at the May 23, 2016 commission meeting.

Written comments and RSVPs can be sent via email to ethics.commission@sfgov.org.

Assembly Bill 1200 has been sent to California Gov. Jerry Brown. The bill revises the definition of lobbyist to include individuals attempting to influence state governmental procurement of $250,000 or more.

Legislators passed the bill despite criticism of the measure from the California Fair Political Practices Commission.

If Brown signs the bill, the new rules will go into effect January 1, 2017.

Vendors and lobbyists are now required to disclose campaign contributions and affirm the disclosed contributions were made without the expectation of a governmental benefit in return. The late-2015 amendment requires disclosure of contributions to county officials and county-level candidates if made on or after April 1, 2016.

While the amendment aims at promoting greater transparency of the procurement process, some have argued contributions to political parties and noncandidate committees allow contributors to remain out of public view.

The Kansas Legislature adjourned after passing a budget in the early hours of May 2, 2016. Lawmakers have been in session only 73 of the scheduled 90 days and will return to the state capitol on June 1 for a brief adjournment ceremony.

Leadership is hopeful business has been completed for the year; however, more work may be ahead as the state’s supreme court reviews changes to how more than $4 billion is distributed to school districts. Justices will hear arguments on May 10.

Photo of the Kansas State Capital dome by Aviper2k7 on Wikimedia Commons.

Last week, Gov. Matt Bevin signed a revenue bill including changes for executive agency lobbyists. House Bill 80 contains a provision increasing the registration fee for lobbying executive agencies from $125 to $500 beginning July 1, 2016 through June 30, 2018.

The change was included in a last-minute amendment by the Senate on the final day of the legislative session. The Executive Branch Ethics Commission had been pushing hard during the closing days of the session to increase the fee, fearing a budget short-fall would result in cuts to the Commission’s staff.

The Washington Attorney General’s Office has been asked to give an informal opinion as to whether initiative campaigns need to disclose top five donors on signature gathering petitions. This request comes from Senator Pam Roach, who is taking issue with the Public Disclosure Commission’s advice for initiative campaigns to disclose top donors on petitions.

State law requires political committees to include their five top contributors on political ads about ballot measures that cost $1,000 or more. The issue is whether initiative petitions are advertisements and thus subject to the disclosure requirement. Because this issue arose during an election cycle, the Secretary of State’s Office will accept all valid petition signatures regardless of whether the donors are disclosed.

With scheduled renovations to begin May 1 at the Alaska Capitol, lawmakers are moving to a new location before continuing to work to fix the state’s multi-billion dollar budget deficit. Constitutionally, the legislature can remain in session for up to 121 days, despite a 90-day limit written into state law after voters passed a ballot initiative in 2008.

Senate President Kevin Meyer wants to remain in Juneau as long as the legislature remains in regular session. Last year, lawmakers moved to Anchorage following Gov. Bill Walker’s call for a special session.

On Wednesday, Walker announced he is prepared to call a special session in Juneau if the budget issue, including his plan for a broad-based tax, cannot be addressed before the 121-day deadline.