States rush to catch up with campaign finance ruling

Arizona is moving quickly to rewrite its laws in the wake of a U.S. Supreme Court ruling that allows corporations and labor unions to spend money directly on political campaigns, but a handful of states might be in legal limbo until after the 2010 elections.

More than a half-dozen states have major questions hanging over their campaign finance laws after the Supreme Court’s January ruling in Citizens United v. Federal Election Commission, which found that bans on direct spending by corporations and unions in political campaigns are unconstitutional.

The court’s ruling struck down a federal ban on that kind of corporate and union spending, and most of the 23 states that had such bans are operating on the assumption that the laws will be found unconstitutional if challenged. Now, while Congress decides how to regulate that spending for federal candidates, many states are scrambling to adjust their own laws to do the same for state and local races.

According to the National Conference of State Legislatures, Connecticut, North Dakota, Ohio and Pennsylvania have not yet determined what they will do to comply with the ruling, while Montana and Texas legislatures won’t even meet again until 2011.

Arizona Secretary of State Ken Bennett is pushing a bill that would enact new reporting requirements
for corporations and labor unions that go beyond what is already required by the state’s laws on independent expenditure committees.

Some states, however, are taking more drastic steps. Lawmakers in Iowa, Maryland, South Dakota and West Virginia, for example, introduced bills that would require shareholder approval before corporations could spend money on campaign advertising, according to the NCSL. Political maneuvering has all but killed the South Dakota bill, but Iowa and Maryland are pressing ahead. Tennessee is considering a ban on independent expenditures by foreign corporations.

“Maryland and Iowa are so far taking the most dramatic approach. But it remains to be seen how those bills will fare,” said Jennie Drage Bowser, a senior fellow at the NCSL’s Denver office. Bowser described Arizona’s efforts as “middle of the road,” compared to other states.

Other states are simply changing their laws to implement the same reporting requirements for corporate and union advertising as they do for other independent expenditures. Alaska and Massachusetts are two states that are applying old rules to the new campaign spending.

A bill in the Minnesota Legislature that would eliminate the state’s ban on independent expenditures by corporations and unions is stalled while the state deals with its budget problems, and elections director Gary Goldsmith said he doesn’t know if anything will be passed this year.

Goldsmith said Minnesota’s reporting requirements for other independent expenditures will be applied to corporations and unions as well. He said he thinks most corporations will comply with the informal requirements while the Legislature decides whether to establish binding regulations.

“It won’t be law, but it will offer a sort of safe harbor for corporations who want to engage in independent expenditures,” Goldsmith said.

At least one state seems intent on continuing its ban, regardless of the Supreme Court’s ruling. Montana Attorney General Steve Bullock has said he will continue to enforce the ban until it is challenged in court.

“Montana’s ban has been around for a really long time. I think it has been almost since statehood. And Montana’s always been sort of very proud of this hard line that they draw between corporations and political activity,” Bowser said.

Twenty-seven states already allow the type of spending the Supreme Court deemed constitutional, though one is taking a renewed interest in regulating it. Maryland, which did not ban campaign advertising by corporations and unions, is looking to require stockholder approval before a company can spend money on independent expenditures.

Ciara Torres-Spelliscy, who serves as counsel for the Brennan Center for Justice, a progressive think tank at New York University, said Citizens United underscored Maryland’s weak campaign finance laws.

“There were all sorts of holes in their reporting requirements under their campaign finance law, so they’re taking this as an opportunity, perhaps, to fix those loopholes,” Torres-Spelliscy said.

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