Donor fatigue

Jeremy Duda and Luige del Puerto//September 25, 2013

Donor fatigue

Jeremy Duda and Luige del Puerto//September 25, 2013

blank check money cashHigher contribution limits don’t translate into avalanche of cash

Legislators who approved a controversial election law this year and are hoping to get a serious bump in their fundraising efforts should not expect to see an avalanche of hefty checks coming their way.

Or at least not right away – and especially not from individual contributors.

Instead, it would take a few election cycles for contributors to adjust to the higher limits, those who regularly give to candidate campaigns told the Arizona Capitol Times.

The reason why no one is rushing to max out their contributions is obvious, they said: Writing a $4,000 check – the new maximum a person may give to a campaign for the primary and general elections under H2593 – is very expensive.

In addition to increasing how much a person may contribute to a candidate, HB2593, which took effect earlier this month, also deleted limits on the total amounts that individuals and political committees are permitted to give to candidates.

Indeed, if one contributor maxes out the limits and gives to all 90 legislators, that comes to $360,000 in one election cycle. And, that’s not counting contributions to statewide, congressional and local candidates.

There are a few people in the state who have that kind of money, and the pool of regular contributors is small, said lobbyists, who are often approached by candidates for campaign cash.

Additionally, the costs of legislative campaigns have been more or less constant, and nobody is expecting the expenses to rise sharply anytime soon.

Some lobbyists have said they have begun contributing at higher levels – but nowhere near the new maximum.

Veteran lobbyist Kevin DeMenna, who regularly contributes to campaigns and spent thousands of dollars to help candidates in 2012, said while the limits have increased, “What does not follow is you have the need to increase donor amounts.”

A limited pool

DeMenna likened a legislative campaign to a machine that runs on gas. The cost of operating that machine has not spiked in the last two election cycles, he said. He added that Arizona recently went through a presidential race and a vigorous U.S. senatorial contest, and people are feeling “donor fatigue.”

The real issue, he said, is how to expand that limited pool of contributors.

It’s also a cash flow issue, said lobbyist Barry Aarons, who also regularly contributes to campaigns.

The fundraising season for next year’s election kicked in this month. But there is another fundraising rush right before the legislative session begins.

For Aarons, contributing to candidates, even with bigger amounts, in a steady trickle is manageable. But giving to dozens of legislators in the span of a few days is squeezing the wallet.

“There is a cash flow issue… How much money do I have in the bank?” he said. “This will evolve and there will be a leveling off [period] and you’ll reach a certain level, and know what people can or cannot give.”

But lobbyists also said political action committees, particularly the big ones that are called “Super PACs,” are in a better position to take advantage of the higher limits and max out their contributions. A Super PAC, which is permitted to give bigger amounts than regular PACs, is a political committee that has received contributions of $10 or more from at least 500 people within a year prior to applying for the status change.

“I think it allows some greater flexibility to support candidates that agree with the issues of the PAC,” said Spencer Kamps, a lobbyist for the Home Builders Association of Central Arizona, whose political committee regularly engages in electioneering.

He surmised, however, that only a limited number of candidates would get contributions that approximate the new limits.

“I do not think that by and large all the PACs are going to go out there and start maxing out for all these candidates. Resources are too limited,” he said.

Regular contributors also added that the public will likely see higher contributions to statewide races, especially the campaigns for governor and attorney general.

Garrick Taylor, a spokesman for the Arizona Chamber of Commerce and Industry, said political committees were particularly hamstrung by the limits in the total aggregate amounts they could give to candidates.

Sometimes, committees wanted to give more, but candidates had already been “PAC-ed out” – they already received the maximum funds they could get from all the committees.

Taylor said smaller committees suffered as well. By that time they raised sufficient amounts, they were already precluded from giving to candidates who had pooled in the maximum aggregate amounts. In short, other well-positioned committees had already beaten them to it.

Taylor said committees often strive to reach a Super PAC status so they could give more, but that benefit was ultimately “muted” by the aggregate limits in the old law.

“Now you have more opportunities that you didn’t have under the old system,’ Taylor said.


Safe harbor language

Another law, SB1454, also looks promising for political action committees.

Brownstein Hyatt Farber Schreck attorneys Janna Day and Kory Langhofer said in a forum this month that HB2593 and SB1454 will allow an expanded role for corporate or trade association PACs in Arizona politics.

“We’re really talking about the ability of PACs to become much more meaningful and relevant,” Day said.

SB1454 includes “safe harbor” language that allows state-level PACs to use information from federal election rules and advisory opinions to guide its actions. Day said that opens the door for PACs to engage in activities that weren’t explicitly barred in Arizona, but weren’t explicitly allowed either.

“I’m not saying these things weren’t allowed before. But people might not have had the comfort level,” she said.

For example, the Federal Election Commission allows corporations and trade associations that sponsor PACs to encourage employee contributions by giving a matching contribution to the charitable organization of their choice.

“Sometimes, it can be awkward or unpleasant to talk about these political things because you have employees with varying views. These are emotional topics and people can be very sensitive about how their PAC dollars are going to be used, and that can interfere with their interest level in participating. So, this is a way to sort of change the debate,” Day said.

State and federal laws primarily limit solicitations to a “restricted class” that includes a trade association’s members or a corporation’s executives and administrative personnel.

Solicitations to other rank-and-file employees are limited to twice-yearly mailers to their homes.

But by using FEC guidelines, the PACs can now use the charitable contribution match in those mailers.

FEC advisory rules also allow PACs to use prizes, promotions and recognition to encourage contributions, though Day emphasized that raffles are technically illegal under Arizona’s gambling laws.

“The idea is to create some buzz, and you can have special events that are tailored to just those folks,” she said.

PACs can also abide by what the FEC terms the “one-third rule,” which allows the corporation or trade association to pay for prizes and entertainment for contributors out of its own pockets instead of with PAC money, as long as the cost isn’t more than one-third of the amount of money raised.

Also, the sponsoring organizations can pay for administrative and solicitation costs out of their own pockets.

“So, if anybody’s paying for those out of PAC funds, save those dollars for the candidate contributions,” Day said. In addition to the changes in SB1454, Day touted the new PAC rules from HB2593, which eliminated the cap on PAC contributions that candidates can take and increased the amount that PACs and super PACs can contribute.


New and actual contribution limits for legislative races:

Individuals: $2,000

Political Action Committee: $2,000

Super PAC: $4,000

Aggregate contribution caps for individuals and political committees: no limit


2012 actual contribution limits for legislative races:

Individuals: $424

Political Action Committee: $424

Super PAC: $1,736

Aggregate contribution cap for individuals: $6,100 in a calendar year

Aggregate contribution cap for political action committees: $14,032