State Party Fund-Raising Tops $570M

W A S H I N G T O N, June 25, 2002 -- State political parties raised more than $570 million in the 1999-2000 political cycle, a plurality of that money coming from the largely unregulated "soft money" accounts of their federal counterparts, a study by three campaign finance watchdog groups shows.

The survey of 225 state party organizations spread across all 50 states also found that $204 million was raised by state parties and then used to directly influence federal elections, like congressional or presidential races. That "hard" money is subject to federal election law.

Conducted jointly by the Center for Responsive Politics, the Center for Public Integrity, and the National Institute on Money in State Politics, the study is among the first to analyze what the authors called a significant "back door" to election financing.

FEC Guidelines

Its release this week was not entirely coincidental. As part of the rule-making process required by the recently passed Bipartisan Campaign Reform Act, the Federal Election Commission has written guidelines for raising and spending soft money. Representatives from good government groups said they believe the FEC kept a loophole in the law by permitting state parties to raise and spend money on national races — subject to certain restrictions.

"In at least 30 states — even after a federal soft-money ban takes effect later this year — big-money donors will still have parties they can send six- and seven-figure checks to," said Chuck Lewis, executive director of the Center for Public Integrity.

Topping their list of individual soft money donors is software entrepreneur Steven T. Kirsch, who "spread $2.1 million in six-figure chunks among nine different Democratic Party committees, virtually all in key swing states in the 2000 presidential election," Lewis said.

Kirsch is followed on the list by Slim-Fast guru S. Daniel Abraham, a member of the Forbes 400, and Bernard and Marsha Daines.

Telecommunications hub AT&T and tobacco giant Philip Morris placed first and second among corporations. Most corporate money goes to Republicans.

Labor Groups Give to Dems

Democrats, meanwhile, were the main beneficiaries of money from labor groups. The National Education Association, the Association of Trial Lawyers of America, Service Employees International Union, and then the International Brotherhood of Electrical Workers top that list.

Businesses and corporations were the most prolific donors, giving more than $120 million in soft money to the national parties. Individual contributions accounted for $86 million, and the state parties themselves raked in nearly $74 million.

Under the new campaign finance law, national parties will no longer be able to transfer soft money to state parties. But state parties can still raise that money and will be able to spend it on generic party building activities and on carefully crafted advertisements that can't support or oppose a candidate. For nonfederal races — like state governor or state treasurer , state parties are limited only by state law.

Representatives from the sponsoring groups called for tighter coordination between state and federal regulatory authorities and urged states to adopt regulations promoting transparency in political donation and expenditures.

Connecticut is the only state that prevents national parties from transferring soft money to its state parties.