The Connecticut Democratic Party’s reliance on a federal account to raise money from state contractors who cannot legally give to state campaigns drew a carefully worded caution Tuesday from state elections regulators.
In an unsolicited advisory opinion, the State Elections Enforcement Commission warned that more permissive federal campaign laws do not “create a loophole” allowing prohibited donors to support state campaigns.
The commission’s opinion makes no claim that the party has violated finance rules in spending $1.6 million in federal donations to build a campaign infrastructure designed to turn out voters for Gov. Dannel P. Malloy and other state and federal candidates this November.
But it states that no advertising supporting a state candidate can be paid for exclusively by the federal account and warns that that party’s staffing should be structured where possible to segregate activities on behalf of state and federal campaigns.
“In some instances this may mean, for example, they cannot support state and federal candidates within the same communication, that they have to compartmentalize staffing arrangements, or that they must purchase assets from the federal committees if they wish to utilize them,” the commission said.
It was unclear Tuesday night if the opinion would force any changes by the Democratic Party in its current organization or plans for advertising, voter identification and get-out-the-vote activities. James Hallinan, a spokesman, said the party would have no comment until reviewing the document.
The commission said the opinion was consistent with previous advice. It was drafted in response to questions by the media and the “regulated community,” namely contractors and others barred from donating to state campaigns, about the propriety of federal donations that may ultimately be used on state races.
“Of most concern is the fact that much of the reported fundraising has involved Connecticut state contractors, who are prohibited from making contributions to party committees registered with the SEEC [State Elections Enforcement Commission],” the opinion said.
Malloy helped his party use its federal account last year to raise $2.1 million, including $570,000 from a roster of $10,000 donors, many of whom do business with the state. By comparison, it raised only $335,806 through a state account used exclusively to support campaigns for state office.
The state Republican Party also relied more heavily on its federal account, though it badly trailed the Democrats in fundraising. Last year, it raised $528,501 in federal donations and $111,949 through its state account.
Under a law passed in 2005 after the corruption scandal that toppled Gov. John G. Rowland, state contractors are barred from contributing to state candidates or to an account the state parties use in support of state campaigns.
“It is a matter of great importance to the integrity of Connecticut elections that funds that are generally prohibited from being used in Connecticut elections are not, in fact, used to make expenditures in Connecticut elections,” the opinion said.
The commission acknowledges in its opinion “a lack of clarity” at the intersection of federal and state campaign finance laws.
“The overarching principle to be followed is simple: Connecticut committees pay for their expenses with money raised within the Connecticut campaign finance system, i.e., from permissible contributions or public financing grants, properly reported under Connecticut law,” it said.
Federal law, written to ensure that state funds are not used to support congressional campaigns, actually requires that a party’s federal account be used to pay staff salaries and other items, including databases and mailing lists pertaining to voter outreach and fundraising.
Michael Brandi, the commission’s general counsel and executive director, said the federal law was written under the assumption it was more restrictive than state laws. But in Connecticut, he said, that is not the case.
The law passed after the Rowland scandal bars donations from state contractors and limits donations from lobbyists. Government vendors and lobbyists face no similar restrictions under federal rules.
Brandi said his agency frequently advises campaigns and political action committee on how to comply with state law, either in informal conversations or written advisory opinions formally adopted by the commission.
“We never like to be thought of as a gotcha agency,” he said.
The opinion unanimously adopted Tuesday may not be the commission’s last on how a political party’s state and federal accounts interact. The six-page document was not exhaustive.
It offered no guidance, for example, as to whether the party can solicit donations to the federal account by suggesting the money would support the election of Malloy or any other candidate for state office.
The opinion was adopted at a special meeting called to approve public-finance grants for Democrat Gary Holder-Winfield and Republican Steven Mullins, candidates in the special election to fill the state Senate vacancy left by the resignation of Toni Harp after her election as mayor of New Haven.
Malloy was the first governor elected using a voluntary public financing program that provides $6 million for a general-election campaign, but imposes strict spending limits. To qualify, a candidate must raise $250,000 in increments of no more than $100.
His opponents have said that his raising money for the party from state contractors undermines the public financing law. Malloy has promised to comply with state law.
While the advisory opinion was nuanced, the back-and-forth over what it meant was not.
“The very unusual State Elections Enforcement Commission warning to Governor Malloy for his shaking down state contractors for contributions to the state party is a welcome confirmation that this practice is unacceptable and undermines the intent of our state election laws,” said Tom Foley, a GOP candidate for governor. “The fact that some of the donors themselves were the ones to blow the whistle demonstrates that even they object to the practice and fear they may be doing something illegal.”
Hallinan’s only response to Foley was to remind reporters that Foley reached a settlement in October with the elections enforcement commission over a $15,504 poll he commissioned last spring through his out-of-state, independent political group, Voters for Good Government.