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Campaign Finance Reform Impacting the
Way Your Business Contributes Changes Effective March 2005 By Public Policy Advocates LLC (January
2005) As the new 126th
General Assembly settles into their offices, many new members, like most
companies and political action committees, are sorting through the changes
that will occur this March with regard to Campaign Finance. On March 30, 2005, Campaign Finance Laws in In response to
alleged fundraising improprieties that involve a few professional campaign
fundraising strategists, there was a call for transparency in the campaign
finance process. Many Republicans
proposed full-disclosure and unlimited contributions. Many members believe the contribution limits
were not in line with the expense required to run an effective campaign, creating a
perception that illegal activities are widespread in fundraising. In an effort
to move toward full-transparency, all contributors must disclose their
addresses and employers. In addition
to the Pre- and Post-Primary and General Election reporting, as well as an
Annual report, a mid-year, July 30th, filing was included in the
reform. Many reports are currently
filed electronically with the Ohio Secretary of State; however, some
exemptions that were permitted under the current law will be eliminated,
requiring more reports to be filed electronically. Some of the
more significant changes to the law included provisions regarding
contribution limits. Individual contribution
limits were increased from $2,500 to $10,000 to statewide and legislative
political candidates, as well as to Political Action Committees, and $15,000
to legislative campaign funds, such as the Republican or Democratic Senate
Campaign Committee. Under current law,
Political Action Committees (PACs) are limited to contributions of $5,000 to
political candidates per year ($2,500
per election cycle -Primary/General).
HB 1 increases PAC limits to $10,000. However, $5,000 PAC contributions currently
permitted to be made to County Party Funds will now be prohibited. Individuals may give to County Party Funds
for the county in which that individual resides. The
Legislature addressed “527 groups” that have grown in prominence since the
passage of the McCain-Feingold Act, the federal campaign finance reform law
in 2002. The 2004 Presidential
election was the first time these purportedly non-partisan groups’ effect was
felt in Ohio, as seen in the spending of millions of dollars to sway
voters. HB 1
requires contributions to go directly to the candidates in an effort to close
the loophole of the federal law. Furthermore,
“Issue Advocacy Ads” paid for by corporations and unions would be banned 30
days before primary and general elections.
Such ads refer to candidates by name, or display their photos, but
don’t directly call for their election or defeat. Third party-groups whose
primary purpose is non-political would be allowed to run ads, but would be
required to disclose all corporate and union contributions. In perhaps the most controversial move, restrictions will
be placed on the ability of unions to tap a portion of union dues to fund
political activities. Unions must now
make donations through political action committees (PACs) or “separate
segregated funds.” The PAC
contributions will require the disclosure of the union members making the
donations. No “dues money” may be
transferred to union PACs, and in soliciting contributions to the PACs,
unions are limited to their members, officers and employers. Members must “affirmatively consent” to any
automatic contribution to an union PAC – such as
through payroll deductions- in writing.
The PACs will be required to disclose the name and address of each
union member making a donation.
Corporate and non-profit PACs will be subject to similar contribution
and disclosure requirements. There are many companies that are currently structured as
an “unincorporated” business, such as Limited Liability Companies (“LLCs”), Limited Liability Partnerships (“LLPs”),
cooperatives, sole proprietorships or general
partnerships. When the new Campaign
Finance law becomes effective in March there will be changes as to how these
entities are permitted to make contributions.
Most notably, these businesses may no longer make a contribution
“solely” in the name of their business.
LLPs, LLCs,
general partnerships or other unincorporated businesses listed above will now
have to be listed on candidate’s or committee’s report both the partnership
or other unincorporated business and the name of the partner, owner, or
member making the contribution.
In addition,
there are new provisions with regard to registering voters and collecting
signatures for petitions, as well as the use of phone banks in campaign. Any person receiving compensation for
obtaining signatures for a election petition, under
the new law, is required to file a statement of activity with the Secretary
of State before obtaining signatures. If an individual is employed by someone
other than the State to register voters, the individual must disclose on the
voter registration form their own name and the name of the person or entity
employing them to register voters. Any
group utilizing phone banks to make calls on behalf of their issue or
candidate, must disclose who they are and who is funding the calls. On February 28th,
Public Policy Advocates LLC will host a Seminar on Campaign Finance Reform in
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