Report: Politicians in US find loopholes for campaign finances despite political reforms

Report: Campaign finance laws full of loopholes

SACRAMENTO, Calif. — Politicians across the country keep finding ways to skirt campaign-finance laws, using ballot-measure committees and other avenues to raise millions of dollars in unregulated contributions, according to a report issued Tuesday by a California-based think tank.

The Center for Governmental Studies in Los Angeles said legal defense funds, inaugural and leadership committees, donations to favored charities, contributions from political parties and reimbursed travel expenses are among the other “loopholes, tricks and end runs” used to thwart regulations.

Meanwhile, unlimited donations to politicians through committees they control create the appearance of undue influence for large donors and erode public confidence in government, the report stated.

In California, where donations to governors and gubernatorial candidates are limited to $25,900 per election cycle, Gov. Arnold Schwarzenegger raised more than $6.5 million in the first six months of 2009, including 23 contributions of $100,000 or more.

The money went to Schwarzenegger’s California Dream Team, a general-purpose political fund that he sometimes has used to pay for ballot-measure campaigns.

Adam Mendelsohn, a political spokesman for the governor, said Schwarzenegger has a history of taking positions that are contrary to many of his supporters if he believes they are in the best interest of California.

Schwarzenegger became the most prolific campaign fundraiser in California history, taking in more than $125 million in a four-year span. Yet Mendelsohn said the Republican governor has repeatedly called for campaign-finance reform since taking office in 2003.

“He has said they need to ban fundraising during budget season. He signed the bill most recently (for) the initiative that would create public financing for the Secretary of State’s office,” Mendelsohn said. “Every year that he’s been in office he’s called for campaign-finance reform, but the bills have not made it on his desk.”

The center spent a year reviewing political fundraising and spending nationwide, finding that loopholes are used even in states that have taken steps to control donations.

In Alaska, according to the report, four mining companies donated to an inauguration committee for Sarah Palin, then the governor-elect, but state law did not require them to disclose how much they contributed. The fund paid for expenses such as inaugural balls and travel for Palin and her family.

Companies also gain access to politicians by bankrolling travel. In Wisconsin, several corporations spent thousands of dollars to send Republican lawmakers to a meeting of the American Legislative Exchange Council in Chicago, the report said.

“Not every state has all these problems, but no state is completely immune from these fundraising end runs by elected officials and candidates,” the report stated.

The Center for Governmental Studies found that legal defense funds often turn into just another fundraising source. It pointed to such a fund established to help California state Sen. Ron Calderon, D-Monterey Park, after election results were challenged.

Although his opponent conceded two days after a July 2006 recount began, Calderon raised more than $165,000 in his legal defense fund from September through the end of 2006. It said $62,000 was spent on fundraising events at golf resorts, $12,000 went to credit card payments and almost $39,000 was paid for campaign consultants, while only about $35,000 paid for legal and accounting services from 2006 through 2007.

Calderon’s chief of staff, Rocky Rushing, said Calderon followed the law. He said the spending was audited by the California Fair Political Practices Commission, which found no wrongdoing.

The commission subsequently changed its rules on legal defense funds. Since January 2008, lawmakers who set up such funds have been required to identify the specific legal dispute they are raising money for and must spend the money only on attorneys fees and other related legal costs.

If more than $5,000 remains unspent, the candidate is now required to return the money to donors on a pro-rata basis, according to the agency.

The Center for Governmental Studies said it launched its study because it is clear that 30 years of campaign reforms are no longer sufficient to keep tabs on politicians. It’s proposing a model for campaign finance laws that presumes all money candidates or elected officials receive is for a political purpose.

Under that model, politicians would be required to disclose any contributions of more than $100 and would be prohibited from using political money for personal purposes. Legal defense funds would be treated separately from other contributions and travel reimbursement would be limited.