WV Sets Standard for 527s

Mountain State a Test Bed for Election-Funding Rules

by Tom Searls, Charleston Gazette, March 26, 2006

West Virginia lawmakers might have been watching out for their own political survival when they enacted new laws regulating how nonprofit 527 groups can spend election funds, but their actions have drawn praise from national watchdog groups for being the first in the nation to attempt to regulate the 527s.

“No other state has been successful in passing comprehensive 527 reform,” said Cecilia Martinez, executive director of The Reform Institute in Alexandria, Va.

“Your state is rightly characterized as being on the cutting edge of this,” said Paul Ryan, associate legal counsel for The Campaign Legal Center.

Called 527 groups after the section of the federal Internal Revenue Service code that empowers them, they have been legal for years. But when Congress changed federal election finance laws prior to 2004 limiting the amount of “soft money” individuals could contribute to political parties, suddenly 527s were the way those with money could spend all they wanted.

“These reforms will be fundamental in leveling the playing field in West Virginia elections,” Martinez said. “527 groups have flooded the airwaves with negative attack ads that are funded by a handful of contributors.”

…West Virginians got firsthand knowledge of such groups during the 2004 election when a group called “And For the Sake of the Kids” ran millions of dollars of negative advertisements in a state Supreme Court race.

…The 527s allow individuals wanting to spend unlimited amounts to influence elections in a way that circumvents federal laws, Ryan said. As 527 groups, they file as tax-exempt organizations and do not register with the Federal Election Commission as an election group, he explained.

…He noted that the U.S. Chamber of Commerce has become more involved in funding state judicial races, trying to erase judges considered “judicial activists” from the benches.

For months in 2004, no one knew for sure who was paying for the negative ads disparaging Democratic state Supreme Court Justice Warren McGraw. When the group had to file its financial report just weeks before the election, state residents belatedly learned that $2.4 million of the organization’s $3.5 million was bankrolled by one person, Massey Energy chief executive Don Blankenship.

McGraw was defeated by Republican Brent Benjamin, a political unknown just months before.

With Blankenship making rumblings about attempting to defeat another Supreme Court justice and naming several lawmakers as political targets, legislators moved quickly last year to change state laws dealing with such groups.

…“People think this will keep John Doe from being able to put huge amounts of money into a race,” Kimble said. “No, as long as John Doe wants to individually spend that.”

But unlike the unknown financiers of 527 groups, individuals will have to place their names in front of the public immediately.

Kimble noted that the U.S. Supreme Court has long upheld the right of individuals – whether they are candidates or not – to spend their own money as long as they disclose the funding source is themselves.

(Ed. Note: Whatever happened to Blankenship’s “And For the Sake of The Kids” group? About a year ago he said on the radio that it would take a lot of “logistical work” to get it up and running. Hmmm. Might the foundation, or whatever it is supposed to be, finally appear again during this campaign season?)