by Ethan DeWitt, New Hampshire Bulletin
June 22, 2023
In 2022, lawmakers made a change to the state’s campaign finance laws that some quickly came to regret.
In a bill sponsored by Sen. James Gray, the Legislature added new limits on how much candidates could receive from political committees, and how much they could transfer from their previous campaign’s war chests. Where statewide candidates had once enjoyed unlimited transfers, suddenly they would be capped at $30,000 per cycle.
The change took effect in January. But it didn’t take long for New Hampshire politicians and campaign staff to call for its reversal. Having caps on transfers meant that a person who won a state Senate seat in 2022 would not be able to transfer more than $30,000 in leftover campaign funds toward their 2024 re-election campaign. And it meant that someone seeking to run for governor would face the same limits over how much they could roll forward from their state Senate or Executive Council campaigns.
On Tuesday, those caps were lifted, six months after they had taken effect. The budget signed by Gov. Chris Sununu included a last-minute amendment to do away with the caps, allowing any candidate, political action committee, or political advocacy organization to transfer an unlimited amount of money directly to a candidate during an election cycle.
Now, some election reform advocates say the Legislature went too far, and missed an opportunity to add guardrails to political spending. The changes were added in late May did not receive a public hearing before being voted into the budget by the Senate Finance Committee.
“Changing (the limit) to unlimited really unleashes the ability for billionaires, mostly out-of-state billionaires, to donate to candidate committees,” argued Olivia Zink, executive director of Open Democracy, a progressive organization that supports campaign finance transparency.
“…Why do they want to open the door for unlimited amounts of money to flow to candidates?”
Supporters of the changes, who include top Democratic and Republican lawmakers, say the tweak was a simple housekeeping measure.
“We’re just restoring the law to what it had been for years,” said Senate Democratic Leader Donna Soucy, of Manchester, who co-sponsored the budget amendment with Senate President Jeb Bradley.
But the moves have sparked a debate over how much money political action committees should be allowed to spend on political candidates – and whether there should be any limits at all. Many lawmakers argue the system works fine.
“An unlimited amount of money”
In New Hampshire, there are two types of campaign donors: individuals – including people, corporations, and unions – and committees. Those include “candidate committees,” which are controlled by candidates; non-candidate political committees, which can advocate for candidates but not coordinate with them; and political advocacy organizations, which are often nonprofit.
The rules differ depending on the donor. Individuals have one set of caps on how much they can donate to candidates and political committees; the committees have another.
The laws have long been confusing, but the major changes kicked off in 2021, when lawmakers passed a sweeping bill meant to simplify the system.
At the time, the state had a “voluntary expenditure limit” system that allowed state candidates to take a pledge to limit their campaign spending. Those who did could raise more money from political action committees during campaigns, but would be capped on how much they could spend. Those who declined to participate could spend freely, but were limited in how much they could raise from other political organizations: They could transfer unlimited amounts before filing for office in June, but after filing would face strict limits.
Most candidates chose not to participate. Instead, they used the unlimited transfer period before filing for office to roll forward any funds they had from past campaigns. They also used that period to transfer any amounts from other political committees before the same limits kicked in.
House Bill 263, introduced by Rep. Joe Sweeney in 2021, did away with voluntary expenditure limits, which Sweeney said were overly confusing and rarely used.
That bill made many changes, setting off an effort to analyze the effects. One side effect: Political action committees could now donate unlimited amounts to campaigns, at any time of the election cycle the Department of Justice concluded in a December 2021 analysis.
“…With the removal of reference to ‘political committees,’ this paragraph no longer limits political committee contributions,”
In 2022, Gray submitted a bill that attempted to codify the department’s analysis and put into statute a simple table that would summarize those unlimited amounts. When the bill passed, however, it included the $30,000 cap on donations from committees to candidates, which senators say was unintentional. The budget Gov. Chris Sununu signed Tuesday removed the cap.
Sweeney, who supports the changes, said the codified limits could allow new types of donation.
“It makes it so that somebody could raise an unlimited amount of money into a political advocacy organization, which doesn’t have any limits, and then they could take that money and put it into a candidate committee,” he said..
“I’m not sure if that was the intent of the legislators that made the amendment and amended the budget that way. I think that’s going to be the reality of the impact.”
A push for small donor elections
That decision has dismayed some. Zink says the state should be moving toward more campaign finance limits, not fewer. And she said that Gray’s 2022 bill, which imposed the $30,000 limits, should have been allowed to stay in law for long enough to see its effects.
“These caps are important,” Zink said. “The intent of this law is to try to not have one individual have undue influence.”
Zink said removing the caps also gives too much power to national party leaders, who can now distribute out-of-state money more easily to state candidates. National campaign organizations such as the Democratic Legislative Campaign Committee and the Republican State Leadership Committee count as “political committees” in New Hampshire law; the new codification allows them to donate unlimited amounts to specific candidates.
And she argued the last-minute maneuver to add the changes to the budget – without allowing for a public hearing – deprived advocates of the ability to mobilize against the change.
Had the idea been introduced as its own bill at the beginning the year, “I think it would have a different outcome,” Zink argued.
To Zink and others, New Hampshire’s campaign finance system is already too confusing. The line between candidate committees, candidates, and political committees can be blurry, difficult for citizens to track, and difficult to enforce, Zink argued.
“Ideally, I’d love to move in a direction where we have more voter-owned elections, where small donor regular voters have a voice in the process.” she said.
“Never been a functional limit”
Leaders and members of both parties, on the other hand, support the current limits. Some, like Republicans, argue there shouldn’t be caps on how much anyone can spend, whether they are individuals or committees.
“I believe that money is speech and so I’m opposed to placing limits on that,” Sweeney said. He pushed back at the notion that billionaires are holding significant influence over New Hampshire elections, and said state elections still hinge on candidates courting individual voters.
Others say attempting to limit campaign donations is futile. Individuals have always been able to find ways to skirt campaign finance limits in the state, argued Greg Moore, the state director for Americans for Prosperty New Hampshire, a conservative advocacy group. One popular way is through the use of “limited liability corporations” that individuals can form to increase their donations, a process reformers call the “LLC loophole.”
“At heart, there’s really never been a functional limit in New Hampshire on how much an individual or campaign can give to another,” said Moore. “It’s just a matter of how hard you want to work to do it.”
And some, including Democrats, argue that because political advocacy organizations and political committees must disclose their donors, unlimited contributions from those organizations will bring more transparency to campaign finance.
“Every dollar that I receive as a candidate is reported,” said Soucy. “It is transparent. It’s completely transparent.”
As for how unlimited transfers from political advocacy organizations could affect spending in New Hampshire, views are mixed. Sweeney said it would likely have the most bearing on gubernatorial races, where campaigns can raise hundreds of thousands of dollars to be competitive. State House and Senate races were less likely to hit the $30,000 transfer caps.
And Moore predicted that it could open opportunities for national party organizations to spend more heavily, such as the Democratic Governors Association and Republican Governors Association, and their counterpart organizations for state legislature campaigns.
The true effects might not be seen for years, Sweeney said.
“We’ll see how this plays out in a very big presidential election year,” he said, speaking on 2024. “And then the Legislature can take another look at it in two years.”
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