Campaign Finance Reform in the 81st Session

CSHB 2511: Maintaining Texas’ Political Tradition of Full Disclosure, Prohibiting Corporate/ Union Funds, & Unlimited Individual Contributions

CSHB2511 clarifies and modernizes Texas’ ethics laws to ensure we maintain Texas’ long-standing tradition of full campaign disclosure, unlimited individual contributions, and prohibiting corporate and union campaign funds. In recent years, we have had undisclosed corporate dollars employed to fund attack ads against both Democrats and Republicans. We have seen civil suits, indictments, allegations and counter-allegations.

The bill provides modern, clearer definitions so people understand what is required to comply with the prohibition and we can continue to prohibit corporate and union funds in our elections and to maintain full disclosure. This bill addresses the issue in a fair and bi-partisan fashion. Its definitions are based on established federal and state laws in other jurisdictions. The bill explicitly provides that it will have no impact on any on-going civil or criminal case.

The key terms it defines are:

• administrative expenses
• separate segregated fund
• in-kind contributions, and
• electioneering communications

The bill covers four basic items:

1) Administrative expenses.

• The bill specifies for the first time in statute exactly what are administrative expenses, so PACs know when they can use corporate and union funds.
• This definition of administrative expenses also applies to the political parties, which have been allowed since 1991 to spend corporate and union money on undefined administrative expenses and operating costs.

• The list of itemized expenses comes from TEC advisory opinions and federal law.

2) Separate Segregated Fund (SSF).

• The bill clarifies that only PACs established by corporations, unions, or membership organizations can use their own treasury funds for administrative expenses. Corporate and unions cannot be used by an unconnected or independent PAC. Such a PAC is designated a Separate Segregated Fund, the standard term.

• This definition and approach follows the standard practice and law in the US for over 60 years.

3) In-Kind Contribution.

• The bill defines an in-kind contribution as a contribution other than one in cash to a candidate. It also specifies when a third-party expenditure is considered an in-kind expenditure to a campaign:

• --when the candidate or his agent gives prior consent or approval to the expenditure

• --when the candidate requests or suggests the expenditure by a third-party

• --when the third-party suggests the expenditure and the candidate assents

4) Electioneering Communication-the most important issue.

• The bill defines in statute for the first time what an electioneering communication is—which is when corporate and union funds are prohibited and individual donations must be disclosed. If an communication is not electioneering, then it need not be disclosed and corporate and union money is allowed.

• The bill defines electioneering communications per the constitutional requirements specified by US Supreme Court Chief Justice Roberts in the 2007 case of Wisconsin Right To Life.

• Chief Justice Roberts held that magic words (vote for or against) were not required to ban corporate and union funding of communications, but that the communication had to be the functional equivalent of express advocacy. Roberts held that an equivalent electioneering communication was one in which, based on the words taken as a whole and limited context, there was no reasonable interpretation other than it advocates the election or defeat of a candidate.

• Roberts’ constitutionally upheld standard is the one adopted in this bill.

• The “no reasonable interpretation” standard is a high bar: corporate/union funding of a communication is banned only if

• ---The evidence is unambiguous that it’s electioneering and there is no reasonable interpretation that it’s issue advocacy

In short, a communication is electioneering communication only if there is no reasonable interpretation other than it is electioneering.