Friday, October 30, 2009

Shifting Funds

By Marc Korman.

Last week I wrote about campaign finance reports for Maryland House of Representatives candidates. I received some questions about the ability of a state candidate to transfer money to a federal account. Today I will try to address the inquiries.

The context in which I discussed the issue was Delegate Herman Taylor. He is a rumored candidate for the House of Representatives against Congresswoman Donna Edwards. Back in January, Delegate Taylor’s state campaign committee had $19,000 in the bank. I found no record of a federal account and wrote that a “federal campaign committee cannot accept funds from a nonfederal campaign account.”

My meaning was that Delegate Taylor could not transfer the whole $19,000, plus whatever he has raised since, to a new federal account. But there are some things Delegate Taylor may be able to do.

FEC regulation 110.3(d) species that transfers from a nonfederal to a federal campaign account are prohibited. However, the nonfederal committee can coordinate with the federal committee to refund the state contributions and have them donated again as federal contributions. That is exactly what is unfolding in Illinois, where State Treasurer Alexi Giannoulias has been refunding state donations and having them resubmitted for his US Senate campaign.

Some people also asked if Delegate Taylor could make a donation, as opposed to a transfer, from his state account to his federal account within the federal limits. I have not been able to find a definitive answer to the question.

Several people who have worked on Congressional campaigns told me that the answer was no for various reasons. One asserted that state committees could never give to federal campaigns. Another said state committees could donate to federal campaigns, but not if the committees are controlled by the same candidate. Other campaign sources said a state committee could donate to a federal committee up to the legal limit for an individual contribution. Another source said state committee could give up to $1,000 a year in the aggregate to federal candidates, including themselves. All I can say is Delegate Taylor should find a good campaign finance lawyer or spend a lot more time researching the issue than I did before donating to himself.

Incidentally, Maryland has its own rules for the reverse scenario. Federal committees cannot make transfers to state committees, but they can make donations up to the legal limit of $4,000.

If Delegate Taylor or other state legislators are serious about challenging an incumbent, the clock is ticking on getting their campaign finance house in order.