Leaders’ Fund-Raising Operations Amount to ‘Legal Laundering’

Committees Shield Candidates from Taint of Special Interest Cash

November 18, 1999

Madison - Legislative campaign committees controlled by legislative leaders have become legal money laundering operations that raise huge sums of special interest money that benefits candidates but is not reported by the candidates, allowing them to appear free of lobby groups’ attempts to influence them, according to a report released today by the Wisconsin Democracy Campaign and Common Cause in Wisconsin.

"The legislative campaign committee is the poster child of the pay-to-play mentality that is poisoning the political process in this state," said Gail Shea, executive director of the Wisconsin Democracy Campaign.

The four legislative campaign committees (LCCs) collected more than $2.3 million from 1995 to 1998 - over half of it from special interest political action committees (PACs) and other political committees. The partisan committees reported $2.2 million in expenses and more than $362,000 in direct contributions to candidates, the study shows.

After deducting $339,706 in LCC goods and services paid for by candidates, $42,624 worth of in-kind contributions and $105,429 of debt payments, there remains about $1.6 million worth of expenditures. Many of these expenditures were also made for political purposes, such as consulting, fund raising, polling, telemarketing and staff travel. However, none of this $1.6 million in expenses is attributed to candidates even though the function of the LCCs is to elect candidates.  The state Elections Board does not require the LCCs to keep sufficient records to verify how much of the expenses actually benefited campaigns.

"In the last two elections, legislative leaders have used a flaw in our campaign finance laws to legally launder a million dollars to remove the stain of special interest influence and make it appear that their candidates have clean hands," Shea said.

Candidates not only benefit from special interest money they do not have to report, they also get an assist from taxpayers, the report shows. Employees of the four partisan caucuses, who draw over $2 million in annual salaries paid by tax dollars, are heavily involved in carrying out the functions of the legislative campaign committees.

Aside from thwarting full disclosure of the sources of money candidates use to run their campaigns, LCCs damage Wisconsin politics in a number of other ways, the report demonstrates.  The leadership-controlled committees enhance special interest influence, diminish the role of political parties, make legislators more beholden to leadership and less responsive to their constituents, and reduce the competitiveness of elections by increasing the number of uncontested races, the study shows.

"Legislative campaign committees are a big impediment to gaining a more responsive legislature and cleaner elections," said Jay Heck, executive director of Common Cause in Wisconsin.  "Political fund raising ought to be evicted from the Capitol."

Heck and Shea said the legislature should abolish legislative campaign committees as part of a comprehensive overhaul of Wisconsin’s campaign finance system. Several proposals pending consideration in the legislature seek to eliminate LCCs by treating them as PACs, but Shea and Heck said such a provision needs to be accompanied by a prohibition on transfers between PACs. Without a PAC-to-PAC transfer ban, LCCs could be recreated as so-called SuperPACs with as much fund-raising prowess and political clout as the current LCCs, they said.

Legal Laundering