Outside groups spending millions on state level elections, ballot initiativesBy Anupama Narayanswamy Sep 24 2012 2:15 p.m.
A six year battle between the state of Michigan and a local billionaire will come to a head this November, when voters decide whether to build the first public bridge between Detroit and Windsor, Canada. The ballot initiative will be voted on despite an agreement Michigan Gov. Richard Snyder, a Republican, reached with the Canadian government earlier this year which, Snyder says, can't be overturned by the referendum.
The billionaire, Manuel Maroun, has spent at least $2.19 million bankrolling a nonprofit organization, The People Should Decide, via his company DIBC Holdings. Over the past two years, the politically charged nonprofit launched a petitioning campaign to start the ballot initiative and is currently working to get it passed, all to ensure that the Ambassador Bridge, which brings in more than $10 billion in revenue to Maruon's company, remains the only one.
Groups like Maroun's political nonprofit, organized under the section 527 of the tax code, the same as super PACs, have so far collected some $304 million, though contributions and expenditures are slower this cycle. While super PACs have been spending hundreds of millions to influence federal elections across the country, outside groups focused on state and local races and ballot initiatives--called 527s--have been spending millions more.
Even before the 2010 Citizens United and Speechnow.org court rulings opened the door to federal super PACs, 527 groups played a major role in elections. Under the old rules, they could not give money to candidates running for federal office or explicitly endorse or oppose a candidate, but they could run issue ads attacking federal candidates. For example, in 2004, the Swift Boat Veterans for Truth ran controversial ads attacking the Vietnam war record of Sen. John Kerry, D-Mass., that year's Democratic presidential nominee.
While federal 527s--technically known as independent expenditure-only committees and more commonly as super PACs--began disclosing their donors with the Federal Election Commission in 2010, state and local 527 groups continue to follow the old, pre-Speechnow.org system, disclosing their donors and spending to the Internal Revenue Service. Right now there more than 568 organizations registering with the IRS. That's down from the 628 that the Center of Public Integrity identified in a 2005 study.
Adding to the confusion is the fact that a number of political organizations maintain more than one vehicle for influencing politics. For example, the Patriot Majority USA Fund is a 527 group launched in 2005 that gets most of its money from labor unions. Patriot Majority USA is a nonprofit organized under a different section of the tax code--specifically, 501(c)4; it's spent more than $3.6 million influencing federal elections, and does not have to disclose its donors. Patriot Majority PAC is a super PAC. The related groups share an officer, Democratic operative Craig Varoga. And Patriot Majority isn't alone--other such organizations with multiple vehicles for influencing elections include Planned Parenthood and the Young Democrats of America.
527s spending on ads
Since 2011, these 527s groups have spent more than $34 million running ads and on media buys across the country.
Among the top groups running ads is the Republican Governors Association, which supports GOP gubernatorial candidates. The group has spent some $13 million in the races so far on media buys and has been running ads in Washington state and Indiana in the run up to November.
Its counterpart, the Democratic Governors Association, has spent almost nothing on media buys and ad campaigns in the current election cycle, which is a departure from previous years. But DGA has raised some $31 million more in the past two years than its GOP rival--$83 million fro the Democrats, $52 million for the Republicans. Both groups have relied on some high profile donors with big bank balances to get there.
David Koch, the oil industry mogul, has given $2 million to the RGA, which is the tip of the iceberg of his giving. He and his brother, Charles Koch have pledged to donate at least $60 million to political profits in the current cycle. Other major RGA donors include Kenneth Griffin of the hedge fund Citadel Group ($880,000) and Bruce Kovner of Caxton Management.
In addition to giving to 527s these big buck rollers have also given to super PACs. Griffin has given $450,000 combined to Restore Our Future, the principle super PAC supporting Mitt Romney, and American Crossroads. Kovner has given $250,000 to Restore Our Future. Some of the prominent organizations that have given to the RGA include the U.S. Chamber of Commerce ($1million), Wellpoint Industries ($1 million) and ExxonMobil ($650,000).
The DGA on the other hand has received large checks mostly from corporations and industry groups rather than individuals. The only high dollar donor is Fred Eychaner, who gave $300,000. Eychaner has been a prolific political donor, contributing more than $3.4 million, including $1.5 million to Priorities USA, the primary super PAC supporting President Barack Obama. DGA’s industry donors include pharmaceutical companies AstraZeneca Services ($800,00), Pfizer Inc. ($685,000) and the heavyweight pharmaceutical lobby PhRMA ($625,000).
While the DGA hasn't spent much on ads, other 527s that back Democrats at the state level have. The Greater Wisconsin Political Fund, which pushed voters to recall Gov. Scott Walker over Act 10, the budget and collective bargaining law he proposed, is now spending on ads supporting Judge Shirley Abrahamson, chief justice to the state supreme court. Abrahamson's place on the court may be critical; a Dane County judge overturned Act 10, a suit that could end up being decided by the state's high court.
Another tool for influence
Like super PACs, state level 527s can have an outside influence on public officials and policies. By investing the millions from DIBC Holdings in The People Should Decide, Maroun has put his own agenda item before the voters of Michigan. But like other big 527 and super PAC donors, his effort to influence government doesn't end there.
The Maroun family and the company’s employees have also boosted their campaign contributions to Michigan state and federal elected officials. After the plan for the new bridge was announced the campaign contributions were higher than usual and some coincided with the stance the recipients took supporting Maroun, a study by CREW, a Washington, D.C.-based nonprofit, found earlier this year.
The bridge issue has also been taken up by a right wing political nonprofit, Americans for Prosperity, which has been running ads against the proposed bridge, lashing out at Michigan Governor Snyder and arguing that taxpayers should approve the project.
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