Is New Jersey Ready to Train the Spotlight on Dark Money?

Colleen O'Dea | February 21, 2019 | Politics
The upper house is expected to vote today on a bill that would disclose the identity of sizable dark-money donors, possibly pushing it closer to becoming law

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The Senate is scheduled to vote today on legislation to expand New Jersey’s election-reporting laws to require independent groups whose funders are now largely unknown to disclose those who make big contributions.

Pleas from the state’s campaign-watchdog and good-government activists to make so-called dark money organizations report who funds them went unanswered for years, even as issue-advocacy groups increased their election-related spending exponentially. In 2017, those groups spent nearly $50 million to influence gubernatorial and legislative races. But after an organization with ties to Gov. Phil Murphy reversed course earlier this year and said it would not voluntarily disclose its donors, Sen. President Steve Sweeney (D-Gloucester), who has been feuding openly with Murphy, announced his support for S-1500, a pending measure that moved quickly through committee and to the floor of the upper house.

The bill had been poised for passage last month, but instead was amended on the floor of the Senate to prevent elected officials from establishing or managing dark-money groups. The amendment, which passed 31-0 with bipartisan support, is largely seen as a swipe at Brendan Gill, current president of both the Essex County Freeholder Board and the New Jersey Association of Counties. He’s the founder of New Direction New Jersey, which has been backing Murphy’s agenda — in part, through two ad campaigns. It is this group that reversed its policy on revealing donors. Candidates would also be barred from overseeing dark-money groups under the legislation.

How much must be reported

While they would not be required to disclose information about as many contributors as candidates and political action committees must, politically active 501(c)(4) and similar nonprofits would have to report to the state Election Law Enforcement Commission all contributions of at least $10,000 and expenditures of $3,000 or more. Candidates must report all contributions over $300 and all spending, regardless of the amount.

Originally, the bill had sought for dark-money groups a lower contribution threshold for disclosure — the same $300 as for candidates. But numerous nonprofit organizations that do genuine advocacy in addition to some political activities, including the American Civil Liberties Union and New Jersey Right to Life committee, complained that some of their donors might balk at making contributions if their identities are going to be disclosed. The $10,000 contribution threshold would capture the identities of only large donors.

Retroactive revelations

Also troubling to those groups is the provision in the bill that would make it retroactive to January 1, 2018. The use of that date would mean New Direction, which was established last year, would have to disclose its funders as promised. But it also means individuals who may have made a large contribution to any grassroots group would have their identities and contributions made public, too, even if they may not have given money had they known their donations would become public.

The 2018 starting date for reporting contributions would also impact groups that have supported Sweeney in the past, most notably General Growth Fund, a 501(c)(4) with ties to Sweeney ally and South Jersey political boss George Norcross. Politico reported earlier this year that PSEG had mistakenly donated $55,000 to General Majority PAC, which is tied to Norcross. As a PAC it has to reveal its donors. PSEG had meant the donation to go to General Growth Fund, a dark-money group at the same address. The donation had come last fall on the heels of legislative approval for a $300 million nuclear subsidy bill that had been championed by Sweeney.

But it would not cover support Sweeney received in 2017 when he was battling to keep his Senate seat in the 3rd District in the face of millions in independent spending from a group funded by the New Jersey Education Association. The state’s largest teachers union had been unhappy with many of the Senate president’s actions, including his refusal to post a constitutional amendment that would cut the time until the state fully funds public-worker pensions. Because of the lax reporting rules, it’s unknown exactly how much independent groups spent in that district, but ELEC estimates it totaled roughly $14.4 million, including about $4.8 million from the NJEA-backed Garden State Forward.

ELEC has had some luck in the past getting independent groups to report their election-related activities, but has been urging lawmakers to require disclosure for years. Currently, only those political nonprofits formed by a gubernatorial candidate who accepts public funding have to file disclosure reports with the state’s election watchdog. Murphy had to report financial details for the two independent groups he formed before running for office — New Way for New Jersey and New Start NJ.

In the dark about dark money

The main problem with dark money is that voters do not know who is paying for ads meant to influence their votes. This makes it more difficult to evaluate those ads and know what weight to give the information presented in them when deciding which candidates and public questions to support.

Dark money’s influence over campaigns has also been a problem at the national level, particularly in the wake of two U.S. Supreme Court decisions this century. The first, Wisconsin Right to Life v. FEC, struck down a prohibition on issue ads funded directly or indirectly by corporations and unions. The other, the well-known Citizens United v. FEC case, allowed for unlimited independent political spending by corporations and unions. Politically active nonprofits have become a popular vehicle for wealthy individuals and businesses to try to influence the electorate.

Greater disclosure of contributions to politically active social-welfare organizations working at the federal level is a hallmark of the first major proposal of the new Democratic majority in Congress. Called the For the People Act, or HR 1, the bill also would make other sweeping changes in voting and election laws.

New Jersey S-1500, if enacted, would apply only to groups involved in state-level elections. Still, it would be the most significant reform of campaign-disclosure laws in more than a decade.

If passed by the Senate, the bill still must clear the Assembly. A version introduced in the lower house (A-1524) is currently in its original, unamended, form.

Murphy, who has acknowledged raising funds for New Direction, has said he, too, supports disclosure requirements for dark-money groups, although he has not said whether he would sign S-1500 in its current form into law.