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Will Murphy’s CV Deal a Death Blow to NJ’s Dark-Money Bill?

Governor argues his conditional veto addresses ‘egregious loopholes’ in the legislation. Opponents claim it protects groups that contributed to his campaign

dark money

Gov. Phil Murphy’s conditional veto on Monday of a bill shining light on dark-money groups essentially seeks to rewrite the measure — cutting some provisions while adding another that tosses the bill into the middle of his fight with South Jersey Democrats. In doing so, Murphy appears to have killed the bill.

“It would be very difficult to move forward with this,” said Assemblyman Andrew Zwicker (D-Middlesex), prime sponsor of S-1500 in the lower chamber. “He (Murphy) is basically rewriting this bill, something that had been worked on for a long time. There’s stuff in it that does not make sense. It’s hard to see how we pass it.”

Essentially, the measure would require politically active nonprofits or 501(c)(4) groups to disclose their high-dollar contributors — those giving at least $10,000 — when these groups spend at least $3,000 to influence an election, legislation, or regulations. New Jersey’s election watchdog has been calling for some disclosure by dark-money groups, which now are not required to report who is funding them. As of 2016, 23 states had enacted laws covering electioneering expenditures, according to the Campaign Finance Institute. The Election Law Enforcement Commission reported that dark money groups spent almost $50 million to influence the gubernatorial and legislative races in New Jersey in 2017.

Murphy’s 20-page conditional veto (CV) seeks to narrow that disclosure only to election-related spending, as had been sought by some nonpartisan nonprofit groups that had worried the legislation would impact their activities and donations.

Murphy’s ‘egregious loopholes’

In a statement, Murphy said his CV was meant to correct “egregious loopholes that fail to create reasonable and consistent disclosure standards across the board.”

But it goes far beyond that, including an entirely new section that would require companies receiving economic development subsidies to meet ELEC contribution disclosure requirements. Murphy is embroiled in a battle with Senate President Steve Sweeney (D-Gloucester) and South Jersey political boss George Norcross over the state Economic Development Authority’s handling of tax incentives. Norcross has ties to at least two committees, one of which spends money on races without disclosing its donors.

Several people involved with the legislation said it is unfortunate that the laudable goal of letting the public know who is paying for political ads or pushing for legislation has gotten mixed up in the Democrats’ political fight.

“Stopping money in politics is like eating soup with a fork. But that doesn't mean we should stop eating,” said Matthew Hale, a political science professor at Seton Hall University. “Eventually, incremental reforms can lead to real change. It just takes a lot longer than it should.”

Others said it is not surprising that Murphy introduced politics into the bill with his CV, because it was politics that brought the bill to the governor’s desk in the first place.

Brief history of S-1500

The bill was first introduced in mid-2016 as an effort to deal with the increasing influence of dark money in elections. But it only gained traction earlier this year after New Direction New Jersey, an organization with ties to Murphy, changed its mind about voluntarily disclosing its donors.

Reflecting how muddy campaign finance law can be, there’s disagreement between the governor’s office and ELEC over how Murphy’s CV would affect New Direction. Administration officials contend that the bill would not have applied to New Direction prior to the conditional veto because the group coordinates activities with Murphy and such groups were expressly not covered under the bill. They say the CV would require disclosure by New Direction and other 501(c)(4) groups, but only if these groups engage in electioneering — which Murphy would define much more narrowly as $10,000 spent within 60 days of an election and targeting an audience participating in the election. The two ads New Direction ran in support of Murphy would not seem to trigger donor disclosure under those rules.

Earlier this year, Sweeney fast-tracked an amended version of the bill, which sought to require disclosure retroactively to January 1, 2018, which would have covered New Direction’s first year. It would not, however, have covered any activities that may have been undertaken by the General Growth Fund — a 501(c)(4) with ties to Sweeney and Norcross — to help Sweeney win re-election in 2017, when the New Jersey Education Association spent millions trying to unseat him.

That retroactivity provision was removed from the bill before its final passage in late March, when the measure got broad bipartisan support. That support suggests potential success for an effort to override the CV, although based on the sponsors’ comments, that seems unlikely.

Sweeney said he would leave the decision over whether to try to override Murphy up to Sen. Troy Singleton (D-Burlington), the prime co-sponsor of the bill in the Senate. Sweeney was unimpressed by the governor’s recommendations.

“The veto message contradicts itself,” Sweeney said. “It tries to score political points, which is unfortunate.”

More political overtones

Another provision of the CV with political overtones omits a section that would prevent elected public officials, including Murphy ally and Essex County Freeholder Director Brendan Gill, from controlling an independent committee. Gill currently oversees New Direction, which has run ads backing the governor’s agenda. The group reported to ELEC that it spent $500,000 on lobbying last year but did not — and does not have to — say who provided that money.

Jeffrey Brindle, ELEC’s executive director, said that provision of the bill is an important way to curb the power of elected officials. Without it, an official can receive contributions to his own campaign — which are capped and subject to disclosure — but also take donations from a dark-money organization that he controls and that would be a way to circumvent ELEC campaign contribution limits.

Brindle, who has been asking lawmakers for years to shine light on dark money, said he was disappointed. He wants to continue to work with Murphy and lawmakers to “get this back on track,” but he disagrees with many of the changes the governor has asked for.

“A lot of people worked hard on this bill,” he said. “We certainly believe it is in the best interests of the public. It’s good government legislation.”

Brindle also took issue with Murphy’s CV seeking to add independent expenditure committees to the state’s pay-to-play laws, requiring that any business with $17,500 or more in public contracts disclose contributions it makes to these committees. Singleton and Zwicker have a bill (S-1479/A-3462) to strengthen disclosure by companies with public contracts, and, Brindle said, that is the proper place for such a provision. Any efforts to require disclosure by companies getting tax credits also belongs in a pay-to-play bill, not one meant to deal with dark money, he added.

‘Robust disclosure’

In his CV, Murphy wrote that “robust disclosure of campaign spending is more critical than ever.” But he said that efforts to require disclosure of dark money “must be carefully balanced against constitutionally protected speech and association rights” and some provisions of the bill “may infringe on both.” He added that “the bill does not go far enough in mandating disclosures of political activity that can be constitutionally required.”

Zwicker and Singleton said they were “flabbergasted” by the explanations Murphy gave for his CV.

“The governor says that this bill ‘falls short’ of the goal to bring greater transparency to our political process,” the two said in a joint statement. “That is a gross misrepresentation of months, and frankly, years of hard work … The only thing that ‘fell short’ today was the governor’s will to truly address the behemoth of dark money that has eroded the public’s trust in our government and the political process.”

They further called Murphy’s CV “an example of politics at its worst.”

“The Governor's CV goes beyond striking what he asserts to be objectionable or questionable provisions of S-1500,” said David Goodman, team leader of the citizens group Represent New Jersey that had launched a last-ditch effort to prevent the conditional veto. “Adding pay-to-play regulations to independent expenditures may win some legislative support. But requiring ‘economic development subsidies to disclose their contributions’ is a red flag. Legislative sponsors in both chambers will have to review their options, but given the intense acrimony in Trenton right now, the bill's prospects seem to be in serious trouble.”

In Murphy’s corner

Others supported Murphy’s actions.

"Gov. Murphy's conditional veto provides a mulligan for the Legislature to get dark money disclosure right,” said Doug O'Malley, director of Environment New Jersey, in a statement included on the press release Murphy’s office put out to explain the governor’s action. “The Legislature's haste provided a set of unintentional loopholes and consequences that would have created constitutional challenges. This legislation would have created a chilling effect on the impact of citizen organizations to engage in lobbying decision-makers and agencies as well as voter registration drives. Gov. Murphy gets this right — you can disclose dark money in our electoral process without kneecapping citizen-based lobbying organizations."

“New Jersey voters deserve to know who is influencing elections, so it is absolutely vital that we get this bill right” said Jesse Burns, executive director of the League of Women Voters of New Jersey. “We have been supporting the intent of this legislation, but have expressed reservations about the unintended consequences some of the language could have on nonpartisan or grassroots groups that are transparent, while allowing other groups to continue to operate in the shadows. We have a chance to do better here. Let’s take it.”

The Legislature has three actions it can now take:

  • A majority of both houses can vote to agree with Murphy’s conditions, in which case it would become law.

  • Lawmakers could try to override the veto, which would take 27 votes in the Senate and 54 in the Assembly. The bill passed each house the first time with more than enough support for an override, but some Democrats might be reticent to vote to overrule the governor. If they were to override Murphy, the bill would become law in the form passed in March.

  • Legislators can take no action, in which case the measure would not be enacted in any form.

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