NH’s 2020 campaign finance landscape

Changes, trends point to more spending records

New Hampshire campaign finance law has recently seen its most momentous changes since 2014, and some of the more significant ones can reshape how campaigns and outside groups spend this year — a year when vigorous primaries exist for numerous key offices.

Partnerships, unions big winners: In the most consequential campaign finance decision since 2014, the New Hampshire Department of Justice declined to enforce a ban on partnership contributions contained in state law. Granite State Progress had complained before the 2018 election that the governor took illegal partnership contributions from three limited liability partnerships.

The DOJ concluded the statute was unenforceable and partnerships are just another corporate form such as a limited liability company, which can give lawfully. Unions rejoiced in the decision, because they, too, were banned from contributing directly from their treasuries and have long toyed with challenging the law on constitutional grounds.

It remains to be seen which unions may take advantage of the new state of play and whether partnerships will give more freely.

Show your cards in the middle of the holiday season: A change in the law required campaigns to disclose their finances in early December for the first time, as opposed to waiting to June or even August, as in past years. For candidates who dove into races in the summer or fall, there was extraordinary pressure to post credible numbers at the first deadline — smack in the middle of the holiday season. The challenge for candidates was especially acute, considering the fourth quarter is traditionally the most difficult fundraising climate of the year.

Coordination law decision pending: Under campaign finance law applicable to independent expenditures — limitless political spending by outside groups — the outside group can spend to their heart’s content; the only price in return is it must not coordinate their activities with a candidate.

The DOJ has been sitting on a significant complaint filed in the fall of 2018. The complaint alleges that a well-known 501(c)(4) impermissibly coordinated campaign activities with a candidate for state office. A prior high-profile coordination complaint against Save the Children did not amount to any punishment. The current coordination complaint has been one of the longer-pending complaints in some time, and how it is decided may provide important guidance.

Outside groups will need to be very careful not to play favorites with candidates through impermissible coordination. The attorney general has tasked a former police captain as an investigator in such cases, and his investigations, by all accounts, have been aggressive. In addition, the Election Law Unit is adding staff this year.

Inaugural committee impunity and self-reform: Despite credible complaints of self-dealing by the governor’s inaugural committee for its first inaugural celebration — a committee that is a nonprofit under IRS law — paralysis at the Federal Elections Commission and the IRS and state’s Bureau of Charitable Trusts shying away from taking jurisdiction, has led to no enforcement action. This said, optics may have led the committee to contract with outside vendors for the second inaugural, instead of close family and associates, so the scandal may have had salutary benefits after all.

Record-setting hauls: It is not only the stock market that has been (generally) humming of late. Political fundraising has seen some gushers. The governor reported a staggering $846,709 in receipts by Dec. 2. Challengers Dan Feltes reported receipts of $500,759 and Andru Volinsky reported $197,483. Three of the five candidates for Executive Council District 2 raised almost $250,000 combined — before the calendar page even turned to 2020. Thirty-year-old Republican Matt Mowers raised $100,000 in the first 24 hours of his race against first-term Democratic Congressman Chris Pappas — possibly a state record — and Jeanne Shaheen smashed records with $7,237,728 to start her third campaign for the U.S. Senate.

Major loopholes alive and well: Limited liability companies may continue to spend in unfettered amounts, even if controlled by one or two individuals who effectively amplify their giving power exponentially in blocks of $7,000, the maximum pre-filing contribution. The governor vetoed closing this loophole last year.

Political committees are also at liberty to transfer infinite amounts to committees of candidates before they file in June. Theoretically, any two people can establish a political committee and transfer any amount under the sun to a candidate of choice before she or he files. The largest such transfer so far is believed to be $50,000 from back in the 2014 cycle. No legislative effort has been made to close this loophole since it was validated in favor of then-Governor Maggie Hassan in 2014.

Long shadow of Citizens United: Ten years on since it was decided, the U.S. Supreme Court’s Citizens United precedent for massive amounts of outside spending as an exercise of corporate speech — much of it anonymously funded — is still the order of the day. Though reformers in both major parties decry outside spending, it is likely to continue to dominate and define the next State House in New Hampshire, from the governorship on down.

Jay Surdukowski is a trial lawyer at the firm of Sulloway & Hollis who also advises campaigns and organizations on campaign finance and political law.