Dark money disclosures in NJ elections are a 'work in progress.' Will they work? | Stile
In some ways, Monday will be an important milestone in the long, uphill challenge to get a glimpse into the dark money groups that have come to dominate New Jersey elections.
“Independent expenditure” organizations that have flooded campaigns in recent years — without facing limits on fundraising or spending — will be required to disclose donations of $7,500 or more in their spending on the Nov. 7 election.
The 20-day post-election disclosure is required under the Elections Transparency Act — a bill with an Orwellian name that was rushed through the Legislature earlier this year just in time for the majority Democrats to vastly increase the party’s stockpile of cash for the fall campaign.
The law — heralded as a transformative new vehicle of transparency — actually carved out a special status of late-campaign secrecy for the dark money groups. It bakes in a double standard.
The new law requires campaigns and PACs to report any late-arriving contributions or expenditures of $200 or more made in that final 13-day stretch of the campaign. In the first six days of the period, campaigns and PACs have to notify the New Jersey Election Law Enforcement Commission within 72 hours; the deadline narrows to 48 hours in the last week.
Those reporting rules applies to everybody — except independent expenditure groups. They got a pass.
That's especially concerning — because, during the final two weeks of campaigns, special-interest money is spent on the final attack mailers, television and digital ads and get-out-the-vote activities. That last-push wave of cash can make the difference in tight races or simply turn a reasonably close race into a lopsided one. It’s the high season for influence peddling.
It's unclear why these groups — the very ones that have come to dominate campaigns in recent years — were exempted from pre-Election Day disclosures. But to some campaign finance watchdogs, like Philip Hensley-Robin, a former analyst for the League of Women Voters of New Jersey, the loophole — when coupled with other key shortcomings of the bill — belied its much-ballyhooed “transparency” title.
“Overall, I think you could pick out, you know, a clause here or there that was good, but overall, it's a net negative for transparency,” said Hensley-Robin, who is now executive director of Common Cause in Pennsylvania.
South Jersey 'phantom candidates' increase scrutiny
The focus on independent expenditure groups — which, by law, are required to operate separately from a candidate’s core campaign — intensified last month when a mysterious independent expenditure group, Jersey Freedom, began running ads on behalf of “phantom candidates" in two hotly contested legislative contests in South Jersey.
The group, which listed a Queens mailing address, was accused of ignoring a whole range of compliance requirements. Republican lawyers, who succeeded in persuading a Superior Court judge to freeze its assets, said Jersey Freedom began distributing attack ads by mail and preparing television and digital ads aimed at the two state Senate candidates before the group had even filed its registration with the New Jersey Election Law Enforcement Commission.
It reported no contributions but listed a $35,000 loan and advertising costs incurred for the “phantoms," who, the GOP asserts, were enlisted for the sole purpose of siphoning votes away from the legitimately certified Republican state Senate candidates.
One of those candidates, Chris Del Borrello, lost his race in the 4th Legislative District in Gloucester and Camden counties, but it's not clear if the phantom, third-party candidate, Giuseppe Costanzo, who briefly ran under the “South Jersey Conservatives” slogan, made any appreciable difference. But Jersey Freedom’s report is due Monday — assuming it files one — and how it details the group's fundraising and spending will be closely watched.
Overall, Jersey Freedom's campaign antics appeared to make a mockery of the new transparency law, which included a dramatic increase in campaign contributions for individual candidates and party accounts and the creation of new “housekeeping” accounts, which allowed donors to nearly triple the size of their investments. It represented an unprecedented opening of the campaign cash spigots.
But also sneaking under the radar was the little-known loophole that gave these freewheeling groups protection from public scrutiny at the end of the race.
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'Everybody was going to know who gave'
Assembly Majority Leader Lou Greenwald, D-Cherry Hill, a prime co-sponsor of the measure, said there was some discussion about balancing the need for more disclosure from special-interest money groups and preventing legal challenges to New Jersey statutes on constitutional grounds.
Greenwald said a 2010 U.S. Supreme Court decision — one that said campaign finance restrictions keeping corporations, labor unions and others from participating in elections violated those groups' First Amendment rights to free speech — led to the 13-day exemption for independent groups.
That ruling, Citizens United v. Federal Election Commission, also served as the underpinning of a 2019 court ruling that hit closer to home. A federal judge struck down a New Jersey law restricting spending by outside groups on the grounds that it eventually would be tossed out of court.
“Taking this step and making sure it wasn't challenged was very important," said Greenwald, who also argued that the eventual disclosure — even 20 days after the campaign — was still an important breakthrough.
“It wasn’t like they weren't going to be reported," he added. “Everybody was going to know who gave.”
Though that may be true — we’ll see just how thorough the reporting will be this week — there are some holes in that argument:
First, disclosure wasn’t the problem in the original 2010 court case, but campaign laws that broadly restricted or banned the outside groups' participation.
And with the pass they were given on disclosure in the final two weeks, they are still free to wield undue influence on the final stage of the campaign, with their new disclosure coming long after the race ended and the winners were declared.
The loophole got little attention during the heated debate over the sweeping bill that became law last year. But some, like Politico New Jersey, flagged it, and a “white paper” analysis in September recommended extending the same 72- and 48-hour notification requirements to independent groups and lowering the contribution threshold to $5,000.
Will it make any difference? The lame-duck session that begins in earnest this week would give lawmakers a chance to pass a quick-fix amendment to the bill.
Senate President Nicholas Scutari, D-Linden, defended the bill and said, “We have to make analysis of the election as it transpired," but he said he is not sure there really is a loophole. And in the case of Jersey Freedom, Scutari said he is not sure how or if the group exploited the new law.
But he is convinced that the law greatly expanded public transparency “in terms of fundraising” — meaning that the expanded fundraising rules, which allow for dramatically higher contribution limits, made it easier for regulated campaigns to compete for donor money. In theory, it brought more money out of the dark and into the light, Scutari argued.
“It’s a work in progress,” he said of the new law.
In the weeks leading up to the election, independent groups operated quietly in the dark, out of the public’s eye, while every other candidate, campaign account and PAC operated by strict and enhanced new reporting requirements.
Work in progress? It’s more like a system that continues to work solely for the donors with the deepest pockets.
Charlie Stile is a veteran New Jersey political columnist. For unlimited access to his unique insights into New Jersey’s political power structure and his powerful watchdog work, please subscribe or activate your digital account today.
Email: stile@northjersey.com
This article originally appeared on NorthJersey.com: NJ election 2023: Dark money disclosures coming this week
