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Citizens United-Enabled Spending Leaves States Defenseless, Public Citizen Report Finds

July 25, 2014

Citizens United-Enabled Spending Leaves States Defenseless, Public Citizen Report Finds

With State Campaign Finance Laws Invalidated, Outside Groups Ramp Up Spending

WASHINGTON, D.C. – Outside groups are exerting outsized influence on the elections in states and local jurisdictions that had their campaign finance laws invalidated by the U.S. Supreme Court’s 2010 ruling in Citizens United v. Federal Election Commission, a new Public Citizen report finds.

In its report, A Rising Tide, Public Citizen profiles elections in five states where laws that previously restricted corporate and union expenditures were invalidated or undermined by Citizens United. The report highlights how even modest investments by outside groups can have a disproportionate impact on state and local races because those races require less money to have a significant impact.

In Citizens United, the Supreme Court said that corporations and unions could spend without limit on “independent expenditures” – things like broadcast ads and fliers – to influence elections. Citizens United opened the door to election activity for two types of groups: 501(c)(4) nonprofit groups and super PACs. Before Citizens United, states could restrict the ability of nonprofit groups to spend corporate or union money to influence elections. Now, states are powerless to do so. Without Citizens United, the legal justification for super PACs never would have existed.

Citizens United didn’t just change how federal elections are conducted, it fundamentally altered how state and local elections are funded as well,” said Adam Crowther, author of the report and a researcher for Public Citizen’s Congress Watch division. “Now, a wealthy individual, corporation or union can spend relatively little but transform a local race. The problem is becoming more acute nationwide, which is why Congress this week held a hearing on the problem of undisclosed money in our elections.”

Here are the five states:

• Massachusetts. Boston’s 2013 mayoral race saw historic levels of spending, particularly from outside sources. Outside groups – groups not associated with a campaign – spent more than $3.8 million on the race, establishing a new record. Prior to Citizens United, Massachusetts state law prohibited political action committees that made independent expenditures from accepting contributions of more than $500 from corporations or unions.

• North Carolina. An ongoing race to fill a seat on North Carolina’s Supreme Court has attracted large sums of outside spending by newly enabled political groups. Of the roughly $1.3 million of outside money spent on the primary, two super PACs, Justice for All NC and NC Chamber IE, cumulatively have spent more than $1.2 million on the race. This spending would have been prohibited prior to Citizens United because of its corporate sources.

• New Jersey. New Jersey has a “pay to play” law that prevents corporations seeking government contracts from making direct campaign contributions to candidates and political parties. However, corporations can give to super PACs, which can then spend for or against a single candidate. This happened in New Jersey, where the Committee for Economic Growth and Social Justice, which is backed by corporate interests, made expenditures during the 2013 Elizabeth, N.J., school board race.

• Texas. Empower Texans, a 501(c)(4) group, spent more than $1 million on a special election for a seat in the Texas state Senate. If corporate or union money was used to finance this expenditure, it would have been illegal in Texas prior to Citizens United.

• Wisconsin. In Wisconsin, 501(c) nonprofit groups, which prior to Citizens United were prohibited by state law from spending corporate money on political activity, spent significantly on the state’s Supreme Court race. Two 501(c)(4) groups, WMC Issues Mobilization Council and Club for Growth Wisconsin, cumulatively spent $740,000 on the race – far more than the $394,000 spent by one of the candidates.

“That corporations and other wealthy interests can shield their political contributions behind 501(c)(4) groups is ridiculous, particularly when they are trying to influence state and local elections,” said Lisa Gilbert, director of Public Citizen’s Congress Watch division. “At the very least, Congress should act and pass the DISCLOSE Act to fix this problem at the federal level and bring these anonymous donors out into the open. In the interim, the Securities and Exchange Commission should move forward on its important political spending disclosure rulemaking for shareholders.”