By: Jordan Meadows
Staff Writer
Governor Roy Cooper’s veto on House Bill 237, primarily due to alterations in campaign finance regulations, was overridden by the General Assembly on Friday. These changes were introduced without prior inclusion in other proposed legislation; the standard legislative committee process was circumvented by adding the changes to an unrelated bill.
How these modifications were introduced– and their potential implications– has sparked widespread speculation and criticism. The bill initially drew controversy for its sweeping provision prohibiting masks.
Republicans argue that the bill aims to create parity between political parties, whereas Democrats contend that it constitutes a last-minute rule change during an election year. These disputes are not new; they have been ongoing for over two decades: in July 2004, the legislature amended election laws to prohibit federal campaign and national political party committees (527 committees) from using corporate funds within 60 days before a general election.
Significant emphasis has been placed by Republicans on the fact that this new bill does not change contribution limits: individual candidates are restricted to accepting $6,400 from any single source, excluding political parties or affiliated organizations. The new regulation specifically impacts Federal Political Party Committees —527 committees and Super PACs.
Under the new provisions, both 527 committees and Super PACs will still be allowed to contribute to political parties, provided that corporate, union and other prohibited funding sources, which are restricted from direct contributions except for Independent Expenditures (IEs), are kept in a separate account. Utilizing any of these prohibited sources would constitute a class 2 misdemeanor, consistent with existing regulations.
These organizations will continue to be subject to donor disclosure through the Federal Election Commission (FEC) or Internal Revenue Service (IRS), but they will no longer be required to create and submit separate reports to the North Carolina State Board of Elections (NCSBE). Instead, they will send copies of their federal expenditure reports from the FEC or IRS to the NCSBE.
Federal committees are only obligated to report expenditures made within the state or funds provided to state-level committees. The frequency of FEC committees’ reports to the SBE will increase as they are now required to report monthly, rather than quarterly.
Contributions to federal-level committees cannot be designated for North Carolina political parties or affiliated committees by donors. Therefore, state lobbying organizations cannot bypass state contribution limits by contributing to federal-level committees and subsequently transferring funds to state political parties.
While this bill maintains restrictions on state lobbying organizations and lobbyist donations, federal PACs are exempt from these limitations. Since federal political committees are no longer classified as “political committees” under state law, they are not restricted in their contributions. This allows Federal PACs to donate to candidate committees during legislative sessions, subject to applicable contribution limits. However, federal political committees are still prohibited from earmarking donations to candidates through party committees.
While the bill introduces a new avenue for significant contributors to inject funds into North Carolina elections, large donors already can contribute substantial sums through the state’s political parties and their affiliated committees. Nevertheless, the law prohibits earmarking funds, and all organizations affected by the bill must disclose their donations through the SBE, FEC, or IRS.
Despite existing transparency requirements, large-dollar donors can conceal their contributions through state parties or by transferring them to candidate committees or affiliated entities, but such actions would be deemed earmarking and thus illegal.
The bill’s changes regarding the flow of federal funds in elections would notably alter this landscape. The primary targets of these changes appear to be the Governors Associations and Attorney General Associations of each party, but they also impact other federal “Independent Expenditure only” organizations.
Regarding the bill’s stated goal of “leveling the playing field,” it would ostensibly do so by addressing funding disparities. Structurally, both political parties already operate on an even playing field.
