Inaction on NC transparency bill hid $2 million in outside spending

With election spending reform stalled in Washington, states have emerged as important arenas for efforts to give the public a clearer picture of who is spending money in politics and how much money is flowing into races.

In North Carolina, lawmakers appear poised to pass one bill to heighten transparency of campaign spending. But at the same time, they've failed to move another reform measure, allowing millions of dollars worth of spending from super PACs and other outside groups to be hidden until months after an election.

Last week the North Carolina House approved a measure requiring campaign committees to file electronic reports by 2017. It came as a surprise amendment to Senate Bill 403, which made technical changes to election and campaign laws and which had already passed the Senate, where it's now awaiting final concurrence. As the elections watchdog group Democracy North Carolina had documented, 92 out of the state's 170 legislators submitted their filings by paper in 2014, resulting in "incomplete, misleading, or hard-to-decipher campaign reports."

But the state Senate has signaled little interest in taking up another piece of legislation, House Bill 918, which sailed through the House on a 97-16 vote in spring 2013. Last year that bill -- which increases the amount and frequency of disclosure by outside spending groups -- got shuffled into a Senate committee.

As a result of the Senate's inaction, more than $2 million worth of outside spending in North Carolina's May 2014 primaries was hidden or delayed from being made public, according to a Facing South/Institute for Southern Studies analysis. And if the N.C. Senate doesn't act on the bill in the current legislative session, millions more in outside spending will likely be obscured from the public in the state's November elections.

A Key Disclosure Reform

H918, titled "Electioneering and Independent Expenditures Reporting Changes," has two provisions aimed at increasing transparency about money spent by groups that aren't tied to a candidate or party.

The first would make registered political committees file reports on the same timetable as other groups that engage in independent expenditures. In North Carolina's May 2014 primaries, four registered committees -- led by the conservative super PAC Justice for All NC -- spent more than $1 million on TV ads and other expenditures but didn't have to report them before the primary due to a loophole in the current law.

The bill would also require groups that spend more than $5,000 to file a report within 48 hours of the expenditure at any point during the year, as opposed to the current law which requires only 48-hour reports in the weeks before an election.

Of the more than $2.5 million spent by outside groups in state-level races in North Carolina's primaries in May, at least $2 million -- or more than 80 percent of the outside spending -- would have been affected by H918:

* Justice for All NC spent more than $768,700 on attack ads across the state targeting incumbent Justice Robin Hudson, according to an estimate compiled by Facing South/ISS analyzing TV station ad buys. Due to the current loophole for registered committees, Justice for All NC didn't have to report any of the spending before the primaries, and a report with the exact numbers won't be filed until late July.

* Altogether, four registered committees spent at least $1.1 million in North Carolina state-level races. Three of them have voluntarily filed disclosure reports ahead of the July deadline mandated by law, but those voluntary disclosures didn't always appear in a timely manner. For example, the conservative group N.C. Citizens for Freedom in Education IE PAC spent $57,943 on legislative races but didn't file a disclosure until May 6 -- the day of the primary.

* Eight non-registered committees spent more than $1 million on state races heading into North Carolina's spring 2014 primary. But six of them spent the money more than 17 days before the election, so they weren't required to a file a report within 48 hours. Under HB 918, any time of the year groups spend more than $5,000 in independent expenditures or electioneering they would be required to disclose it within 48 hours to the state election board.

The following chart by Alex Kotch, Facing South/ISS research associate, details the outside spending in North Carolina's state races before the May 2014 primary and how it would have been affected by HB 918. Click on the chart for a larger version: