Did the Texas Association of Business break the law when it used unidentified corporate funds to pay for a $1.9 million political ad campaign? That depends on your interpretation of state campaign-finance laws (different regulations govern federal elections).
For state campaign laws, here are a few handy definitions:
PAC
“Political action committees” are the political arms of corporations or special-interest groups. They can raise money from individuals and thereby contribute to issue campaigns or directly to candidates, and are required to file campaign-finance reports identifying their contributors and expenditures. In Texas, individual campaign contributions to and from PACs are essentially unlimited.
Issue Advocacy
Can you say loophole? Corporations and labor unions are prohibited from making direct contributions or expenditures to political campaigns. One way around that is to pour money (the sky is the limit) into ad campaigns that serve “to inform” or “to educate” voters on state issues. But the ads must pass the “magic words” test, by not expressly advocating the election or defeat of a candidate. In other words, you can attack or praise a candidate all you want — just omit words like “elect” or “vote for” or “vote against.”
Coordination
The loophole above is legal only as long as the “issue advocacy” ads are not “coordinated” with a political candidate or the candidate’s campaign. One of the issues in the current T.A.B. dispute is precisely what constitutes “coordination,” and if indeed it was done for the fall state campaigns.
Hard Money
Money intended for express advocacy on behalf of a candidate. Hard-money contributions are regulated and must be reported.
Soft Money
This is what pays for issue-advocacy ads and general party-building. Corporations and unions can make unlimited soft-money contributions to these efforts.
This article appears in March 28 • 2003.
