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Gansler recommends 25 changes to Maryland campaign finance law

Attorney General Douglas F. Gansler released on Tuesday 25 proposed changes for Maryland’s campaign finance regulations, including closing a loophole that allows businesses to bypass donation limits by routing funds through subsidiaries.

Another set of proposals would tighten restrictions on slates of candidates, which can be used to transfer unlimited campaign funds. Other changes would update campaign law to cover new technologies, like social networking websites Facebook and Twitter.

“There were a lot of areas crying out for reform,” Gansler said, adding “people in Maryland have to have trust in the system.”

The 51-page report and its recommendations were composed by the 12 members of a committee brought together by Gansler, the first such review conducted since 1987. The group included four members of the General Assembly, the lawyers for both state parties and experts in election law.

Gansler said he hopes the General Assembly will act on the proposals this year, before the state enters a new election cycle.

“There are certainly members who will champion this,” said Senate Minority Leader Allan H. Kittleman, R-Howard and Carroll.

Del. Jay Walker, a Prince George’s Democrat and member of the election law subcommittee in the House, said the report will serve as a “working guideline” for lawmakers.

“I know there have already been couple [of bills submitted], and I expect you’ll see more,” he said.

The regulation of candidate slates was one the biggest issues for members of the committee. Gansler said slates “seem to be the biggest way to circumvent campaign finance limits.”

Legislation in 1991 opened a loophole allowing members of the same slate to transfer unlimited funds between candidates without the transparent reporting required of candidate-to-candidate transfers.

Under the current system, wealthy, would-be benefactors can declare themselves a candidate for a minor office, join a slate and pump funds into for distribution to the slate’s other members.

The committee viewed that as a clear circumvention of the $4,000 donation limit to individual candidates and added it could make “lesser-funded slate members overly dependent upon better-funded members for their financial support.”

The committee recommended the General Assembly require slates disclose which candidates benefit from transfers and expenditures, and limit slate membership to “active” candidates.

It urged lawmakers to treat clusters of limited liability corporations as one entity to prevent them from skirting limits by using subsidiaries to make donations. Carville B. Collins, a partner at DLA Piper who has served as counsel to candidates from both major parties, said the General Assembly should outlaw the creation of “sham entities” for the sole purpose of using them to make contributions.

Lawmakers should also consider raising donations limits from the levels set in 1991. Donors are limited to $4,000 per candidate and $10,000 total per election cycle.

“You’re inviting more outside interests into Maryland because there’s not enough money to run some of these ads the candidates want to run,” Gansler said.

Across the country, state caps average $8,359 per candidate. Both Virginia and Pennsylvania do not cap donations, while Delaware allows $1,200 for candidates running for state office, and $600 for local offices.

Other recommendations centered on increasing transparency, including requiring disclosure of loans made to campaigns within 24 hours, employer information from large donors and campaign spending by outside groups.

The report did not include recommendations on all the hot-button campaign finance issues. Public financing was not addressed, nor were federal issues like the 527’s that fall outside of the scope of the Federal Election Commission, or 510(c)(4) organizations, including  trade associations, that allow for donor anonymity.

“There is a lot that needs to be looked at,” said Bruce L. Marcus, counsel to the Maryland Democratic State Central Committee. “This is not the beginning and the end. It’s a beginning.”

KEY RECOMMENDATIONS

-Require large donors to disclose employer information

-Treat clusters of LLCs as one entity

-Outlaw the creation of “sham” entities just to make donations

-Disclose the beneficiaries of transactions within and expenditures by candidate slates

-Allow only active candidates to be part of slates

-Require disclosure of loans of more than $4,000 to campaigns within 24 hours

-Require outside interests spending directly on a race to disclose their activity

-Consider raising limits higher than $4,000 per candidate and $10,000 per election cycle

-Allow for secure electronic campaign donations and expenses

-Allow temporary investment of campaign funds

-Clarify the campaign finance law’s application to new media, like Facebook and Twitter