The Pew Charitable Trusts

When it comes to curbing the influence of special interest money in politics, state lawmakers are sometimes credited with doing more to end questionable practices than the U.S. Congress, which has voted to ban so-called soft money.

But reform advocates say campaign fundraising is as open to mischief at the state level as it is at the federal level and that change is unlikely anytime soon.

"The kind of problems we see at the federal level we see at the state level as well...The pressure to find more ways to get more money into campaigns is everywhere," says Ed Davis, who tracks campaign finance laws for the Washington, D.C.-based government watchdog group Common Cause.

A proposal to outlaw unlimited and unregulated "soft money" contributions to the national parties has been sent to President Bush, having won U.S. Senate passage Tuesday. The House of Representatives had previously approved it.

Campaign reform advocates in a number of states have been trying to take advantage of the federal action on the issue to push through companion legislation. But most bills under consideration, including two before the Maryland Assembly, focus more on public disclosure requirements in hopes that shining a brighter light on donors will help check the influence of soft money in campaigns.

Critics say the federal measure amounts to an unconstitutional infringement on freedom of expression. But Bush says he'll sign it, clearing the way for likely court challenges. If the new law survives, it is expected to slow down the amount of national money pouring into state party coffers to help finance congressional and presidential campaigns.

But it won't stop soft-money from being sought and used by state parties to help statewide and local candidates. If anything, campaign finance experts say, it's likely to put pressure on the parties to go after even more special interest money.

"What we think it will stop is the use of the state parties as money laundering apparatuses for the national parties in federal elections. That's a good thing. But it won't stop the state parties from raising all the soft money they want for themselves and using it in statewide races," says Davis.

"That concerns us because, generally, there has been an increase in (special interest soft money) going to state candidates, " Davis says.

The measure contains a provision that would let individuals and political action committees (PACS) give up to $10,000 to state parties and their affiliates (county, precinct, caucus or other designated committees) for use in voter registration or get-out-the-vote drives to help influence federal elections.

Chris Neeley, executive director of the South Carolina Republican Party, says he's concerned that the new campaign finance law will interfere with "the ability of citizens to contribute and express their views and their rights" in the nation's political process. But he acknowledges that new federal restrictions could have the unintended effect of boosting the status of state parties as fund-raising tools.

"It actually could potentially make state parties more powerful...What we could see is a lot of the corporate money and large donors giving more (soft money) to the state organizations. Instead of the money going to Washington, it's going to the states," Neeley says.

In the 2000 election cycle, state parties took in more than $600 million in soft money. That was more than the National Democratic and Republican Parties managed to raise for federal races. Depending on the state, soft money from corporations, labor unions, wealthy individuals and special interest groups accounted for 25 to 47 percent of total contributions, according to a study released last summer by a coalition of nonprofit groups tracking soft money in state politics.

Only Connecticut bans soft money contributions at the present time. Alaska also did so for awhile, but court rulings led lawmakers there to reverse some of the campaign finance regulations passed in 1996.

Massachusetts, Arizona, Maine and Vermont have tried to eliminate soft money by offering candidates the option of accepting public funds to run their campaigns. But most of the statutes impose only voluntary limits on fund-raising and spending, and they are facing legal and legislative challenges.

Twenty-two states ban direct contributions to the parties from labor unions and/or corporations, but not from other sources such as individuals or special interest groups.

A few states South Carolina, Michigan and Ohio have created loopholes that encourage soft money contributions. In those states, state parties and their affiliates can use soft money for administrative or operating accounts. The amount of money and how it's spent does not have to be reported, although a measure that would change that has been introduced in Ohio.

"I'm getting the feeling that lots of money is slipping through because nothing's being done to close these kinds of loopholes (at the state level)," says Edwin Bender, director of research for the non-profit, Montana-based National Institute on Money in State Politics.

A Wisconsin law, which tries to eliminate soft money by encouraging public financing and better disclosure, is considered one of tougher new state measures on the table. At the moment however, it's caught up in a fight between the House and Senate and it's unclear if it will survive.

A Minnesota bill that would have doubled the amount of money available for public financing of campaigns and imposed more restrictions on soft money donations was voted down in the Senate finance Committee earlier this month when a number of key supporters were absent.

A similar measure pushing taxpayer financing of campaigns also died Tuesday (3/20) in the Connecticut Legislature for lack of support. Like most other public financing bills, it would have allowed candidates to receive funding from income tax return check-offs in exchange for imposing voluntary spending limits on their campaigns.