Sioux Falls lawyer and lobbyist Justin Smith is waging Twitter war on the Anti-Corruption Act proposed by Rick Weiland and Don Frankenfeld. Secretary of State Shantel Krebs has yet to certify the 25,216-signature petition submitted two weeks ago to put the act on the South Dakota ballot next year, but Smith is bombarding his followers with arguments against the bill, which, if certified, would likely be labeled on the ballot as Initiated Measure 22:
Smith has called both the initiative and its sponsors “insidious.” Smith’s primary reason for branding Weiland and Frankenfeld stealthily treacherous and deceitful is the public campaign financing component of IM 22. The Anti-Corruption Act is much more than that plank: its 70 sections also set new limits and disclosure requirements for campaign finance, impose greater limits on revolving-door lobbying, and create a statewide ethics commission to enforce those rules and investigate corruption in general. Smith has arguments against those other planks, but for the moment, he’s ginning up memes against gouging the general fund with welfare for politicians. Thus, let’s focus on IM 22’s public campaign financing.
IM 22 creates a Democracy Credit Fund, from which every registered South Dakota voter would be assigned two fifty-dollar Democracy credits. Voters may assign their Democracy credits to any candidates for Legislature or state office (not Congress or President) who agree to abide by IM 22’s campaign finance restrictions.
Section 68 makes an annual appropriation to the Democracy Credit Fund of $9 for every registered voter. Section 68 indexes that per-voter appropriation annually for inflation. According to the Secretary of State’s November 2, 2015, count of 519,503 registered voters, the first appropriation would equal $4.68 million. Smith laments that this ongoing appropriation would take money away from education and other priorities.
However, IM 22 Section 42 caps the Democracy Credit Fund at $12 million. Section 63 suggests that the ethics commission would adjust that cap for inflation every other year, but the language is not clear. Adjusted or not, that 12-million-dollar cap creates the possibility that, after a couple years, if voters do not take full advantage of their Democracy Credits, the annual appropriation would decrease, as we would top the fund off at $12 million and return the remainder right back to the general fund.
But suppose voters and candidates do make full use of the Democracy Credit Fund. Smith says the Democracy Credit Fund would pad politicians’ pockets with graft. However, under Sections 61 and 62, Democracy Credits can’t line politicians’ pockets. Whereas current state campaign finance law has no prohibition against candidates converting campaign funds to personal use, the Anti-Corruption Act says Democracy Credits must be used for legitimate campaign costs and cannot be used for candidate salary or be kept in a campaign war chest forever:
Section 61. A candidates may only use democracy credit proceeds for campaign costs or debts for the relevant office and election cycle, and may not use such proceeds after a reasonable period, to be set by commission rule, following the election to pay campaign debts. No candidate may use democracy credit proceeds for any cash payments or in violation of any law; to pay the candidate; to pay any entity in which the candidate or an immediate family member holds in aggregate a ten percent or greater ownership interest; to pay any amount over fair market value for any services, goods, facilities or things of value; or to pay any penalty or fine; nor to pay any inaugural costs or post-election officeholder costs.
Section 62. Any candidate who has redeemed a democracy credit, then withdraws, dies, becomes ineligible, loses participating candidate status, is eliminated in a primary election, is eliminated in a special election, or is eliminated in or wins a general election, shall within a reasonable period, as set by commission rule, pay all debts and obligations, account to the commission and restore to the commission and the Program “Unspent Democracy Credit Proceeds.” The commission shall define “Unspent Democracy Credit Proceeds” by rule.
These sections of the Anti-Corruption Act do more to prevent “graft” than anything in current South Dakota campaign finance law.
Besides, for real “graft” to take place, we need a pot of money that politicians themselves can dip into at will. Politicians would not control the Democracy Credit Fund; voters would. IM 22 wouldn’t force anyone to spend the money appropriated for the Democracy Credit Fund. Every voter would get to decide whether $100 of their own tax dollars gets spent or stays put. Considering that $100 represents the state sales tax collected on $2,500 worth of purchases, and considering that probably every voter in this state spends at least $2,500 on food and clothing every year, the Democracy Credit really just gives voters a chance to spend their own money on candidates of their choosing. Voters don’t get that kind of direct, democratic choice on any other general fund expenditure.
Public campaign finance is the trickiest part of the Anti-Corruption Act. Shouting “welfare for politicians” is easy judo for lobbyists and politicians who want to fight an act meant to prevent corruption among lobbyists and politicians. Such is the rhetorical battle we’ll see over the next eleven and a half months.