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HB 1074: Republicans Invite Court Fight over Unconstitutional Ban on Out-of-State Ballot Question Money

Our Republican legislators wag their fingers at us voters for passing Initiated Measure 22, which they repealed on the insistence that it was unconstitutional. But when they want to pass their own limits on campaign finance, Republican leaders gleefully ignore concerns about constitutionality.

This week’s example of selective constitutional zeal is House Bill 1074, Representative Spencer Gosch’s proposal to limit out-of-state money in ballot question campaigns. Gosch’s original bill was both unworkable (a floating cap on out-of-state donations at 75% of in-state donations) and unconstitutional. On Wednesday, House State Affairs threw out the unworkable but kept the unconstitutional. HB 1074 now seeks to cap contributions to ballot question committees from people, political committees, and organizations not based in South Dakota at $100,000 per election cycle.

The unconstitutional nature of HB 1074 is its obvious violation of the First and Fourteenth Amendments. Freedom of speech applies to every citizen, regardless of home state. South Dakota cannot say, “South Dakotans can say X but Minnesotans cannot.” In this case, “say X” happens to be “write a check for $150,000 to SD Voice to promote Cory’s I&R amendment.”

Representative David Lust tried to make this point in House State Affairs, calling the $100K cap on out-of-state contributions to ballot question committees “censorship.” Speaker G. Mark Mickelson insists that the state has a compelling interest (key phrase to use when trying to override the First and Fourteenth Amendments) in limiting out-of-state contributions, but the case law Mickelson wishfully dismisses says no way:

University of Chicago Law School professor William Baude said he doubts it would survive a court challenge.

The U.S. Supreme Court declared in a 1981 decision that limits on contributions to ballot measure committees are unconstitutional under the First Amendment, said Paul S. Ryan, a vice president at the Washington watchdog Common Cause, which opposes big money in politics.

The high court has said that contributions to candidates can be limited to prevent the corruption of public officials, Ryan said. But, he said, the court found that with a ballot measure, unlike a candidate, there is nobody to corrupted, so there’s no legal justification for limiting donations [James Nord, “South Dakota Tries to Limit Outsiders’ Money in Initiatives,” AP via Pierre Capital Journal, 2017.02.15].

That ruling suggests Mickelson and friends can’t even impose the uniform cap on contributions to ballot question committees that Secretary of State Shantel Krebs originally proposed in Senate Bill 54. Amendments have stripped that cap from SB 54.

Even if HB 1074 lucks out with the judges, it has loopholes big enough for Rod Aycox and Henry T. Nicholas to drive their bank trucks through. Read the bill language:

Contributions to a statewide ballot question committee from a person who is not a resident of the state at the time of any contribution, a political committee that is organized in a state other than South Dakota, or any other organization that is not filed as a domestic entity with the secretary of state for the four years preceding a contribution may not exceed one hundred thousand dollars in the aggregate for a general election cycle [2017 HB 1074, Section 1, excerpt, as amended 2017.02.15].

If I’m a billionaire who wants to plunk over $100K into a South Dakota ballot question committee, I can show a little foresight, organize an entity in the state this year, and be ready to pour unlimited funds into a petition drive in 2021. Or I can hire a lawyer or Lisa Furlong to organize a political committee for me in South Dakota and start transferring money right now. Or I can call up in Madison, rent a mailbox, and establish my personal South Dakota residency in days.

Those holes in HB 1074 will render it useless in stopping what Mickelson and friends say they want to stop. The Constitution says they can’t stop what they want to stop. But when HB 1074 comes to the House floor this week, these Republicans will continue to insist that their desire to rein in initiative and referendum is worth a losing fight in court.


  1. Donald Pay 2017-02-19 10:08

    It’s a Republican manufactured talking point, bought at the cost of a costly lawsuit that taxpayers get to underwrite. Clearly, they are just trying to put up a shiny object to distract from their corruption.

    If they were serious they would pass a resolution opposing Gorsuch for the Supreme Court. Anyone who believes money is speech and the rich should be able to count for more in initiatives needs to oppose all these righty appointees.

    Hey, I’m in total favor of keeping out-of-state money out of all initiative and referenda campaigns, but I’d go much farther. Keep out-of-state interests out of lobbying the legislature and spending on candidate campaigns as well.

    The real problem is the corrupt legislature and governor. I’m in favor of passing this, and then expanding it to include the real crooks.

  2. Robin Friday 2017-02-19 10:32

    hmmm. . .so SD legislators can take all the outside money they want, from whomever and wherever. . .but the voters can’t use outside money to promote initiated measures? And the legislators see no problem with this?

  3. mike from iowa 2017-02-19 11:23

    Donald Pay- iowa just pulled a Scott Walker. They hustled through a bill for Guv Braindead to sign on his way to be Ambassador to China. Took away bargaining rights for teachers and all other public sector unions except cops and firefighters. Sound familiar?

  4. Tim 2017-02-19 11:23

    “Those holes in HB 1074 will render it useless in stopping what Mickelson and friends say they want to stop”
    Cory, I think you are missing the point, they don’t want to stop all money, just that money that goes against what they are trying to do to the people that live here. Since they seem to have a serious issue with being told what to do by voters, they just want to limit what we can raise.

  5. Curt 2017-02-19 11:32

    HB 1074 is a bad bill, but it reveals some of the internal dynamics of the majority party. The two Repubs who voted nay in committee are Rhoden (the Chair) and Lust. They have served in leadership roles in recent legislatures but the likes of Haggar and Mickelson have risen to succeed them. It will be interesting to watch the drama play out this week on the House floor, and – if it survives there – on the Senate side as well.

  6. Donald Pay 2017-02-19 12:21

    Cory points out that the bill as written does favor out-of-state interests through the Section 1. State citizens generally start initiatives on issues of some immediacy in the state. The out-of-state bill mills have multi-year, multi-state strategies to test initiative language or bill language here and there until they pass something in some state. That’s how most of the national bill mills, like ALEC work, and their primary target are righty legislatures. It’s almost as if ALEC or some such bill mill wrote Section 1. I’d be much tougher in Section 1.

    Partly because of that, I’m inclined to look at the bright side of HB 1074. If HB 1074 passes, it sets up the framework to hang some really good reforms onto in subsequent years. If nothing else, the state gets the honor of paying for the lawsuit testing the precise of this limitation, small as it is. If they are successful, they just put their heads into the noose that is going to hang them.

  7. Chip 2017-02-19 14:07

    I would be very careful Cory, about referring to money as speech. That’s some pretty choppy water IMO and also could come back to haunt you.

    There is however a thick layer of hyprocsy here, as there always is where the GOP is concerned, that certainly needs to see the light of day.

  8. Cory Allen Heidelberger Post author | 2017-02-19 15:26

    Chip, I choke a bit when i refer to money as speech, but I recognize that the courts view money and speech as equivalent, so I recognize that when we take hB 1074 to court, that’s what the plaintiffs will say, and that’s what will set the judges to nodding in agreement.

    Now, if Marty Jackley wants to hinge his defense of HB 1074 on our(?) behalf on a quest to overturn precedent and declare that money is not speech, then holy cow, gimme all of that you got, Marty!

    But we won’t get that. Marty will follow the path G. Mark describes: acknowledge that money is speech but argue the state has a compelling interest in restricting that speech. However, the courts will reject that argument with a real-world analysis based on their reading of Dakota Free Press: HB 1074 leaves so many holes through which out-of-state interests can drive their money trucks that HB 1074 isn’t really preserving any compelling state interest, thus demonstrating that the state itself doesn’t really see any compelling threat to its electoral process that warrants real action. HB 1074 isn’t just unconstitutional but laughable.

    Marty, send reinforcements to the lobby. You don’t want to take HB 1074 to court. You have a Governor’s race to run; you can’t afford any more court losses.

  9. Chip 2017-02-19 16:52

    Point well taken. I like the way you think. ;) I would find myself a good lawyer though to work it from the right angle to make all of that happen. Stay on message. Do things with intention. Keep in mind though if your message is strong enough, you don’t need money. Ask Bernie.

  10. Cory Allen Heidelberger Post author | 2017-02-19 20:11

    Stay on message? Maybe that’s my problem, Chip—I’ve got dozens of messages, new ones popping up on the blog each day. Maybe I just need to say three things over and over and over:

    (1) Republicans make stuff up.
    (2) Republicans don’t do their job in Pierre.
    (3) Republicans repeal our votes.

    I clearly need a tighter message than, “Republicans deem our initiative unconstitutional and declare an emergency to overturn it but then ignore warnings about their own unconstitutional bills and pass unworkable legislation in hopes of going to court.”

  11. Chip 2017-02-20 08:13

    Maybe stay on message was a poor choice of words. How about stay on point, not necessarily on message but on top of your game. If you’re going to go after them don’t be sloppy or just toss something up there and hope it sticks. You don’t want to look like an idiot in the end. Don’t be self-indulgent, like making it illegal to give someone a cupcake, but still take people to task. South Dakotans IMO value an honest, positive, pragmatic approach to things. They’re just a little confused, and don’t want to be associated with the far left. And who can blame them? That’s why I switched to an Independent years ago. Democrats are the party of Jefferson, and they need to remember that.

    What would you say are the three most important things to SD voters?

  12. Buckobear 2017-02-20 09:25

    Seems almost “un-republican” to forbid “money” coming into the state’s businesses (advertising, broadcast media, etc). Maybe next we’ll forbid out-of-state tourists ….. keep your stinkin’ Minnesota money in Minnesota !!

  13. Cory Allen Heidelberger Post author | 2017-02-20 09:46

    Chip, last election, I campaigned on supporting education, protecting voters, and fighting corruption. I’ll stick by those issues as the most important things we can work on through state government.

    While I don’t like out-of-state special interest groups hijacking our initiative process, I don’t think setting special limits on non-South Dakotans’ contributions to our state political campaigns is constitutional, workable, or even one of the top ten ways to make our elections better. We do more to protect voters by educating them (perhaps including more on state government and state current events in our K-12 civics curriculum), protecting the Voting Rights Act, implementing automatic voter registration, funding more satellite voting stations on the reservations and anywhere else that one can demonstrate a need, getting rid of voter photo ID requirements, holding more public forums for legislators and candidates, getting more legislators to get online and post regular updates on their work in Pierre, and adding far more transparency and enforcement to South Dakota’s campaign finance laws.

    Note that IM22 did not make it illegal to give anyone a cupcake… unless it was a $101 cupcake.

  14. Porter Lansing 2017-02-20 10:06

    How To Properly Eat a Cupcake … (chef’s tip o’ the day) ~ Slice the cupcake on the equator horizontally. Turn the top half over to place the frosting in the middle. Eat the cupcake as a sandwich without the frosting getting on your face or fingers.

  15. Chip 2017-02-20 14:11

    IMHO People couldn’t give two schiitz less about education. Not that it’s right, but they’ve got bigger fish to fry. Teacher pay is an issue because we are/have priced our way into a shortage in some subjects, but by and large we are destined to play catch up on this until we have more leadership in Pierre interested in taking a more proactive approach to this. But you have to crawl before you walk, and education is more of a walk than a crawl.

    Voter suppression? Don’t waste your time. People care less about that than they do about education. Nobody wants excuses, they want results. It’s all in your message. Have a strong message and you will overcome these obstacles. Again you need to fix this once you have the power to do so in the legislature.

    Corruption? Absolutely!! #1 issue in SD today IMO. Campaign finance, corruption after elected, and also killing the will of the voters. I don’t think that making a bunch of laws is as important as identifying and documenting at this point. Just make sure the voters are aware. I understand that without putting laws in place it may seem like people are just crying foul as they may be perceived to do in voter suppression, but I still belive in keeping it as simple as possible until you have a better handle of what you’re up against.

    #2 for me is immigration. Refugees and illegals. This is on peoples minds and to not address or at least acknowledge this is a huge detriment to Democrats. I think that refugees need more attention. We can’t just place them here and expect them to fend for themselves, they need to be better taught what is expected of American citizens. They need to know our expectations as Americans, liberals expecially, of how women are to be treated. They need to know how we, again liberals especially, treat our LGBT community. They need to know that fredom of the press is a Constitutional right. These are just a few things that I feel go under the heading of assimilation, which is a word that nobody likes but should be embraced by liberals as well because some of these things are very important. Illegal immigration? Throw the ball to their end of the court for a while. Make business owners help police this. They’re the ones hiring them.

    #3 in my mind is healthcare. I think we need to help our two largest healthcare providers provide healthcare plans that are more mobile. I don’t know what it would take to facilitate that but I think it’s worth looking into. Their plans are much more affordable, and for most of us 95% of our healthcare takes place right here in state or locally. It’s just that chance that you may get sick out of the region that is the issue. Make no mistake about it though, I think single payer is the way to go.

    I may be crazy, but there’s a few things to chew on for a while.

  16. Cory Allen Heidelberger Post author | 2017-02-20 20:28

    Refugees and immigration is a red herring for South Dakota voters. No stats support fear of refugees. Our workforce depends on immigrants, and possibly always will. We can handle any assimilation difficulties by making clear our own commitment to Constitutional rights and not carving out exceptions to deny rights to out-of-state contributors, adoptive parents of different religions, LGBT residents, Indians, etc. If we show immigrants that we won’t tolerate one ounce of Christian Sharia, then they’ll get the message Islamic Sharia has no place in our pluralistic democracy, either.

    Health care? Heck year, but we won’t solve that in Pierre. We’ll solve that in Washington by waiting a couple years for Trump and Ryan to throw us into chaos with ACA repeal, then taking back Congress, then taking back the White House with Franken and Warren, who will work with Majority Leader Sanders to pass ACA+, complete with public option (though we start with single payer and negotiate down to public option).

    Education and voter suppression (not just the classic keeping Indians away from the polls, but attacks on initiative and referendum) matter. If people don’t give a darn about those issues, they need to.

    There’s my fundamental campaign problem. Run me head-to-head against a Trumpist, and I’ll probably lose, because I don’t believe in telling people what they want to hear. As I do in the classroom, I believe in telling people what they need to hear, what our democracy depends on their hearing.

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