Mickelson Initiative #3 Revisits Disclosure of Dark Money

South Dakota may see more ballot measures in 2018 than in 2016, thanks in part to Republican Speaker G. Mark Mickelson. Ten measures made the 2016 ballot; right now, petitions for five ballot measures are circulating, and nine more distinct proposals may hit the streets. That’s fourteen total, three of which come from the leader of the party that has tried to stifle ballot measures.

Speaker Mickelson announced two of his ballot measures last month: an initiated law to raise the state tobacco tax to fund vo-tech schools and an initiated law to ban out-of-state contributions to ballot question committees. Now a third Mickelson initiative has popped into the Secretary of State’s hopper, a recycling of Mickelson’s 2017 House Bill 1200, which in its amended form proposed more detailed reporting of the big money spent on campaigns:

1. If a ballot question committee receives $25,000 or more from a single political action committee or an “entity” (remember, that’s the new term of campaign finance art created by 2017 Senate Bill 54 to refer to businesses, unions, and other donors other than natural persons, candidate committees, political parties, and PACs), the ballot question committee must file a report listing the names and addresses of that PAC or entity’s 50 largest contributors.
2. Any PAC or entity spending $25K or more on independent campaign ads must report its 50 largest contributors.
3. If any of those 50 largest contributors is a PAC or entity that doesn’t have to report its contributors, then the ballot question committee or entity or PAC must also go find out and report that contributor’s top fifty contributors.
4. Reporting committees don’t have to disclose 501(c)3 nonprofits; entities “from which any part of the net earnings inure[] to the benefit of a private shareholder, partner, member, or person;” or donors giving less than $5,000.
5. Failure to report brings up to a $5,000 civil penalty. Ballot question committees may have to pay an additional fine equal to a quarter of an undisclosed donor’s aggregate contributions. Entities and PACs may have to pay an additional fine equal to a quarter of what they spent on independent communications. Any violation would also be a Class 1 misdemeanor, meaning up to a year in jail and $2,000 fine.
6. Any violating committee is banned from contributing to any other ballot question committee or making any other independent communication expenditure for five years.
7. All ballot question committees created, funded, or run by the same outfit “are affiliated and share a single contribution limit.”

Sections 6 and 7 together interest me. If one reads Section 6 as a “limit”—and indeed, Section 6 sets a contribution limit of zero on a violator—then Section 7 appears to close the loophole that would let a violator get around Mickelson’s ban by forming a new committee.

Of course, as the Legislative Research Council warns in its June 30 letter to Speaker Mickelson, Mickelson’s ban may “raise constitutional scrutiny”:

…”When Buckley identified a sufficiently important governmental interest in preventing corruption or the appearance of corruption, that interest was limited to quid pro quo corruption.” Citizens United v. F.E.C., 567 U.S. 516 (2012).

Further, the Supreme Court of the United States directly addressed the issue of limits or prohibitions on contributions to ballot question committees and found them to be an unconstitutional restraint on the rights of association and free speech…

However, the Supreme Court has not directly addressed the issue of whether a state may prohibit independent expenditures or contributions to a ballot question committee as part of a criminal penalty. With regard to other protected rights, however, the Court has upheld a prohibition only as against those who have committed felonies, not misdemeanors [Jason Hancock, LRC director, letter to Rep. G. Mark Mickelson, 2017.06.30].

Concerns about constitutionality didn’t stop Speaker Mickelson from getting this bill through the House 42–25, but the Chamber of Commerce, the Retailers, the fundagelicals, ALEC, and the Koch Brothers all ganged up on HB 1200 to kill it in Senate Judiciary on March 1. As with his proposal to ban out-of-state money from ballot question campaigns, Speaker Mickelson is bringing to the people a measure that he couldn’t muscle past the big-money lobbyists in Pierre.

I’ll admit I’m torn in evaluating Mickelson’s initiative efforts. I appreciate his newfound faith in the voters, especially after he pushed the lawsuit and legislation that overturned the voter-approved Initiated Measure 22. But I feel a little uneasy about a legislator resorting to the people’s initiative process to pass his bills. I guess I didn’t complain about Rep. Rev. Steve Hickey using the initiative process to place his 36% payday loan rate cap on the 2016 ballot, but Hickey resigned from the Legislature during the petition process, and he never enjoyed the sort of power that Mickelson does as Speaker of the House, leading the supermajority party in the Legislature and thus in a position to pass almost anything he wants in Pierre.

And now instead of using that unique power, the chance he gets every January in Pierre to cajole and horsetrade his way to legislative wins on the floor of the House with a few dozen of his closest friends, Speaker Mickelson is coming into our clubhouse and crowding the already arduous petition process with his three proposals, every one of which has clear constitutional problems.

But even the mighty Speaker Mickelson may not be able to overcome the power of big money in Pierre. If he really can’t move campaign finance transparency among his privileged Pierre pals, maybe he has to come to us for approval. And even though he spurned us with his repeal of IM22 (and don’t let him forget that), maybe we can hear him out on his three petitions.