Delegate takes on election funding

Bill would speed repayment of loans that bypass rules

March 12, 2007|By Melissa Harris | Melissa Harris,sun reporter

Candidates for state office are increasingly receiving large loans from contributors, a trend that some say raises questions about the lenders' influence and has prompted one lawmaker to propose a restriction on the practice.

During 2006, 144 contributors lent $2.26 million to candidates for state and county offices, including a $500,000 loan to Gov. Martin O'Malley that helped him in the final days of the campaign, according to State Board of Elections records released this month.

During the three previous years, donors made 44 such loans for a total of $421,069.

The data do not include loans from candidates or their spouses, which is a far more common practice than taking loans from other contributors.

Del. Luiz R.S. Simmons, a Montgomery County Democrat, has introduced a bill that would require candidates to repay the loans more quickly.

Simmons said that current law, which does not cap loans to campaigns, essentially permits candidates to skirt campaign finance limits. Individuals and companies are otherwise limited to contributing $4,000 to an individual candidate for Maryland or county office and $10,000 to any number of candidates during a four-year election cycle.

The current system "is another example of Maryland's porous election laws," said Simmons, who didn't seek co-sponsors for his bill, because he expected it would draw little support. "The rules emasculate the whole public policy behind them."

Candidates say borrowing money from anyone other than their spouse or own savings account is not preferred, but when they're locked in a tight race and big donors have reached campaign finance caps, loans are often the only way to keep up with an incumbent.

"We were neck-and-neck with my opponent in polling, but the problem was that he was upping the ante," said Rushern L. Baker III, who lost the Democratic primary for Prince George's County executive last fall by a 5-point margin to incumbent Jack B. Johnson.

Baker borrowed $310,000 from the Renter's Finance Corp., an arm of a Virginia apartment management company unhappy with a Johnson proposal, to pay for his last round of television and radio advertisements, according to state campaign records.

However, had the corporation decided to make an outright contribution to Baker's campaign, rather than a loan, the donation would have been capped at $4,000 under state campaign finance rules.

"We just simply had no other resources to go to," said Baker, who also lent $196,000 of his own money to his campaign.

In the waning days of last year's gubernatorial election, O'Malley relied on a similar strategy.

John P. Coale, a well-connected Washington attorney, lent Martin O'Malley $500,000, infusing the Democrat's gubernatorial campaign with enough cash to pay for a final blitz of television commercials.

After his election, O'Malley quickly raised the money to repay Coale, who is known for his work on tobacco litigation and who is the husband of Fox News commentator Greta Van Susteren.

Two spokesmen for the governor declined to comment on Simmons' legislation. However, in a November Sun article, O'Malley spokesman Rick Abbruzzese said that seeking a loan from Coale, who served on the campaign steering committee and later the governor's transition team, was a "strategic decision."

"We were in the midst of a constant barrage of negative attacks on television and in the mail," Abbruzzese said. "A decision was made to borrow this money to make sure that we weren't badly outspent."

Quick repayments of loans, such as the governor's, are the exception rather than the rule, according to election records requested by Simmons.

During the four-year election cycle that ended Dec. 31, 2006, donors lent candidates $2.68 million. As of Dec. 31, only $657,034, or about a quarter of the loans, had been repaid.

Simmons said that large loans, especially when they rescue cash-strapped candidates, do more than affect the outcome of a race.

"They impact candidate loyalty," Simmons said, arguing that a candidate could feel beholden to someone who provided such critical aid.

Del. Jon S. Cardin, a Baltimore County Democrat who chairs the subcommittee that handles election issues in the House, said he needs to do more research on the issue before reaching an opinion on Simmons' proposal.

He also said existing requirements that candidates report the source of the loans introduces some accountability into the system.

"We have to make sure that we have a problem first, and then see if this is the right solution," he said. "I understand where [Simmons] is coming from."

Under current law, candidates who received loans from 2003 to 2006 have until Dec. 31, 2010 to repay them. But Simmons and state prosecutors question whether candidates, particularly ones who lost and lack fundraising leverage, will ever do so.

"Seven or eight years, who's even going to be tracking it or remembering it?" Deputy State Prosecutor Thomas M. McDonough asked.

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