State law limits the amount of money that individuals and groups, including corporations and political committees, may contribute to a candidate who is running for office. Those limits are set in statute and adjusted for inflation by the Public Disclosure Commission (PDC). Currently, the limits are set at $2,000 per election for statewide executive, judicial, and port commissioner candidates, and $1,000 per election for state legislative and local office candidates.
Contributions by one person or entity, including a political committee, may be aggregated for purposes of the campaign contribution limit in certain circumstances:
The PDC has enacted rules to clarify when two entities are treated as a single entity and share a contribution limit. Examples of affiliated entities include: a corporation and its subsidiary; a national union and a state body of the union; and a trade association and a local unit of the association. In addition, two or more entities are treated as a single entity if one is established, financed, maintained, or controlled by the other. The PDC uses a multifactor test to determine this, which includes consideration of the ownership of voting stock, the authority to participate in governance, overlapping membership, and the provision or funding of goods and services for less than full value.
Additional provisions are created to aggregate certain contributions for purposes of campaign contribution limits:
Any limited liability company (LLC) that has registered with the Secretary of State, and is not classified as a corporation under federal tax codes, may make campaign contributions only if the company has: (1) been in existence for at least a year; and (2) electronically filed a declaration with the PDC stating that the LLC is a legitimate business with a legitimate business interest, and it was not created for the sole purpose of making contributions. The PDC must develop a method for filing this declaration and it must be made public on its website.
The amended bill specifies that two entities share a contribution limit if one of the entities, rather than each entity, is established, financed, maintained, or controlled by the other. It also provides that two entities share a contribution limit if the same individual owns or holds a majority interest in each.
(In support) Washington has one of the best campaign finance systems in the country, in large part thanks to two citizen-led initiatives and a number of bills throughout the years to tweak and improve them. This bill is a small but meaningful way to make the system better. A contribution limit is the cornerstone to a campaign finance system, but there is a loophole that allows some to contribute many times more than limits. If a person gives for themselves and for other organizations they own, they are essentially getting around the personal limit. There are currently some aggregation and attribution provisions, but nothing that looks to the actual owner. There is not yet evidence that people are creating shell LLCs to get around the recent bills to increase disclosures, but there was speculation at the time that people would start and this bill prevents that from happening. Currently nothing is preventing companies from being formed for the purpose of evading contribution limits and pushing dark money into campaigns.
(Opposed) None.
(Other) It might make more sense if the certifications regarding LLCs were filed with the Secretary of State rather than the PDC as part of the registration process; otherwise the PDC will have to create a new system to manage these certifications. There are questions about how this bill would be implemented by treasurers, who currently do not look into who controls an entity when they receive a contribution. It is unworkable to require treasurers to independently research the governance structure of a donor. It should not be their responsibility to do so either.