The Law of Unintended Consequences?

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Shortly after the indictment of Rod Blagojevich, Illinois legislators passed a number of campaign finance reform measures, including contribution limits for the first time in the state’s history and limits on independent expenditure-only committees (i.e. SuperPACs). Shortly thereafter, citing to Citizens United, a federal judge struck down the law restricting contributions to SuperPACs.

In response, Governor Pat Quinn signed a law in 2012 that allows all contribution limits to be removed in a race once an outside group spends $250,000 on behalf of or against a candidate for statewide office ($100,000 for the Legislature or local government).

The law also has another provision: if a candidate is “self-funding”, then this designation lifts the contribution limits for all candidates (including the self-funding candidate) for the same office. What’s a self-funding candidate? If during the 12 months prior to an election, the candidate or their immediate family contribute, loan, or make independent expenditures in support of or opposition to the candidate totaling more than $250,000 (for statewide offices) or $100,000 (for all other elective offices) to the candidate’s political committee or to other political committees that transfer funds to the candidate’s committee.

Allowing a candidate to contribute enough to his own campaign to obliterate all limits may seem counter-intuitive, but this is the state of campaign finance today, particularly after the Supreme Court’s decisions in Davis v. FEC (2008) and Arizona Free Enterprise Club’s Freedom Club PAC v. Bennett (2011). In Davis, the Court struck down the Millionaires’ Amendment, which allowed candidates to receive contributions at increased limits if their opponents (typically millionaires) spent more than certain threshold amounts of their own personal funds on their campaigns. And in Bennett, the Court struck down a provision of the Arizona public financing law that afforded additional money to a publicly-funded candidate where outside groups made independent expenditures over certain amounts (see here)

As a result, Governor Quinn’s Republican opponent Bruce Rauner just received a $2.5 million dollar contribution from a hedge fund CEO. Mr. Rauner contributed more than $250,000 to his campaign (indeed, reports indicate Mr. Rauner has pumped more than $6 million into his campaign) which lifted the contribution limits for all candidates – including Mr. Rauner.

The law of unintended consequences? Governor Quinn probably thinks so.

Topics:  Campaign Finance Reform, Citizens United, FEC, PACs, SuperPACs

Published In: Civil Procedure Updates, General Business Updates, Elections & Politics Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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