The Senate approved a bill Wednesday that would close a “loophole” in the state’s transparency laws, and would require legislators running for federal office to disclose their contributions every 10 days during the legislative session. The loophole allows nonprofit organizations to avoid disclosing donors behind political spending if those giving the money requested in writing that their donations not be spent for political purposes, even if the group decides to use the money for politics anyway. The amended SB 387 ultimately passed the Senate on a 35-3 vote after clearing the Senate Judiciary Committee last Friday, where State Ethics Commission Executive Director Jeremy Farris spoke in favor of the bill. The bill now heads to the House for consideration. “I think it closes the gap,” said Farris, noting that Wirth’s bill was similar to recommendations the commission made in its 2020 annual report.
Legislators are barred from soliciting campaign contributions while the Roundhouse is in session– unless they happen to be running for Congress.
During the state’s prohibited fundraising period, lasting from January 1st to the end of the session, lawmakers may not solicit any campaign contributions and lobbyists may not donate to any state campaigns. But federal campaigns aren’t subject to state law. This means four Democratic state lawmakers running for an open congressional seat may fundraise at the same time they’re conducting state business during the 2021 legislative session. New Mexicans won’t officially know who contributed to them until after the session.
“The original intent of having a prohibited period for state lawmakers was so that the public wouldn’t have the perception that lobbyists were literally giving our elected officials money for their state campaigns while they’re in the middle of a legislative session,” said Heather Ferguson, executive director of Common Cause New Mexico. On Wednesday, the Senate Rules Committee unanimously endorsed a bill sponsored by Sen. Jacob Candelaria, D-Albuquerque, that would require state elected officials running for federal office to disclose their donors every ten days during the prohibited period.
Sen. Majority Leader Peter Wirth, D-Santa Fe, is seeking to tighten a so-called “loophole” in New Mexico’s campaign finance laws that allowed a dark money group to hide its donors during the 2020 election. “I do think we need to continue our work to be sure that voters know who’s donating to independent expenditure committees,” Wirth said during a hearing today before the Senate Rules Committee. “This bill is a baby step.”
In 2020, the nonprofit Committee to Protect New Mexico Consumers (CPNMC) argued it didn’t have to disclose who funded $264,000 spent on mailers sent to voters, taking advantage of an exception in the campaign reporting act that allows a group to keep donors secret when they request in writing that their contributions not be used for political spending.
Underlined language that SB 387 would add to the Campaign Reporting Act. Wirth’s Senate Bill 387 would require outside spenders to separate those kinds of contributions from money given for political spending, keeping them in a segregated bank account in order to be legally shielded from disclosure, leaving less room for groups to use that exemption to their advantage. “It’s an attempt to just figure out where the dollars are coming from,” Wirth said about the fix to outside spending transparency laws that Wirth championed for more than a decade and that became law in 2019
Secretary of State Maggie Toulouse Oliver spoke briefly in support of the bill, praising Sen. Wirth’s prior work on bringing more transparency to political spending.
New Mexico Public Regulation Commissioner (PRC) Joseph Maestas on Wednesday demanded that Public Service Company of New Mexico disclose whether it contributed to a dark money group that supported a November ballot measure seeking to overhaul the agency charged with regulating the utility. “I’m just simply calling on PNM to come clean, you know, disclose whether or not you donated to this dark money PAC [sic],” Maestas said during a PRC hearing, referencing the nonprofit group Committee to Protect New Mexico Consumers. PNM may not be under legal obligation to disclose its involvement, Maestas said, but it had a “moral obligation” to do so. “I agree, we’d love to hear,” Stephen Fischmann, the PRC commission chairman, said. “I think there’s a strong possibility that it’s the case that they did donate to it.”
New Mexico In Depth received no response Wednesday from PNM spokesman Ray Sandoval despite multiple requests for comment, continuing weeks of silence on whether or not the utility contributed to the nonprofit.
If there’s one thing that’s dominated my reporting over the eight months I’ve spent with New Mexico in Depth, it’s dark money; it was the subject of my first story, and almost half the stories I’ve reported since then. Bryan Metzger
For the uninitiated, “dark money” typically refers to outside spending by nonprofit entities that are not obligated to disclose their donors, at least under federal law. In 2019, New Mexico passed a law to force these kinds of organizations to disclose their donors, but in 2020, two groups challenged the law rather than comply with it, underscoring the difficulty in bringing to light what special interests are behind political spending.
This morning, we published a story that took a deep dive on one of these groups– the “Committee to Protect New Mexico Consumers”– which spent $264,000 advocating for the passage of a constitutional amendment to change the state’s Public Regulation Commission (PRC) from a five-member elected body to a three-member appointed body, beginning in 2023. It was the first time I’d really attempted to get to the source of a dark money group’s funds, rather than simply report on a lack of disclosure. What we found were some strange bedfellows.
Exxon Mobil Corporation contributed to a dark-money group that supported a successful November referendum reforming the state’s Public Regulation Commission (PRC), according to a campaign finance report filed by one of its lobbyists. One of the largest oil and gas producers in New Mexico, the multinational conglomerate gave at least $10,000 to the “Committee to Protect New Mexico Consumers,” a nonprofit that spent a quarter of a million dollars touting the merits of a constitutional amendment, which eventually passed handily. The contribution can be found in an Oct. 7 report filed by Exxon Mobil lobbyist Deanna Archuleta. The Committee to Protect New Mexico Consumers refused to disclose its donors when the State Ethics Commission (SEC) demanded it do so despite new campaign disclosure laws requiring groups like it to say where the money they spend on political campaigns comes from.
After a decade-long effort, New Mexico lawmakers passed new campaign reporting requirements in 2019 to force nonprofit groups, which can spend money on political campaigns without registering as political committees, to disclose their spending as well as the names, addresses, and contribution amounts of their donors who fund such “independent expenditures.”
Outside campaign spending by groups or individuals not affiliated with a particular campaign have long been a target of reformers seeking to rein in the influence of money on politics. Without disclosure, nonprofits can spend unlimited amounts of “dark money” without the public knowing where the money comes from. In 2020, two nonprofit groups immediately put the new law to the test by refusing to disclose donors despite enforcement efforts by both the Secretary of State and the New Mexico State Ethics Commission. “I’m not at all surprised,” said Sen. Majority Leader Peter Wirth, D-Santa Fe, who championed the transparency measure for a decade. “Anytime you’re trying to rein [dark money] in, you know, there’s going to be groups that are going to push the limits.”
The challenges by the nonprofit groups represent a key test for both the law itself and for the enforcing power of the state’s newly created ethics commission, also established in 2019 after several decades of ongoing debate and setbacks.Approved by voters and given powers by the Legislature, the commission can subpoena records and enforce state statutes that cover campaign spending, lobbying, and government conduct.
Over the course of May and early June this year, a new group called the “Council for a Competitive New Mexico” (CCNM) spent over $130,000 on a media campaign supporting a group of incumbent state senators, most of whom would go on to lose as part of a progressive wave in June’s Democratic primary. The media campaign included several negative mailers and automated phone-calls against candidates opposing the incumbents while the public was left in the dark about who organized the group and who funded the media campaign.
Now, an ethics complaint filed this week with the Secretary of State’s office alleges that CCNM broke New Mexico’s election code by not disclosing its donors.
Neri Holguin, campaign manager for two of the candidates who won during the June primary, Siah Correa Hemphill and Pam Cordova, writes that the group may have violated the New Mexico Elections Code by not reporting who paid for the negative advertising and phone calls against those candidates as well as others.
“It was a deliberate attempt to make it as difficult as possible for voters to know who’s behind these hits on our candidates,” said Holguin in an interview. “They knew the rules enough to file as an independent expenditure (IE) and to list their expenditures, and so why not list contributors?”
“Voters need to know that, and we have no way of knowing that right now,” said Holguin. At the core of Holquin’s complaint is a new state law that triggers certain groups to disclose publicly and quickly who the donors are that paid for their electioneering activities if the costs are larger than a state-prescribed threshold.
Holguin said she believes CCNM was created by a group of people, including prominent New Mexico lobbyist Vanessa Alarid–whom she mentioned by name in the complaint–that have used similar tactics in recent years to influence elections at the local and state level without disclosing publicly who is funding the activities in a timely fashion.Chevonne Alarid, the president of the nonprofit group, however, said disclosure isn’t necessary until it files its annual report to the Internal Revenue Service. In addition, she and Vanessa Alarid both denied Vanessa’s involvement.
As the Democratic primary in New Mexico’s third congressional district heated up in May, two mysterious groups– Avacy Initiatives and Perise Practical– began spending a combined $300,000 to support Teresa Leger Fernandez, now the Democratic nominee. The groups ran positive, even glowing advertisements about Leger Fernandez, but didn’t disclose who paid for the ads. Few details could be found about them online. This “dark money” spending drew significant criticism from other candidates, who condemned Leger Fernandez for not calling for removal of the ads.
But a review by New Mexico In Depth of Federal Election Commission filings suggests the real goal was to deny another candidate in the race—Valerie Plame— the win by boosting the prospects of the Leger Fernandez campaign.
It’s not uncommon for groups to spend money to support one candidate in order to prevent another candidate from winning. But when groups don’t disclose their donors, voters are left in the dark about the motives behind such efforts.
“Our voting public is incredibly busy, and doesn’t have time to do research on every single one of the candidates,” said Heather Ferguson, executive director of Common Cause New Mexico.
In the past decade, people, companies and unions have dispensed more than $1 billion in dark money, according to the Center for Responsive Politics. The very definition of that phrase, to many critics, epitomizes the problem of shadowy political influence: Shielded by the cloak of anonymity, typically wealthy interests are permitted to pass limitless pools of cash through nonprofits to benefit candidates or political initiatives without contributing directly to campaigns. Such spending is legal because of a massive loophole. Section 501(c)(4) of the U.S. tax code allows organizations to make independent expenditures on politics while concealing their donors’ names — as long as politics isn’t the organization’s “primary activity.” The Internal Revenue Service has the daunting task of trying to determine when nonprofits in that category, known colloquially as C4s, violate that vague standard. But the IRS’ attempts to police this class of nonprofits have almost completely broken down, a ProPublica investigation reveals.