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Analysis: Raising Political Money the Indirect Way

State officeholders cannot raise money for their own campaigns during legislative sessions, but they can ask supporters to back their favorite charities, or even the political parties that support them during election season.

Gov. Rick Perry delivers a farewell speech to a joint session of the Texas House and Senate on Jan. 15, 2015.

Appearances are so subjective. What might be a well-intentioned fundraiser for a civic organization during a legislative session — when all of the state’s officeholders are on hand in Austin — instead ends up looking like a campaign finance money laundry.

State law bars lawmakers from raising money for their political accounts during legislative sessions. It would be unseemly to take money while they’re passing laws, especially if any of it came from people who wanted certain bills to live or die.

Seems reasonable.

But this wouldn’t be a Texas ethics law if it didn’t have a loophole.

Later this month, the Republican Party of Texas is having a big fundraiser at the Four Seasons Hotel in downtown Austin. The list of featured honorees is topped by the governor, the lieutenant governor, the speaker of the House, seven other statewide elected officials, six Texas Supreme Court justices, 16 of the state Senate’s 20 Republicans and 66 of the state House’s 98 Republicans.

The state’s GOP is raising money for its own federal account, the one that is set up in compliance with federal campaign finance laws and is allowed to play in federal elections, from Congress on up.

But federal campaign finance laws limit the size of contributions. And the invitation for the Texas event says, down there in the fine print, that “contribution to the federal account in excess of the federal limit will be deposited into the state account unless otherwise prohibited.

The state account is the one that the party can use in state elections. In spite of the fact the headliners of the event are selected in those state elections, it’s not against the law for them to help an organization that exists to assist them. As long as the state officeholders are not raising money for their own accounts during the fundraising blackout period, they’re following the rules.

Lawmakers and other officeholders can raise money for other things during a session, according to the Texas Ethics Commission and state law — like sponsorships for intern programs, the favorite charities of state politicians and political campaigns that are not covered by the ban.

That last exception covers special elections and elections for nonstate positions. For instance, Texas voters will decide this month among contenders for three House seats and one Senate seat. And because that Senate election will probably send a current member of the Texas House to the Texas Senate, there will be another special election after that to fill the empty House seat.

Charity events are not unusual during sessions, either. On March 9, House Speaker Joe Straus will be roasted at a fundraising event for the Texas Legislative Internship Program, which is affiliated with Texas Southern University.

It has a lot in common with the GOP event: fancy downtown hotel (the new JW Marriott just down Congress Avenue from the Texas Capitol), suggested contributions/dinner packages of up to $25,000, state officeholder as headliner and so on.

It’s a way to squeeze the political donor community for a good cause, and they get a night of inside jokes and a tax deduction, besides.

The fundraisers for political parties take things in a different direction. Political parties support their candidates in state elections. The winners of those elections turn around and raise money for the parties, and the cycle repeats.

The donors to these political causes do not get tax deductions as an incentive for their contributions like they do at the charity fundraisers. Deductions might be the reason to attend the Straus roast, but it’s not why they’re buying tables at the GOP event.

The benefits for the officeholders are different, too. They are not directly benefiting from the money given to the party while they are in their legislative mode.

But it’s not like the money is going to a charity that can’t help them later. It’s going to a political party, which can.

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