State high court closes loophole for 'soft money'

Justices say parties must disclose donors of funds for issue ads

Posted: Thursday, November 25, 2004

ANCHORAGE - The Alaska Supreme Court has upheld a state regulation that political parties disclose the sources of so-called "soft money" contributions.

The requirement was passed by the Alaska Public Offices Commission after the 2002 governor's race. It closes a loophole that allowed political parties to collect unlimited amounts of money from undisclosed sources as long as it wasn't used to campaign directly for or against a particular candidate.

"Hard money" is spent to advocate explicitly for or against a candidate. It is subject to laws that limit how much an individual or group can donate to a candidate or party, and that require the disclosure of contributors.

Soft money, however, has been used to pay for "issue ads" that indirectly attack or support candidates. Also, having soft money available to parties to pay for non-campaign purposes frees up hard money that would otherwise have to be spent for nonpolitical purposes such as office upkeep rather than active campaigning.

In its ruling Friday, the state Supreme Court said, "Soft money can be used in numerous ways to evade hard money restrictions."

The issue arose during the 2002 state election cycle, when campaign finance reform advocates Mike Frank and David Finkelstein petitioned the APOC for an emergency regulation requiring disclosure of soft money contributors. Their petition said Alaska's major political parties had collected hundreds of thousands of dollars in soft money contributions that were being used to affect state elections that year.

The campaign watchdog agency didn't issue the emergency order Frank and Finkelstein asked for, but adopted a regulation requiring soft money disclosure 10 days after the election. The regulation affected only political parties, not independent groups that also collect and spend soft money during campaigns.

The Democratic Party supported the regulation. Republicans opposed it. The Libertarian Party, and attorney Ken Jacobus, filed a lawsuit against it.

Superior Court Judge Mark Rindner ruled the regulation legal in 2003, and the Libertarians appealed.

In its ruling, the Supreme Court said campaign finance disclosure "is intended to inform the electorate, deter actual corruption and avoid the appearance of corruption, and aid in the detection of violations of contribution and expenditure limits."

"Soft money disclosure" aids in that purpose "because it informs the electorate as to the sources of political party money," the court said.

The high court also noted that the Federal Election Commission requires disclosure of similar soft money donations to political committees involved in federal elections.

Finkelstein said the ruling is significant because it lets voters know the source of soft money used to affect political campaigns.

Jacobus said he wasn't surprised by the ruling because he thought the legal question of whether the agency had the authority to adopt a regulation without explicit legislative authorization was a close one.



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