THE ISSUE: Candidates helped by political action committees they control apparently do not need to disclose the PAC spending as in kind contributions, according to guidance provided to a state senator’s campaign. Campaigns must report other PAC assistance in disclosure reports to the public. The state department of elections declined to answer questions from The Independent News.
VIRGINIA BEACH – When political action committees spend on behalf of a candidate in Virginia, the campaign that is benefitting usually reports that help or service as an in-kind contribution, but it is more complicated when the candidate controls the PAC.
The campaign of state Sen. Frank Wagner, a Virginia Beach Republican who last year sought his party’s nomination to be governor, this month said a state election official told the campaign such reporting was not necessary after The Independent News asked about more than $17,000 in spending Wagner authorized through a political action committee.
Wagner’s campaign reported in-kind contributions from other PACs in public disclosures filed with the state elections department, but not spending by the PAC that Wagner controlled.
According to the state senator’s legislative aide, Vicki Wilson, who also was the PAC’s treasurer, an election official told the campaign it does not need to amend its disclosures to reflect that PAC spending because the PAC had reported it.
This apparent distinction in reporting between a political action committee controlled by an organization or individual outside a campaign and one controlled by the politician could complicate the public’s ability to see the extent of monetary contributions that benefit a politician or how that money is spent.
People trying to track spending benefitting a politician would need to know that the PAC exists and review its disclosures or try to connect the dots through the Virginia Public Access Project. That poses another challenge for citizens seeking information about political spending.
“You haven’t made it impossible to find, but you have made it harder,” said Michael Gilbert, a law professor at University of Virginia who specializes in federal campaign law and follows state election practices.
“If your goal is transparency, you want a shorter trail to follow,” Gilbert said. “The trail is shorter if you follow the campaign’s disclosure records.”
The Independent News asked about spending authorized by Wagner through the Transportation, Energy and Healthcare Leadership PAC, which was formed in late 2013 and closed this past year. Wagner said his campaign would look into how it reported the spending, and The Independent News waited for Wagner to get a response from elections officials before publishing this story.
There has been no indication Wagner or his campaign did anything wrong, and, to be clear, the PAC itself reported the spending. It included payments to a consultant, a membership at a private club Wagner used for political meetings, a charitable donation and other expenditures similar to those that might be reported a candidate’s own campaign financial disclosure forms.
The Wagner campaign did not reflect what could be considered in-kind contributions believing it might be essentially reporting the spending twice. “Double reporting” was how the state senator put it in December.
During that interview, Wagner said there was no effort to hide spending through the PAC, which was funded in large part by Wagner for Senate.
“It was certainly not my intent to deceive anybody,” he said.
Wilson said any “loophole” could be studied further and potentially addressed by the state to make requirements clearer.
State elections officials would not respond to specific questions from The Independent News over the past two months. The department forwarded links to policy documents and election law. A spokesperson requested written questions but would not answer them or any follow-up questions.
A policy document at the state elections website defines contributions as money or services “and any other thing of value” provided to a candidate or committee. This can include money provided to the campaign by the candidate themself.
In-kind contributions are the “donation of goods, services, property or anything else of value that is offered for free or less than the usual and normal charge,” as well as “payments by a third party for goods and services rather than money.”
Contributions are considered in-kind when requested or suggested by the campaign or the campaign is involved in strategy of the expenditure, according to the statement.
Wagner formed the political action committee with $10,000 from his state senate campaign coffers and donations of $2,500 each from PACs of Virginia Natural Gas and Dominion Energy. The Transportation, Energy and Healthcare Leadership PAC shut down this past year. It reported only one other contribution since 2013 – $2,500 from the Dominion Energy PAC in early 2015.
Though Wilson was the Transportation, Energy and Healthcare Leadership PAC treasurer, Wagner is listed as authorizing expenditures in records filed with the state and reviewed by The Independent News. The purpose of the PAC was to support Wagner’s candidacy in the state senate, according to information provided by the state elections department through a request for the records.
Wagner said the PAC was established as a “leadership committee,” the sort of committee used by politicians considering a run for higher office. Such committees raise funds and may donate to other political organizations to build support.
“It was intended to be a leadership PAC toward a statewide race,” Wagner said, adding that the PAC did not remain a priority amid a senate campaign and his eventual run for governor.
Wagner ended up spending down the PAC money, which represented a relatively small pot of funding compared to the cost of running in elections for state office.
In hindsight, he said, he might have transferred the money back to the state senate campaign, though he and Wilson both stressed that all donations and spending were reported in the PAC’s disclosures. That appears to be sufficient, given the elections department response to the campaign, as it was relayed by Wilson to The Independent News.
“The PAC was set up to support the senate campaign, and it did that,” Wagner said.
The PAC came and went with little public trace beyond quarterly reports filed to the state. Last year, Wagner authorized a donation of the committee’s last few dollars to his senate campaign committee.
The political action committee paid for meals, travel and costs of political events and meetings. The money also paid for a consultant based in Baltimore and about $1,700 toward Wagner’s dues at the Town Center City Club in Virginia Beach, the PAC disclosure forms show.
In one case, it was not clear to a recipient that the money was from the PAC rather than the campaign. A $1,000 donation was made in 2015 through the PAC to benefit the JT Walk oraganized by the Virginia Gentlemen Foundation. The foundation listed the donation as as coming from Wagner and his name appeared as a donor online.
The Transportation, Energy and Healthcare Leadership PAC also picked up part of the bill for a luncheon last year for state Sen. Jill Vogel, who was then running to become lieutenant governor.
Vogel’s campaign organization reported in its own disclosures an in kind gift from Wagner for Senate related to expenses for the event. The PAC apparently picked up part of the bill, and the senate campaign covered other expenses for items such as flowers, beverages and ice, records show. Vogel’s records do not seem to differentiate.
Pete Quist, research director at the National Institute on Money in State Politics in Helena, Mont., said states have different rules, but many allow candidates to establish PACs, generally in a leadership committee role. “Typically, what you see in these kinds of committees is you’re raising money and doling it out to other committees,” Quist said during a telephone interview.
“Most of the expenditures sound like typical campaign expenditures,” he added after a reporter described some of them.
J.T. Stepleton, a researcher at the institute, said it was reasonable to question whether spending by a PAC to benefit the candidate who formed it should be reported as in kind contributions by the candidate.
“Most people aren’t assuming you’re using your leadership PAC funds for normal campaign expenses,” Stepleton said. “I think most people look to the candidate committee when they’re trying to follow the money.”
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