PAC Money is Subject to a Special Rule Related to the Legislature

ElectaFile Short Summary: PAC Money has special restrictions.Treasurers for candidate committees for legislative office or statewide office must know and understand the legislative calendar. To fail on that is a huge risk and a potential Maalox moment related to PAC Money.

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The ElectaFile Business Intelligence Team has heard that last week’s legislative mini-session threw a bunch of PAC donors and candidate committees for a loop. Our mission is to help, so we’re digging into the PAC legislative blackout window this week. Stand by to get weedy!!

You’ll hear about Political Action Committees and you’ll hear them called PACs. Everyone of us needs to stay sharp on PAC money. Razor sharp!

PAC funds can be jet fuel for campaign committees. A PAC is a special type of committee that raises money from individual donors—sometimes related to a particular company or industry—and pools those funds to make strategic political donations. If you’re a treasurer for a candidate committee, the news of a PAC contribution is big stuff.

Because PAC funds are jet fuel for campaigning, and because PACs are often associated with businesses, industries, interest groups, and entities, the law in North Carolina restricts when certain PAC funds can be accepted by certain candidate campaign committees.

If you’re a candidate committee for legislative office or statewide office, you cannot receive PAC contributions when the legislature is in “regular session.” “Regular session” is a legal term that we’ll get into in a minute.

**Don’t Get Thrown Off by the Exception** Now…there is a subtle exception to the PAC restriction…that can get awfully confusing. We want you to ignore the exception unless you confirm otherwise. The prohibition applies only to PACs who have hired a lobbyist or whose parent entity has hired a lobbyist.

In the real world on Planet Earth, more than 80% of PACs fit this definition. That is, the vast majority of PACs are “children” of parent entities who do business with or have industries regulated by the government. Because they do business with or have industries regulated by the government, they have hired professionals called lobbyists to make sense of that world and advocate on their behalf.

You should assume when you receive PAC money that the PAC is subject to the legislative blackout unless you confirm otherwise.

OK. So good so far. PAC money is subject to a legislative blackout.

What Does it Mean to Accept a Contribution? Let’s boil it down.

1. The check cannot be dated during the legislative session.

    

2. A check—regardless of its date—cannot be delivered to the treasurer or the candidate or a bundler or anyone else as an agent of the campaign really during the legislative session.

3. You can’t even communicate a pledge to donate during the legislative session.

These rules indicate a policy choice in the law that it’s not good for someone who likely has business before the Governor or the legislature to be handing in political contributions while they are doing that business. The alternative could be the appearance of “pay to play,” so to speak. That is not good either.

When is the Legislature in Session? This is the tricky part that a lot of folks miss because the legislative calendar has a steep learning curve.

The law defines “regular session” as

(3)        The General Assembly is in "regular session" from the date set by law or resolution that the General Assembly convenes until the General Assembly either adjourns sine die or recesses or adjourns for more than 10 days.

You have to understand something called the Adjournment Resolution. Here’s the current one. It’s available on the General Assembly’s website and it is the Rosetta Stone for most of the hard chargers who work in and around the Legislature.

If you read this one, you see that the legislature finished its business on October 25 and “stayed out” until November 29. This is longer than 10 days so PAC money could have been accepted from October 26 through November 28.

Last week, the legislature “came in” on November 29 and stayed in until November 30. It will next return on December 20. This means PAC money is acceptable from this past Friday, December 1 through December 19.

Key Point: Experienced pros in this space will point out that if the legislature isn’t scheduled to come in on a day until “12 o’clock noon” then arguably the legislature is not “in session” at say 9 AM that morning. It’s a good argument. Do your own research. If you cut it close, failures of executions could have checks handed in or discussed after kick off, so to speak. You must beat the ball to the bag. If you want to talk hypos, drop us a line….

All we’ll say is the safest of safe harbors is accepting PAC money at events the night before the legislature convenes. That practice is common in #ncpol.

You get the idea. There are blackout periods that turn on the legislative calendar, and the Adjournment Resolution is the Rosetta Stone for calculating those blackout periods.

Where Do People Get Tripped Up?

Mini Sessions are Lesser Known. People forget about the “mini-sessions” because in the old days the General Assembly would adjourn in the summer of the odd year and come back in the late spring/early summer of the even year. Think July ‘23 and May ‘24. Now, in the era of divided government, the legislature comes back for these “mini-sessions” that count as blackout periods just the same even if no legislatin’ is happening.

Check Mishandling Around Legislative Days. People mistakenly believe that the rule only applies to check dating or check delivery but not both. This is a big one. Folks will pre-date the check but give it to the treasurer or the candidate during a legislative day because that’s when everybody’s in town.

Pledging Donations on Legislative Days. It’s natural to talk to folks about everything on legislative days, but if a would-be PAC agent pledges a donation on a legislative day, you’ve got a potential headache. He said/She said situations are tough to prove or disprove, but it’s a headache. Better to have a clean break on campaign fundraising convos with PAC agents on legislative days.

Not Knowing The Rule Applies to Candidates & Incumbents! Legislative incumbents and statewide office incumbents probably know about these rules because the ice cold Political Bros when not buying yard signs coach them up (No Mistakes!)…

The rule applies to candidates too! So if you’ve just dipped your toe into running, you may not know or understand the Ancient Greek that is the Legislative Calendar. Learn it, live it, love it!

What Happens if I Mess Up? What Happens Because I’ve Already Messed Up?

Use the Safe Harbor! There’s a 10-day safe harbor that is critical. If you figure out you’ve accepted a PAC check in violation of the Rule, the law is clear that you have 10 Days to return it.

If You Messed Up Last Week, Use the 10-Day Safe Harbor Today! There’s still time if you have a check delivered or dated either November 29 or November 30, return it.

The Safe Harbor Means You Avoid Forfeiture. Put simply, if you catch and return a contribution within the safe harbor, you won’t later have to forfeit the funds to the State. If, however, the State Board audit process catches it, you’re subject to forfeiture perhaps months or years later. This is a cash flow problem that we’ve talked about in our other posts. You’ll have to find the money to pay that bill, so to speak!

Let us know your feedback on this post. Stay sharp!

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