Obscure party funds become Minnesota campaign cash magnets

Five years ago, Isanti County Republicans got by on roughly $800 — campaign money they used to rent a local fair booth, manage a party mailing list and make a contribution to a rookie state lawmaker from the area.

By 2014, however, the Isanti GOP was flush with cash as lobbyists and others with Capitol connections poured in more than $20,000. This year, its bank balance swelled to nearly $50,000, allowing the little operation to spread the wealth to Republican legislative candidates around the state.

What changed? Isanti's GOP morphed from afterthought to big-money target at exactly the same time Kurt Daudt went from obscure local representative to Republican House minority leader and then speaker of the Minnesota House.

It was no coincidence. While state law limits how much individual candidates can take from lobbyists and PACs, the rules are looser for local party units like the Isanti County GOP. It's a campaign-cash pathway that lobbyists and others seeking influence at the Capitol are quietly exploiting.

Interest groups have channeled hundreds of thousands of dollars in campaign cash to GOP and DFL causes the past few years by moving the money through the local political units of some of Minnesota's most powerful lawmakers. The money flies mostly under the public radar but buys lobbyists visibility and possibly influence with the Capitol's power brokers.

Daudt and DFL Senate Majority Leader Tom Bakk have mastered the cash flow in ways that past GOP and DFL legislative leaders did not.

"If I help them raise some money, they help candidates who need it around the state," Daudt said. "I don't, of course, get to tell them where to spend the money but they do a nice job of helping candidates around the state."

There's a reason for the arms-length distance.

At the federal level, separate accounts are commonly established and run directly by lawmakers who are anxious to assist like-minded candidates and build good will that can come in handy when they seek to become or remain caucus leaders.

But at the state level, so-called leadership PACs are barred by Minnesota law. There's an exception, however, that allows candidates to be involved in activities of party units.

Donors to the local accounts include major lobbying firms; individual lobbyists; and political funds for insurers, utilities, car dealers, credit unions, labor unions, medical professionals and so much more. Some donors contribute directly to candidates and to the local parties who in turn help the same candidates. But the extra layer expands the giving power.

George Beck, the former chairman of the state's campaign finance board and the current head of Minnesota Citizens for Clean Elections, said he's disturbed by how much money in politics has become untraceable and how other dollars are passed along so many times that the initial source gets blurred.

It's too easy, he added, to use the local party operations to circumvent contribution limits. "You can't really tell what's going on."

In the just-concluded campaign, the Isanti County GOP cut checks of $1,000 or more to 16 legislative candidates in some of the state's most competitive races. Since 2013, when Daudt became a legislative leader, the Isanti County fund has collected about $115,000 and sent most of it out the door.

Officials in the party operation downplayed the party's expanded donor base and stressed that a four-member board decides what to do with the money, not Daudt.

"We have such-and-such amount of money in our bank account," said John Staton, the long-time Isanti County party treasurer. "We have fulfilled the requirements for our own area and therefore we have funds we can give to other party candidates and basically do as we can."

Likewise, Bakk's 3rd Senate District DFL has had little trouble raising money — amassing $170,000 since 2011. He makes no secret about ginning up donations for the local fund through an annual golf event and other ways.

"There are members, especially incumbent members, that have been around a long time, who have a lot of fundraising capacity," Bakk said. "And when you reach the point you can't take any additional money often times people will say, can you give it to my Senate district or can you give it to my county unit."

The local DFL account's donor list is a who's-who of lobbyists and political action committees. In 2014, the fund had to amend a required financial report to note that a check with Bakk's name on it was actually intended for the 3rd District.

Some of the money stays with local candidates, but a lot of it gets mailed off to campaigns far from northeastern Minnesota. It has written more than three dozen checks of at least $1,000 to incumbent DFL senators between 2013 and 2016 and plowed tens of thousands more into the main Senate DFL caucus fund.

Bakk said in an interview that he doesn't have any say over where the local party money goes. And, he added, neither do donors.

"Well it's against the law for anybody to earmark money when you give money," Bakk said.

The local DFL chair in Bakk's district didn't return a call for comment.

Minneapolis Rep. Paul Thissen had been a House speaker and DFL minority leader but won't be at the helm of his party next session. The 61st Senate District DFL, which includes Thissen's House district, hasn't used the model to the same degree as Bakk and Daudt. The same is true for Eden Prairie Sen. David Hann, the Republican minority leader who lost his own re-election contest this fall.

But the pattern also shows up in the districts of some key committee chairs. For instance, lobbyists and political funds have been cutting checks in recent years to the Fillmore County GOP, home to House Tax Committee Chairman Greg Davids. And some of that money gets cycled to races outside the southern Minnesota county.

Similar donations have surfaced in the 52nd Senate District DFL in Dakota County, home for a time to the Commerce Committee chairmen for the House and Senate. Lobbyists and groups with issues before the panels fed the local party coffers — more than $100,000 over four years.

Both powerful lawmakers declared before this campaign got going that they wouldn't be back at the Capitol next year. Sen. Jim Metzen was battling cancer and died this summer; Rep. Joe Atkins ran for a Dakota County commissioner post and won.

The local party is already feeling their loss, with a 2016 balance sheet showing a precipitous falloff in donations.

MPR News reporter Catharine Richert contributed to this report.