NorthJersey.com

Party Leaders' Fund Transfers Aid Senator's Rise

NorthJersey.com — Thursday, August 12, 2004

By BENJAMIN LESSER
STAFF WRITER

Part 5-B of 7 parts (links to all parts of this series in sidebar to right)

UNDER THE INFLUENCE: MONEY IN TRENTON

PART ONE:
Sunday, August 8, 2004

A record $56 million flowed to the winners in last year's legislative elections, much of it from interest groups trying to influence state policy. And the pressure to give keeps growing.

PART TWO:
Monday, August 9, 2004

Can't win in court? Get the law changed. That's a strategy that appears to be working for one millionaire who opened his checkbook to legislative candidates after losing a family dispute.

PART THREE:
Tuesday, August 10, 2004

The Record found that three legislators took more in donations than they were legally allowed to receive from one businessman, but they gave the money back and under the law will likely face no punishment.

PART FOUR:
Wednesday, August 11, 2004

Doctors ramped up their contributions last year as they battled to limit their exposure to big malpractice judgments in court. But lawyers also gave big, and won in the end.

PART FIVE (A) | PART FIVE (B):
Thursday, August 12, 2004

One of the most reliable sources of campaign cash for politicians is other politicians. Money from politicians is used to enforce party discipline or help ambitious candidates make new friends.

PART SIX:
Sunday, August 15, 2004

Who were the top 10 donors to each North Jersey legislator? And who gave the most to the Senate and Assembly Democratic and Republican PACs?

PART SEVEN:
Monday, August 16, 2004

Campaign finance reforms touted by legislative leaders this year will affect only a fraction of contributors, and even they may be able to keep giving money and getting contracts.


THE STAFF

  • Herb Jackson, 42, has covered New Jersey government and politics or directed coverage as an editor for 15 of the past 20 years. A Hudson County native and Rutgers University graduate, he has worked in the Trenton bureau of The Record since 1998. Since February 2002, he has taken readers behind the scenes in Trenton with his column, "Capital Games."
  • Benjamin Lesser, 28, has worked on computer-assisted projects since coming to The Record in November 2000 from The Times Union of Albany, N.Y. While attending the University of Missouri School of Journalism, he worked for the National Institute for Computer-Assisted Reporting. He has also taught classes at Columbia University's Graduate School of Journalism.
  • Editors: Deirdre Sykes, Charles Stile
  • Copy editors: Mike Kozma, Nancy Cherry
  • Graphics editor: Jerry Luciani
  • Designer: Robert Townsend
  • Graphic artist: Bob Rebach
  • Photographer: Chris Pedota
  • Paul Sarlo owes his state Senate seat to the 18,035 people who voted for him in the 36th Legislative District, made up mostly of southern Bergen County towns.

    But the Wood-Ridge Democrat also owes his victory to more than $1 million in campaign cash donated by a select group living outside the district - the state party's power brokers.

    Nervous about holding on to the seat, Democratic leaders cast a wide fund-raising net for Sarlo, hauling in contributions from other lawmakers, political bosses in counties as far-flung as Camden and Middlesex, and of course, some of New Jersey's most generous campaign donors.

    More than 65 percent of all the funds Sarlo received came from state, county, and legislative war chests. "We needed resources to get our message out,'' he said.

    Sarlo is not the only political figure whose meteoric two-year rise from obscurity to the Senate was paved with the deep pockets of party bosses, and he certainly will not be the last.

    In fact, he is a beneficiary of a process that allows party leaders to amass hefty contributions and then transfer, or "wheel," the funds directly to a candidate's campaign account. At least $14 million was wheeled from one party organization to another and to individual candidates during last year's election, when $56 million was spent overall on winning campaigns.

    Quite often, top party leaders collect contributions from other county committees and contributors and route the money into campaigns that need it.

    These transfers, party officials say, allow them to carry out their core "party-building" responsibilities: raising and spending money to get enough of their members elected so that they can dominate city councils, county freeholder boards, and the state Legislature.

    But campaign watchdogs and other critics point to a troubling underside to wheeling. These flurries of transfers – often done in the final days of a campaign – allow wily donors to evade campaign contribution limits, they say.

    Unlimited sums

    An individual donor, for example, is permitted to give Sarlo a maximum of $2,200 for a general election campaign, while a PAC can contribute up to $7,200.

    But a donor can multiply his or her potential influence by also making donations to state party, legislative leadership or county committees - up to $25,000 to state party or legislative leadership committees and $37,000 to county committees. Many of these same committees are then free to transfer unlimited sums to a candidate's campaign.

    Various local plumbers unions, for example, contributed $9,800 to Sarlo's campaign. They also contributed $92,250 to the Senate Democratic Majority Committee, controlled by Senate President Richard J. Codey. In turn, Codey's committee gave Sarlo $644,068 in financial support.

    Sarlo also received $16,450 from local International Brotherhood of Electrical Workers unions. IBEW unions donated an additional $78,100 to the New Democratic Assembly Leadership PAC, controlled by Assembly Speaker Albio Sires of West New York. Sires' committee then gave Sarlo more than $100,000.

    There is no way to determine whether any of the same money that organized labor gave to the Senate or Assembly committees actually ended up in Sarlo's campaign. But some critics fear that donors, chafing at the contribution limits, privately ask party officials to route their money to specific candidates – a tactic that party leaders routinely deny exists and that watchdogs acknowledge is almost impossible to confirm.

    "The commission has expressed concern about unlimited transfers," said Frederick Herrmann, executive director of the state's Election Law Enforcement Commission. "There's an appearance that the money is circulating in a way that can't be accounted for. It could lead to the circumvention of contribution limits."

    ELEC has conducted investigations of suspected wheeling, but none has led to any formal charges or fines, said Jeff Brindle, ELEC's deputy director. "Once the money goes into the committee's treasury, it's difficult to trace it," he said.

    Part of reform effort

    Despite these concerns, the current system has its defenders, who note that it was established in the last set of major campaign finance laws enacted in 1993. Before that, individual candidates were viewed as easy prey for special interest groups and lobbyists, who sometimes recruited candidates, raised money for them, and even ran their campaigns.

    The creation of new and powerful "legislative leadership'' committees, controlled by each party's top officials in the Legislature, was aimed at changing that relationship. Now, special interest money is consolidated with the leadership, who can then exercise control over how it is spent. Supporters say the money – and influence – is pooled and diluted, making it less likely for candidates obligated to any one donor.

    "It means that the parties are responsible for raising money, allocating funds, and recruiting candidates," said Alan Rosenthal, a Rutgers University political science professor who served on the committee that recommended the 1993 reforms.

    "It's better to see all that done by the parties than by various interest groups."

    But the law also gave some top legislative leaders even more fund-raising clout than originally envisioned. As speaker, Sires controls the New Democratic Assembly Leadership political action committee, which took in more than $5 million in donations and spread around more than $3.3 million to Democratic legislative candidates and committees.

    In addition, Sires is the mayor of West New York and controls the West New York Democratic Municipal Committee. His West New York committee contributed more than $400,000 to the Democrats' legislative election efforts in 2003, including a $37,000 loan to the Bergen County Democratic Committee.

    "It's fair to say that, for starters, the laws permitting transfers between party organizations never contemplated anything near this magnitude," said Tom Byrne Jr., former chairman of the Democratic State Committee. "It concentrates legislative power more than it ever was before."

    Republicans have also been in a position to take advantage of the system. In 2001, former Senate President Donald T. DiFrancesco served as acting governor after Christie Whitman resigned to join the Bush administration.

    DiFrancesco was in a rare but powerful spot to launch his own campaign for governor. He was raising money for the Senate President's leadership PAC, maintained control of the Republican State Committee, and also raised money for his own 22nd District legislative account - until he dropped out of the race amid questions about past business dealings.

    Rosenthal added that no campaign finance system yet devised has been able to totally regulate the flow of campaign cash.

    "If you say you've come up with the perfect campaign finance system," he said, "I'll personally sign the papers to have you committed."

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