Article by Erik Smith. Published on Saturday, July 31, 2011 EST.

Democrat Wanted to Transfer $1 Million from Congressional Coffers to New Campaign for Governor – But the State Says There Are Limits

Congressman Jay Inslee, Democratic candidate for governor.

By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, July 30.—Election watchdogs are saying no to a plan from Democrat Jay Inslee to transfer $1 million from his congressional coffers to his new campaign for governor, without observing state rules for contributions to campaigns.
            There are limits, after all.

            It is an issue that has simmered and burbled for a week, and which has made for some of the most delightful press releases in ages. We’ve had political figures accusing one another of not knowing the basic rules of their trade and therefore demonstrating their unfitness for public service. We’ve even seen them quoting reporters as authorities – never a safe thing to do.

            Now we have the final answer. The Republicans were right. The Democrats were wrong.

            But even if Inslee can’t spend his million bucks the way he wanted to, the rest of us can say we got entertainment worth almost that much. 

            A Big Wad of Cash

            The basic problem was this. Jay Inslee, an eight-term congressman who represents a district just north of Seattle, had a big pot of money left over from all the campaigns he ran in the past. When he jumped into the governor’s race June 27, he had about $1.2 million in the congressional kitty. He wanted to spend it on his new campaign.

            The plan was to dump it in as a lump sum, without disclosing donors or counting their money toward the more-restrictive state limits on campaign contributions. So those who gave the maximum of $5,000 to an earlier Inslee congressional race could give a second time – up to $3,200 in the gubernatorial race – and no one would know.

            And political action committees that are barred from participating in Washington elections, because they don’t have 10 contributors living in this state – their money could have been spent on the governor’s race as well.

            No Free Pass for Congressmen

            The Inslee campaign said it checked with the Public Disclosure Commission staff and was told there was no problem. It could transfer the money. State limits only applied to money raised this year. As for surplus money from previous years, Inslee didn’t have to worry about contribution limits. So poof – he had an extra $1 million or so to spend.

            Republicans hit the roof when they heard that one. “That’s illegal,” said Randy Pepple, campaign manager for Republican candidate Rob McKenna, the sitting attorney general. Of course state campaigns have to abide by the state contribution rules, Pepple said. Congressmen don’t get a free pass.

            If Inslee got away with it, he said, no one would ever know where his money came from. 

            Things got muddier when Associated Press ran a story about the issue July 25. It quoted PDC officials saying Inslee was right.

            Democrats Take the Ball

            Next thing you know, the state Democratic Party was pumping out a press release. The headline itself was a scream:

 “McKenna Allows Campaign to Manipulate the Law to Further His Political Ambitions – Attorney General Should Know the Rules and Play by Them”

            It dutifully referred to the AP story, and said, “Despite the full legality of these actions, McKenna allowed his campaign to misrepresent campaign finance laws to fuel political attacks against Jay Inslee.”

            It went on to quote state Democratic Party chairman Dwight Pelz: “Just because he wears the badge of attorney general doesn’t mean that Rob McKenna gets to manipulate state law to suit his political agenda. Rob McKenna, candidate for governor, should know better.”

            Um, Wait a Second

            Doug Ellis, the interim executive director of the Public Disclosure Commission, was following the debate, and got a little concerned. “I was looking at the news articles that had been coming out over the last few days, and it looked as though there was some confusion or miscommunication,” he said.

            Whether it was the staff or the press or the campaign, someone got something wrong somewhere. State rules apply to state campaigns, he said. So every dollar transferred from a federal campaign has to comply with state contribution limits. Every dollar has to be attributed to a donor. And every donor has to give written permission before money can be shuffled from one account to the next. He fired off an email to the Inslee campaign telling it so.

            The upshot is that Inslee can transfer some of the money, but not all of it. The campaign will have to do a persnickety job of accounting before it can use any of it. And it’s going to need a great big stack of permission slips.

            ‘Perplexed and Disappointed’

            In a statement Friday, the Inslee campaign called the decision a “rule change,” blamed bum advice, referred to the Associated Press story, and said, “We are perplexed and disappointed at this sudden change by the PDC.”

            Now it was the Republicans’ turn to crow. In the state-party press release, chairman Kirby Wilbur planted his tongue firmly in cheek and said:

            “Dwight Pelz should make sure of the facts before issuing public statements with such certainty.

            “I also believe that a fine by the PDC is appropriate in this case. I would suggest $2 million, with $1 million suspended. The state could use the money.”

            Playing by D.C. Rules

            Actually, it doesn’t look like Inslee’s campaign had violated the rules – yet. It hadn’t gotten around to making that million-dollar transfer. Its June 30 fund-raising report showed only that it had transferred a lump sum of $191,000 from the federal account. The transfer goosed the numbers so that it looked like Inslee’s contributions were running close to even with the McKenna campaign, which had launched three weeks earlier.

            Now the Inslee campaign is going to have to file an amended report that accounts for every penny and demonstrates that the state contribution limits were observed.

            The whole thing was pretty stinky, said McKenna manager Pepple. His campaign put out a statement, of course, about “Inslee’s illegal donation scheme.”

Your support matters.

Public service journalism is important today as ever. If you get something from our coverage, please consider making a donation to support our work. Thanks for reading our stuff.