Perry Vetoes "Dark Money" Bill

This is one in a series of occasional stories about ethics and transparency in the part-time Texas Legislature.

Gov. Rick Perry has vetoed a divisive measure that would have forced some tax-exempt, politically active nonprofits to disclose their donors. That effectively kills the measure for this session; lawmakers stripped a similar amendment from an Ethics Commission reform bill on Friday.  

In his veto statement — the first of the session — Perry said the bill "would have a chilling effect" on donors' constitutional rights to freedom of speech and association.

“At a time when our federal government is assaulting the rights of Americans by using the tools of government to squelch dissent it is unconscionable to expose more Texans to the risk of such harassment, regardless of political, organizational or party affiliation," he said.  

The bill's author, Sen. Kel Seliger, R-Amarillo, said Perry's veto was "embarrassing," and added that there "doesn’t seem to be a real strong groundswell” for a veto override, though he didn't rule it out.

"This is a sad day for integrity and transparency in Texas," Seliger said. "Gov. Perry's veto of SB 346 legalizes money laundering in Texas elections. The governor's veto is ironic since money laundering is illegal in other endeavors."

House lawmakers passed Senate Bill 346, a "dark money" bill that would've applied to nonprofits falling under 501(c)(4) of the tax code, earlier this month. They did it in a hurry, leaving in a provision many of them disliked that exempted labor unions in an effort to deny the upper chamber its request to revisit senators' original vote to pass it. 

The measure has faced ardent opposition from far-right activists like Michael Quinn Sullivan, whose conservative group Texans for Fiscal Responsibility is a 501(c)(4). He has argued that SB 346 is an unconstitutional attempt to harass protected donors. 

"Texas Gov. Rick Perry today saved Texans from the threat of harassment and intimidation simply by virtue of their contributing to non-profit entities that speak out politically," Sullivan said in a statement. "The governor's veto of SB 346 sends a welcome message, that the Lone Star State won't tolerate infringements on clear constitutional rights or chilling limitations on political speech."

Supporters of the legislation "will be subject to threats and intimidation donors to Tea Party groups, home-school organizations, right-to-life advocates and civil rights causes," Sullivan wrote in an op-ed published in The Dallas Morning News on Wednesday. 

But advocates say that if such nonprofit groups are going to play on the political field, they should be subject to the same rules as other campaign donors. In the 2012 election cycle, groups that used the 501(c)(4) designation spent more than $300 million to influence elections, according to the Center for Responsive Politics. 

“Certain groups keep scorecards and continuously bombard the internet. All that’s fine, it’s what this process is about,” state Rep. Charlie Geren, R-Fort Worth, said during House debate on the measure. “The problem occurs when these groups wade deep into the political process … and use a loophole that keeps their donors secret.”

Until Friday, there was still a chance the nonprofit disclosure measure could survive. By way of an amendment, the House tacked similar language — without an exemption for unions — onto a Texas Ethics Commission reform bill that passed earlier this week.

The amendment was stripped out in conference committee; Sen. Joan Huffman, R-Southside Place and the reform bill’s author, said she was "not supportive" of it staying on the bill. 

Craig McDonald, the director of the left-leaning money-in-politics group Texans for Public Justice, said Perry's veto "lets his far-right friends play politics under their own special set of rules."

"Their campaign contributions will remain secret," he said. "No one will have to take their hoods off." 

Seliger said that if Perry calls a special session, he will re-introduce the bill.  

Chris Hooks and Aman Batheja contributed to this report.