"Dark Money" Hearing Centers on Transparency vs. Free Speech

Nearly a year after Gov. Rick Perry vetoed a bill that would have forced some tax-exempt, politically active nonprofits to disclose their donors, a hearing in the Texas House on Thursday showed that it remains as divisive a concept as ever.

The House State Affairs Committee heard testimony on the issue of “dark money,” the term for political spending done by nonprofits falling under 501(c)(4) of the tax code. Panelists in favor of disclosure said Texans should know who is funding ads attempting to influence how they vote.

“Texas does not limit restrictions," said Jim Clancy, chairman of the Texas Ethics Commission, adding, "The defense mechanism that the public has is the transparency of who is making that contribution and knowing who is standing behind the measure.” 

Critics argued that requiring advocacy organizations to disclose their donors would be used for retaliation purposes. Several cited the recent case of Mozilla CEO Brendan Eich, who resigned following criticism over a $1,000 donation to a campaign in support of banning gay marriage in California.

“If they can’t win on the merits of their ideas, they are attempting to win through oppression and official intimidation,” said Michael Quinn Sullivan, who runs Empower Texans, a network of organizations that includes a 501(c)(4) that has spent heavily in recent election cycles. “That is a wrong path for the people of Texas.”

Sullivan was not invited by committee Chairman Byron Cook, R-Corsicana, to speak at the hearing, so he voiced his views at a press conference earlier in the morning. He and the leaders of several other conservative groups accused Cook of not being interested in a full airing of the issue.

Yet testimony at the hearing included some critics of mandating disclosure of dark money spending, including Russell Withers, general counsel and a policy analyst for the Texas Conservative Coalition Research Institute. Withers told the committee that there was no justification for private organizations to follow the same rules required of candidates and elected officials.

“I don’t think the public is particularly concerned with who paid for the ad,” Withers said. “I think the ultimate issue is in the marketplace of ideas. The public decides for themselves once they hear the message.”

Cook expressed bafflement at Withers’ argument, questioning why voters should be prevented from having information that could help them put a political message in context.

“I’m glad to have the dissenting view because I think a debate is healthy, but I am just struggling with the logic,” Cook said.

State Rep. José Menéndez, D-San Antonio, argued that voters would be interested to know if a group spending heavily in favor of a candidate was funded by overseas gambling interests hoping to have laws changed so they could build casinos in Texas.

Clancy offered a scenario of a group called Moms for Healthy Kids trying to influence Texas elections.

“That’s great as long as it’s being paid for by moms,” Clancy said. “If it’s paid for by Michael Bloomberg, then that’s a different situation — someone out of state with a lot of money who has an agenda. “

Ahead of the hearing, U.S. Sen. Ted Cruz weighed in on the issue via Facebook, describing the kind of disclosure laws under discussion as “pernicious.”

“Today the Texas Legislature is holding a hearing on requiring outside groups to disclose their donors to engage in political speech,” Cruz wrote. “That would be a disastrous policy that would unconstitutionally chill free speech.”