Secret Spending in the States
Dark money spending — together with a new phenomenon we've identified as "gray money" — have surged in state and local elections. This report, the most comprehensive empirical look yet at the impact of secret spending beyond the federal level, finds that fully transparent spending has declined from 76 percent in 2006 to just 29 percent in 2014 in six states where data was available.
- Our first-of-its-kind analysis showed that, on average, only 29 percent of outside spending was fully transparent in 2014 in the states we examined, sharply down from 76 percent in 2006.
- Dark money surged in these states by 38 times on average between 2006 and 2014.
- State super PACs, which are legally required to disclose their donors and thus hold themselves out to be transparent, increasingly reported donations from nonprofit groups that are not, themselves, required to disclose their donors. Donations from dark groups to super PACs increased by 49 times in these states between 2006 and 2014, from less than $190,000 to over $9.2 million.
- In a troubling new phenomenon we’ve identified, “gray money” has ballooned to nearly 60 percent of all outside spending in 2014, on average in the states we examined.
- Measuring dark money alone understates the extent of the transparency problem. We found a sharp rise in what we term “gray money”: spending by state super PACs that reported other PACs as donors, making it impossible to identify original donors without sifting through multiple layers of PAC disclosures.
- “Gray money” ballooned from 15 percent of all outside spending on average across the six states in 2006 to 59 percent of all outside spending by 2014.
Dark money at the state and local levels frequently flows from special interests with a direct and immediate economic stake in the outcome of the contest in which they are spending, in contrast to what is often portrayed as the more broadly ideological outside spending at the federal level. When uncovered, secret money at this level has traced back to such sources as a mining company targeting a state legislator who held a key role opposing quicker mining permits, payday lenders supporting an attorney general who promised to shield them from regulation, and food companies battling a ballot measure to add labeling requirements.
Lower costs make it relatively easy for dark money to dominate state and local elections. For many of the contests we looked at, dark money groups outspent candidates themselves with amounts in the low $100,000's or even $10,000's — a modest business expense for special interests, but a major hurdle for many candidates and community groups. At the federal level that degree of dominance can easily cost in the $10 millions.
Strong disclosure laws and enforcement can make a real difference. California, which saw many times more outside spending than any of the other states we examined, nevertheless saw a remarkably low amount of dark money in each cycle. It seems that the state’s exceptionally tough disclosure requirements and active enforcement culture have helped to keep secretive spending at a relative minimum.