Cash from groups like the Kochs has helped the state GOP build a robust network. | AP Photos GOP, Kochs eye N.C. gains

The GOP lost big nationally in 2012, but may have found the key to future success in one southern state.

Cash from groups backed by the Koch brothers and others helped North Carolina Republicans build a robust conservative infrastructure and fundraising network, leading to the GOP winning both the governor’s mansion and the state legislature in the same year for the first time since Reconstruction.


That takeover didn’t come overnight, but it caught Democrats by surprise, especially since Barack Obama carried the state in 2008 and lost only by 2 percentage points last year.

( PHOTOS: Republican money men)

The hope, say conservatives, is to replicate their successes elsewhere.

“Getting dramatic economic change at the federal level is very difficult,” said Tim Phillips, president of the Koch-backed Americans for Prosperity. “A few years ago, the idea we had was to create model states. North Carolina was a great opportunity to do that – more so than any other state in the region. If you could turn around a state like that, you could get real reform.”

Since November, change has come quickly.

Gov. Pat McCrory appointed a Koch ally and major Republican donor, Art Pope, as the state’s budget director.

( Also on POLITICO: Dems learn money isn't everything)

In the legislature, Republicans are expected to pass an overhaul of the state’s tax code, the public education system and election laws, including a controversial voter ID bill. The state House on Monday voted to allow concealed weapons on college campuses, at sporting events and in businesses that serve alcohol.

Several other measures, such as one that would establish Christianity as the official state religion, are not expected to pass but have made national headlines in recent weeks.

And last month, Pope proposed eliminating public financing for judicial races, and McCrory canned members of the State Board of Elections just as the board announced an investigation into contributions made to governor’s campaign.

Democrats are still trying to figure out what happened.

“I’ll do anything for an hour with David Axelrod and for him to tell us what do to,” said Martin Nesbitt, a top Democrat in the state Senate.

( Also on POLITICO: Democratic strategist: Party 'in decline')

There’s fear on the left that the outside cash and gerrymandered districts means the bad news isn’t over. Sen. Kay Hagan, won on the coattails of Obama’s 2008 win but is considered vulnerable next year. Rep. Mike McIntyre, who was re-elected by fewer than 600 votes last year, is also a top Republican target.

The Republican establishment has taken notice. McCrory gave the Republican weekly radio address last Saturday and Karl Rove is scheduled to speak at the state GOP convention next month in Charlotte. (A Rove spokesman declined to elaborate on the speech.)

“I certainly hope that people will look to North Carolina,” said Phil Berger, the state Senate’s president pro tempore. “We are doing a lot of things that are right.”

“We promised people when we were elected that we would straighten and get the state house in order,” Berger added. “We balanced the budget, we cut taxes and reduced government spending by nearly $1 million.”

AFP wasn’t the only outside group operating in North Carolina. Others include the Republican Governors Association, which is backed by the Kochs and Pope; Republican State Leadership Committee, which has received contributions from mega-donors such as Steve Wynn and Sheldon Adelson; and Real Jobs NC, which Pope co-founded, outspent left-leaning outside groups in North Carolina by more than a 2:1 margin, according to the Institute for Southern Studies.

Phillips declined to say how much money AFP, which isn’t required to disclose its contributions and spending, spent in the state. “It was significant,” Phillips said. “It was one of the states we were most active.”

AFP recently announced it would spend $500,000 in North Carolina on efforts that focus on town hall meetings, mass-marketing and grassroots organizing to rally support for tax reform, which would include a reduction or elimination of personal and corporate income taxes.

“There will be more old conservative policy changes in North Carolina than in any other state this year,” said Dallas Woodhouse, AFP’s state director. “We have a lot of ground to make up. We have the right mix of state leaders and governor to pass some earth-shattering reform.”

McCrory and Pope both declined requests for an interview. A spokesperson for the governor’s office told POLITICO they were being “selective in what kinds of interviews [Pope] does.”

But earlier this year at a roundtable discussion with reporters and students at the University of North Carolina — Chapel Hill, Pope repeatedly tried to change his image of being a major political contributor in the state.

“I’m not the biggest political donor in North Carolina. The biggest political donors are Democrats,” Pope said, according to a student journalist in the room.

“There has been a lot of discussion and my name being used in association with Citizens United,” Pope added. “Well, the activities I’m engaged in or supported, going back to 2010 and other areas in 2012 in North Carolina, had nothing to do with Citizens United. They were all involved in issue advocacy, education, voter education, which were allowed under existing law pre-Citizens United.”

The influx of outside money — often from groups that don’t have to disclose their donors — has surprised political observers who have touted the state’s efforts to curb big money in the past.

“This is a real important moment for the issue of money in politics,” said Chris Kromm of the Institute for Southern Studies. “North Carolina is going to emerge as a good case study and cautionary tale on the role of money.”

Because the outside money isn’t going to disappear , Democrats are jumping into the game.

With the state Democratic Party still reeling from a sexual harassment scandal involving a top official, prominent Democrats are working on a long-term strategy rebuilding their infrastructure through a coalition of outside groups.

“What everybody has realized is that the rules of the political game have changed,” said Thomas Mills, a Democratic strategist in the state. “A lot of people have written the party off for the time-being.”

North Carolina Democrats also lost some of their star power to the Obama administration when the president nominated Charlotte Mayor Anthony Foxx for transportation secretary and Rep. Mel Watt to oversee Fannie Mae and Freddie Mac.

Dean Debnam, director of N.C. Futures Action Fund, a tax-exempt nonprofit which bankrolled a number of liberal outside groups in 2012, said he is meeting with donors and national groups to expand the donor base and has doubled his staff since November.

“We don’t have a base that’s equivalent to the Koch brothers or an Art Pope,” Debnam said. “But there’s a great amount of concern and people are putting money at a level that they haven’t done before.”

Gary Pearce, a long-time N.C. Democratic strategist and a former adviser to former Gov. Jim Hunt, also said Democrats were ready to open up their wallets in a big way to combat the GOP spending.

“I think there is a lot of money that the party has never tapped before,” Pearce said. “There’s a lot of money looking for a good place to go.”

Democrats may also turn to the Obama-backed nonprofit Organizing for Action. OFA didn’t respond to inquiries about its efforts, but its national issues director, Lindsay Siler, was the Obama campaign’s state director.

The chairman of the state Democratic Party, Randy Voller, said he’s been making calls to donors “every day of every week,” setting up breakfast and lunch meetings to explore ideas and make fundraising pitches to donors.

“I’m aware that there are outside groups but their focus is for themselves. They do things that benefit us, but our focus in this office is on people who want to invest in the N.C. Democratic Party,” Voller said. “If the party actually shows that it stands for these beliefs and it actually does it, the money will flow and the boots will be on the ground.”

Ken Vogel contributed to this report.