State parties are seeing financial strain as they compete with outside groups for cash. Last call for state parties?

For many state parties, the party may soon be over.

State party officials across the country say the explosion of money into super PACs, nonprofit groups and presidential campaigns has made fundraising more difficult. And some of those outside groups are starting to take over the traditional local roles state parties play, spending big on voter contact and outreach operations.


The effect is that candidates can be more beholden to national organizations or single-issue groups rather than state party leaders. That’s leading to a change in candidates and their beliefs and the issues that come up in elections and statehouses.

The GOP takeover of North Carolina in 2010 and 2012, for example, was bankrolled largely by the network founded by GOP megadonors Charles and David Koch and primarily directed through the nonprofit Americans For Prosperity. AFP’s former chairman, Art Pope, now serves as North Carolina budget director.

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In Texas, two Democratic outside groups have essentially built a party organization outside the official Texas Democratic Party. Several Obama campaign veterans are running the group Battleground Texas as a field and turnout operation, while the Lone Star Project is doing opposition research and tracking against Republicans.

In New Jersey, labor groups funneled money into legislative elections through a group now called General Majority PAC, a free-spending outside group headed by a former top aide of Senate Majority Leader Harry Reid.

In Wisconsin, it was labor money that drove recall fervor against Gov. Scott Walker and several GOP state senators in 2011. State Democratic officials were quietly hoping to negotiate with state Republicans — before ultimately backing the labor-driven recall efforts.

State parties on both sides of the aisle are seeing a major cash crunch.

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“We’re like a tube of toothpaste that’s being squeezed from both ends — eventually you spring a leak,” said Republican Party of Texas Chairman Steve Munisteri. “You have various national tea party organizations, you have various conservative organizations. Then you add to that issue advocacy groups and super PACs. It’s just increasing competition for the dollar.”

“If you’re a donor and you can write a million-dollar check to an outside group with little or no disclosure and focus it on very specific activity and have no [regulatory] urgency or burdens in terms of disclosure hanging over your head, why wouldn’t you go that way and give a contribution?” said Ken Martin, chairman of the Minnesota Democratic-Farmer-Labor Party.

State parties have long been responsible for the lion’s share of local voter contact, as well as providing a robust organization to train, develop and support candidates, budding operatives and local volunteers.

“To me, these are probably the most important groups in politics — not the groups that run ridiculous ads on television in 30-second ads,” said Neil Reiff, an election attorney who represents more than 40 Democratic state party organizations.

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State parties can spend money on state elections and on federal elections, but the finances for both types of spending must be kept in separate accounts. POLITICO examined the federal data for all 100 state parties, with help from the law firm Sandler, Reiff, Young & Lamb. A separate analysis was conducted of state finances, using numbers collected by the National Institute on Money in State Politics.

On both sides of the ledger, state parties have shown signs of financial strain. For in-state elections, state parties raised an average of $5.4 million in 2000. By 2008, that number had dropped to $4.1 million. By 2012, it was $2.8 million.

On the federal side, just four state parties out of 100 — all Republican — had more than $1 million of federal funds in the bank at the end of 2013.

And several state parties had almost no cash in the bank on the federal side. Fifteen of the 100 state parties — eight Democratic and seven Republican — have more debt than money in the bank.

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The New Mexico Democrats had just over $3,000 in cash on hand at the close of the year and was more than $30,000 in debt. The Delaware Republican Party had just under $2,000 on hand at the close of 2013, while the Kansas and Maryland GOP state parties had about $900 each. The Mississippi Democratic Party had $2,817.30 on hand, with nearly $6,000 in debt.

Based on the increasingly competitive fundraising environment and facing dwindling resources, state officials on both sides are urging Congress to make life easier for state parties.

State parties are hamstrung by federal rules that affect the use of volunteers, direct mail and phone banking in federal elections. Also, donation limits to candidates and national political parties are currently indexed to inflation and increase year-to-year. But donation limits to state parties are not — and have been stuck at $10,000 per cycle since 2002.

The Association of State Democratic Chairs passed a unanimous resolution in November, endorsing a series of fixes to those problems. They’re hoping the full DNC will consider the measure this month. Those proposals include allowing state parties more flexibility in running direct mail, phone banking and field programs on behalf of federal campaigns.

The 2013 Republican National Committee autopsy report commissioned after the 2012 election came to a similar conclusion. “State parties are suffering the most under the current campaign finance laws. It is critical that we provide more support to state parties to allow them to do more with scarcer resources in the current environment,” the report said.

“If we don’t do this — and pass some of these common-sense reforms — in my opinion, political parties are going to go the way of the dinosaur,” said Martin, the DFL chairman and head of the ASDC’s Committee on Campaign Finance Reform.

But any changes or tweaks to current election law need to made by Congress — which created the rules in the first place. And legislation on any campaign finance issues has gone nowhere in the past several years.

Ironically, until Congress closed a key campaign finance loophole in the 2002 McCain-Feingold campaign finance overhaul, most state parties were flush with cash.

The loophole allowed essentially unlimited funds known as soft money to be raised by the national political parties to be spent on party building activities and issue ads. Between 1992 and 2002, soft money fundraising for both parties skyrocketed — going from from $86 million to nearly $500 million. Much of that cash was spent through state and local party organizations.

In closing the soft-money loophole, the law created a complicated system of rules that state parties had to abide by when working on federal elections.

Under the rules, for example, state-party run phone banks for federal candidates had to be staffed only by volunteers. They could make calls only for presidential elections — not congressional races. Mail, campaign literature and get-out-the-vote operations around federal races were regulated by similarly strict rules, conditions and requirements regulating volunteer time, coordination with the national party and what kind of funds could be spent.

Those rules seem almost quaint now.

The Supreme Court essentially cracked open the door to a different kind of soft money in 2010. In the Citizens United ruling and several subsequent court and administration decisions, unlimited cash was again permitted to flow into the system — but this time it had to be spent by independent groups, not local parties. Super PACs and nonprofits like American Crossroads, Restore Our Future and Priorities USA Action became an integral part of the campaign finance landscape.

That has changed the nature of politics in some states.

“There’s nobody refereeing the fights,” said Thomas Mills, a North Carolina-based political consultant and observer who has worked on local, state and presidential races. “We’re not seeing party bosses or strong chairs that can try to work out deals behind closed doors to keep it from breaking out into the public.”

“The super PACs have, frankly, an easier sell,” Florida Democratic Party executive director Scott Arceneaux said about the changes in campaign finance law. That sell is: “Invest in us, and we’re going to go on television and say these horrible things about Republicans.

“We do voter registrations, we do vote-by-mail campaigns,” said Arceneaux. “We do a lot of things that are a little bit less sexy but no less important.”