Changes to State Campaign Finance Laws in 2021 (A Year in Review)

In 2021, states made some important changes to campaign finance laws and regulations. Notably, many of the enacted bills revised key definitions, allowed new types of campaign expenditures, imposed prohibitions on foreign contributions, added new requirements and prohibitions for the use of campaign and carryover funds, added new filing and reporting requirements, or modified contribution limits and reporting thresholds.

Revised Key Definitions

Arkansas expanded on its definition of carryover funds. Maine revised its definitions of a ballot question committee, political action committee, and a leadership political action committee. Montana provided that a person hosting a fundraising reception or other political event on his or her property may now do so without disclosing such use of a home as a regulated contribution. These changes may add on requirements or eliminate certain restrictions for those operating a PAC or raising contributions.

Allowed New Types of Campaign Expenditures

In recent years, following the Federal Election Commission (FEC) rulings that allowed candidates to use campaign funds to cover their campaign-related childcare expenses, states began taking initiative in codifying these rulings into their laws that are typically silent about this issue. In 2021, Arkansas, Connecticut, Delaware, District of Columbia, Illinois, Montana, Rhode Island, Vermont, and West Virginia joined this list to make running for office more of an option for candidates with young children. These changes resemble provisions initially passed by other states in previous years. Additionally, related to a different category of expenses, Montana allowed a candidate that advances to the general election to pay a personal loan made to the campaign using primary or general election funds.

Imposed Prohibitions on Foreign Contributions 

States have also taken initiatives that diverged from other FEC rulings. California and Idaho prohibited a foreign government or other foreign principal from making contributions or expenditures in connection with state or local ballot initiatives in their states (or in connection with the election of a candidate to state or local office). Unlike the FEC approach, which tends to prohibit foreign spending on a ballot initiative when the spending has a “connection with” the elections or where a candidate is “inextricably linked” to the ballot initiative committee, these laws prohibit foreign contributions on any ballot initiative. More states, such as Maine and Massachusetts, have been considering their own laws to prevent foreign nationals from influencing ballot measure elections.

Added New Requirements and Prohibitions for the Use of Campaign and Carryover Funds

States further added new requirements and prohibitions pertaining to the use of campaign and carryover funds. Arkansas prohibited the use of campaign funds or carryover funds to pay for an ethics violation. Florida prohibited a candidate from donating surplus funds to a charitable organization that employs the candidate. Hawaii provided that excess contributions made by nonresident contributors should escheat to the Hawaii election campaign fund when a committee fails to return the excess portion to the contributor within thirty days after the election period.

Added New Filing and Reporting Requirements

State legislatures’ response to the COVID-19 pandemic extended to campaign finance disclosure as well. Alabama required electronic filing of all campaign finance reports and statements. Arkansas took a slightly different approach, requiring the secretary of state to develop electronic reporting forms and a criteria for an updated and simplified electronic campaign finance online reporting system by January 1, 2022.  California now requires a limited liability company that qualifies as a committee (or a sponsor of a committee) to file a statement of members listing all persons who have a membership interest in the company of at least 10% or who made a cumulative capital contribution of at least $10,000 to the company. Montana revised its reporting deadlines for municipal candidates and political committees. Virginia added a reporting requirement for any candidate for a statewide office or the General Assembly to report contributions that exceed $1,000. 

Modified Contribution Limits and Reporting Thresholds

Other 2021 developments included changes to contribution limits and reporting thresholds. Arkansas campaign contribution amounts previously couldn’t exceed $2,700, but now the Arkansas Ethics Commission will establish the maximum campaign contribution level. The Arkansas Ethics Commission has enacted rules specifying that as of February 2, 2021, the maximum campaign contribution limits cannot exceed $2,900. Florida enacted a law preempting counties, municipalities, and other local governmental entities from establishing contribution limits that differ from the limits established in the Florida Election Code. Montana increased the aggregate contribution limits for what a political committee or individual may give to candidates. New Hampshire increased the expenditure and contribution reporting threshold for all political entities and modified the maximum contribution amount a person may contribute to candidate and political committees. North Carolina enacted regulations that increased contribution limits from $5,400 to $5,600 to account for changes in the inflation rate, which were effective January 1, 2021.

States further enacted measures to penalize violations of campaign contribution and disclosure laws. The new Tennessee law now disqualifies an officer of a multicandidate political campaign committee from running for a state or local public office if the committee has not paid assessed civil penalties for violating campaign contribution or financial disclosure laws within 30 days.