Early WA governor’s race skirmish? Campaign finance loophole scrutinized

Washington’s campaign-finance watchdog is eyeing whether to close a loophole that could give Attorney General Bob Ferguson a big campaign cash advantage if he runs for governor next year.

In what amounts to an early 2024 gubernatorial race skirmish, Ferguson’s potential rival, state lands commissioner Hilary Franz, is backing the loophole’s closure as a great idea.

The debate revolves around so-called surplus accounts where Washington politicians are allowed to park unspent campaign donations for use in future campaigns.

Ferguson, a Democrat who has been attorney general since 2013, has amassed in his surplus fund.

That money was raised ostensibly for reelection to his current job. But under the state’s current rules, Ferguson could transfer it over to a gubernatorial campaign, and then hit up his donors for new contributions.

Tallman Trask, a Seattle attorney, asked the state Public Disclosure Commission to close the loophole Thursday, saying it allows an end-run around the state’s contribution limits.

Right now, the PDC allows candidates to move surplus money in lump sums to campaigns for a different office. While donors have to give permission for their money to be shifted, there is no disclosure of which ones do so. They’re free to give additional donations to the campaign for a different office, such as governor.

Trask argued that flies in the face of the state’s generally robust campaign-finance laws.

“The ability to hide contributor information and side-step contribution limits through surplus fund transfers undermines the goals of Washington’s campaign finance structure,” Trask wrote in his petition seeking a PDC order closing the loophole. “It limits the voter-approved and demanded transparency, transparency which is a necessary component of public trust in campaigns and the political system.”

The move to crack down on surplus funds, which could blunt Ferguson’s fundraising advantage, was backed by Franz, the Democrat who has served as Commissioner of Public Lands since 2017.

Dmitri Iglitzin and Derek Schoonmaker, lawyers for Franz’s campaign, wrote in a memo that they’d reviewed the law and found Trask’s petition raised “well-founded concerns” and urged the PDC to withdraw its “erroneous guidelines” regarding the surplus funds.

Schoonmaker also testified to the PDC on Thursday, saying the current guidelines on surplus money “undermine transparency” and allow some donors to give more than contribution limits would otherwise allow.

Franz has a surplus fund too, but with only about $29,000 in it.

Jack Sorensen, a Franz campaign spokesperson, said in an email Thursday “Hilary is committing to not touch surplus funds until new guidance is issued.”

In a text message Thursday, Ferguson said he had no comment on the debate.

Franz and Ferguson have openly talked about their ambitions to run for governor, but both have been waiting for Gov. Jay Inslee to announce whether he will bow out after three terms in office. Ferguson has made it clear he will only run if Inslee steps aside.

The proposed rule change isn’t only about the hypothetical governor’s race. In his petition, Trask noted that more than a dozen elected officials have more than $100,000 in their surplus accounts, while 100 have more than $10,000 in the accounts.

“If any of those elected officials were to announce a run for a different office than the one they currently hold, current PDC guidelines would allow them to transfer the entirety of those funds to the new campaign, without full disclosure of the contributors and without any of the contribution limits otherwise applicable,” Trask wrote.

Washington now limits individual contributions to candidates to $2,400 for each election.

At its meeting Thursday, the PDC decided to have its staff prepare two options — one keeping the current guidance in place, and another essentially granting Trask’s request and specifying that surplus funds used for a campaign for another office are subject to contribution limits.

The commission will have a special meeting May 11 at 9:30 a.m. to discuss the issue and take public comment before deciding what to do.

“I am still interested in hearing from other campaigns that would be affected by this,” said commission member William Downing.