Realtors plan may be preview of NC politics ahead

By GARY D. ROBERTSON

RALEIGH, N.C.

State Board of Elections Chairman Larry Leake didn't want to hear about a new U.S. Supreme Court ruling that opens the doors to more direct corporate and union involvement in political campaigns while he weighed evidence whether the North Carolina Association of Realtors broke the law in 2008.

"I am at this moment in time more interested in what North Carolina law says," Leake told an attorney last week arguing over how the Realtors used mandatory member dues to fight tax increases on county land sales. "Help me understand that."

But the phrase "Citizens United" -- a reference to the plaintiff in the landmark Supreme Court case in January -- will be one to which lawyers and campaign finance reform advocates say Leake and other board members must soon respond. They contend the legal methods the association used to spend millions of dollars to influence a tax debate will become more prevalent as more groups flex their political muscles in state elections after the justices' ruling.

"They're having permission in a sense and even encouragement from the Supreme Court to be more politically active and to use their treasury money ... and not just in a referendum but in direct advocacy of candidates," said Bob Hall, executive director of the reform group Democracy North Carolina.

The Citizens United ruling is likely to alter significantly North Carolina and federal campaign because state and U.S. campaign laws had barred corporations, unions and trade associations from using money from their operating funds to produce and run campaign ads to endorse or oppose a candidate.

The Supreme Court struck down those kinds of prohibitions, giving the groups more options than employee-funded political action committees or alternative organizations created under the Internal Revenue Code for political advocacy.

State election officials and the Legislature haven't decided exactly how to respond to these rulings.

"I'm confident that if the General Assembly believes our laws are unconstitutional in any respect they'll take the unconstitutional laws off the books," Leake said.

Leake tried to keep the lid on the Citizens United discussion as board members listened to more than two hours of testimony and arguments. It was a tall order although the complaint by association member Becky Harper had been filed more than a year before the ruling.

She argued the association violated campaign finance laws by forcing her to pay extra dues in July 2008 to replenish the group's "Issues Mobilization Fund" and extend the association's efforts to oppose county referenda to raise the land transfer tax. The extra assessment of up to $70 per member generated $1.8 million, said Michael Weisel, Harper's attorney.

Weisel, former legal counsel to House Co-Speaker Richard Morgan, said the examination of the association's finances is an example of what North Carolina politics could look like as more groups like the Realtors enter.

Weisel pulled out for board members a flow chart -- reminiscent of a Rube Goldberg-style map -- of boxes, lines and arrows explaining how the Realtors helped create nearly 30 different organizations to spend $2.7 million in 2007 and 2008 opposing a land transfer tax.

The 38,000-member association spent more than $1 million to lobby the public and elected officials, Weisel said, citing records filed by the group. Nearly all of it was spent in 2007 while the Legislature debated whether to give counties the authority, with local voter approval, to raise the transfer tax on land transactions from the current 0.2 percent of the land's value to 0.6 percent.

Another $910,000 went to a tax-exempt group called the North Carolina Homeowners Alliance that developed mailers and electronic advertisements in opposition to what the association called the "NC Home Tax." And after the Legislature authorized the proposed tax, the association funneled more than $700,000 to local committees that helped defeat county referenda 20 separate times to increase the tax, according to Weisel's chart.

"This is the face of politics in North Carolina post-the Citizens United case," Weisel said.

The board determined the Realtors group did nothing illegal. But members voted to require reports filed by local referendum groups to be sent to the state board to make it easier for the public to know "whether there is some state or national entity that has taken a great interest in this issue," Leake said.

The Legislature needs to go further so that the public knows how corporations are paying for political activity, said Damon Circosta, executive director of the North Carolina Center for Voter Education. Congress also would have to step in, too, according to Weisel.

"At the very least we need to know where the money is coming from," Circosta said.

John Wallace, the association's attorney, said the level of donor identity on some tax forms filed by nonprofits has expanded in the last two years. The state elections board will likely have to recommend how to monitor groups that have never directly advocated for candidates until now.

"It does pose a real interesting challenge for a group like this board," he said.