A new Tennessee law not only brings the state into line with a U.S. Supreme Court campaign finance ruling, but goes a step further by allowing businesses to give donations directly to candidates.
Gov. Bill Haslam signed the bill into law on Wednesday. He told reporters earlier that he did not take a position on the bill sponsored by fellow Republican lawmakers that gave businesses the same contribution abilities as political action committees.
"I know the argument would be if unions and PACs and others give, why can't corporations give at that same limit?" he said. "I was fine if that happened or didn't happen, to be honest with you, as long as that limit is in place."
Under the state's previous law, most businesses were limited to running PACs funded through voluntary contributions from employees. Limited partnerships were allowed to make donations, but did not make significant portion of contributions to candidates.
An Associated Press analysis of campaign finance records shows that state candidates received about $41 million in donations during in the 2009-2010 campaign cycle. Individual donors gave $28 million, or 68 percent, while PACs accounted for $9.6 million, or 24 percent. Candidates and businesses both gave less than $2 million, or 4 percent each.
Tennessee was among 24 states that had laws on the books limiting or banning corporate contributions that could conflict with the Supreme Court's ruling last year in the landmark Citizens United case that it was unconstitutional to ban businesses from funding campaign activities by independent groups.
But the high court in the decision did not overturn the federal ban on direct corporate contributions to candidates, meaning states could keep those prohibitions in place.
While several states have enacted new laws on independent expenditures, Tennessee alone in opening the doors to direct corporate contributions to candidates, said Jenny Bowser, an elections analyst with the National Conference of State Legislatures.
Fred Wertheimer, president of Washington-based Democracy 21, a group that supports campaign finance reform, said he is troubled by the move to give more political influence to private businesses in Tennessee.
"As a general proposition, corporations should not be using shareholders' money to pay for campaign contributions," he said. "There are all kinds of dangers involved in corporate contributions, which is why we ended up with the (federal) corporate ban in 1907 in the first place."
Republican state Rep. Glen Casada of Franklin, a main sponsor of the legislation, said he equates campaign cash with free speech.
"It takes money to get information out," he said. "The more information you can get out to voters, the better they can make their mind up on who they want to support."
Casada argued that the measure also puts the corporations under the same rules that apply to labor unions. Wertheimer called it "absurd" to compare the clout of businesses to labor unions.
"If you look at the trillions of dollars in assets that corporations have available in their treasuries, versus the money that labor unions have, that's just an argument without any validity," Wertheimer said.
Unions accounted for just 5 percent of all campaign contributions during the 2007-2008 campaign cycle in Tennessee, according to an analysis by the National Institute on Money in State Politics.
House Democratic Caucus Leader Mike Turner of Nashville said the corporate contributions law taken in concert with other GOP-led efforts to curb the influence of teachers and trial lawyers illustrate Republicans aims to deprive Democrats of their financial base.
"It's a concerted effort to de-fund the Democrats," Turner said. "I think they're trying to be a one-party state."
Erik Schelzig can be reached at http://twitter.com/SchelzigAP