House Bill Goes After Unanswered Question In Money As Free Speech

Feb 28, 2018

State lawmakers will consider a bill that places a cap on out-of-state money going to ballot question committees.

Under current state law, ballot question committees can receive unlimited donations from parties, persons, and interest groups.

This bill, which came up last year, caps contributions at $100,000 per person or group.

Critics of the bill say it’s unconstitutional and restricts free speech. Supporters say it protects the initiative and referendum process in South Dakota.

Think back to the 2016 presidential election and the laundry list of ballot questions South Dakota voters considered. Whether it was the cap on interest rates for loans, the Marsy’s Law crime victims bill of rights, or the campaign finance reform and ethics package known as IM22, the campaigns both for and even against these ballot measure questions were well funded.

Millions of dollars were spent on those campaigns, and a lot of that money came from interested groups that weren’t necessarily from South Dakota.

Republican State Representative Spencer Gosch is the prime sponsor of House Bill 1216. He says it’s a bill that will quells some of the influence that out-of-state money has on elections in South Dakota.

“Now, if you go back to the state’s origination, the initiated measure process was supposed to be for South Dakotan to combat big money in the legislature," Gosch says. "Well, over the years the legislature has been regulated as to how much money in campaign contributions it can have. I’ve always said the sharks have swam to the easier waters and now they’re going after the initiated measure process.”

The bill caps out of state contributions at $100,000 each, for the first four years an entity is in South Dakota. After that, the contributions from these groups are unlimited.

Representative Gosch says that amount, to him, is something comparable to what a South Dakotan can raise to oppose or support something politically.

“Let’s face it. You come up and you don’t like an idea as a South Dakotan, but somebody from New York is going to spend $12 million. That quiets your voice," Gosch says. "Simply put, that quiets your voice as a South Dakotan. So, if you want to fight something, limiting it to $100,000 to the ballot committees I felt was a reasonable number.”

As for the four years requirement, Gosch says these groups can come into South Dakota for one election cycle, set up shop, stay for the election and then pack up and leave. The rationale behind four years is that shows, at least to the lawmakers proposing the bill, these groups are invested in South Dakota.

If HB 1216 passes, that cap would impact the national group Represent Us, who might want to donate money to the Anti-Corruption amendment coming up in November. Represent Us backed Initiated Measure 22 in 2016. It would not impact Americans For Prosperity South Dakota, since they’ve been registered in the state for more than four years.

Supporters of this bill say it’s an unanswered question in the law. They point to previous US Supreme Court decisions that have ruled international money in domestic elections is unconstitutional, and they’re using that same argument here.

They say that there’s a compelling interest for South Dakota to limit the monetary influence a wealthy person from California or New York may have when it comes to state elections.

There are lawmakers in Pierre who argue this bill will be challenged in court and found unconstitutional.

Republican State Represetnative David Lust says previous argument is "a hollow argument." He says because of the Citizens United case money is considered speech, and in the past the Supreme Court has ruled that caps on money can only be used if the appearance of quid pro quo corruption is potential.

But, Lust says that’s not the case for ballot questions because ballot questions can’t be bribed.

“The Supreme Court has not gone in this direction because they’ve clearly laid down the marker that, unless there is that corruption—that quid pro quo corruption element—that it’s an unconstitutional restriction of speech to prohibit out of state money," Lust says.

So the question that’s unanswered is state sovereignty versus free speech in the form of money.

Lust says he disagrees with it on a free speech principle. He says the presumption for limiting out of state money is that South Dakotans can’t sift through speech.

“That somehow we would be duped by a message coming from somewhere else. So that’s really the heart of the matter, that we as a legislature feel we have to protect South Dakotans from themselves," Lust says. "That is something that is just anathema to my views on South Dakota citizens and my confidence in South Dakota citizens in being able to sift through speech—be it out of state or in state—and make a prudent determination.”

Other observers say it will likely get challenged in court.

This bill failed in the Senate last year.

Anytime legislation gets reintroduced, it generally has a tougher battle the second time around. Last year, the bill passed the house by a 50 to 18 margin. This year the bill barely made it past the house floor. The bill failed initially, but several lawmakers were gone that day. The sponsor asked for a reconsideration of the bill the next day and it passed with the necessary 36 votes from the house.

This bill has a tougher hill to climb in the Senate. It failed last year in committee. Representative Gosch says he hopeful it’ll pass Senate State Affairs. It failed on a three to four vote. Of the nine member committee, two lawmakers were absent last year, Senators Kris Langer and Jenna Netherton.

Even if this bill fails in the State Senate, it’s not the end for banning out of state money for ballot questions.

There’s an almost identical proposal put forth by Speaker of the House Mark Mickelson, ironically in the form of a ballot question in November. The Secretary of State has certified this initiated measure that asks voters this very same question senate state affairs is taking up.