Who Runs Philly Part 14: How Independent Expenditure PACs like Phila. 3.0 make campaign contribution limits irrelevant

Who Runs Philly? is an ongoing project from Philly Power Research focused on highlighting the powerful people, organizations, businesses, and interest groups that shape Philadelphia. This week, we are looking at Independent Expenditure Political Action Committees (PACs), which can raise and spend unlimited sums of money as long as their political spending is not coordinated with candidates’ campaigns.

Philly For Growth-funded ad featuring talking baby supporting City Council At-Large candidates

While building our campaign finance tools this year, we became more and more aware that our data was missing one crucial piece of the picture. Most of our tools only include contributions made directly to candidates’ campaigns, while excluding money donated to what are known in PA as “Independent Expenditure Committees” (sometimes referred to as “Super PACs” in federal elections), such as the Philadelphia 3.0 PAC.

Philadelphia 3.0 PAC spent more money supporting Jamie Gauthier’s successful campaign for City Council District 3 (West Philly) than either Gauthier or her opponent Jannie Blackwell’s campaigns spent themselves. Meanwhile, Philly for Growth PAC collected hundreds of thousands of dollars from real estate developers including OCF Realty and Leonidas Addimando to run TV commercials supporting their favored City Council At-Large candidates.

Additionally, the nonprofit trade association American Beverage Association spent over a million dollars to campaign against the soda tax, pouring money especially into the Council District 7 (Kensington/Frankford) race. On the other side of the soda tax debate, Super PACs funded by unions and Michael Bloomberg spent over a million dollars on ads supporting Mayor Kenney.

What is Different about These PACs?

Since 2003, Philadelphia has actually had relatively low limits on direct contributions to municipal candidate campaigns. In a normal year, an individual can give no more than $3,000 to any candidate, while a Political Action Committee (PAC) can give no more than $12,000. PACs may be funded by businesses, union members, or other individual donors. These limits do not apply when candidates donate to their own campaigns, and if any candidate gives more than $250,000 to their own campaign (as Allan Domb did this year), then these limits double for everyone else running for the same office.

However, Independent Expenditure PACs are able to raise and spend unlimited amounts of money on political communications, as long as their spending is not (officially) coordinated with candidates’ campaigns. If you live in West Philly and received a flood of mailings in support of Gauthier, you may have noticed that many of them stated “Paid for by Philadelphia 3.0. Not authorized by any candidate or candidate’s committee.” Wealthy donors can use these types of PACs to get around the contribution limits for direct donations to campaigns and still dump huge amounts of money into influencing election results.

The involvement of Independent Expenditure PACs in local politics is relatively new. These types of PACs emerged as a result of the 2010 Supreme Court decisions in Citizens United v. FEC and SpeechNOW.org v. FEC, which opened the door for independent expenditures-only committees to raise and spend unlimited amounts of money from individuals, corporations, nonprofits, or unions. The 2015 election was the first time they started making a major impact in local Philly elections, although in 2011 an Independent Expenditures Committee connected with electricians’ union leader John Dougherty spent tens of thousands on attacks against Council candidate David Oh.

Evolving Strategies

Analysis of the past few elections suggests that wealthy donors are working out how to best use Independent Expenditure PACs to get the results they want at the local level.

In 2015, super PACs spent more money on the mayoral primary than all of the candidates combined. Additionally, newly-formed Philadelphia 3.0 PAC spent half a million dollars that year attacking incumbent City Council members and supporting their endorsed slate of candidates - although only 2 out of 6 were elected (Derek Green and Maria Quiñones-Sánchez).

In the 2017 District Attorney race, the Philadelphia Justice & Public Safety super PAC funded by George Soros spent $1.45 million supporting Larry Krasner’s winning campaign, while the Build a Better PA PAC spent about $250,000 from labor unions supporting Jack O’Neill.

What was new this year was how Philadelphia 3.0 PAC and the American Beverage Association focused most of their money on specific City Council District candidates.

We know that Philadelphia 3.0 PAC has spent at least $504,000 on political communications so far this year (these totals may still rise after the Cycle 3 campaign finance reports are submitted, due June 20). At least $300,000 of this money was specifically listed as supporting Gauthier in reports submitted during the last two weeks of the campaign (compare this to $169,425 spent by Gauthier and $78,459 spent by Blackwell from 1/1/19 to 5/6/19).

The rest of the spending by Phila. 3.0 does not specify which candidate it was supporting. But given that Phila. 3.0-funded pro-Gauthier mailings and social media ads started appearing earlier in the year and were showing up nearly daily at many homes across West Philly, it seems fair to assume that a large portion of the remaining $200,000 was also spent supporting Gauthier and circulating “West Philly Issue Reports.” The issue reports did not mention Gauthier by name, but primed voters on issues that 3.0 later focused on in their pro-Gauthier materials.

A “West Philly Issue Report” mailing funded by Philadelphia 3.0 PAC

The American Beverage Association used a similar strategy of independent expenditures to avoid contribution limits. The ABA spent money that it collected from soda and energy drink companies to promote a wide range of City Council candidates who came out against the soda tax. However, they targeted the vast majority of their City Council spending ($631,390) in support of Quiñones-Sánchez in District 7, who ended up barely defeating Angel Cruz by 485 votes. Quiñones-Sánchez has been one of the strongest opponents of the soda tax in City Council and introduced a bill for its repeal.

From a strategic perspective, it seems to make some sense for an Independent Expenditure PAC to focus on a City Council District race rather than the Council At-Large race. To get nominated in the crowded Democratic Council At-Large race this year, it took about 42,000 votes to come in the top five. In District 3, on the other hand, even with unusually high turnout, it only took about 12,000 votes to come out on top. Quiñones-Sánchez won in District 7 while only receiving 6,070 total votes. With fewer voters to sway, less money may be needed to have an impact.

Also, in the At-Large race, most years (and this year in particular) there have been far more candidates running compared to in the District races. This year, 28 people were on the ballot for the Democratic nomination for Council At-Large, compared to just two people in District 3 and District 7. The large number of candidates in the At-Large race can make things less predictable, cause ballot position to have a larger effect, and complicate the strategies involved with attempting to boost any particular candidate(s).

Although Philadelphia 3.0 played less of a role in the Council At-Large race this year, two of the three candidates they endorsed won their primary election. Three of four candidates supported by Philly for Growth won.

List of Philadelphia City Council candidates who received support from Independent Expenditure PACs in 2019

What Does It All Mean?

As demonstrated in the mayoral race, Independent Expenditure PACs can represent diverse and sometimes competing interests. But in general, they represent ways for individuals or organizations with huge amounts of money to channel these funds into support for candidates or agendas, while bypassing local campaign contribution limits.

Looking at the spending and vote totals this year, it seems reasonable to conclude that independent expenditures likely helped a few candidates win who may not have done so otherwise, including Jamie Gauthier and Maria Quiñones-Sánchez in the Council District races. These expenditures probably also played at least some role in helping boost Domb, Green, and Gilmore Richardson into the top five in the At-Large race. Regardless of one’s views on these particular candidates, the involvement of unlimited political spending represents a threat to democracy. It can result in greater inequality between candidates’ outreach and marketing resources and also raises questions about whether these candidates will be beholden to the interests which provided their campaigns with a major financial advantage.

Check back here for our Independent Expenditures PAC Part 2 blog post in which we will take a closer look at specifically which people and companies supplied the money funding these PACs’ spending this year. We will also explore some of the possible steps that could be taken to reduce the power of Independent Expenditure PACs locally.