NASHVILLE (MCT) – Wealthy candidates for state and local office could find it more difficult to lend big money to their campaigns and then reimburse themselves later when donors might be more willing to give, under a bill that won state House approval Thursday.
House Bill 1553 by Rep. Bill Dunn, R-Knoxville, passed on a 75-12 vote after a debate in which members differed over whether it might end up hurting or helping "working class" candidates who can't afford to lend their campaign funds big money. The Senate version is still in committee and may face tougher going because there are more affluent members in the upper chamber.
Current Tennessee law – because of a U.S. Supreme Court ruling that says limits on how much of their own money candidates may spend on their own campaigns violates Free Speech constitutional provisions – allows candidates to give their campaigns as much of their personal money as they want, including loans from their personal funds for which they can reimburse themselves as donations from others flow in.
But the bill places a $100,000 limit, per election, on the amount of a candidate's personal money that can be considered a loan to their campaign. They could re-pay themselves up to $100,000, but no more.
Former governor Phil Bredesen loaned his campaign nearly $3 million but wrote almost all of it off. Gov. Bill Haslam sank just under $3.5 million of his personal money into his 2010 campaign, which is still listed as a campaign loan on his campaign financial disclosure.
There may be a loophole, however: Tennessee law allows candidates to reimburse any of their campaign contributors' donations – including themselves – if their campaign fund has surplus revenue. The House did not amend the bill to remove that loophole.
The bill also prohibits candidates from paying themselves interest on money they lend their campaigns. Dunn said that in "some places in the country, candidates are paying themselves 18 percent interest and it's a moneymaking enterprise."
Rep. Brenda Gilmore, D-Nashville, said she believes the bill "would be a hindrance or barrier to working class people running for office because someone with financial means could give themselves over $100,000. But if I had to borrow money, I'd be limited to $100,000 to what I could borrow."
Dunn countered, "I think it would help the person who's less wealthy because someone who has millions and millions of dollars may think twice before they put millions in (to their campaigns) because they know they're not going to get it back."