Pat Welle Helps Us Find Who is Contributing to Local Campaigns and Where the Money Goes

Sep 30, 2020

The following is a conversation with economist Pat Welle as part of our Vote 2020 series. Pat has talked with local candidates who have made filing errors on their campaign finance reports, and takes a positive and proactive approach to improving public disclosure. He talked with Maggie Montgomery and Dan Houg about "red flags" in campaign finance reports, how everyday citizens can take a look at the reports, and how campaign finance laws are (and aren't) enforced.

Maggie Montgomery (with Dan Houg):

It's already election time in Minnesota, and many of us are going to go to the polls on November 3rd. But many of us are also voting by mail right now, or voting early in person at our county election offices. What you may not know is that candidates for public office have to file reports that disclose how much money is coming into their campaigns and how that money is being spent. And those reports show us who is helping get a candidate elected. So on the phone to tell us more is Pat Welle. Pat is emeritus professor of economics and environmental studies at Bemidji State. And I believe Pat, you said you were also a former campaign treasurer, is that correct?

Pat Welle:

That is true. I was a party unit treasurer back in the late eighties after I finished my PhD. And then I worked as treasurer for a number of candidates that I believed in up into the early two thousands. I haven't done it for a while, but I have that treasurer's experience

Maggie Montgomery:

We do want to get to the nuts and bolts - but what drew you into this topic besides that experience? Why is this important?

Pat Welle:

Well, part of that experience actually is that it's volunteer work and it's often thankless, and it gets kind of difficult if people are assuming the worst and being adversarial. That can put treasurers in a bad position. So that's part of my own sensitivity in needing people to be civically engaged as volunteers. Let's make it as good for them as possible. But also, kind of on an academic level as an applied public policy economist, thinking about how different sectors work. Economists tend to focus so much on spending in the marketplace, but from my area - especially looking at environmental economics - the involvement of the public sector and the not-for-profit sectors determine outcomes as well. So kind of a fascination with the rules and being really concerned about dysfunction at the federal level, with the sheer magnitude of money. And the rules about corporations being citizens and Citizens United saying campaign funding is free speech. I really am concerned a lot about the rules, and incentivizing candidates to be so obsessed with money at the federal level, to look at the local level and the state level and see that things are different. And also with Bemidji we've had some, well, we had substantial violations in 2018. Just talking to friends and people in the community whose opinions I think are really important to see that, you know, there's some lack of confidence and resentment about some of the things that have happened to pass. So to try to just get involved; look at it and take a civic minded approach and a respect for candidates and try to just raise a level of information.

Maggie Montgomery:

Yeah, there were some irregularities, I guess, in the Bemidji election and that created some bad will. So your approach is more in knowing that so many campaign treasurers are volunteers and trying to be more of a problem solver than negative.

Pat Welle:

Right. Again, at sort of on an intellectual level, I wanted to learn more and kind of update from what I knew back when I was a treasurer (and those were for state offices) to see, if there were irregularities, to sort of take a constructive approach and try. And so far it's been successful just to in a nonthreatening way say, ‘here's some questions about your report and I'm not sure how it really fits the rules, but, you know, can we talk about it?’ And that's been my approach, to hopefully have the record be more complete and consistent. And it's not to say there's not a role for people to file complaints, which is a public service, and that was a public service provided by a couple of individuals who filed the complaints in 2018. But I'm at a level of just trying to sort out how we can have more complete and consistent records. That's not the approach I'm taking - to ultimately want to file complaints.

But I had good conversations. I've been talking to public officials as well as the candidates, and there are some different interpretations. Everyone can go to their county or city websites to find these campaign finance reports. And I think it's educational. Probably the most important thing as you start it is just for us to be better informed about who is contributing. And you know, we're likely with local elections to know these people who are contributing, and we can make up our own minds from what we know about contributors, whether that's a positive, negative or neutral reference on the candidates themselves.

Dan Houg:

Can you actually tell who's contributing or is that so obscured in names and entities that it's like, ‘I don't know what this is.’

Pat Welle:

Well, there again at the federal level there's a lot of things that trouble me about how the money is spent and the whole role of PACS - political action committees - and so forth. But the state… there's two state laws. One refers to state legislative and constitutional and judicial elections, and there’s a separate law that refers to county, city, school district, soil and water conservation district elections. There are different rules. But yes, at the local level where I've been focusing, just trying to review reports and having some conversations, any contribution a hundred dollars or more has to be listed in the report with a maximum of $600 in an election year. So yeah, you can go right there for candidates that are going to be on your ballot and you can see where the money's coming from.

Maggie Montgomery:

Well, you're talking about these two levels of law. One is for state offices, but you said that the Minnesota Campaign Finance and Public Disclosure Board does not enforce campaign finance laws at the county, city, school board, and you also said one other level. Who enforces the local laws?

Pat Welle:

The city and county attorneys, ultimately, as I understand the way the law reads, and I've been referred to some of them try to get answers to my questions. But ultimately, in practice, I talked to a local official who noted that the Campaign Finance Board, which is at the state level, does get linked to the county and city webpages that have these reports. But they don't take it upon themselves - and I'm not even sure how proactive they are in trying to deal with violations or apparent irregularities for state candidates - but they essentially wash their hands for cities, because some cities actually have their own separate laws, different from the statewide law that applies to cities and counties. So that might be part of why they sort of have a hands off approach.

But ultimately the answer to your question is, it's vigilant citizens that are expected to file complaints if they think there's a violation. And at the state level, I think that's probably operationally more effective because you've got partisan motivations for people to keep their opponents honest. But with nonpartisan local elections, essentially what I've been able to determine - and talking to others who are concerned about this - it's citizens that have to monitor it and try to address if unfair things are going on.

Maggie Montgomery:

How do you know that? I mean, by looking at the report. What are some of the red flags you might see that might make you think that something isn't right?

Pat Welle:

Well frankly it's sort of difficult in the sense that, again, I've learned that there's enough that’s subject to misinterpretation and some of the ways the manual reads and so forth, they have different passages and different parts of a 68-page manual. But you'll find it's common that there's way more money being spent than what is listed as contributions. And the leakage there is that at local levels - again, we're talking about dollar figures, and part of the relief to me as a social scientist being so upset about the obscene monies at the federal level - local campaigns don't even have to file if they don't have contributions or disbursements in excess of $750. So we're talking about some pretty low absolute magnitudes here. But you'll find that, you know, let's say a candidate has $1500 in disbursements, but they only show $500 in contributions.

And a lot of those aren't at the hundred dollar level where they even have to report the individuals. But if you have $500 in income, but you spent $1,500 on disbursements, you wonder where, you know, how do you reconcile those numbers? And the reality is there's a lot of leakage because candidates have different interpretations of whether they have to account for their own contributions to their own campaigns. And that's something I would encourage listeners to check on. Just if one thing you want to look at, it is valuable to know, you know, who are the contributors. But there's this sort of void there about many reports that don't explicitly say, this is what the candidate contributed of their own money.

I talked to a state official earlier this week…I guess maybe it was the end of last week. But anyway, the answer I got was, for the state it's very clear in the law that a candidate has to treat themselves as an individual contributor. So they have to list their own, and they can do loans, but they have to be paid back through other people's contributions. With this city and county level there's a lot of inconsistency about how the candidates’ own contributions are treated. And I don't want to represent myself as  knowing the answers, but I haven't been able to even get a definitive answer from the questions I've asked locally.

Maggie Montgomery:

What you're saying is that if a local candidate wants to spend, say, $10,000 of their own money, it's unclear whether that exceeds the $600 limit on most contributions because they're spending it on themselves.

Pat Welle:

That's one way to say it. Yep. I would say unclear. I imagine there is a definitive legal answer. I've been more just talking to people. Haven't gotten one. And I know from talking, frankly again, in a nonthreatening way, with candidates, that there's different answers they're getting from trying to consult the experts. So they're behaving differently. But it is true, and again getting back to my talking to people, or just concern for this fundamental level of local democracy that questions are raised. And I'd encourage the listeners to think philosophically about your own ethics about good elections. Is someone spending low five figures to get elected to an office that pays low five figures? You know, wondering, is that really a strong expression of their commitment to democracy? That's again, the way I would tend to give the benefit of the doubt, but you know, there is skepticism of, you know, what do you plan to do with this power if that's what you're doing?

Maggie Montgomery:

We are talking with economists Pat Welle. So you're saying that the reports can tell us who is putting the money in, but not necessarily why.

Pat Welle: Right.

Dan Houg:

Can the public look at these reports, or do you have a special inside track or do you have to file to have some sort of clearance? How does someone besides yourself look at these numbers?

Pat Welle:

Well, that's another reason where I continue my pride in being a Minnesotan is our reputation for high voter participation. Myself as an applied economist, having been a part of a variety of policy hearings, and the way we do our public hearings, for example, we really do, in Minnesota, have some excellent institutions set up to have transparency and full disclosure. So, by law, you have for state offices…I encourage people to go to the Campaign Finance and Public Disclosure Board website; they have a very nice website. Under elections they have a box that comes up, but if you want to know your state senate candidates and their reports, you can just click on a box, put in the Senate district number, and it's just amazing how much information comes up.

Each county and municipality has their own. In the case of Beltrami County, where I've been looking, you have the auditor/treasurer's office web page, and right there you have the campaign finance reports. The City of Bemidji, under the city clerk's administration, you have an elections web page. So all those reports are linked there, and you just click on the links and there are the official reports. In the case of the state, they come up as computer electronic files being submitted. At the city level, with things a lot less formal, there's often a PDF of just a printed page that someone had and maybe wrote in their own handwriting, the answers to their questions.

Maggie Montgomery:

So as an economist, Pat, I'm sure you look at the bigger implications of all of this stuff. What does it mean for all of us when big money becomes a concern in local elections?

Pat Welle:

Yeah, you know, I don't know. I guess as a social scientist, again, I tend to think of this pretty broadly, maybe more than some other economists that are much more market oriented. Again, I think at the federal level, we have this horrible dysfunction that comes down to - when you look at the incentives for how legislators spend their time, their need to try to raise money and often from big money sources - if not a toxic effect in reality, it certainly undermines the confidence of people. And I think in Bemidji, for example, we have always, you know, attention. I'm, myself, as an economist, I'm a big advocate of main street businesses. I don't encourage people to be suspicious of any kind of business contributions, but there is that tension about, you know, are people who are more powerful economically trying to get the upper hand because they have money to throw around?

I would note that for Minnesota, again, it's really important that explicitly in the laws, it prohibits corporate donations. If a business is not incorporated, it's my understanding that the law doesn't prohibit that. But I think in appearance, again philosophically - how people look at this - I think it's a lot better for just the owner of a business to contribute as an individual than it is to use their business name. But if it's an incorporated business it's prohibited to contribute. But that's part of the tension again, sort of philosophical aspects that enter in is, how sensitive are we to people who have more money contribute more to these campaigns and how much of it is for the common good, and how much of it is hoping that the political power that comes from it will somehow provide an upper hand.

Maggie Montgomery:

Pat, I appreciate your taking the time to talk with us today. Thank you so much for joining us.

Pat Welle:

My pleasure. Thank you.

Maggie Montgomery:

That's economist Pat Welly, and this conversation is part of our vote 2020 Project, from Northern Community Radio.