I finally have the commission's explanation of their position, spelled out in a February 6, 2006 memo to Deputy Attorney General Charleen Aina. It seems to me to reflect several fundamental errors.

At the bottom of the first page, the memo says that a corporation "is required to register as a noncandidate committee." True. But the commission assumes that by registering and reporting, the corporation (or union) must necessarily create a separate entity, a noncandidate committee separate from the corporation. This is the crucial assumption because the key to the commission's legal interpretation is that a corporation can't transfer or contribute more than $1,000 to its own noncandidate committee. It is crucial because there is no reference in the statute to a $1,000 limit in contributions from corporations to candidates. It is only the presumed "transfer" from a corporation to its political committee that is arguably restricted by law.

But contrary to the commission's assumption, the statue does not specifically require a corporation to create a legally separate segregated committee, a political action committee, as would be required to participate in federal elections. Some local corporations do this because they want to contribute to federal candidates, and unions follow because they have other applicable provisions of labor law in addition to a desire to back federal candidates. Others have always just had a budget for campaign contributions and written corporate checks to candidates.

There's an issue of logic here. Every separate segregated fund is a noncandidate committee, but not every noncandidate committee is a separate segregated fund. Simple, but the commission or its staff appear to have stumbled over this point.

If the corporation and the registered committee are the same entity, as has often been the case with local corporations, there would be no "transfer" between separate groups to be subject to the $1,000 cap. A budget category or even a bank account is not sufficient to create a separate segregated PAC. In the past, corporations registered themselves as noncandidate committees and then spent their own money for campaign purposes, subject to the regular contribution limits. The commission is now ignoring that this is how the system has worked in the past.

On page 2, the commission makes another major error in its review of the statute's history when it states that the same $1,000 contribution limit applied to corporations prior to 1997. What? If they are claiming that their interpretation simply returns to limits that were in place prior to 1997, that appears to be an error. Anyone who follows politics can tell you the same thing.

And then on page 3 the commission states that in 2005, "the legislature decided to limit the funds available for corporations to contribute and passed Act 203..." This statement appears to be directly contradicted by conference committee report that explicitly states that proposed limits on corporate contributions were removed from the final bill. The legislature did not "decide" to limit corporations, at least according to the official legislative history.

When HB1747 (which became Act 203) went to conference, the bill was amended by "removing the new limitation on contributions or expenditures by banks or corporations" as specifically noted in the conference committee report.

In the long run, all this probably matters little. With a little time to adjust, corporate and union PACs will still be among the deep pockets in politics simply because they can draw on a lot of people for support.

Perhaps this reflects the new executive director at the Campaign Spending Commission, who may have adopted an extreme position in order to get the message out that there's a new sheriff in town. That I can understand. What I don't get is why, when, and how it was decided to make the point by pushing this particularly shaky legal position.