Should NC politicians be banned from paying themselves rent with campaign money?
Should politicians be able to use their campaign donors’ money to pay for a home they already own?
That’s the question the North Carolina State Board of Elections is now weighing, after leaders there previously signed off on such arrangements. Specifically, the potential rule change would ban politicians from using their campaign funds to pay the rent or mortgage of any residence owned by them or a family member.
If state officials do decide to ban such practices, it would appear to be a change aimed one of the most powerful politicians in the state, N.C. Senate leader Phil Berger.
Berger, a Republican from Rockingham County north of Greensboro, has been criticized for using his campaign funds to essentially pay his mortgage on a second home in Raleigh near the legislature, the News & Observer reported last year.
Berger created an LLC that he used to buy a Raleigh townhouse, then used his campaign funds to pay rent to that LLC.
“Unless the State Board of Elections takes action, politicians will continue to profit handsomely by funneling campaign contributions to themselves, directly or indirectly, to pay for inflated expenses and subsidized assets,” said a formal ethics complaint against Berger in 2019.
That complaint was written by Bob Hall, a longtime government watchdog in North Carolina politics. Hall later initiated the process for state officials to change the rules, which is what they’re considering now.
The elections board had a public hearing on the matter Thursday. Around 20 people attended via an online call, although neither Hall nor Berger spoke.
In December Berger sold his townhouse to a lobbyist, turning an $80,000 profit — a deal which state officials also signed off on, The News & Observer reported in February.
The new suggested rule change would not appear to stop such a deal in the future, either. State law does ban lobbyists from giving anything of value to lawmakers. But there exceptions to that rule — including for sex, and for contracts like home sales.
Berger has since bought another Raleigh apartment through his LLC. Campaign finance records from earlier this year show his campaign is still paying his LLC rent for it, at a rate of $1,500 a month.
“The State Board of Elections approved this matter years ago,” said Dylan Watts, a spokesman for the Berger campaign, in an email Thursday. “If the new Board of Elections adopts new rules, the Phil Berger Committee will of course comply with those new rules.”
State officials won’t vote on the rule change until later this year.
In addition to the public hearing on the matter Thursday, people who wish to weigh in can submit written comments through the board of elections website through June 15.
Only two people spoke at Thursday’s hearing, both in favor of the rule change banning such arrangements.
A representative for the group Democracy NC said they support the change. So did Wally White, a Democrat who is running against Berger this fall.
Is rule change strict enough?
White said he doesn’t think the new rule would be strict enough, and that the state should do even more to stop politicians from using their campaign funds on things that might be considered personal expenses.
“Any campaign donations should be used for the public’s well-being,” White said.
The rule change would only affect residential property, not commercial property. That means politicians would be free to continue using campaign money to pay themselves rent for office space.
For example, both Berger and N.C. House Speaker Tim Moore, a Cleveland County Republican, own small law firms and use their campaign funds to pay rent to their businesses.
Recent campaign finance filings show that Moore’s campaign pays his Kings Mountain law firm $1,000 a month in rent.
Berger pays his Eden law firm $1,500 a month in rent, in addition to the $1,500 a month his campaign pays for his Raleigh apartment.
The News & Observer has also reported that Moore, like Berger, had used his campaign funds to pay rent on an apartment he owned in downtown Raleigh. However, more recent campaign finance reports show no rent payments from Moore’s campaign for the apartment — just the payments to his law firm.
Lax campaign finance rules
Even if this rule change does go through, state lawmakers who live outside the Triangle would still be able to use their campaigns to pay for rent or hotel rooms in Raleigh, as long as they aren’t paying that money to themselves or a family member.
Although taxpayers fund a $104-per-day stipend to lawmakers for room and board when they’re in session, many lawmakers supplement that with campaign funds.
That’s just one example of North Carolina’s campaign finance laws being more permissive than the laws for federal candidates like members of Congress, or the president.
In addition to rent payments, federal campaign finance laws ban purchases like clothes or tickets to sporting events that are allowed under state laws. State-level candidates can buy those things with their campaign money as long as it’s connected with either the campaign or their official duties.
A News & Observer investigation in 2018 found many politicians weren’t just using their supporters’ campaign contributions on ads, staffers and other expenses that donors might be thinking of when they make political contributions.
Some contributions have been used to pay for items including a pistol, a $600 bar tab, new suits and dry cleaning. Most of those purchases don’t get lawmakers in trouble, but a former Democratic lawmaker from Winston-Salem, Ed Hanes, had to pay a fine after using his campaign money to go shopping while on a trip to Singapore, among other improper purchases.
And a former Republican lawmaker from Cabarrus County, Fletcher Hartsell, was sentenced to eight months in federal prison in 2017, along with probation in the state court system. He pleaded guilty to using his campaign to pay for more than $200,000 in personal expenses, including speeding fines to tickets to the musical “Jersey Boys.”
This story was originally published April 30, 2020 at 3:20 PM.
