In the closing hours of its session last week, the Maryland General Assembly passed the Campaign Finance Reform Act of 2013 and Governor O’Malley is expected to sign it soon. Even so, the changes do not take effect until after the 2014 state elections.

The final version of the bill is largely unchanged from the initial House-passed version we described previously, meaning that after the 2014 elections, contribution limits will increase, certain business entities will be limited in their giving, pay-to-play reporting will be simplified, and enforcement strengthened.

Continuing the trend we’ve noted of states imposing additional disclosure requirements on independent expenditures, especially by nonprofits, the Maryland bill was amended at the last minute to include the following provisions:

  • IE or EC Donor Disclosure Threshold Decreased. An organization subject to independent expenditure or electioneering communication registration and reporting requirements will have to identify any person making cumulative donations to the organization of $6,000 or more during a reporting period; the original bill required donor disclosure at $10,000 or more. This disclosure is required whether or not the contribution was made for the purpose of furthering independent expenditures or electioneering communications.
  • Tax-exempt Organization Registration and Reporting. Nonprofit organizations exempt under Sections 527, 501(c)(4), and 501(c)(6) of the Internal Revenue Code will be subject to state campaign finance registration and reporting requirements if they make:

    • A donation to a person for the express purpose of causing the person to make an independent expenditure or electioneering communication disbursement in Maryland;
    • A donation to an out-of-state political committee for the express purpose of causing the political committee to make a disbursement in Maryland; or
    • A contribution to a state campaign finance entity for the express purpose of causing the entity to make a disbursement in Maryland. 

These registration and reporting requirements kick in if these donations, contributions, or disbursements reach $6,000 or more in any election cycle. It will be interesting to see how these rules work with respect to an entity that is not incorporated in, or doing business in, Maryland, that contributes to an entity in another state, which then makes any of the disbursements described above.