The 527 factor: It's big in state races, too

While groups such as MoveOn.org, and Swift Boat Veterans for Truth have grabbed national attention with their growing advertising clout in presidential politics, other so-called 527 committees are making their dollars felt in state races across the US.

• In Washington State, a last-minute onslaught of 527-fueled ads appeared to tilt the outcome of one race in the Sept. 14 primary when controversy emerged over ads against one Democratic candidate for attorney general. The committee buying the ads was secretly backed by the US Chamber of Commerce.

• In North Carolina, dueling Republican 527s battled over the state legislature during the primary while the Democratic-backed State Capitol Media Project spent an estimated $600,000 against Republican gubernatorial candidate Patrick Ballantine.

• In Colorado, Americans for Job Security, a Virginia-based Republican 527, hammered Democratic US Senate candidate Ken Salazar's environmental record while, during the primary, Pete Coors was challenged by a committee supporting a rival Republican.

Such groups aren't new, but their importance - and influence - escalated when campaign finance limits were imposed by passage of the McCain- Feingold act. Clamping down on spending and fundraising by candidates and political committees sent the money oozing in other directions.

Named for the section of the tax code that gives them tax-exempt status, 527s have no contribution or spending limits. More important, 527 contributions do not count against an individual's limit per campaign cycle. Thus, a contributor who is allowed to give only $95,000 to candidates and political committees during the biennial election cycle can donate millions to 527s à la George Soros.

A recent federal court ruling, however, has added uncertainty to the labyrinth of campaign finance law. Earlier this week, US District Judge Colleen Kollar-Kotelly rejected 15 Federal Election Commission rules, including one governing the direction and solicitation of 527 funds, that had been used to resolve questions arising from McCain-Feingold. The FEC can appeal the ruling. For now, though, it's business as usual.

More than 60 of the 300-plus committees registered with the IRS as 527s describe their mission as state activity, according to Derek Willis of the Center for Public Integrity in Washington. They raised $56 million through June 30, the end of the last filing cycle.

Moreover, the number of committees is growing weekly. The amount they've raised and spent is expected to be much larger when they next file on Oct. 15.

"Here's the whole irony of McCain-Feingold," says Stephen Moore, co-founder of the Club for Growth, a Washington group dedicated to electing Reaganite Republicans. "They didn't even understand their own law made 527s more powerful, not less powerful."

The Club for Growth's 527 will spend at least $5 million on campaigns at the state level between now and Nov. 2, focusing on Senate races in Oklahoma and South Carolina, House races in Texas, and other spots where Mr. Moore sees a chance to make an impact.

That's not to say it is easy. Federal campaign laws apply on the presidential and congressional levels - for instance, corporate and labor-union contributions can't be used for ads that mention a candidate 60 days before the election. Each state, however, has its own regulations.

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