Powerful Union’s PAC Failed to Register as a Political Committee in Maryland

The New York-based political action committee for a health care workers union has given hundreds of thousands of dollars in both cash and indirect campaign help to Maryland candidates without registering with the State Board of Elections, as is required by law, an investigation by Maryland Matters has found.

The PAC for Local 1199 of the Service Employees International Union, based in Manhattan, has filed paperwork with the New York State Board of Elections, but for years has not filed with the Maryland board in Annapolis, despite giving cash donations to campaign committees and paying for election help, such as mailers, here in the state.

Under Maryland law, out-of-state campaign committees are required to register with the State Board of Elections and file campaign finance reports periodically, at least a half-dozen times in an election year, such as 2018. Penalties for failing to register and file reports could easily run to thousands of dollars and involve an investigation by the State Prosecutor’s Office.

On Monday, the 1199SEIU NYS Political Action Fund registered as an out-of-state committee with the Maryland State Board of Elections — after an inquiry to state officials Friday by Maryland Matters about the source of campaign mailers circulating in Baltimore.

 Jared DeMarinis, director of the candidacy and campaign finance division at the State Board of Elections. Photo by Josh Kurtz

Late Tuesday, the union’s New York State (NYS) PAC also filed a campaign finance report in Annapolis – its first in years — for activity between Jan. 1, 2018, and June 10, 2018, the close of the Maryland election board’s most recent reporting period.

The report, however, only showed that on May 29, 2018, the union PAC paid $65,809.35 to Online Printing Associates in Washington, D.C., for mailings.

No other detail about the spending was offered, but presumably that amount includes the cost of four mailers sent out in Baltimore City, all of which were mailed from “1199SEIU United Healthcare Workers East” at its 611 N. Eutaw Street address and “paid for by the 1199SEIU NYS Political Action Fund, Helen Schaub, Treasurer.”

In a statement provided to Maryland Matters on Thursday, Schaub blamed the failure to file the proper records with the Maryland election office on “inadvertent” processing errors, and said the union was moving quickly to rectify the mistake and update its records. She added that the Maryland records would be completely up to date by the next campaign finance reporting deadline in August.

“1199SEIU is committed to transparency,” Schaub said. “All of our mailings properly identified the 1199SEIU NYS Political Action Fund as the payer, and the PAC has reported all of its spending, in Maryland and elsewhere, in its public filings with the New York State Board of Elections.”

Three of the Baltimore mailers, sent to voters in the 43rd District, were clear in their opposition to state Sen. Joan Carter Conway’s re-election bid against Democratic primary challenger Del. Mary L. Washington, though the reasons cited seemed arguable, after closer examination.

A fourth mailer was sent citywide in support of State’s Attorney Marilyn J. Mosby in her fight to retain her seat over Ivan J. Bates, one of her two Democratic primary opponents.

It was not immediately clear why the 1199SEIU United Healthcare Workers East would weigh into an election for the city’s top prosecutor, who ordinarily does not deal with health policy or personnel.

Union PAC officials in New York were not immediately available for comment.

Other similar mailers paid for by the PAC are also being circulated elsewhere in the state, including one against incumbent Sen. Thomas M. “Mac” Middleton (D-Charles), the chairman of the Senate Finance Committee who is running for re-election in District 28, state officials have said.

Jared J. DeMarinis, director of candidacy and campaign finance for the Maryland State Board of Elections, acknowledged that he contacted the 1199SEIU PAC, after Maryland Matters raised questions about what entity was paying for the Baltimore mailers, as the 1199SEIU NYS Political Action Fund did not appear to be registered in the state.

DeMarinis said he did find that the union’s fund was registered in New York state as a political action committee, and that he examined the union’s filings there online.

“They need to amend their reports,” he said. “They’re supposed to be filing a report that shows they’re giving money to all the candidates who are on their [New York] report.”

He pointed out that once contacted, the 1199SEIU PAC registered Monday with the Maryland election board as an out-of-state committee.

“I talked to their lawyer … and he’s going to file the corrected reports,” DeMarinis said. “We’re waiting for all the corrected reports from the campaign … of all the activity of 1199SEIU NYS.”

DeMarinis declined to speculate on what penalties the PAC might be facing or what action the state of Maryland might take.

“Right now, we’re waiting for all the data to come in before we assess our next moves,” he said. “The first step is to make sure the public disclosure element is satisfied … before moving on.”

DeMarinis explained that the PAC did not register in Maryland as an independent expenditure committee, although the mailings – which state clearly they were “not authorized or approved by any candidate” – were independent expenditures. Under the law, independent expenditure committees are prohibited from coordinating their efforts with the candidates or issues they are supporting or opposing.

In Maryland, committees register as one or the other, DeMarinis said, explaining that some committees that are not registered as independent expenditure entities — like the 1199SEIU PAC — do legally pay for occasional independent campaigns, such as the mailings in question. But as a rule, those entities are established to directly support specific candidates with transfers and contributions, as is the case with the 1199SEIU NYS Political Action Fund, he said.

In order for the 1199SEIU PAC’s campaign finance report filed Tuesday to stand, it very likely will have to be amended to include all contributions to Maryland candidates and organizations since at least the first of the year, DeMarinis said.

That number alone could easily run into the hundreds of thousands of dollars.

In just the 12-day period between Jan. 1, 2018, and Jan. 12, 2018 – the end of the New York State Board of Elections’ most recent campaign finance reporting period — the 1199SEIU PAC gave $36,500 to Maryland candidates.

While the PAC’s spending for the first six-and-a-half months of 2018 is still unknown, in the period from Jan. 1, 2014, to June 19, 2014 — the last year there was a Maryland gubernatorial election – it handed out $344,348.10 in cash and services to candidates and organizations here in the state, according to New York campaign finance reports.

The next campaign finance filing deadline for the New York State Board of Elections is July 16, and should include the 1199SEIU NYS Political Action Fund’s contributions and expenditures in Maryland for the period of Jan. 12, 2018 through July 12, 2018.

Maryland records show that 1199SEIU United Healthcare Workers East most recently registered as an out-of-state campaign committee with the state election board on June 8, 2007.

That account was closed Oct. 3, 2016, though it was not immediately clear if any campaign finance reports were filed in Maryland before that date, during the first 22 months of the state’s current four-year election cycle, which began Jan. 1, 2015.

From the time the account was closed on Oct. 3, 2016 to Jan. 12, 2018, the PAC contributed $310,442.51 to Maryland political candidates, organizations and causes, New York election records show.

A robust donor

During Maryland’s current campaign finance cycle, from Jan. 1, 2015, and Jan. 12, 2018, the SEIU PAC gave $495,984.34 to Maryland candidates and to aid state political organizations. Again, that does not include the yet-unreported contributions after Jan. 12, 2018, the last date New York election committees were required to report until next filing deadline, on July 16.

The 1199SEIU NYS Political Action Fund contributed a total of $9,000 to Mary Washington’s campaign committee between 2010 and 2017 and gave a total of $15,000 to Mosby’s campaign between 2014 and 2017, according to New York State Board of Elections files.

Oddly enough, among the PAC’s disbursements last year was a $2,000 contribution to Conway on May 10, 2017, records in New York show.

The mailings aimed at Conway being paid for by the PAC this year, however, urge voters not to re-elect her. They state that the incumbent senator “sponsored a bill to cut taxes for Maryland millionaires,” and that “families can’t count on Joan Carter Conway any longer.”

A mailer being sent out by the PAC of the Service Employees International Union Local 1199, which is based in New York. 

Cited as evidence in the mailings are two pieces of legislation from the 2014 session of the Maryland General Assembly — House Bill 739 and Senate Bill 602, identical bills cross-filed in both houses of the legislature.

The legislation gradually raised to $5.9 million the amount of wealth left behind after death that is exempt from Maryland’s estate tax, in keeping with an earlier federal change that did the same. At the time, the cost to the state by 2019, when fully phased in, was estimated to be $104.7 million a year.

Proponents argued that the estate tax exemption needed to be raised because Maryland’s tax rate was driving wealthier residents to other states to save their heirs from paying more tax; opponents complained that the plan benefited the rich by robbing state coffers of money that could be spent on education and benefits to lower income residents.

Nevertheless, after reviewing the history of the bill, it seemed like a bit of an odd choice as the single issue to use against an opponent.

The primary sponsors of the 2014 estate tax legislation – sought by the GOP long before that election year — were the General Assembly’s presiding officers, Senate President Thomas V. Mike Miller (D-Calvert), and House Speaker Michael E. Busch (D-Anne Arundel).

House Bill 739, the bill that became law, was co-sponsored by 87 other members of the 141-member House of Delegates. Across the hall, Senate Bill 602 was co-sponsored by 34 other senators, including Conway, in the 47-member Senate.

The House passed the legislation, 119-14, with three members not voting and five unexcused absences. The Senate then approved it on a 36-10 vote – Conway voted for it — with one member absent and sent it to Gov. Martin J. O’Malley (D), who signed it into law without any apparent hesitation.

Despite their different votes on the bill, Washington, Conway’s Democratic primary challenger this year, did not seem to have a problem running on the incumbent senator’s ticket in 2014 as one of three candidates for the 43rd District House seats.

Maryland Attorney General Brian E. Frosh (D) was still a senator in 2014 and voted against the bill, yet he endorsed Conway for re-election this year.

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