Iowa's 'magic word' rule allows political groups to keep spending secret

At least two state  lawmakers say they want to update Iowa's so called "magic word" law, which has shielded the financial influence of one of the country's largest political groups as it swept into a small city election predicting it wouldn't be outspent.

National conservative group Americans for Prosperity, backed by the billionaire Koch brothers, and a local group called Citizens for Responsible Growth, have been actively criticizing incumbent candidates as it rails on the city of Coralville's debt and spending.

“It is something, if we can, we ought to tighten that up and require more reporting if they are going to be involved in local races and other issues,” said State Sen. Bob Dvorsky, a Democrat from Coralville.

“They should be subject to as much reporting as regular candidates because they certainly are influencing things, and spending money on things. I think it is something that ought to be dealt with.”

State Sen. Joe Bolkcom, a Democrat from Iowa City, also would like to see changes.

"People ought to know who is writing the checks," Bolkcom said. "They clearly have in mind a view point; they clearly have in mind who they want to win the election. If the Koch brothers are involved in the outcome of the Coralville election, we should know that.

By Thursday afternoon, city council candidates were required to disclose their fundraising and spending. Record financials reported by some candidates may have been topped by AFP. But reports for AFP and Citizens for Responsible Growth were nowhere to be found.

And, they had good reason.

Despite heavy involvement in the race, such as phone calls and mailings, the groups were not required to file a report.

“We are considered a magic word state,” said Megan Tooker, director and legal counsel of the Iowa Ethics Campaign Disclosure Board. “Express advocacy requires you to use explicit words that unambiguously tell people how to vote. Just criticizing someone doesn't rise to the level of express advocacy.”

AFP's communications included one flier titled, “Search Results: One Big Mess,” with photos and names of the three incumbents running, John Lundell, Tom Gill and Bill Hoeft. Residents were directed to call city hall and say "STOP making bad deals with OUR money.

This falls short of the “express advocacy” standard that is law in Iowa, Tooker said. The groups have also avoided disclosure of their financial information by not directly donating or providing services to candidates.

AFP's Iowa director Mark Lucas, who previously predicted the big spending by his group, did not return messages seeking comment.

In some states, a mailing like the one mentioned would be considered electioneering, and thus subject to financial disclosure laws. Half the states in American have some form of electioneering standard, said Ian Vandewalker, counsel in the non-partisan democracy program at the Brennan Center for Justice at NYU School of Law.

Iowa does not have electioneering rules.

Across the state in Des Moines, the National Association of Realtors Fund got involved in the Des Moines City Council race. That group had to disclose it spent $62,200 because it directly supported candidate Chris Diebel.

Vandewalker from the Brennan Center predicts this kind of influence and participation from outside groups will only become more common in local elections.

“These groups know they can swoop into a state race or local race where spending isn't that high and completely overwhelm one side or the other and have a lot more bang for their buck and I think we will be seeing more of that in the future.”

Some candidates in the Coralville race would like to see what they are up against.

"If we have to do that, I believe they have to, too," mayoral candidate David Fesler said. "The expenditures especially need to be out there."