The difference between ‘old’ and ‘new’ campaign money, and what it means for November

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Eric J. Shelton, Mississippi Today/ Report for America

Mississippi Attorney General Jim Hood, left, and Lt. Gov. Tate Reeves speak during the Neshoba County Fair Wednesday, August 1, 2018.

Both leading candidates for governor, Republican Lt. Gov. Tate Reeves and Democratic Attorney General Jim Hood, have thus far tried to save the campaign funds they raised before January 2018 – funds they could take home with them if they are not successful in their campaigns this year.

Even as Reeves has spent $3.1 million on his campaign for governor this year, the cash in the J. Tate Reeves campaign committee has increased $46,097 to $5.29 million.

As of the last campaign finance report filed July 10 with the Secretary of State’s office, he is making no campaign expenditures from the J. Tate Reeves account. Instead, he is raising money – $3.6 million thus far this year – depositing the money with the Tate For Governor committee and making campaign expenditures from that account.

The $5.29 million in the J. Tate Reeves committee was raised prior to January 2018 – and that is an important distinction.

In the 2017 session, legislation was passed to prevent politicians from spending campaign funds on personal expenses. Investigations found the money was being spent on clothes, boots and other personal items and, when politicians left office, they could take the cash in the account with them.

The new law went into effect in January 2018 with the caveat that no prohibition would be placed on how funds raised before January 2018 could be spent.

The loophole did not mean that funds would be spent on a first in, first out basis. In other words, if a politician had $100,000 in his campaign war chest before January 2018, the new law did not mean once the politician spent $100,000 on his campaign that the money that could be directed toward personal expenses would be gone.

No. What politicians have been doing this election cycle is establishing separate accounts of money – old money and new money. The politicians – nearly all of them – have been spending their new money first and preserving the funds that could be used for personal expenses.

Reeves, who has by far the most old money, is not only saving his old money, but also increasing it through investing.

During the current calendar year, the J. Tate Reeves committee has made $57,297.25 in investment earnings and has paid $10,617 in taxes, according to the campaign finance forms filed with the Secretary of State’s office.

The campaign finance forms show that the investment earnings originated from the address for investment firm Coker & Palmer, where Reeves’ wife, Elee, is a financial adviser, according to the firm’s web site.

Parker Briden, a spokesperson for the Reeves campaign, said in reality the lieutenant governor, who is a financial analyst, makes the decisions on the investments and that the firm does not receive a commission.

“This is the proper way to handle an investment,” he said. “This activity has been disclosed for years and is in full compliance with Mississippi ethics guidelines.”

Indeed, there is no prohibition on investing campaign funds in state law. Many campaigns attempt to earn interest on their political contributions, but few have accounts as large as Reeves, generating as much in earnings as has the lieutenant governor’s account.

Hood has $629,224 in so-called old money that can be used for any purpose. He also is spending money raised after January 2018 first. He has spent $867,827 as of the last report, released on July 10.

His campaign said the old money will be spent before the campaign ends.

“Jim Hood is focused on earning the support of Mississippi voters to become the next governor,” the statement said. “To keep pace with the millions of dollars in corporate kickbacks taken by Tate Reeves, our campaign is prepared to use all available campaign funds to achieve that goal.”

Briden said that upcoming campaign finance reports also will show that the Reeves campaign will be using the old money. The next campaign finance report filing is due July 30.

“Our next report will show that this money is being spent on the 2019 election and we will need it all, and more, to stop Washington liberals from putting Jim Hood in the governor’s office,” Briden said.

Briden also said, “On the subject of money raised under the old law, this would be a great opportunity for Mississippi Today to ask Jim Hood the hard questions about personal use of his campaign money. It’s long past time.”

Before the law changed, the Clarion Ledger reported Hood reported about $268,000 in non-itemized credit card spending. The campaign has said that Hood complied with the law as it was written at the time and is now adhering to the new law. Now all credit card spending must be itemized.

The Hood campaign continues to make monthly payments of $804 from the old money fund for a truck that Hood uses for campaigning.