A trio of new campaign finance reforms advanced through a South Dakota legislative panel this week, signaling a potential shift in how the state’s elections are funded. With growing concerns over the influence of money in politics, the bills, championed by Senator Michael Rohl, seek to put tighter restrictions on campaign loans and contributions, pushing for greater transparency.
On January 22, 2025, South Dakota’s Senate State Affairs Committee approved three bills designed to address growing concerns over campaign finance loopholes. The proposed legislation, which now heads to the full Senate, aims to restrict how loans are used in campaign funding, impose tighter limits on contributions from inactive committees, and demand more reporting from committees with no active candidates. All three bills were introduced by Senator Michael Rohl, R-Aberdeen.
Addressing the Loophole in Campaign Loans
One of the most talked-about proposals in the package is aimed at closing a significant loophole in the state’s campaign finance laws. Under current law, candidates and political action committees (PACs) can accept unlimited loans to fund their campaigns. This policy, intended to allow candidates to borrow money to finance their campaigns without hitting contribution caps, has raised concerns after being exploited in the recent election cycle.
In 2024, Aberdeen businessman Toby Doeden made headlines when he reported a $100,000 contribution to his own Dakota First Action committee. The donation surpassed the $10,000 limit for individual contributions to PACs in South Dakota. However, Doeden amended his filing to reclassify the donation as a loan, a move that sidestepped the contribution limits and attracted criticism for exploiting a clear gap in the law.
Senator Rohl, who introduced the bill to address this issue, explained that the loophole had effectively rendered the state’s contribution limits meaningless. “Now that this loophole has been exposed, it’s no longer a loophole now,” Rohl remarked during his testimony. “It’s a pathway. Now, every single person in the state knows about it. Every single person in the state can do it, and we, essentially, no longer have campaign finance limits in the state of South Dakota.”
The bill stipulates that any loan made to a campaign, when combined with contributions from the same source, cannot exceed the existing contribution limits. This would close the door on the ability of wealthy donors to circumvent the limits using loans, making it harder for money to flood into South Dakota elections.
The proposal passed in a bipartisan 6-3 vote, though it wasn’t without controversy. Two of the three senators who voted against it—Senators Tom Pischke and Carl Perry—received donations from Doeden’s PAC. Both expressed concerns over the bill’s effectiveness and readiness. “There are a lot of loose ends in what this plan is proposing, and I think it’s just not ready for prime time,” Perry said.
Key Aspects of the Loan Capping Bill:
- Limits the total amount of loans and contributions from the same source to be in line with state contribution caps.
- Ensures transparency by requiring detailed reporting of loans made to campaigns.
Tighter Restrictions for Inactive Committees
Another significant component of the proposed reforms targets inactive political committees—those associated with candidates who are no longer seeking office. Currently, these committees can retain large sums of money and continue making unlimited contributions to active campaigns and committees. The new bill would impose the same contribution limits on inactive committees that are already applied to active candidate committees, closing a potential avenue for money to flow unchecked.
Inactive committees often hold substantial balances long after their associated candidates have left office, leaving room for speculation about how that money is being used. By applying the same limits that govern active campaigns, the bill aims to ensure that these funds don’t provide an unfair advantage to specific candidates or political action committees.
For example, committees that are no longer tied to a political candidate could potentially funnel large amounts of money to super PACs or other political organizations, allowing donors to exert influence long after an election cycle has ended. The new bill would curb this by limiting how much can be transferred, offering more oversight and ensuring that these funds aren’t used to evade existing campaign finance restrictions.
- The bill would apply the same contribution limits to inactive committees as to active ones.
- It is intended to make the campaign finance system more transparent and prevent the misuse of leftover campaign funds.
The Path Forward
While these reforms have made it through a key legislative committee, they still face several hurdles before becoming law. South Dakota’s full Senate must now weigh in on the proposals. The bills will likely stir more debate, particularly from those who believe the restrictions could stifle political speech or unfairly limit campaign fundraising efforts.
Supporters, including Rohl, argue that these reforms are necessary to maintain the integrity of South Dakota’s elections, ensuring that the system remains fair and transparent. Critics, on the other hand, warn that overly strict campaign finance laws could limit the ability of candidates to raise the necessary funds to compete effectively in elections. The outcome of this legislation could have a lasting impact on how South Dakota runs its campaigns, especially in the lead-up to the next election cycle.
The bills’ passage through the committee is just the first step in what promises to be a heated legislative battle. If they pass through the full Senate, they will move to the state’s House of Representatives for further consideration. If enacted, the reforms could reshape the landscape of political fundraising in the state, ensuring that money has less influence over the electoral process.
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