Two candidates for governor can take unlimited donations. One can’t.

A little-noticed provision in a 2015 law is allowing deep-pocketed donors to make unlimited contributions that are being funneled into the two leading campaigns for governor, finance records show.

Gov. Roy Cooper and Lt. Gov. Dan Forest have benefited from “Council of State affiliated party committees,” which allows them to solicit and accept donations of any size in collaboration with other statewide elected office holders from their party.

The money is then used to purchase core services such as advertising and consultants for the contenders’ main campaign organizations. It’s an advantage that the third candidate in the race — Rep. Holly Grange, R-New Hanover — doesn’t have because all of her supporters are limited to the $5,400 maximum contribution.

While the committees have been allowed since 2015, Council of State Democrats led by Cooper didn’t form the N.C. Democratic Leadership Committee until January of this year. Since then, it has raised $1.18 million, of which $186,735 has gone to Cooper’s campaign to cover expenses such as office rent, research and fundraising consultants, finance reports show.

So far, the committee hasn’t spent any money toward re-electing the three other Democrats on the Council of State, but committee treasurer Scott Falmlen told the Insider that “between now and November 2020 I am confident the committee will undertake numerous activities benefiting all of the Democratic slate of Council of State candidates.”

The money has come from about 20 donors, including $500,000 from SAS Institute co-founder John Sall and his wife, Virginia; $200,000 from former Morgan Stanley and Credit Suisse CEO John Mack of New York City and his wife, Christy; $150,000 from billionaire New York real-estate heiress Amy Goldman Fowler; $70,000 from Red Hat founder Bob Young; $50,000 from Bloomberg board chairman Peter Grauer of New York; and $10,000 from Loews Hotels CEO Jonathan Tisch of New York. About half of the donors live outside North Carolina.

Council of State Republicans, led by Forest, have raised $1.62 million for the N.C. Republican Council of State Committee since it was created in 2017.

Most of that money came from Durham businessman Greg Lindberg, who gave $1.42 million in 2017 and is now charged with trying to bribe the state’s insurance commissioner. The committee received a single $1,000 contribution in the first half of this year, and records show Lindberg’s donation continues to fund its operations, which included $136,000 in support this year for Forest’s campaign. That money provided Forest with campaign mailers, Facebook advertising and office space.

The committee chipped in $1,500 for Superintendent of Public Instruction Mark Johnson’s campaign and $1,200 for Labor Commissioner Cherie Berry’s campaign. Berry is not seeking re-election next year, and Johnson has not announced if he’s running again.

Asked about the continued use of Lindberg’s money — which some have suggested should be returned — committee director Ian Richardson said in an email that he has “no further comment on the legal expenditure of funds from a legal contribution.”

The Council of State affiliated party committees were part of a 2015 law that allowed legislative leaders from each party to set up their own caucus campaign groups separate from the state Democratic and Republican party organizations. The new type of committees essentially function under the same rules as political parties, including allowing for unlimited contributions.

The idea stemmed from a dispute between GOP lawmakers and then-NCGOP chairman Hasan Harnett, who was unpopular with many prominent Republicans. Legislators wanted the option to separate their fundraising operations from the party, but Harnett was ousted from his leadership role shortly after the law was passed.

So legislative leaders have made little use of their affiliated committees, instead largely keeping the traditional model of fundraising through the party. The Republican Senate Leadership Committee, for example, hasn’t received or spent money since 2016.

But the emergence of the Council of State committees as a key player in 2020 has renewed concerns about the law. Longtime campaign finance watchdog Bob Hall called it a “troubling” mechanism to avoid the $5,400-per-person contribution limit.

“It does orient the campaigns toward the super-rich and the megadonors,” Hall said. “It distorts the ways that policies get enacted often, because (politicians) are thinking ‘who’s paying the bill.’ The two parties tend to not object to having more vehicles to get more money in, but the ordinary public — we’re the ones who suffer.”

Hall explained that the new committees differ from the political parties, because large donors to parties can’t legally designate which campaigns they want their money to support. But while the parties are involved in dozens of races, the Council of State committees are led by Forest and Cooper, and so far most of the donations have gone to support them.

It’s unclear which other Council of State members are actively involved in committee decision-making. Asked if Cooper makes all decisions or if others play a role, Falmlen said “by statute, Gov. Cooper is the leader of the committee.”

For the Republican group, “Lt. Gov. Forest is the chair of the committee, but he is not the sole decision maker. Other Republicans have been and are involved in the committee,” Richardson said in an email. The law requires the committees to have by-laws, but both Richardson and Falmlen declined to provide them to the Insider, saying the documents are not public records.

This story was originally published August 27, 2019 at 6:00 AM with the headline "Two candidates for governor can take unlimited donations. One can’t.."