Today, S&M Brands has practically bankrolled the drive to return Morgan and his supporters to the legislature.
S&M contributed $100,000 to a nonprofit political group Morgan formed that promotes his leadership and disparages his opponents. That contribution is nearly two-thirds of the $160,200 the N.C. Republican Main Street Committee raised between April 1 and June 30, according to its quarterly financial report filed Thursday.
Chris Heagarty, executive director of the nonpartisan N.C. Center for Voter Education, said the contribution feeds voters’ cynicism about political leaders being co-opted by big-money special interests.
“The average donor in Speaker Morgan’s district can’t compete with that kind of money, and so that leads people to question who our leaders are listening to,” Heagarty said. “It doesn’t take a rocket scientist to come up with the theory that something may be suspicious.”
Morgan, who faces a Republican challenger in Tuesday’s primary, said Friday that he wasn’t aware of the contribution and it had nothing to do with his assisting the small tobacco companies. He said he put a stop to legislation that arbitrarily assisted the big tobacco companies.
Everett Gee, S&M Brands’ corporate counsel, said the company appreciated Morgan’s effort to quash the bill. But Gee said it had nothing to do with the company’s $100,000 donation April 29.
“Absolutely not,” Gee said Friday. “Our company is very politically active, and traditionally we’ve been involved in Republican politics as far as individual family members. So it’s nothing unusual for us to support good conservative candidates.”
Last month, Morgan’s foes formed a nonprofit group of their own, the Republican Legislative Majority of North Carolina, which raised $200,000 from just one source: Variety Stores of Henderson. The company is a subsidiary of Variety Wholesale of Raleigh, and its president, Art Pope, is a former state representative and a Morgan foe.
“We have no legislation of interest pending before the General Assembly beyond the same interests that most citizens have — lower taxation, good government and sound budgets,” Pope said.
The committee has spent more than $100,000 on radio ads against Morgan and his allies.
Morgan’s Main Street committee has spent more than $135,000 on radio ads. Paul Shumaker, a political consultant to Morgan, said the ads promote the House Republican leadership and contest claims by Morgan’s foes that he and his supporters raised taxes.
S&M Brands of Keysville, Va., is one of several small cigarette makers that stood to lose plenty if a Senate bill backed by big tobacco companies had passed last year. The bill would have changed the Master Settlement Agreement to prevent the small companies from removing money from an escrow account set up to cover any awards that states might seek in a future tobacco lawsuit.
The bill passed the Senate without dissent. But before the House could vote, Morgan moved the bill to the House Rules Committee, where many bills get buried. He did so after an important ally, Rep. Julia Howard of Davie County, told him that a small cigarette manufacturer in her district, Alternative Brands, also would have been hurt by the bill.
“How can you use the argument one year that says you cannot amend the [Master Settlement Agreement] for any purpose or you put at risk the trust fund money, and then all of a sudden the next year — when it serves your purpose — you can change it?” Morgan asked.
Morgan, a Moore County insurance broker and cattle farmer, became co-speaker last year in the first-ever power sharing arrangement between House Republicans and Democrats. Since then, the party has been split between the Morgan and anti-Morgan camps. Both have recruited Republican candidates to knock out the other’s supporters.
Rep. Danny McComas and former Speaker Harold Brubaker, who both also said they didn’t know about S&M’s contribution, formed the Main Street committee in March with Morgan.
It is one of a growing number of nonprofit political groups, known as 527s for their classification in the tax code, that does not have to file financial reports with state and federal election commissions as long as the group does not promote or oppose a particular candidate. A change in federal law forced these groups to report their contributions and expenses to the Internal Revenue Service.
The Main Street committee’s filing also shows that another cigarette maker, Liggett Vector Brands in Research Triangle Park, contributed $5,000. Other big donors were beer-related businesses and check cashing companies. Anheuser-Busch of St. Louis, the nation’s largest beer maker, contributed $25,000, and 15 regional beverage distributors across the state kicked in a combined $7,200.
The beer and wine industry staved off a tax increase last year and is bracing for another attempt next year when lawmakers look for ways to make up for roughly $480 million in temporary sales and income taxes set to expire.
