Two rival candidates have asked the city of Houston to block state Sen. John Whitmire from using $2.7 million in proceeds from stock sales to underwrite his campaign for mayor.
Already dominating in the fundraising race, Whitmire’s campaign unloaded thousands of stock shares over the summer, further boosting his finances ahead of the Nov. 7 election and a likely December runoff.
U.S. Rep. Sheila Jackson Lee and former Metro chair Gilbert Garcia said in a letter to the city Friday that those stock sales represent an end-run around the city’s campaign finance rules.
The two candidates paired up earlier this month in a letter alleging Whitmire’s transfer of millions of dollars from his state account to a local campaign account violated the law. In their latest letter, they asked City Attorney Arturo Michel to notify Whitmire he cannot use the proceeds from stocks purchased using state campaign funds.
“It’s yet another way to circumvent the city ordinances, to his advantage, and the amount is substantial,” Garcia said Friday.
Whitmire has served in the Texas Legislature for decades, amassing a massive campaign account that he has transferred to put to use in the mayor’s race. A campaign spokesperson dismissed the letter as “nonsense” based on a misreading of the law.
Under Texas law, campaign donors can give as much as they want to candidates running for state offices.
In city of Houston races, however, individuals are limited to giving $5,000; political committees can give up to $10,000.
In their letter earlier this month, Jackson Lee and Garcia asked the city attorney’s office to investigate whether Whitmire violated Houston campaign finance rules by transferring donations that would have exceeded the city’s limits.
Whitmire has said he transferred money from his state to city account in compliance with the law, interpreting it as a cap on contributions from individual donors rather than capping the overall transfer. His leading contenders, however, argue there is no way for the public to know whether Whitmire was complying with the cap by setting aside money that exceeded donation limits. They called on Michel to launch an investigation.
Whitmire’s campaign finance reports do not break down how much of his reported $6.9 million in cash on hand is eligible for use in the mayor’s race.
“We keep track of that internally. We’re very aware of it. But still, the vast majority, almost all of it, is spendable,” campaign spokeswoman Sue Davis said.
On Friday, Garcia and Lee took exception to Whitmire’s use of stock sales to help fund his mayoral bid.
The pair said the stock sales represented an “investment gain” from the state campaign account rather than the type of “unexpended political contribution” that can be transferred to a local account under the city code.
“The investment proceeds which Mr. Whitmire intends to use are not permitted by the city of Houston ordinance because they are not ‘unexpended political contributions,” the pair said in the latest letter.
Lee and Garcia urged Michel to intervene to stop Whitmire from spending the money on the race.
“The other 16 candidates, all of us are being harmed, because we can’t compete with the amount of money he’s spending on his campaign,” Garcia said. “At a minimum, there should be far better transparency and disclosure of this money.”
Davis said the letter was based on a misreading of the law. She said Whitmire’s campaign has never attempted to claim the stock sales are “unexpended political contributions,” language she said applies to candidates who are closing down their campaign accounts.
“There is nothing on the local or state level that prohibits the use of investment returns in a campaign,” she said. “If a campaign account generates revenue, there is no problem using those funds. These are not contributions.”
In comments after a Tuesday night debate where Lee raised the stock sales, Whitmire dismissed the complaints.
“They definitely are misrepresenting a lot of the contributions to the campaign account. Everything we’ve done is run by the city attorney. We’re doing the exact same thing Sylvester Turner did,” he said. “What you’re witnessing is candidates that have been advised by their consultants to attack Whitmire.”
As Whitmire noted, he is not the first mayoral candidate to transfer large sums from his state to his city fund. Sylvester Turner did the same during his first race for mayor in 2015, drawing a lawsuit from one of his opponents that was dropped before a judge could rule on it.
Whitmire’s stock sales this summer were the latest in a long series of investments. Between the start of 2020 and June 2023, his state campaign reported earning $12.5 million from investments while plowing $11.5 million back into stocks.
The latest round of stock sales included blue chips such as Apple, Microsoft and IBM, along with lesser-known firms like Highpeak Energy and Reservoir Media that went public only recently.
Whitmire’s rivals do not allege the practice of buying and selling stocks, by itself, violates any rules. Experts say trading stocks is unusual but not illegal for Texas campaign organizations.
“It’s perfectly legal and it’s actually contemplated by the election code,” said Randy Erben, chair of the Texas Ethics Commission. “If you have a significant balance, you want to get some returns.”
While many campaigns park their money in a bank, Harris County Commissioner Rodney Ellis long has used campaign funds to buy and sell stocks. Gov. Greg Abbott bought millions of dollars worth of U.S. Treasury bills with his campaign funds.
“It’s uncommon, as far as I know,” said Cal Jillson, a professor of political science at Southern Methodist University. “You hear about it occasionally, but most campaign funds are not invested with the idea of growing them, they’re simply secured in some kind of a savings vehicle.”
Michel has yet to respond to the first letter requesting an investigation, according to Garcia.
A city spokesperson did not immediately comment on the latest letter Friday.
Even outside of the advantage from his state war chest, Whitmire has proven himself an adept fundraiser in the mayor’s race. Leading in the polls, Whitmire reported raising $1.1 million from July through September. Lee raised $631,000.