enhancing values: practical campaign reforms for states

R E S E A R C H S E R I E S�

Institute

M a k i n g D e m o c r a c y W o r k

e n h a n c i n g va l u e s :

Practical CampaignReforms for States

Practical CampaignReforms for States

ReformThe

InstituteReformThe

Senator John S. McCainChair of Advisory Board

Richard H. DavisPresident

Trevor PotterLegal Counsel

Cecilia I. MartinezExecutive Director

ENHANCING VALUES:PRACTICAL CAMPAIGN REFORMS FOR STATES

PROJECT DIRECTORS

Anthony CorradoProfessor of Government

Colby College

Daniel OrtizProfessor of Law

University of VirginiaSchool of Law

The Reform Institute211 North Union Street, Suite 250

Alexandria, VA 22314

Tel (703) 535-6897Fax (703) 299-9110

www.reforminstitute.org [email protected]

Reform in the States: A Message from Senator John McCain

One of the clear victors of Election 2004 is the small con-tributor of grassroots America. The implementation of thesoft money ban, known as McCain-Feingold, encouraged thepolitical parties and candidates to reach out to new, low-dollar donors. According to pre-election reports in theWashington Post, at least 33% of contributions to theDemocratic Presidential candidates were in amounts under$200, a 16% increase from 2000. President Bush doubledhis small-dollar contributors in this election cycle. In addi-tion, the national political parties raised more $100 millionmore hard dollars (direct, limited contributions to cam-

paigns) in the 2004 election cycle than they raised in hard and soft money combined in2000. The political parties are thriving under the McCain-Feingold reforms. This newgrassroots emphasis, particularly successful in Internet fundraising, has led to recordnumber of new small donors and a broadening of each party’s financial base.

In my home state of Arizona, public campaign financing had been widely used by candi-dates since 2000, thus dramatically reducing the time candidates spend raising moneyso they can focus on talking with voters. The 2004 results are very encouraging—themajority of candidates ran with public funds that were matched with small donor dona-tions. Over half of these publicly funded candidates won their elections. That meansmore time spent with voters and less time spent at political fundraisers with big donors.

At the state level, innovative campaign finance laws are working to reduce the influ-ences of special interests and expand civic participation. The majority of judicial candi-dates successfully used the new public campaign financing program in North Carolinaresulting in campaigns about issues not campaign cash.

The Enhancing Values: Practical Campaign Reforms for States guide is the first of itskind, incorporating new campaign finance language from the Bipartisan CampaignReform Act of 2002 and the “lessons learned” from public campaign financing pro-grams in the states. This important policy making tool is the work of scholars and pro-fessionals in the field of campaigns and elections, providing valuable guidance forimproving our democracy.

John S. McCainUnited States Senator

�

ACKNOWledgements

Anthony Corrado

Daniel Ortiz

Educational Foundation of America

Michael Caudell Feagan

Mark Schmidt

Marianne Viray

Suzanne Luft

Doug Clopp

Maine Citizens for Clean Elections

Colleen Connor

Citizens Clean Elections Commission in Arizona

New York City Campaign Finance Board

Rick Davis

Trevor Potter

Carla Eudy

Winnie Strzelecki

Amber Johnson

Courtney Nahigian

Cecilia Martinez

�

TABLE of CONTENTS

Reform in the States: A Message from Senator John McCain................................i

Acknowledgements..................................................................................................ii

Introduction ..............................................................................................................1

Chapter 1: Public Campaign Funding Programs ..................................................5

Maine’s Full Public Campaign Funding Law..........................................................10

Arizona’s Full Public Campaign Funding Law ......................................................12

2002 Maine House Primary Elections ....................................................................14

2002 Maine House General Elections ....................................................................14

2002 Maine Senate Primary Elections ....................................................................15

2002 Maine Senate General Elections ....................................................................15

Arizona 2002 Primary Election Candidates ..........................................................16

Arizona 2002 General Election Candidates............................................................16

Arizona 2002 General Election Winners ................................................................16

The Value of Public Funding ..................................................................................17

New York City’s Public Matching Funds Law..........................................................22

New York City Candidate Participation ..................................................................25

2004 Election Results in Arizona ..........................................................................26

Chapter 2: The Backdrop of Private Campaign Finance Regulation ................27

Appendix A ............................................................................................................33

Appendix B ............................................................................................................34

Appendix C ............................................................................................................34

About The Reform Institute ..................................................................................37

�

valuable contribution to the health of ourdemocracy. Most importantly, they can revi-talize the basic principles that form thefoundation of our government. This is espe-

cially true when comprehensiveapproaches to reform areadopted. But even smallerchanges can make a big differ-ence in promoting the cause ofgood government.

To be effective, campaignfinance laws should aim toachieve the following objectives,which constitute the basic pur-poses of regulation in this area.

1. Campaign finance laws should provideadequate funding for political campaigns.Money is said to be the “mother’s milk” ofpolitics, because it is the means of acquir-ing the goods and services needed towage viable campaigns. The health andvitality of our democracy depends in parton the ability of candidates, parties, andpolitical groups to garner the resourcesneeded to make their case to voters. Anysystem of campaign finance should ensurethat candidates and other active citizenshave a fair opportunity to conduct well-funded, competitive campaigns.

the principles and Goals of Reform

I N T R O D U C T I O N

Campaign finance laws enhance thequality of our democracy by promot-ing the fundamental principles and

values of a free society. An effective systemof campaign funding ensuresthat candidates and other par-ticipants in the political processhave an opportunity to gatherthe resources needed to wageviable campaigns and sharetheir views with the public. Bydoing so, the laws expand thechoices available to voters andpromote more robust publicdebate. An effective fundingsystem also protects the integrity of thepolitical process by minimizing corruption,reducing the influence of money, and foster-ing equality of political participation. In ful-filling these goals, campaign finance rulescan strengthen our democracy and restorepeople’s faith in government and publicofficials. They can help reconnect citizens tothe political process, encourage greater indi-vidual involvement in public affairs, andproduce a more responsive, transparent andaccountable government.

Campaign finance reform alone will notresolve all of the problems in our politicalsystem, but well-crafted reforms make aIM

AGE

CO

UR

TES

Y O

F TH

E U

.S.

NAT

ION

AL A

RC

HIV

ES A

ND

REC

OR

DS

AD

MIN

ISTR

ATIO

N,W

WW

.AR

CH

IVES

.GO

V.

• Prohibit large, unregulated political con-tributions

• Prohibit contributions from corporations,regulated utilities, and labor unions

• Prohibit cash contributions, except forsmall individual donations

• Place reasonable limits on contributionsfrom individuals and political committees

• Require full public disclosure of contri-butions to candidates, parties, and politi-cal committees

• Require full public disclosure of themonies raised and spent on independ-ent expenditures and electioneeringcommunications

The best regulatory approaches gobeyond the disclosure and regulation ofcontributions. These systems seek to reducethe role of private money by providingpublic resources to candidates for thefinancing of their campaigns. In the mostcomprehensive program of reform, candi-dates are able to receive public resources tofinance their campaigns, eliminating alto-gether the need to raise substantial amountsof money in private contributions. Otherapproaches to reform offer public resourcesto candidates as an incentive to encouragesmall donations from individuals, therebyempowering small contributors, broadeningcitizen participation in the financing of elec-tions, and diminishing the role of largedonors and special interests.

3. Campaign finance laws should ensuretransparency and public accountability.Elections provide citizens with an opportu-nity to vote for the candidates and policychoices that best represent their views. Inorder for individuals to make informeddecisions, they need to have access toinformation about the candidates and theirpositions. This includes access to informa-tion about the sources of a candidate’ssupport and the sources supporting themessages being distributed to influence

Campaign finance laws must preserve thefreedom of speech and political association,and allow candidates and others to amass thefunds needed to engage in effective advoca-cy. The rules should not be so restrictive asto impose unfair burdens on candidates andpolitical organizations or to impede their abil-ity to raise the funds needed to communicatewith the electorate. Instead, they shouldencourage citizens to express their views andto participate financially in election cam-paigns. At the same time, the law should bal-ance this objective with the other principlesof reform to protect against the detrimentaleffects that unregulated money can have inthe political system.

2. Campaign finance laws should protect theintegrity of the political process.The U.S. Supreme Court, almost threedecades ago, held that the “primary interest”served by campaign finance legislation “is theprevention of corruption and the appearanceof corruption spawned by the real or imag-ined coercive influence of large financial con-tributions on candidates’ positions and ontheir actions if elected to office.”1

Campaign finance laws must protect theintegrity and legitimacy of representative gov-ernment against the corruptive and undueinfluence that can accompany political gifts.Without strong safeguards to diminish theinfluence of money in the political process,the representative character of our democra-cy is undermined, and public confidence andtrust in government is lost.

The threat of corruption or undue influ-ence is greatest when there are no limitsplaced on political contributions, and whencontributions are not disclosed to the publicin a timely manner. Campaign finance regula-tions should contain strong measures thatprohibit the exchange of campaign donationsfor political quid pro quos and preventdonors from buying access to elected officialsor candidates for office through large politi-cal gifts. At a minimum, the rules should:

E N H A N C I N G VA L U E S : P R AC T I C A L C A M PA I G N R E F O R M F O R S TAT E S � The Reform Institute

2

spent on electioneering communications,and special reporting requirements for con-tributions or expenditures made late in acampaign. The best systems provide forelectronic disclosure, facilitating publicaccess via the Internet, in a form that canbe easily searched by voters who seekinformation about a particular candidate orpolitical committee, or the contributionactivities of particular donors. This is themost efficient means of ensuring that all citi-zens have an opportunity to access theinformation they seek on campaign funding.

4. Campaign finance laws should empowercitizens and reduce the influence of specialinterests.A truly representative government thatreflects the will of the people and enjoys theconfidence and trust of its citizens can onlybe achieved by reducing the influence ofspecial interests in government. Campaignfinance rules should not favor monied inter-ests. Rather, they should empower individu-als and expand their influence. Reforms thatenhance the role of individuals increase theresponsiveness of the political system andrestore the power of individual citizens todetermine the outcome of elections and thedirection of government policy.

The key to reducing the influence of spe-cial interests and returning power to indi-vidual citizens is to increase the value ofindividual donors who give small amountsto the candidates of their choice. Reformsthat serve this purpose include:

elections and public policy debates. Full,timely, and effective public disclosure ofthe financial activity that takes place inelections is thus an essential requirementof any campaign finance system.

Full public disclosure of the moniesraised and spent in connection with elec-tions offers a number of benefits. First, dis-closure promotes transparency and thusfacilitates public scrutiny of the financialtransactions that take place in an election.As the experience with financial transac-tions in the business community and otherareas of the private sector has demonstrat-ed, rules that promote transparency andpublic review can be an effective vehiclefor identifying and addressing financialabuse. Disclosure is therefore a necessary,but not sufficient, means of safeguardingthe integrity of the political process andthwarting corruption.

Second, disclosure helps promote a moreinformed electorate. By providing informa-tion about the sources of funding backinga candidate or political group, disclosureprovides citizens with important informa-tion that can help to distinguish the choicesthey face. Furthermore, it enhances theability to hold public officials accountablefor the financial practices that take place inan election.

Finally, disclosure facilitates more effec-tive enforcement of the law. It yields a pub-lic record of the contributions and expendi-tures made in each election, which makes iteasier for enforcement agencies to monitorthe transactions that take place in a cam-paign and identify violations of law.

The most effective disclosure rulesrequire more than a simple accounting ofthe monies raised and spent in a campaign.To be effective, the rules must ensure time-ly reporting and include provisions formaking information available to the publicin an easily digestible form. The rulesshould also require timely reporting ofindependent expenditures and monies

3

I N T RO D U C T I O N— The Principles and Goals of Reform

“THERE IS NO ENEMY OF FREE

GOVERNMENT MORE DANGEROUS AND

NONE SO INSIDIOUS AS THE CORRUPTION

OF THE ELECTORATE.”

—THEODORE ROOSEVELTFourth Annual Message to Congress, 1905

To encourage competition, campaignfinance laws should include such reforms as:• Voluntary public campaign funding with

accompanying limits on campaign spend-ing for candidates who accept publicresources

• Supplemental public funding to help can-didates maintain competitive levels ofspending when facing privately funded,high-spending opponents

• Rules that encourage participation inbroadcast candidate debates, at least forcandidates running for statewide office

• Provisions that require the Secretary ofState or other appropriate election officialto prepare and disseminate to the publicimpartial voter guides offering informationabout candidates and ballot propositions

6. Campaign finance laws should guaranteeeffective enforcement and administrativesupport.Effective administration and enforcement ofthe law is an essential component of anyregulatory system. Indeed, the recent experi-ence with campaign finance regulation at thenational and state and local levels suggeststhat the objectives of reform will only beachieved if regulations are independentlyadministered, vigilantly monitored, and strict-ly enforced.

Any effort to regulate the role of money inpolitics must give due regard to the needs toadminister and enforce the law. Most impor-tantly, the laws should establish an inde-pendent, unelected agency responsible foradministering and implementing regulations,set forth clear enforcement procedures, andcontain strict penalties for violating the rules.Adequate budgetary support and staffing isalso essential, since the agency or officeresponsible for the law can carry out itsfunctions only if it has the resources to per-form all of its duties. Too often the benefitsof reform have been diminished by the fail-ure to provide administrators with the neces-sary authority and resources.

• Voluntary public campaign funding pro-grams that emphasize low-dollar qualify-ing contributions

• Programs that offer public matching sub-sidies on individual contributions toamplify the value of small contributions

• Tax credit incentives to encourage indi-viduals to participate financially in politi-cal campaigns

• Rules that promote individual participa-tion by allowing contributions to bemade via the Internet

5. Campaign finance rules should encour-age electoral competition.Elections best serve their purpose whenthey are characterized by high levels ofcompetition. Competitive elections offervoters more meaningful choices. Theyattract greater interest within the elec-torate and produce higher levels of voterparticipation. They also attract a largernumber of candidates, since individualsconsidering service in public office aremore likely to stand for election whenthey know they have a fair chance inseeking an office. When elections arecompetitive, citizens win.

Money is not the only factor that affectsthe level of competition in an election.Ballot access rules and the methods usedto draw district lines also play an impor-tant role in determining the fairness andindependence of electoral contests. Butcampaign finance laws can enhance thefairness of elections and the quality ofchoices available to voters by ensuringthat incumbent officeholders and thewealthy do not have an unfair advantagein election campaigns. The rules shouldhelp to level the playing field by incorpo-rating reforms that serve to improve theresources available to the challengers.Such an approach helps to ensure thatelections are decided on the basis of acandidate’s message, not the size of acampaign’s warchest.


4

caps. Other programs, such as the systemused in New York City elections, offer candi-dates the option of qualifying for matchingsubsidies on small contributions as a meansof reducing the emphasis on fundraising andcreating incentives for broadening the partic-ipation of small donors.

Public financing improves the politicalprocess in a variety of ways. Public fundingreduces the amount of time candidates haveto spend raising money and their relianceon powerful special interest groups. Itbreaks down financial barriers, enablingmore candidates to seek public electedoffice and thus increasing the choices avail-able to voters. And it encourages greaterindividual participation in the financing ofcampaigns by raising the value and relativeimportance of contributions from individualswho give low-dollar amounts.

Full Public Funding ProgramsThe most comprehensive approach toreform is a system of full public campaignfunding for candidates seeking office. Thissystem, often called “Clean Money” reform,establishes a voluntary program of publicfinancing that is designed to provide partic-ipating candidates with the monies neededto wage a viable campaign for elective

Public Campaign Funding Programs

C H A P T E R 1

States and localities throughout thecountry have adopted major cam-paign finance reforms in recent years

that have established new methods ofcampaign funding and demonstrated thebenefits of comprehensive reform. Theseefforts have been based on bold andinnovative approaches that use publicfunds as a means of financing campaignsand empower individual citizens byemphasizing the strategic importance oflow-dollar contributions.

Public financing programs recognize thatelections are a public good and offer quali-fied candidates the option of using publicfunds, instead of contributions from high-dollar donors and special interests, to payfor their campaigns. This approach toreform has been adopted by several statesand localities, with the laws typically varyingfrom state to state, offering diverse solutionsto the problems associated with money inpolitics. Some programs, such as those usedin Maine and Arizona, provide qualifiedcandidates with full funding that essentiallyfrees candidates from the need to raise pri-vate contributions and provides each candi-date with a fixed and equal amount ofmoney equivalent to the sum they areallowed to spend under campaign spending

vides supplemental funds to the publiclyfunded candidate to help ensure a levelfinancial playing field. Public funding pro-grams thus offer a safeguard so thatwealthy candidates or high-spending con-tenders do not gain an unfair financialadvantage by forgoing public funds.

Key Features of Public CampaignFunding LawsAs this brief summary suggests, the suc-cess of a full public funding systemdepends on a number of key provisions.

Level of Benefit: No feature of a publicfinancing system is more important thanthe level of support its provides to partici-pating candidates. For elections to fulfilltheir promise, candidates must be able tocarry out well funded and robust cam-paigns. If a public financing program doesnot provide the funding needed to con-duct a viable campaign, candidates willhave little incentive to participate andnone of the objectives of this reform willbe achieved. A public financing programmust provide resources to candidates thatare ample enough to encourage participa-tion and fund competitive or hotly con-tested races. In full public funding pro-grams, this means that: • The law must permit reasonable levels

of spending. Since the grants awarded tocandidates are based on the amountsthey are permitted to spend, the level ofsupport is directly related to the spend-ing limit. Spending allowances shouldnot be set so low as to make it difficultfor candidates to communicate theirviews effectively to voters. At the sametime, they should not be so high thatthey have little effect on the cost of cam-paigns. States that have successfullyimplemented full public funding pro-grams have based benefits on the aver-age amount spent by candidates in thetwo elections immediately preceding theimplementation of public funding. This

office. The public funding programs inMaine and Arizona represent the bestexamples of this type of reform.

Full public funding programs are basedon a number of common features. All ofthese programs are voluntary, since con-stitutional doctrine precludes states fromrequiring candidates to use public funds.Candidates who choose to receive publicfunding become eligible by raising a cer-tain number of qualifying contributionsfrom individual donors, typically in theamount of $5. Candidates are alsoallowed to raise a limited amount of“seed money” to launch their campaignsand begin the process of gathering quali-fying contributions. To be eligible, candi-dates must also agree to abide by estab-lished ceilings on campaign spending,and forego any additional campaignfundraising or the expenditure of anypersonal funds on their campaigns.Candidates who qualify for funding bymeeting these requirements receive afixed amount of public money that willallow them to spend the sum permittedunder the spending cap applicable totheir campaigns.

Candidates who decide not to acceptpublic funding are allowed to raise privatecontributions from sources and in amountsregulated by state contribution limits.These candidates are not subject to spend-ing limits. However, if a publicly fundedcandidate is facing a non-publicly fundedopponent whose spending exceeds thespending allowance established by thepublic funding rules, the law usually pro-


6

FOR ELECTIONS TO FULFILL THEIR

PROMISE, CANDIDATES MUST BE ABLE

TO CARRY OUT WELLFUNDED AND

ROBUST CAMPAIGNS.

qualifying thresholds should be set highenough to discourage frivolous candida-cies or the granting of public resources tocandidates who prove incapable ofdemonstrating an appropriate level ofpublic support. • Candidates should qualify for public

funding by raising a fixed number ofsmall qualifying contributions from indi-viduals who are registered voters intheir state or district. In the states thathave successfully implemented thisreform, the amount of a qualifyingdonation is set as low as $5, so as notto exclude any individual eligible tovote. The number of contributionsrequired to become eligible should varydepending on the office being sought,with the highest requirement set forstatewide candidates. In lieu of raisinga specific number of contributions,qualifying thresholds should alsoinclude an aggregate sum that a candi-date needs to raise in order to be eligi-ble for public campaign support.

• Eligibility should also be based on acandidate’s consent to abide by certainfinancial restrictions including, at a mini-mum, agreeing to limit campaign spend-ing, forgo any additional privatefundraising for the campaign, and refrainfrom making expenditures from personalfunds in support of the campaign.

• Only candidates who have first qualifiedfor the ballot should be certified toreceive public funds.

• Qualifying contributions collected bycandidates who become eligible for pub-lic money should be deposited into theaccount or fund used to finance the

average amount is usually reduced by afixed percentage to reflect the fact thatpublicly financed candidates do notneed to spend money raising funds.

• The law should distinguish betweendifferent offices and types of cam-paigns. Benefit levels should be relatedto the costs of the office being soughtand the type of election being contest-ed. At a minimum, different benefit lev-els are needed for statewide elections,senate elections, and house elections.Separate sums of money should beprovided for primary elections andgeneral elections, with funding provi-sions for runoff elections, where appro-priate. These amounts should beadjusted to account for gerrymandereddistricts where additional funding forprimary campaigns may be needed. Inaddition, benefit levels and spendingceilings should be adjusted for contest-ed and uncontested elections.

• The law should adjust benefit levels inadvance of each election cycle to ensurethat the incentive to participate in publicfunding does not diminish.

Eligibility Requirements: Public fundingprograms must establish reasonable eligi-bility requirements that conform to theobjectives of this reform. The qualifyingthreshold should be low enough toencourage broad participation by a widerange of candidates in order to increaseaccess to the political process, expand therange of choices available to voters, andenhance electoral competition. It shouldbe designed to empower individual citi-zens by basing qualifications for fundingon a demonstration of voter supportthrough the raising of small donations.The eligibility requirements must alsoinclude provisions that reduce the empha-sis on money in campaigns, control risingcosts, and prohibit candidates from rais-ing additional funds. At the same time,

7

C H A P T E R 1— Public Campaign Funding Programs

THE QUALIFYING THRESHOLD SHOULD

EXPAND THE RANGE OF CHOICES

AVAILABLE TO VOTERS

• All seed money contributions andexpenditures should be duly reportedand publicly disclosed.

Matching Funds: Candidates are morewilling to accept public funds when par-ticipation in the program does not putthem at a major financial disadvantage.This means that public financing mustprovide benefits that are ample enough toallow participating candidates to competeagainst high-spending, privately financedopponents or wealthy opponents with theresources to finance a campaign out oftheir own pockets. Because nonparticipat-ing candidates are not required to limittheir spending, they may in some circum-stances be able to outspend their publiclyfinanced challengers. This possibility mayserve to discourage participation and isone of the arguments commonlyadvanced against publicly funded elec-tions. In order to address this issue, pub-lic funding programs should offer match-ing funds or supplemental funding topublicly financed candidates facing free-spending nonparticipating opponents. • Supplemental matching funds should

be available to publicly funded candi-dates who face nonparticipating oppo-nents who spend more than theamount permitted under the publicfunding spending ceilings. Once a non-participating candidate exceeds thespending limit by more than 10 per-cent, a publicly funded challengershould receive additional publicresources to match that opponent’sspending. Publicly funded candidatesshould be eligible for matching fundingup to a sum equal to three times asmuch as the amount of the originalgrant (i.e., they should be able toreceive up to 200% more than the sizeof the original grant in supplementalfunding). This approach allows a pub-licly funded candidate to compete and

public funding program. These contribu-tions will thus become one source offinancing for the program.

Seed Money: Most first-time candidatesfor state legislative or constitutional officebegin a campaign without the namerecognition or donor base enjoyed byincumbent officeholders or establishedpoliticians. To help these candidates initi-ate their campaigns and start the workneeded to get on the ballot and gatherqualifying contributions, the law shouldallow candidates to raise some money toserve as the “seed money” for a campaign. • Candidates should be permitted to raise

a limited amount of seed money fromprivate contributions to start up theircampaigns. All seed money shouldcome from strictly limited contributionsfrom individuals. For example, in theArizona 2002 election cycle, gubernatori-al candidates could collect up to $42,440in seed money, while legislative candi-dates could collect up to $10,610. In aneffort to focus on low dollar contribu-tions, individual seed money contribu-tions should range from $100 to $250,and should be adjusted for inflation Therules should allow seed money to bedonated by any United States citizen.

• Candidates who accept public fundingshould not be permitted to collect orspend seed money contributions oncethey are certified to receive publicresources. One option for any unexpend-ed seed money funds is to contributethese monies to the account or fund usedto pay for the public funding program.


8

PUBLIC FUNDING PROGRAMS SHOULD

OFFER MATCHING FUNDS IN ORDER TO

FACILITATE COMPETITION.

charge is applied to fines for speeding,parking infractions, HOV violations, andcriminal penalties. In May v. Brewer, theU.S. Supreme Court has upheld the con-stitutionality of this approach.

• Qualifying contributions collected bycandidates to qualify for public benefits,and deposits of unexpended seedmoney revenues collected by publiclyfinanced candidates.

• A tax checkoff on state individualincome tax forms that allows tax filers todesignate contributions to the program.

• Annual appropriation. An annual appro-priation from general revenues is one ofthe principal mechanisms used in Maineto generate the monies for its program.This approach, however, does not guaran-tee reliable or sustainable support, since itsubjects funding to the uncertainties ofthe legislative appropriations process andthe dictates of state budget laws. The effi-cacy of this approach depends on thestrength of legislative support in favor ofpublic funding. In Maine, the public fund-ing statute requires an annual transfer of aset amount from general revenues to thepublic financing program on or beforeJanuary 1 of each year.

• Regardless of the methods employed, allrevenues for public funding should bedeposited in a special account dedicatedto this purpose.

Enforcement: Systems with the mosteffective enforcement mechanisms rely onan independent commission to administerand enforce the law. An independent,unelected agency should be responsiblefor monitoring and reviewing candidate

be heard, even in the most competitiveand high-spending contests.

• Supplemental matching funds should alsoapply to any independent expendituresmade in an election either against a pub-licly funded candidate or in favor of anonparticipating opponent. Publicresources awarded to match independentspending should be included in the over-all limit on the amount of matching fundsa publicly funded candidate may receive.

• To promote the efficacy of matchingfunds, nonparticipating candidatesshould be subject to additional pre-elec-tion filing and disclosure requirements toensure that participating candidates canreceive timely payments to match anyspending that might occur in close prox-imity to an election.

Financing: Adequate, reliable and sus-tainable financing is essential to any publicfunding program. Without adequate financ-ing, this reform cannot achieve its objec-tives. Any program of public financing mustinclude funding mechanisms that can guar-antee the resources needed to make suchprograms a success.

Various mechanisms are being used tofinance public funding programs. Theseinclude alternatives that do not rely onappropriations from general revenues andthe use of taxpayer dollars. Arizona, forexample, funds it program entirely withoutthe use of general revenues. Possiblesources of revenue include:• A surcharge on certain civil and criminal

fines and penalties. In Arizona, this mech-anism produces about 60 percent of therevenue needed for its program. When aviolator of a state law(s) is assessed afine, a 10 percent fee is added to the fine,which is allocated directly to the accountused to finance the public funding pro-gram. For example, $10 is added to a$100 speeding ticket and then depositedinto the public funding account. This sur-

9


ADEQUATE, RELIABLE AND SUSTAINABLE

FINANCING IS ESSENTIAL TO ANY PUBLIC

CAMPAIGN PROGRAM


10

Maine’s public funding program wasadopted through a ballot initiative in

November 1996 that approved the MaineClean Elections Act, which established thefirst state program of full public financingfor gubernatorial and state legislative can-didates. Publicly financed elections werefirst held in 2000. The major provisions ofthe program include:

Qualifying for Public Funds: After signingand filing a declaration of intent to seek

certification as a Maine CleanElection Act candidate, a candidatemust collect a set number of $5contributions from registered votersin the electoral district relevant tothe office being sought (e.g., leg-islative candidates must collectcontributions from registered vot-ers in their district). These contri-

butions must be in the form of acheck or money order and made payable tothe Maine Clean Election Fund in supportof a particular candidate. The number ofcontributions that has to be raised dependson the office being sought. • A gubernatorial candidate must collect at

least 2,500 contributions.• A state senate candidate must collect at

least 150 contributions.• A state house candidate must collect at

least 50 contributions.

Seed Money: An individual may raiseseed money contributions in amounts notto exceed $100 per individual donor.Individuals may only collect and spendseed money contributions prior to becom-ing a candidate and during the “qualifying

period” for public funding, which extendsfrom November 1 of the year before theelection to March 16 of the election yearfor gubernatorial candidates or January 1through March 16 of the election year forstate senate and house candidates.Candidates may not collect or spend seedmoney contributions after being certified toreceive public funding. The amount of seedmoney a candidate may collect is limited to$500 for a state house candidate, $1,500for a state senate candidate, and $50,000for a gubernatorial candidate.

Candidate Funding: Candidates certifiedto be qualified for public funding receiveamounts based on the average sum spentby comparable candidates in the previoustwo election cycles. In 2004, legislativecandidates were eligible for initial grants ofvarying amounts, depending on the officeand character of the race.

Matching Funds: Matching funds are trig-gered when a publicly funded candidate isoutspent by a privately funded opponent.When a campaign disclosure report showsthat the sum of a nonparticipating (i.e., notpublicly funded) candidate’s funds raised orborrowed, expenditures, or obligations,alone or in conjunction with independentexpenditures, exceeds the amount distrib-uted to a publicly funded candidate(s) com-peting for the same seat, the participatingcandidate(s) is given additional publicfunds equivalent to the amount of theexcess spending reported by a nonpartici-pating opponent. This supplemental fund-ing is limited to two times the initial distri-bution provided to a participating candi-date. So, for example, in a contested gener-

Maine’s Full Public Campaign Funding Law

Uncontested Primary Contested Primary Uncontested General Contested General

Senate $1,514 $6,487 $6,717 $16,791House $456 $1,374 $1,613 $1,613

*Amounts distributed are equal to the average amount of campaign expenditures made by each candidate duringelection races for the immediately preceding 2 years for each election. For example, the uncontested primary for2004 is equal to the average amount of campaign expenditures made by each candidate during all uncontested pri-mary races for the immediately preceding two primary elections.

11


al election contest for a state senate seat,a publicly funded candidate receives an ini-tial distribution of $16,791 and mayreceive up to an additional $33,582 inmatching funds, for a total public distribu-tion of $50,373.

Financing: Revenue for the public fundingprogram is deposited in a special, dedicat-ed, non-lapsing fund called the Maine CleanElection Fund (MCEF). MCEF is used tofinance the payments made to candidates,as well as the administrative and enforce-ment costs of the program. The principalsource of revenue is an annual transfer of$2 million from the state’s general fund rev-enues, which, according to statute, is to betransferred by the State Treasurer on orbefore January 1 of each year. Revenuesare also provided by: (1) a tax checkoff pro-gram on state individual income tax formsthat allows resident tax filers to designate$3 to be paid into the fund (a husband andwife who file jointly may each designate$3); (2) the $5 contributions raised by can-didates to qualify for public funding, which

are deposited in the MCEF once a candidateis certified to receive public money; (3)unspent seed money contributions deposit-ed by candidates after being certified forpublic funding; (4) voluntary contributionsmade by individuals to the fund; and (5) anymonies received from fines, penalties, orinterest. In addition, any public funds distrib-uted to candidates that are not spent aftera candidate has lost a primary or generalelection are returned to the MCEF.

Administration and Enforcement:Responsibility for administering the law,including management of the MCEF, is heldby Maine’s Commission on GovernmentalEthics and Election Practices. TheCommission consists of five membersappointed by the Governor, subject to con-firmation by the state legislature. TheCommission employs an executive directorand staff to carry out the day-to-day admin-istration of the program. The Commissionhas authority to investigate violations of thelaw by any candidate and authority toassess civil penalties.

Maine’s Full Public Campaign Funding Law (Continued)


12

In November 1998, Arizona voters passedthe Citizens Clean Elections Act, which

established a system for publicly fundingcandidates for statewide and state legisla-tive offices. This voluntary program wasfirst used in the 2000 elections. Major pro-visions of the program include:

Eligibility Requirements: To participate inthe public funding program, candidates mustcollect a limited number of $5 contributionsfrom registered voters in their respective dis-

tricts or, in the case of statewide candi-dates, in their state. These contribu-tions may only be collected during adefined “qualifying period.” For candi-dates for statewide office, this peri-od runs from August 1 of the yearbefore the election until 75 daysprior to the general election; for

legislative candidates, it runs fromJanuary 1 of the election year until 75 daysprior to the general election. The number ofqualifying contributions that must beobtained depends on the office. In 2002, theminimum thresholds were set as follows:

Minimum Number/Office $5 Qualifying ContributionsGovernor 4,000Secretary of State 2,500Attorney General 2,500State Treasurer 1,500Superintendent of Public Instruction 1,500

Corporation Commissioner 1,500

Mine Inspector 500State Legislature 200

Limits on Personal Contributions: Toreceive public financing, candidates mustalso agree to limit personal and familyspending on their campaigns. For example,a candidate for state legislature is limitedto a maximum of $550 in personal contri-butions, which includes contributions fromimmediate family members, each of

whom may give no more than $110.Seed Money: Individuals are allowed to

raise “early contributions” to explore a can-didacy or initiate an effort to qualify for pub-lic funding. These contributions are limitedto $110 per individual donor, with adjust-ments for inflation every two years. Theamounts candidates may raise from earlycontributions is set at different levels,depending on the office. In 2002, legislativecandidates were allowed to receive up to$2,650 in early contributions; corporationcommission candidates, $10,610; andgubernatorial candidates, $42,440.

Levels of Funding: The amount of publicfinancing a candidate receives varies onthe basis of the office being sought andwhether a race is contested or not. Majorparty candidates in contested races in2002 were eligible for base public fundinggrants, not including matching funds, in thefollowing amounts:

Primary GeneralOffice Election ElectionGovernor $409,950 $614,930Secretary of State/Attorney General $86,310 $129,460

Treasurer/Corp. Commissioner $43,150 $64,730

Superintendent of Public Instruction $43,150 $64,730

Mine Inspector $21,580 $32,370Legislature $10,790 $16,180

Independent candidates are eligible toreceive 70 percent of the amount of theseinitial primary and general election pay-ments. An unopposed candidate is eligibleto receive public financing in an amountequal to the sum of the qualifying contribu-tions he or she collects.

Matching Funds: Candidates participatingin the public funding program are eligible toreceive matching payments when an oppos-ing, nonparticipating candidate spends anamount in excess of the spending limit set by

Arizona’s Public Campaign Funding Law

13


the public financing distributions. Matchingfunds are also provided to participating can-didates to respond to independent expendi-tures made in support of an opposing candi-date or against the participating candidate.A candidate may receive up to three timesthe amount of the original public fundingpayment in matching funds.

Disclosure and Reporting Requirements:All candidates must file regular disclosurereports of their expenditures and contribu-tions. These reports must be filed electroni-cally with the Secretary of State and mustbe made available for public inspection.• To ensure the timeliness and efficacy of

matching fund payments, nonparticipat-ing candidates must also file “triggerreports” when certain dollar amounts areexceeded. These reports are used todetermine the amount of additional pub-lic funding that should be provided to theparticipating candidate. A nonparticipat-ing candidate must file supplementalcampaign finance reports when he or shespends more than 70 percent of the pri-mary campaign spending limit applied toa publicly funded opponent, or receivescontributions, less the expenditures madeduring a primary, that exceed 70 percentof the general election spending limitapplied to a publicly funded opponent.

• Any individual or entity that makes inde-pendent expenditures on behalf of a candi-date must report the expenditure once itexceeds a threshold amount establishedby the law. Thereafter each additionalindependent expenditure totaling an estab-lished amount must be reported as well. Financing: Revenues for the program are

deposited in a dedicated account called theCitizens Clean Elections Fund (CCEF). Theserevenues are generated from a number offunding mechanisms, including: (1) an addi-tional surcharge of 10 percent imposed on

all civil and criminal fines and penalties col-lected pursuant to the provisions of the law;(2) a voluntary check-off on state income taxforms that allows an individual to designate$5 to the CCEF and receive a $5 reduction ofthe amount of tax to be paid; (3) voluntarydonations to the CCEF for which individualsmay receive a dollar-for-dollar tax credit not toexceed the higher amount of 20 percent ofthe tax amount on the donor’s tax return or$530 per taxpayer; (4) qualifying contribu-tions received by candidates; and (5) amountsreceived from civil penalties imposed on viola-tors of the Act.

Administration and Enforcement: The lawestablishes an independent commission, TheCitizens Clean Elections Commission, whichis responsible for administration andenforcement. Members of the Commission,which consists of five members, serve singleterms of office and are not eligible for reap-pointment. No more than two of the fivemay be members of the same political party,nor may more than two be residents of thesame county. Individuals who have beenappointed to, elected to, or run for politicaloffice, or served as an officer of a politicalparty in the previous five years are not eligi-ble for appointment.

To encourage compliance, the law containsstrict penalties for violations, including: • Penalties for violating reporting require-

ments include fines of $110 per day forlegislative candidates and $320 per dayfor statewide candidates.

• Public financed candidates who exceedthe contribution or spending limits face apenalty of ten times the amount of theexcess contribution or expenditure.

• A knowing violation by a participating can-didate may result in that candidate havingto repay from personal funds the amountexpended from his or her campaignaccount.

Arizona’s Public Campaign Funding Law (Continued)

paigns are financed. Comprehensivepublic funding programs can reduce theinfluence of high-dollar donors and spe-cial interests in election campaigns, elim-inate the financial barriers to politicalparticipation, and place the power todecide elections back into the hands ofthe voters. Where this reform has beenadopted, citizens have quickly seenmajor improvements in the character andquality of elections.

Protects against corruption by reducingthe influence of high-dollar donorsBy making public resources available tocandidates, full public funding reducesthe dependence of politicians on high-dollar donors and special interests. Itdecreases candidates’ dependence onhigh-dollar gifts, not by trying to reducecampaigning, but by offering candidates aneutral source of alternative funding. Itgives candidates the option of substitutingpublic resources for private gifts, whichreduces the role of monied interests incampaigns and the potential for corrup-tion in the political process.

For example, since Maine implementedpublic financing in 2000, the role of pri-vate money has declined sharply. Privatecontributions have dropped from $3 mil-lion in 1998 (the last election prior to theestablishment of public funding) to $1.6million in 2000 and then to less than$900,000 in 2002.2 This decline reflectsthe growing number of candidates whohave decided to use public funds tofinance their campaigns. In 2002, 60 per-cent of the general election candidatesseeking seats in the Maine House and 72percent of those seeking seats in theSenate chose public funding to pay fortheir campaigns. As a result, of the $2.9million spent by all legislative candidates,more than $2 million, or 70 percent ofthe money, came from public sourcesrather than private interests.3

disclosure reports, certifying candidateeligibility for the receipt of public funds,determining payment of matching funds,disseminating information contained indisclosure reports to the public, andissuing regular reports on the aggregatefinancial activity in each election cycle.It should also have the authority topenalize candidates who fail to complywith the requirements of the law, inaddition to transmitting findings of viola-tions to the Attorney General for prose-cution. The agency must also have ade-quate staff and funding to carry out itsresponsibilities.

The Advantages of Full PublicFundingThe experience with public financinghas demonstrated the value of thisapproach as a means of bringing aboutfundamental change in the ways cam-


14

2002 MAINE HOUSE PRIMARY ELECTIONS

Republicans

Democrats

Incumbents

Challengers

Open Seats

0% 20% 40% 60% 80% 100%

Publicly Funded Candidates Privately Funded Candidates

43 61

46 52

69 32

94 51

53 88

2002 MAINE HOUSE GENERAL ELECTIONS

Republicans

Democrats

Incumbents

Challengers

Open Seats

0% 20% 40% 60% 80% 100%


41 54

66 35

72 30

98 44

66 67

most recent election in Maine, for example,most of the candidates seeking seats in thestate legislature ran with public funding,including: • In House races, 52 percent of primary

candidates and 60 percent of House gen-eral election candidates

• In Senate races, 61 percent of primarycontenders and 72 percent of generalelection candidates

• More than 75 percent of Senate incumbentsand 40 percent of House incumbents

• In House races, 65 percent of the Demo-crats and 37 percent of the Republicans in the primaries; 69 percent of the Demo-crats and 55 percent of the Republicans in the general election.

• In Senate races, 59 percent of the Repub-licans and 59 percent of the Democrats in the primaries; 71 percent of the Repub-licans and 78 percent of the Democrats inthe general election.

Similarly, in Arizona, of the $5.7 millionspent by legislative candidates in 2002,more than $3 million, or about 54 per-cent, came from public funds.4 Half of thegeneral election candidates seeking seatsin the House or Senate ran publiclyfinanced campaigns. In that year Arizonaalso held elections for statewide offices,and 16 of the 23 major statewide candi-dates relied on public money to pay fortheir campaigns. Those who won officewith public financing include theGovernor, Secretary of State, AttorneyGeneral, State Treasurer, State MineInspector, and the two CorporationCommissioners whose seats were up forelection.5 As a result, Arizona’s state gov-ernment is now led by a group of publicservants who can focus on the concernsof citizens, rather than big money donors.

Provides the campaign resources toensure broad candidate participationPublic financing revitalizes our democracyby providing adequate resources andencouraging a high level of candidate par-ticipation. Publicly financed candidates donot have to spend their time focused onthe money chase, trying to raise the fundsneeded to wage a campaign. Instead,these candidates spend most of their timemeeting with voters and sharing theirviews on the issues confronting theirstates. By freeing candidates from theneed to raise large sums of money, publicfinancing eliminates the financial barriersthat prevent many citizens from ever seek-ing public office. This reform opens thedoors to elective office for those who lackties to monied interests and expands thechoices available to voters.

In both of the states that have adoptedthis reform, candidate participation hasbeen very high. Whether Republican orDemocrat, incumbent or challenger, largenumbers of those seeking office have cho-sen the public funding alternative. In the

15


2002 MAINE SENATE PRIMARY ELECTIONS

Republicans

Democrats

Incumbents

Challengers

Open Seats

0% 20% 40% 60% 80% 100%


20 6

15 15

13 10

24 13

23 15

2002 MAINE SENATE GENERAL ELECTIONS

Republicans

Democrats

Incumbents

Challengers

Open Seats

0% 20% 40% 60% 80% 100%


21 6

17 7

13 7

24 7

25 10

and 70 percent of the statewide candi-dates in the general election

• 50 percent of the legislative candidates inthe primary elections and 48 percent ofthose who ran in the general election

• 63 percent of the Democratic candidatesin the primary elections and 44 percentof the Republican primary contenders

• 67 percent of the Democratic generalelection candidates and 36 percent of theRepublican general election candidates

Expands voter choice and improvescompetitionPublic financing is an especially importantsource of funding for challengers who lackthe advantages of incumbency or ties towealthy constituents. Of the 230 candidateswho chose the public alternative in Maine’s2002 elections, 167 were challengers facingincumbents or individuals competing foropen seats. Public funding provided thesecandidates, who did not have the access todonors and benefits enjoyed by incum-bents, with the resources needed to com-pete for election. In this way, public financ-ing served to increase citizens’ access to thepolitical process, encourage more citizensto run for office, and promote better fund-ed and more competitive campaigns.

Public financing eliminates the financialbarriers that discourage many citizens fromrunning for public office. By doing so, itoffers voters a more diverse pool of candi-dates and allows new voices to be heard inelection campaigns. Challengers are able toachieve financial parity with their oppo-nents, or at least obtain the monies neededto mount competitive campaigns againstestablished incumbents. While challengersstill face the problems posed by restrictiveballot access rules, partisan districtingefforts, and incumbency advantages, theyhave a better opportunity to compete and amore level financial playing field in publiclyfinanced elections. States with publicfinancing have seen an increase in the

Public financing has also gained greatpopularity among legislative candidates inArizona. In the 2002 elections, publicfinancing was used by: • 63 percent of the major party statewide

candidates during the primary elections


16

ARIZONA 2002 PRIMARY ELECTION CANDIDATES

Statewide (41)

Legislative (226)

Democrats (112)

Republicans (135)

Independents (4)

Libertarians (15)

0 25 50 75 100 125 150 175 200 225 250

Publicly Financed Candidates Privately Funded Candidates

4171

60 75

5 10

113 113

26 15

3 1

ARIZONA 2002 GENERAL ELECTION CANDIDATES

Statewide (23)

Legislative (147)

Democrats (76)

Republicans (77)

Independents (4)

Libertarians (14)

0 25 50 75 100 125 150


2551

28 49

5 9

71 76

16 7

3 1

ARIZONA 2002 GENERAL ELECTION WINNERS

Statewide (9)

Legislative (90)

Democrats (36)

Republicans (63)

Independents (3)

Libertarians (13)

0 2010 90807060504030


1917

22 41

5 8

32 58

7 2

2 1

17


In November of 1998, Arizona votersapproved a clean elections initiative, cre-

ating a campaign finance system thatoffers full public financing to candidates forstate offices who choose to reject specialinterest contributions and agree to cam-paign spending limits. Since 2000, the sys-tem has been actively changing the face ofArizona politics for the better.

While many elected officials and poten-tial candidates were originally very wary ofthe system, those who decide to run as“clean” candidates quickly lauded the idea.Republican Marc Spitzer, an ArizonaCorporation Commissioner, ran as a publiclyfunded candidate and highly recommendsthis method. “I am not a novice campaign-er, having run for office successfully fourtimes under traditional private financingand in 2000 under Arizona’s CleanElections law. The comparison is stark.Clean elections empowers the constituency,gives voices to thousands of voters,expands opportunities and enhancesdemocracy. Clean elections is about bring-ing back grassroots, one-to-one politics, theway it used to be, instead of high-dollarmedia campaigns financed by huge contri-butions from the well-heeled. Clean elec-tions is about the restoration of democracy.”

Public financing has not only begun torestore democracy in Arizona, it has alsoopened the door to women and people ofcolor who wish to become public officials.In 2000, because of the availability of pub-lic resources, more women and people ofcolor were able to take advantage of theoption to run for office. Of the women who

ran, 98 percent said they would not haveentered the race without public money.Similarly, 80 percent of Latino candidatessaid public funding was a factor in their deci-sion to seek office.

State Representative Meg Burton Cahill, aDemocrat and a potter by profession who ismarried to a bricklayer, boasts about beinga politician who authentically represent herblue-collar friends, neighbors and con-stituents. She narrowly defeated a powerfulRepublican incumbent, and says that “with-out the clean elections option, I would nothave run for office and subsequently defeat-ed a powerful incumbent and the futureSpeaker of the House.”

In Arizona, public financing is a popularprogram that is engaging more Arizonians inthe political process, either as a candidate oras a voter. Citizens in this state are betterrepresented because the program hasencouraged candidates to become moregrassroots-oriented. Representative LeahLandrum Taylor, a Democrat who serves asHouse Assistant Minority Leader, summa-rized the experience with the clean electionslaw by noting that it offered “a good opportu-nity for individuals to get out there, talk tomore of their constituents, do more of aneffort to reach more individuals…I woulddefinitely run again as a Clean Election can-didate…The response was phenomenal.”

Candidate statements quoted in MarcBreslow, Janet Groat, and Paul Saba,Revitalizing Democracy (Northeast Action2002). This report is available athttp://www.neaction.org/revitalizingdemocracysummary.pdf.

The Value of Public Funding

political groups. The concern is that publicfunding may make it easier for specialinterests to influence an election, sincethese groups can spend unlimited amountsof money independently for or against apublicly funded candidate, while the can-didate has to abide by spending limits.This may give independent spenders anunfair advantage.

To date, independent expenditures havenot been a major problem in publicly fund-ed elections or discouraged candidates fromparticipating in the program. Whether theywill become more of an issue in the futureis uncertain. In Maine, for example, therewas minimal independent spending duringthe 2000 elections. In 2002, a rise in inde-pendent expenditures occurred, but theextent to which it was related to publiclyfinancing is not clear. A combined total of$196,000 in independent expenditures wasreported for all legislative races, with someexpenditures made in 44 percent of theHouse contests and 60 percent of theSenate contests.7 While independent spend-ing was more frequent in races featuringone or more publicly funded candidates, itoccurred in 58 percent of the races inwhich no major candidate accepted publicfunds. The vast majority of these effortswere concentrated in highly competitiveelectoral districts.

Even if independent spending doesoccur in some races, full public financingprograms offer a major advantage overother campaign finance systems by provid-ing participating candidates with matchingfunds to respond to the messages of inde-pendent spenders. This approach ensuresthat candidates will have the resourcesneeded to engage in effective advocacy oftheir own positions, without imposing con-straints on the speech of other citizens orgroups engaged in an election campaign.Moreover, it helps establish a level playingfield so that a wealthy candidate or well-funded interest group can not drown out

number of candidates, a greater number ofcontested primary and general electionraces, and greater opportunities for non-incumbents to win office. The reform hasimproved competition and empowered vot-ers by presenting them with more mean-ingful choices at the ballot box.

The early experience with full publicfunding programs indicates that this reformhas been particularly valuable in encourag-ing the participation of candidates whorepresent constituencies that have tradi-tionally been underrepresented in thepolitical process. A growing number ofwomen candidates are seeking electiveoffice with the help of public financing. In2002, 67 percent of the women who ranfor seats in the Maine legislature acceptedpublic funds, as did 62 percent of thewomen contesting legislative races inArizona.6 Public financing has alsoincreased the opportunities for Latino andAfrican-American candidates. In Arizona,more than half of the Latino candidates in2002 and all of the African-American can-didates relied on public resources tofinance their campaigns. Public financingthus promotes more robust political debateby expanding the range of views and per-spectives engaged in public discourse.

Diminishes the influence of independentexpenditures by special interest groupsOne of the major questions raised aboutpublic funding programs is whether theyencourage independent expenditures by


18

IN 2002, 67 PERCENT OF THE WOMEN WHO

RAN FOR SEATS IN THE MAINE LEGISLATURE

ACCEPTED PUBLIC FUNDS, AS DID 62

PERCENT OF THE WOMEN CONTESTING

LEGISLATIVE RACES IN ARIZONA.

campaign. This reform thus empowersindividuals and reduces the risk of corrup-tion in the political process by diminishingthe role of high-dollar gifts and specialinterest money in election campaigns.

Key Features of Public Funding Incentive LawsMost of the key features of full publicfinancing programs previously identifiedapply equally to public funding incentivelaws or partial subsidy programs. Like fullpublic financing systems, public incentiveprograms are only effective if they pro-vide a level of benefits substantial enoughto encourage high candidate participation.They should permit reasonable levels ofspending that allow candidates to wagecompetitive campaigns. The eligibility cri-teria for qualifying for public resourcesshould be designed to promote broad par-ticipation, but should not encourage non-viable candidacies. They should alsoincorporate a means of allowing publiclyfunded candidates to level the playingfield when facing nonparticipating, free-spending opponents. Finally, any programmust have reliable and sustainable sourcesof financing, and provisions to ensureeffective administration and enforcementof the law.

The principal difference that has to beconsidered in partial public funding sys-tems relates to the different type of benefit

the voice of any opponents and diminishthe information available to voters.

In addition to providing matching funds,public financing should include provisionsthat not only promote the efficacy ofmatching programs, but also promote accu-rate tracking and reporting of independentspending. These include provisions torequire supplemental “trigger” reports fromcandidates who do not opt for public fund-ing when they reach certain thresholds ofreceipts or expenditures that suggest thatthey may exceed the public funding spend-ing limits; strict and timely disclosure ofindependent expenditures, including imme-diate reporting of expenditures reachingcertain established threshold amounts; andthe extension of matching funds andreporting requirements to include all elec-tioneering communications made to influ-ence the outcome of an election.

Public Funding Incentive ProgramsCampaign finance systems that offer sometype of partial public subsidy representanother worthwhile alternative for reform.These systems are not as comprehensive asfull public financing, but they can bringabout significant changes in campaignfunding that promote many of the majorobjectives of reform.

Public funding incentive programs usepublic resources to encourage greater citi-zen participation in the financing of cam-paigns. Typically, these programs offercandidates a partial public subsidy in theform of matching funds on low-dollar con-tributions from individual donors. Theobjective of this approach is to enhancethe value and relative importance of low-dollar contributions, thereby providingindividuals with a greater incentive tomake a contribution to the candidate oftheir choice. Similarly, it encourages candi-dates to emphasize grassroots fundraisingand provides them with a means of raisingthe monies needed to wage a competitive

19


“PUBLIC CAMPAIGN FUNDING HAS MADE

POSITIVE CHANGES IN THE WAY

CANDIDATES RUN THEIR CAMPAIGNS,

ALLOWING THEM TO SPEND MORE TIME

WITH VOTERS.”

—SENATOR JOHN McCAIN

must raise 50 contributions of $10 or morefrom residents of the council district for atotal of at least $5,000 in order to be eligi-ble for matching funds. • Only contributions from individual

donors who are U.S. citizens should beaccepted as qualifying contributions andbe eligible for matching funds.Qualifying contributions that determineeligibility for public funding shouldcome solely from residents or registeredvoters in the relevant electoral district(e.g., from within the legislative districtfor a state legislative candidate or withinthe state for a statewide candidate).

• Only contributions raised within anestablished “qualifying period” shouldbe eligible for matching payments. Forexample, only individual contributionsin eligible amounts received afterJanuary 1 of an election year should beeligible for matching payments. Such aprovision helps to ensure that onlyrecent, timely contributions are eligiblefor matching in a particular race. It alsohelps to ensure that public matchingfund rules do not serve to encourageearly fundraising and the further length-ening of political campaigns.

• As a condition for accepting publicmatching funds, a candidate must com-ply with certain fundraising and spend-ing restrictions. A candidate should haveto agree to abide by limits on campaignspending and to agree to a pre-deter-mined limit on the expenditure of per-sonal funds in support of the campaign.

Level of Benefit: The level of matchingfunding provided in a public incentiveprogram should be consonant with theobjectives of this approach. Since the prin-cipal purpose of public matching funds isto increase the importance of small-dollardonors and promote grassroots fundrais-ing, while at the same time providing can-didates with public resources to reduce the

offered by this approach. Instead of provid-ing candidates with a public grant basedon the amount they are permitted to spendin their campaigns, partial systems providecandidates with public money based onthe amounts they raise from certain low-dollar contributions. For example, in presi-dential primary campaigns at the nationallevel, the federal matching funds programoffers eligible candidates a $1-to-$1 matchon the amount contributed by an individualup to $250. In the program used in NewYork City, individual contributions of $250or less are matched on a $4-to-$1 basis, sothat a contribution of $50 from an individ-ual donor provides a participating candi-date with $200 in public support for a totalof $250 in campaign revenue. In exchangefor this benefit, candidates must agree tolimit their campaign spending and adhereto contribution restrictions on the privatedonations they raise for their campaigns.

As these examples suggest, the extent towhich public incentive programs fulfill theirpurpose depends in part on the conditionsof eligibility, the level of benefit, and therange of eligible contribution amounts.

Eligibility Requirements: To be eligiblefor public matching subsidies, candidatesshould be required to demonstrate athreshold level of public support. Themost common approach is to require can-didates to raise a certain threshold numberof contributions and a certain aggregateamount of money. For example, in NewYork City Council elections, a candidate


20

“THE 4-TO-1 MATCH ALLOWED PEOPLE

FROM MY DISTRICT, WHICH IS A DISTRICT

THAT IS RELATIVELY POOR, TO MAKE THEIR

DONATIONS COUNT.”

—NY COUNCILWOMAN HELEN FOSTER

Contribution Limits: Since matching pro-grams provide candidates with publicresources, but still allow candidates toraise money from private sources, someprograms impose stricter fundraising limitson publicly financed candidates. Forexample, candidates who choose to acceptpublic funds may be subject to stricter lim-its on contributions raised from privatedonors than candidates who do not partic-ipate in the program. This approach isanother means of reducing the role ofhigh-dollar donors.

The Advantages of Public Incentives Partial public funding in the form of match-ing funds on low-dollar donations can makea valuable contribution to the health of ourdemocracy by shifting the emphasis in cam-paign fundraising away from high-dollarcontributors and special interest money, andby increasing citizen participation in thepolitical process. By leveraging the role andvalue of small donors, public incentive pro-grams reduce the risk of corruption, providebenefits great enough to ensure candidateparticipation, and help to improve thechoices available to voters by increasing theresources available to challengers.

Reduces the risk of corruption and expandscitizen participationPublic matching fund programs aredesigned to reduce the risk of corruptionin the political process by encouraging

time and effort needed to raise money,matching funds should be concentrated onlow-dollar contributions. At a minimum,these programs should provide a $1-to-$1match on low-dollar contributions. Aneven greater incentive would be providedby a multiple match on low-dollar contri-butions, such as $2 or $4 in public match-ing money for every $1 received from anindividuals in contributions of no morethan $100.• Matching fund benefits should be adjust-

ed to distinguish between the differentoffices and types of campaigns, withhigher amounts of spending—and thushigher potential amounts of public fund-ing—permitted in contested elections.

• The law should adjust spending limitsand the amount of a matchable contribu-tion in advance of each election cycle inorder to ensure that the incentives offeredby public financing do not diminish.

• Candidates who face no oppositionshould receive reduced amounts ofmatching funds, or be ineligible toreceive such payments. If such candi-dates are allowed to receive some fund-ing, the total amount they may receiveshould be capped at a relatively lowlevel to conserve public resources. Thiswill avoid the problem that has occurredin some places, where candidates whoface no opposition qualify for significantamounts of matching money, eventhough they do not need it.

• Regardless of the level of benefit, partici-pating candidates should be required toreturn any unspent matching funds tothe account or fund used to finance thematching program. One way to deter-mine the amount to be repaid is todetermine the portion of a candidate’stotal campaign monies that came frompublic matching payments, and applythis percentage to the amount ofunspent money remaining in a campaignaccount after the election.

21


“[THE PROGRAM] GAVE ME THE FREEDOM

THAT I DIDN’T HAVE TO ENTER INTO ANY

ARRANGEMENTS, WHETHER SPOKEN OR

EXPECTED, IN TERMS OF PAYBACK IF I

BECAME ELECTED.”

—MARY MURKOWITZ, NYC CANDIDATE


22

Rocked by several corruption scandalsthat threatened to undermine public con-

fidence in New York City’s municipal govern-ment, the New York City Council adopted aseries of ethics reforms in the mid-1980s.The most prominent of these reforms wasthe Campaign Finance Act, which wasdesigned to limit the role and influence of pri-vate money in the political process. The actwas signed into law on February 29, 1988.

The Campaign Finance Actestablished a program of publicmatching funds for individualcontributions in New York cityelections, including the contestsfor Mayor and BoroughPresident, as well as City

Council. Originally, the law providedpublic matching payments on a $1-to-$1basis on individual contributions of up to$1,000. The law was subsequently amend-ed in 1990, 1992, and again in 1998. Therevisions changed the terms of the programto a $4-to-$1 match on contributions of$250 or less from residents of city. Initially,this $4-to-$1 rate was only available to can-didates who agreed not to accept corpora-tion contributions, which at the time wereallowed in New York City elections. Soonthereafter, corporation contributions werebanned, and the $4-to-$1 benefit has beenapplied to the eligible contributions submit-ted by all participating candidates.

The major features of the New York Cityprogram include:

Eligibility Requirements: To qualify forpublic matching funds, a candidate mustraise a minimum number of contributionsof $10 or more, as well as a certainamount of money. The amounts a candi-date has to raise varies depending on theoffice being sought. • A mayoral candidate has to raise 1000

contributions and total funds of at least$250,000.

• A candidate for the office of public advo-cate or comptroller has to raise 500 con-

tributions for a total of at least $125,000.• A candidate for borough president has to

raise 100 contributions from residents ofthe borough for a total of at least twocents ($0.02) per borough resident, or$10,000, whichever is the greater amount.

• A candidate for city council must raise 50contributions from residents of the councildistrict for a total of at least $5,000.

• Candidates who participate in the publicfunding program must also agree to lim-its on campaign spending and limits oncontributions. The contribution limitsapply to the aggregate amount a candi-date may receive from any single contrib-utor during the four-year election cycle.The aggregate amount a candidate mayreceive from a donor varies on the basisof the office being sought. The limits areas follows:

Office AmountCitywide office $4,950Borough President $3,850City Council $2,750

Level of Benefit: Candidates who qualifyfor public funding can receive $4 in publicfunds for each $1 contributed by an individ-ual up to $250. So the total amount of pub-lic matching money that a candidate mayreceive as a result of any individual’s contri-bution is $1,000. • A candidate who decides to accept pub-

lic funding may receive public matchingpayments that total up to 55 percent ofthe spending limit applicable to that can-didate’s race. In the 2003/2005 elec-tions, the total amounts of public moneythat may be accrued by a candidate areas follows: • A mayoral candidate may receive total

matching fund payments that do notexceed $3,150,400 per election.

• A candidate for the office of publicadvocate or comptroller may receive atotal of $1,969,550 per election.

New York City’s Public Matching Funds Law

23


• A candidate for borough president mayreceive a total of $708,950 per election.

• A candidate for city council may receivea total of $82,500 per election.

These limits on public matching fundsare raised when a participating candidateis facing a nonparticipating opponent whospends more than the amount establishedby the public funding spending ceilings. Inthis circumstance, the spending limit in therace is raised and a publicly funded candi-date may receive up to 67 percent of theamount that can be permissibly spent inpublic funds. In 2003/2005, the totalamount of the public funding that a partici-pating candidate may receive in each elec-tion in these circumstances is:

Mayor $3,818,667Public Advocate $2,387,333Comptroller $2,387,333Borough President $859,333City Council $100,000

Enforcement and Administration: The NewYork City Campaign Finance Board isresponsible for administering this system.

The Board is an independent, nonpartisanagency that consists of five members. Twomembers are selected by the Mayor andtwo members are chosen by the Speaker ofthe City Council. The Mayor and Speakermay not appoint two members from thesame political party. The Chairman isappointed by the Mayor in consultation withthe Speaker. Board members serve stag-gered, fixed terms of office and, onceappointed, cannot be removed at the will ofthe appointing authority.

Financing: Financing for the program isfrom city general revenues. The CampaignFinance Act requires the Campaign FinanceBoard to submit an estimated budget to themayor for inclusion in the city’s executivebudget. A provision in the City Charter,approved by voters shortly after the adop-tion of the act, gives the Campaign FinanceBoard authority to draw program fundingdirectly from the city’s general fund if aninsufficient amount has been appropriatedto fill candidates’ matching fund claims.This “draw down” provision is unique to NewYork City and is considered a last-resortfunding mechanism. To date, it has neverbeen utilized.

New York City’s Public Matching Funds Law (Continued)

utors.9 As Councilwoman Helen Foster,who represents a primarily African-American district in the Bronx noted, “the$4-to-$1 match allowed people from [her]district, which is a district that is relativelypoor, to make their donations count. I wasvery encouraged. People would come andgive me $10 and happily give the $10knowing that it would multiply.”10

A multiple matching benefit on low-dol-lar contributions not only led to anincrease in the number of contributors,but also led to an increase in the size ofcontributions. In 1997, the most commoncontribution was in the amount of $100.In 2001, it was $250. Councilman DavidYassky observed that “people undoubtedlygave more money than they otherwisewould have, because of the campaignfinance system. I explained the matchingsystem, somebody would give me a checkfor $100, who I think would have given$50 because of every dollar beingmatched 4-to-1.”11

Provides the campaign resources neededto ensure broad candidate participationPublic matching fund programs typicallyexperience high levels of participationfrom candidates. This type of reformoffers many benefits to candidates. Itprovides substantial sums of publicmoney to candidates who emphasizelow-dollar donors, thus making it easierto finance a campaign. It reduces theemphasis on fundraising in campaigns bydecreasing the amount of money candi-dates have to raise from private donors.It encourages candidates to spend moretime reaching out to their constituentsand gives constituents a greater stake inthe election. It is therefore not surprisingthat most candidates are willing to partic-ipate in matching fundprograms wherethey are offered.

Multiple match benefit programs havebeen particularly successful in encourag-

candidates to finance their campaignslargely from low-dollar contributions andpublic resources. These programs alsoserve to diminish the influence of partic-ular donors or special interests andincrease the funding available to candi-dates by expanding the number of indi-viduals who contribute to campaigns.

When New York City adopted its pro-gram, the City Council hoped that theavailability of public incentives wouldentice more New York City residents tomake small contributions and thusenhance the importance of those whocould not afford to make larger dona-tions. The reform has fulfilled this pur-pose. According to the New York CityCampaign Finance Board, the number ofcontributions to candidates who havedecided to participate in the programnearly doubled between 1997 and 2001,growing from 71,600 in 1997 to 139,400in 2001.8 As a result, the 2001, whichwere especially competitive due to theimplementation of a term limits law,involved the largest number of contribu-tors in the program’s history.

The New York City program has servedto increase the participation of smalldonors in the electoral process. In 2003,84 percent of the contributions receivedby candidates came from contributions of$1 to $250. Overall, more than 17,000individuals gave $100 or less to a candi-date, as compared to about 900 who gavemore than $1,000. The highest proportionof contributions came from donations of$50 or less, which accounted for nearly40 percent of the total number of contrib-


24

MULTIPLE MATCH BENEFIT PROGRAMS

HAVE BEEN SUCCESSFUL IN ENCOURAGING

CANDIDATE PARTICIPATION.

who participated in the New York Cityprogram. The 33 sitting officeholdersreceived about $2.48 million in publicfunds, which represented 50.2 percent ofthe total public funding distributed tocandidates. The 41 challengers receivedabout $2.47 million in public funds,which represented 49.8 percent of thetotal public funds paid out. While theamounts were basically the same, publicfunds made up 63 percent of the moniesavailable to challengers and 34 percent ofthe total campaign funds available toincumbents. Public funding was almosttwice as important to challengers as itwas to incumbents.13

Public matching funds help to level theplaying field for challengers, giving thema better opportunity to compete. Whilechallengers may not receive as muchmoney as participating opponents, as isthe case with full public funding systems,matching funds increase the relativeamount of money challengers have tospend on a campaign and thus makes iteasier for them to present their case tovoters. The availability of these publicresources thus empowers voters andstrengthens their role in the electoralprocess. Democracy is revitalized by thisapproach to reform.

ing candidate participation. New YorkCity, for example, has witnessed increas-ing interest among candidates andstronger candidate participation through-out the years. Since 1991, a majority ofthe candidates on the ballot in city elec-tions have opted into the program, andmost of these candidates have successful-ly met the qualification requirements andreceived public funds. In 2003, 73 per-cent of the 102 participants whoappeared on the ballot received a total ofmore than $4.9 million in public funds.12

Improves voter choicePublic matching funds enhance thechoices available to voters by reducingthe financial barriers to candidate partic-ipation and allowing more of those whoare willing to run for public office toraise the monies needed to mount acampaign. One of the benefits of publicincentive programs is that they providevital resources to challengers.Candidates running against establishedincumbents and first time candidatesoften lack large bases of financial sup-port or access to high-dollar contribu-tors. As a result, in traditional privatefinancing systems, they often find it dif-ficult to raise the funds needed to havetheir voices heard or to compete effec-tively against better financed opponents.The availability of public matchingfunds helps to address this problem byenhancing the relative value of the con-tributions made by a challenger’s sup-porters. Although incumbents alsoreceive the same benefit, the availabilityof public money has proven to be muchmore important to challengers.

For example, in 2003, public fundsconstituted 44 percent of the total cam-paign monies available to candidates

25


NEW YORK CITY CANDIDATE PARTICIPATION

2001

1993

1989

Total Candidates Candidates Participating in Program

280 15

Candidates Receiving Public Funds

0% 20% 40% 60% 80% 100%

229 141 82

170 107 66

239 136 111

139 48 37

355


26

Figures released on November 3,2004, by the Citizens Clean Elections

Commission in Arizona show a 10 per-cent increase in publicly funded candi-dates who successfully won their elec-tion, thus demonstrating a 4 percentincrease among candidate participationsince the program was first implementedin 2000. • In the general election, 56 percent of

candidates running for statewide and

legislative offices were financed with pub-lic funds, up from 52 percent in 2002,and 17 percent in 2000.

• Of the 94 races (4 for statewide, 90 forlegislature), publicly funded candidateswon 52 percent of the statewide andlegislative offices, up from 39 percent in2002, and 17 percent in 2000.

• 25 percent of lawmakers that make upthe 2005-2006 legislature were electedusing public campaign funds.

2004 Election Results in Arizona

program must rest on most, if not all, ofthese features. These features are• Disclosure of permissible private spending

above threshold amounts• Bans on spending from certain sources,

most often from business corporationsand unions

• Limitations on the amounts persons andentities can contribute to political candi-dates, parties, and to political committees

• Restrictions on coordination of spendingamong candidates, parties, political com-mittees, and individuals

• Regulation of so-called “electioneeringcommunications”

Some of these features are long-standing,some are new; some pose controversy, somedo not. All, however, are constitutionally per-missible means to prevent corruption and allhelp underpin any system of public funding.

DisclosureOf all these regulatory strategies, disclosureis the most widely used and the least con-troversial. Three important policies underlieit. First, disclosure provides critical informa-tion about where campaign money comesfrom and where it goes. This informationhelps voters evaluate candidates. With it

The Backdrop of Private Campaign

Finance Regulation

C H A P T E R 2

Public financing programs of all typesmust operate on a foundation ofprivate campaign finance regulation.

A public financing program that did notrestrict traditional private contributions, forexample, would fail to achieve many of itsaims. It would neither greatly reduce thepressure candidates feel to raise moneyfor their campaigns nor enhance individ-ual participation by raising the value andrelative importance of those who canafford to give only low-dollar amounts.Similarly, a scheme that neither limitedcontributions to political parties nor limit-ed the amounts of expenditures politicalparties could coordinate with their candi-dates would, practically speaking, under-cut any public financing program.Individuals and corporations wanting toinfluence a candidate or just boost thatcandidate’s prospects could contribute tothat candidate’s party instead. Indeed, pri-vate campaign finance regulation is soimportant for achieving so many goals thatall states provide for some form of it, eventhose without public funding.

Private campaign finance regulation restson five different features, any combinationof which a state can adopt. To achieve itsprimary aims, however, a public funding

Source BansA less universal feature of many states’ reg-ulation of private spending is a ban ondirect election spending from certainsources, particularly business corporationsand unions. Three separate policies supportsource bans. First, corporate source bansprotect the integrity of the political market-place by preventing entities whose purposeis to amass economic power from convert-ing it into political power. When theirspending is banned, corporations cannotobtain an unfair advantage over individualsin the political marketplace. Second, bansprotect shareholders and union memberswho have paid money into a corporation orunion for economic purposes from havingthat money used to support political candi-dates whom they may oppose. Corporateshareholders who strongly support particu-lar candidates for public office will not findthe corporation using its considerable eco-nomic resources to oppose them. Third,bans on direct corporate and union spend-ing ensure that major shareholders andindividual union members cannot use thecorporation or union to evade any spend-ing limitations placed on them as individu-als. Without a corporate ban, for example,two major owners of a corporation couldcircumvent whatever spending limits applyto them as individuals by arranging for thecorporation itself to spend money on candi-date elections.

Recognizing that individuals connectedto business corporations and unions mighthave important common interests, howev-er, states that prohibit direct contributionstypically allow business corporations andunions to set up and administer associatedpolitical committees. The corporations andunions can usually pay for a committee’sset-up, administration, and solicitationexpenses but not make any contributionsto the account that the committee uses tofund its own political contributions andexpenditures. Funds spent on behalf of

voters can better locate candidates on theissues, better see the interests to whichparticular candidates are likely to bereceptive, and thus better predict the can-didates’ policies once in office. Second,disclosure deters corruption by bringinglarge contributions and expenditures topublic light. Publicity both discouragessome from spending money to buy influ-ence over public officials and allows vot-ers more easily to detect special favorsthat a successful candidate may give tofinancial supporters once in office. AsJustice Brandeis wrote, “Publicity is justlycommended as a remedy for social andindustrial diseases. Sunlight is said to bethe best of disinfectants; electric light themost efficient policeman.” Third, disclo-sure provides the data necessary toenforce other private campaign financeregulations. Without reporting, for exam-ple, it would be very difficult for any pub-lic authority to detect violations of its othercampaign finance requirements, includingthose of public funding. Disclosure is theminimum requirement of any workableregime of campaign finance regulation—public or private.

Recognizing this, all fifty states and theDistrict of Columbia require disclosure ofsome information on contributions abovea certain amount to candidates, parties, orpolitical committees. Arizona, for example,requires candidates and political commit-tees to report on loans and contributionsreceived and expenditures made. All con-tributions above $25 and all expendituresregardless of amount must be itemizedand the contributors and recipients identi-fied. Maine also requires candidates andpolitical committees to report all contribu-tions and expenditures and requiresdetailed information of any individual con-tribution over $50, including the name,address, occupation, principal place ofbusiness, if any, of the contributor, alongwith the contribution amount.


28

laws need not worry over it. Second, acontribution can cloud a candidate’s inde-pendent judgment. In this view, a contribu-tion that influences a candidate to vote dif-ferently than she otherwise would destroysthe sacred relationship between voter andrepresentative. It leads to representativesshirking their responsibilities by followinginterests other than those they should.

Third and most controversially, the accessa contribution gains a contributor can leadto the appearance of corruption, if notactual corruption. Even if access does notsecure actual influence over governmentofficials, the second form of corruption, theSupreme Court has found that it can cer-tainly lead to its appearance.

All three forms of corruption justify limitsnot only on contributions to candidates butalso on contributions to political partiesand political committees. If the law limitedcandidate contributions but left contribu-tions to political parties and political com-mittees untouched, individuals could seekundue influence over and access to candi-dates by contributing to these intermedi-aries. As the Supreme Court found inupholding prohibitions on so-called “softmoney,” a form of previously unlimitedcontributions to political parties, in therecent litigation over the Bipartisan

state candidates must come from individu-als connected in certain close ways to thebusiness corporation or union itself andare often limited.

Approximately 20 states prohibit directcontributions to candidates, political partycommittees, or other political committeesand direct expenditures to influence elec-tions by business corporations and approxi-mately 15 prohibit such contributions andexpenditures by unions. The remainingstates mostly cap contributions although afew, like New Mexico and Virginia, placeno limit on them at all except during timesaround state legislative sessions. Arizona,for example, prohibits direct corporate andunion contributions to candidates entirely,while Maine allows business corporationsand unions to contribute no more than$500 to a candidate for governor and nomore than $250 to a candidate for anyother office. Arizona likewise takes a stricterapproach to direct corporate and unioncontributions to political parties. It prohibitsboth. Maine, by contrast, allows both tocontribute unlimited amounts to parties.

Contribution Limitations Many states limit the amount of moneypeople and political committees can con-tribute to state candidates, state parties, orstate political committees. Although statesmay be tempted to enact contribution lim-its in order to level the playing field amongcontributors, that policy cannot by itselfconstitutionally support them. States relyinstead on a different policy of long-recog-nized authority: preventing corruption andthe appearance of corruption. The threat ofcorruption has several forms. First, a candi-date can promise a vote in return for acontribution. This form—so-called quid proquo corruption—is the least controversial.Everyone condemns it. In fact, becausebribery laws independently protect againstit, many, including some on the SupremeCourt, have argued that campaign finance

29

C H A P T E R 2— Private Campaign Finance Regulation

“THE DANGER IS THAT OFFICEHOLDERS

WILL DECIDE ISSUES NOT ON THE MERITS

OR THE DESIRES OF THEIR

CONSTITUENCIES, BUT ACCORDING TO THE

WISHES OF THOSE WHO HAVE MADE LARGE

FINANCIAL CONTRIBUTIONS VALUED BY THE

OFFICEHOLDER.”

—SUPREME COURT IN MCCONNELL V. FEC

Maine has a somewhat simpler system.Apart from special limits on contributionsthat can qualify a candidate for public fund-ing, it limits individuals and political commit-tees from contributing over $500 to a guber-natorial candidate per election cycle andover $250 to any other candidate per elec-tion cycle. It also limits an individual, but nota political committee, from making aggregatecontributions to candidates of over $25,000in any calendar year. Neither Arizona norMaine limits contributions by individuals orpolitical committees to political parties.

Limitations on CoordinatedExpendituresThe Supreme Court has long drawn a linebetween contributions to a candidate,which can be reasonably limited, and inde-pendent expenditures made by an individ-ual or political committee to support ordefeat a candidate, which cannot. Trulyindependent expenditures, in the Court’sview, both pose less danger of corruptionand impose a greater burden on individualspeech than do contributions. Independentexpenditures, after all, are directed by theindividual herself, not handed over toanother for spending.

Coordinated expenditures, however, are adifferent matter. As the Court has noted,“expenditures made after a ‘wink or nod’often will be as useful to the candidate ascash.” In such cases, the candidate hasapproved how the money will be spenteven if he never receives it himself. For allintents and purposes, coordinated expendi-tures function the same as contributionsand should be regulated for the same rea-sons. Otherwise, would-be contributors willsimply circumvent any contribution limita-tions by making direct campaign expendi-tures coordinated with a candidate.Regulating the one form of spending andnot the other makes little sense.

States that limit individual contributionsthus generally limit coordinated expenditures

Campaign Reform Act of 2003 (the“McCain-Feingold” legislation), these inter-mediaries can serve as conduits. In returnfor contributions, which they can then turnover to their candidates, parties can providespecial access. As the Supreme Court put it,“[t]he record … is replete with … examplesof national party committees peddlingaccess to federal candidates and officehold-ers in exchange for large soft-money dona-tions.” So routinized was this practice, infact, that the “national party committeesactually furnish[ed] their own menus ofopportunities for access to would-be soft-money donors, with increased pricesreflecting an increased level of access.”

For these reasons, approximately 70 per-cent of the states and the District ofColumbia limit contributions. Nearly all,moreover, limit contributions by individualsand committees in the same way. (SouthDakota and Wyoming do, however, capindividual contributions while allowingunlimited contributions by political commit-tees.) Arizona limits individual contributionsto $720 to any statewide candidate, to $280to any legislative candidate, and to $350 toa candidate for local office. Ordinary politi-cal committees are limited to giving thesesame amounts, but so-called “Super PACs,”which receive donations of at least $10 from500 or more people, can contribute up to$3,600 to any statewide candidate, $1,440 toany legislative candidate, and $1,800 to anylocal candidate. In addition, Arizona limitsoverall contributions to candidates from asingle individual to $3,360 in a single calen-dar year and overall contributions to politi-cal committees from a single individual tothe same amount. Arizona has no overallcontribution limit for political committees.


30

SEVENTY PERCENT OF STATES AND THE

DISTRICT OF COLUMBIA LIMIT CONTRIBUTIONS

cy. The corporation would not even haveto disclose what it was doing. Likewise, anindividual who wanted to exceed any con-tribution limits and avoid restrictions oncoordinated expenditures could do thesame. This ability to run sham “issue ads”allowed end runs around the law andundercut the anti-corruption policies under-lying all the provisions—source bans, con-tribution limits, disclosure requirements,and coordination restrictions—of the cam-paign finance regime in place.

Several states have tried to address thistype of advertising. The federal govern-ment has gone furthest, however, and theSupreme Court has upheld its approach. Inthe Bipartisan Campaign Reform Act of2002 (BCRA), Congress adopted a bright-line test to identify “electioneering commu-nications.” Its definition covers only (1)broadcast, cable, and satellite communica-tions (2) clearly identifying a candidate forfederal office (3) airing within 60 daysbefore a general or 30 days before a pri-mary election, which (4) can be receivedby 50,000 or more people in the jurisdic-tion the candidate seeks to represent.BCRA then applies this definition in twodifferent ways. It requires disclosure of dis-bursements for “electioneering communica-tions” by individuals totaling more than$10,000 in a calendar year and bars busi-ness corporations and unions and any non-profit that received any money from busi-ness corporations and unions from spend-ing any general treasury funds on them.

The Court easily upheld the disclosurerequirements placed on those engaging in“electioneering communications.” It simplynoted that “the important state interests[usually supporting] disclosure require-ments—providing the electorate with infor-mation, deterring actual corruption andavoiding any appearance thereof, andgathering the data necessary to enforcemore substantive electioneering restric-tions—apply in full to BCRA[,]” and then

as well. In fact, they usually just treat themas a form of contribution. Arizona, for exam-ple, expressly excludes independent expen-ditures from the definition of “contribution,”thereby counting coordinated expendituresthe same as contributions themselves.Maine, by contrast, specifically says that “anyexpenditure made by any person in cooper-ation, consultation or concert with, or at therequest or suggestion of, a candidate … isconsidered to be a contribution to the candi-date.” Either way the final result is the same:coordinated expenditures are effectively reg-ulated as contributions.

Regulation of “ElectioneeringCommunications”The most controversial and recent type ofregulation of private campaign spendingconcerns so-called “electioneering communi-cations.” Traditionally, regulation—whetherdisclosure requirements, source bans, or lim-its—focused primarily on contributions toand expenditures on political campaigns.Other forms of spending on politics, likefunding advertising on general politicalissues rather than on candidates, escapedregulation entirely. On the national level, forexample, most federal courts held thatspending on advertising that did notexpressly advocate the election or defeat ofa particular federal candidate escaped regu-lation even when it featured the candidateprominently. An ad could, for example, criti-cize a candidate right before an election butso long as it asked the viewer to write thecandidate a letter rather than to vote againsther no campaign finance requirementstouched it—even when it prominently fea-tured and identified the candidate and noone else.

Such a regime led to obvious problems. Acorporation that wanted to influence a raceand get “credit” for its help from a success-ful candidate could spend unlimitedamounts of money running electioneeringads that did not engage in express advoca-

31

C H A P T E R 2— Private Campaign Finance Regulation

munications” and that approach effectivelyforecloses circumvention of all the othercampaign financing protections, any statethat now wishes to address this type ofadvertising should consider following thefederal approach. In addition to beingconstitutional, it has several attractive fea-tures. First, its bright lines make it easy toapply in practice and should minimize liti-gation. Second, by covering only broad-cast, cable, and satellite communicationsin a short time window before the elec-tion, it leaves much important politicalspeech unaffected. State political debatecan thus remain robust and lively. Third,its coverage of only those ads targeted toa particular candidate’s constituencymeans that genuine non-electioneeringcommunications can still feature a candi-date if that makes them more effectiveelsewhere. Finally, many of the particularconditions and thresholds in the federaldefinition can be changed to better reflectlocal conditions. A particular state maybelieve that the time windows should beshorter or that a much smaller targetingfigure is appropriate. So long as the newrequirements are reasonable, there shouldbe no constitutional difficulty.

documented how the lower courts’ priorapproach had allowed spenders to con-ceal their identities from the public, apractice which, in the Court’s view, did“not reinforce the precious FirstAmendment values that Plaintiffs argue aretrampled by BCRA ….”

The Court also upheld the prohibitionagainst business corporations and unionsspending from their general treasuries tofund electioneering communications—evenwith disclosure. The Court noted that theprohibition was not complete. Businesscorporations and unions could alwaysspend for such advertising from their con-nected-political committees and they couldspend from their general treasuries forpolitical communications that fell outsidethis specific category of advocacy. The onlyreal question was whether the bar wasoverbroad. The Court held that it was notbecause electioneering communications notcontaining express advocacy “are the func-tional equivalent of express advocacy.”“[T]he vast majority of [covered] ads,” theCourt thought, “are intended to influencethe voters’ decisions and have that effect.”

Since the Supreme Court has upheldBCRA’s approach to “electioneering com-


32

1. Buckley v. Valeo, 424 U.S. 1, 25.

2. Raymond J. LaRaja, Clean Elections: An Evaluationof Public Funding for Maine Legislative Contests,Center for Public Policy and Administration,University of Massachusetts, April 2004, p 10.Available at http://pubpol1.sbs.umass.edu/docs/LaRaja_FullRpt.pdf.

3. Kenneth R. Mayer, Timothy Werner, and AmandaWilliams, “Do Public Funding Programs EnhanceElectoral Competition?,” Fourth Annual Conferenceon State Politics and Policy, Kent State University,April 30-May 1, 2004, p. 19.

4. Ibid.

5. Candidate information based on the official elec-tion canvass of the Arizona Secretary of State andthe Citizens Clean Elections Commission List ofCertified Participating Candidates for the 2002Election Cycle, November 4, 2002.

6. LaRaja, Clean Elections: An Evaluation of PublicFunding, p. 22, and Arizona Clean Elections Institute.

7. LaRaja, Clean Elections: An Evaluation of PublicFunding, p. 15.

8. New York City Campaign Finance Board, AnElection Interrupted…An Election Transformed, Vol.1, September 2002, p. 46.

9. New York City Campaign Finance Board, 2003 CityCouncil Elections: A Report by the Campaign FinanceBoard, Vol. 1, September 2004, pp. 14-15, 17.

10. Paul S. Ryan, A Statute of Liberty: How New YorkCity’s Campaign Finance Law is Changing the Faceof Local Elections (Los Angeles: Center forGovernmental Studies, 2003).

11. Ibid.

12. Ibid., p. 31.

13. Ibid., p. 33.

ENDNOTES

Appendix A: Maine State Legislature Candidate Participation Statistics1

Chart 1: Maine House of Representatives

2000 2000 2002 2002Primary General Primary General

House Candidates 301 279 302 298

Publicly Funded House Candidates (%) 80 (26.6%) 81 (29%) 157 (52%) 179 (60%)

Republican Candidates 137 115 141 133

Publicly Funded Republican Candidates (%) 22 (16%) 19 (17%) 53 (38%) 66 (50%)

Democratic Candidates 158 141 145 142

Publicly Funded Democratic Candidates (%) 55 (35%) 57 (40%) 94 (65%) 98 (69%)

Incumbents 120 113 104 95

Publicly Funded Incumbent (%) 28 (23%) 26 (23%) 43 (41%) 41 (43%)

House Challengers 103 91 98 101

Publicly Funded Challengers (%) 21 (20%) 24 (26.4%) 46 (47%) 66 (65%)

Open Seats Candidates 78 75 101 102

Publicly Funded Open Seat Candidates (%) 31 (40%) 31 (41%) 69 (68.3%) 72 (70%)

Chart 2: Maine State Senate

2000 2000 2002 2002 Primary General Primary General

Senate Candidates 75 73 80 71

Publicly Funded Senate Candidates (%) 35 (48%) 35 (48%) 49 (61%) 51 (72%)

Republican Candidates 38 35 39 35

Publicly Funded Republican Candidate (%) 16 (42%) 16 (46%) 23 (59%) 25 (71%)

Democratic Candidates 35 33 37 31

Publicly Funded Democratic Candidates (%) 18 (51.4%) 19 (58%) 24 (65%) 24 (78%)

Incumbents 22 22 26 27

Publicly Funded of Incumbents (%) 11 (50%) 11 (50%) 20 (77%) 21 (78%)

Challengers 27 22 30 24

Publicly Funded Challengers (%) 12 (44%) 13 (59%) 15 (50%) 17 (71%)

Open Seat Candidates 26 29 23 20

Publicly Funded Open seat candidates (%) 12 (46%) 11 (38%) 13 (56.5%) 13 (65%)

33

A P P E N D I C E S A , B , A N D C

Appendix B: Arizona State Legislature Candidate Participation Statistics2

2002 2002 2002 GeneralPrimary General Election Winners

Privately funded Candidates for Statewide Offices 15 7 2

Publicly Funded Statewide Candidates 26 16 7

Privately funded Candidates for Legislative Offices 113 76 58

Publicly Funded Legislative Candidates 113 71 32

Privately funded Democratic Candidates 41 25 19

Publicly Funded Democratic Candidates 71 51 17

Privately funded Republican Candidates 75 49 41

Publicly Funded Republican Candidates 60 28 22

Privately funded Libertarian Candidates 10 9 8

Publicly Funded Libertarian Candidates 5 5 5

Privately funded Independent Candidates 1 1 1

Publicly Funded Independent Candidates 3 3 2

Appendix C: New York City Candidate Participation Statistics3

1989 1991 1993 1997 2001

Total Candidates 139 239 170 229 355

Candidates Participating in the Program (%) 48 (35%) 136 (57%) 107 (63%) 141 (62%) 280 (78%)

Candidates Receiving Public Funds (%) 37 (27%) 111 (46%) 66 (39%) 82 (36%) 200 (56%)

1. “Maine’s Public Financing System: Clean Election Statistics House and Senate Races.” 2000-2002. Published by Maine Citizens forClean Elections.

2. “State of Arizona Official Canvas.” Compiled and issued by the Arizona Secretary of State. www.sos.state.az.us3. New York City Campaign, An Election Interrupted…An Election Transformed, Vol. 1, September 2002.


34

ENDNOTES

N OT E S

The Reform Institute: Our Unique, Independent Voice

The health of a free society can be meas-ured by the willingness of ordinary peopleto take an active role in the nation’s dem-ocratic institutions. The Reform Institute’smission is to help reestablish the essen-tial connection between citizens and theirgovernment, and to renew the Americantradition of meaningful, active citizen par-ticipation in the nation’s civic life.

Led by Senator John McCain, theInstitute is a nonprofit, nonpartisan501(c)(3) educational organization dedi-cated to achieving those goals by pro-moting open and fair elections, by reduc-ing the influence of special interests inour politics, and by neutralizing the politi-cal influences percolating into thereform debate.

The Institute is a unique, independentvoice in the constellation of watchdogorganizations. We are entirely non-partisan and strive for objectivity in ourapproach. We believe the reform agendacan only flourish when partisan politicsare largely removed from the debate.

The Institute brings together a broadbase of reformers from all ideological

spectrums, including business leaders,elected officials and, most importantly,average Americans who are tired of pol-itics as usual and have been inspiredby Senator McCain’s principles ofreform.

The Institute’s distinctive network is reflected in the members of ourAdvisory Board—a bipartisan group ofnotable academics, legal experts, elec-tion administrators and public officials.This includes Charles Kolb (Committeefor Economic Development), NormOrnstein (American Enterprise Insti-tute), Tom Mann (Brookings Institution),U.S. Senator Lindsey Graham, DavidPottruck (CEO, Charles Schwab) and for-mer U.S. Senators David Boren andBob Kerry. These and other membersof the Board have joined forces to carryforward the reform agenda from a mod-erate vantage point.

The Institute is proud to carry forwardSenator John McCain’s work in campaignfinance and election reform, and to worktoward a more responsive, open democ-racy for all Americans.

The Reform Institute211 North Union Street, Suite 250

Alexandria, VA 22314

Tel (703) 535-6897 � Fax (703) 299-9110

www.reforminstitute.org � [email protected]

enhancing values: practical campaign reforms for states

Documents