Local Public Campaign Financing and Independent Spending

In a recent blog post, the background issue was the effect of independent spending on a local public campaign financing program in Santa Fe.

Especially in the shadow of recent Supreme Court decisions, this is currently a serious problem for many local public campaign financing programs, and is a potential problem for all of them. In public testimony to the New York City program today (attached; see below), Michael Malbin of the Campaign Finance Institute has raised a possible solution that is worth examining.

"The best defense against outside spending is to cultivate small donors and volunteers within the constituency," he testified. But, he explains, more can be done to cultivate their participation.

One is to require the disclosure of the ultimate sources of the funding behind independent expenditures. Another is to strengthen the rules about independence and coordination, the central issue in the Santa Fe matter.

But the biggest issue is whether to preserve candidate spending limits and, if not, what else to do. When the Supreme Court made compensatory funding — that is, additional grants to compensate for independent expenditures and expenditures of non-participating candidates beyond the spending limit — some programs simply got rid of the spending limit, even though excessive spending (and, therefore, fundraising) was an important reason public financing programs were originally instituted.

Malbin supports this change, because "candidates have to feel they can defend themselves against independent spending or they won’t come into the system at all." But he does not believe it is enough to simply get rid of the spending limit. When this is done, candidates tend to focus on big donors. To preserve the emphasis on small donors, he suggests (for the NYC program) that the programs could raise the matching amount from 6-1 to 10-1 for the first $100 and lower the contribution limit for participating candidates, so the big donors aren't big enough to allow smaller donors to be ignored.

This is a difficult time for local public campaign financing programs. Some like NYC's and New Haven's (which I used to administer) emphasize small donor participation. It has become more difficult to do this in the face of increased independent expenditures. Malbin's suggestion is worth considering. If effective solutions are found, those programs that put less emphasis on small donors (such as Santa Fe) may make changes to make this a greater priority.

Robert Wechsler
Director of Research-Retired, City Ethics

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