Review of Practical Policy and Legal Issues of
Vermont's Campaign Finance Law - 17 V.S.A. 2801 et. seq.
January 9, 2001
TO: Senate Government Operations / House Local Government Committees
FROM: Secretary of State Deborah L. Markowitz
RE: Review of Practical Policy and Legal Issues of Vermont’s
Campaign Finance Law - 17 V.S.A. 2801 et seq.
DATE: January 9, 2001
Where We Are Now:
In 1996 the Vermont Legislature adopted the most comprehensive and aggressive campaign finance law in the nation. The law limited campaign contributions to candidates, PACs and political parties, it defined and limited related expenditures on behalf of candidates, it limited out of state contributions and set limits on candidate spending. The law also included a public finance provision for candidates for governor and lieutenant governor. Some of the law’s provisions were adopted with the express intent of challenging restrictive readings of United States Supreme Court precedent Buckley v. Valeo, and as expected a court case followed. On August 10, 2000, the Vermont Federal District Court struck some of the provisions of the law as unconstitutional. See Landell et al v. Sorrell et al, Docket No. 2:00-cv-146. (The decision is available at http://www.vtb.uscourts.gov.) That case is now on appeal to the Second Circuit Court of Appeals.
In the interest of having certainty for the rest of the 2000 Election cycle for all candidates, political parties, and political committees, the Attorney General did not seek a stay of any part of the August 10th decision. In addition, there was an earlier decision by the 2nd Circuit, Vermont Right to Life Committee, Inc. v. Sorrell, Docket No. 98-9325, that has affected some of the reporting sections of the campaign finance law.
The following is a summary of the current status of the principal provisions of Vermont’s campaign finance law:
- Spending Limits: There are no spending limits for any candidate for public office. (17 V.S.A. §2805a "Campaign Expenditure Limitations; Amounts" was struck as unconstitutional.) There continue to be no spending limits for PACs or political parties.
- Contribution Limits:
- $200/$300/$400 Limits to Candidates. Single sources (individuals, corporations, associations, etc. . . . are limited in what they can contribute to candidates and candidates are limited as to what they can accept.)
- Unlimited Contributions from Family Members. An individual and his or her immediate family can give unlimited contributions to his or her own campaign.
- Unlimited Contributions from Political Parties to Candidates. (The court struck the limits on contributions from political parties to candidates in 17 V.S.A. §2805(a))
- $2,000 limitation on contributions to Political Parties. Vermont law limits contributions to political parties to $2000. This does not affect a political party’s ability to accept contributions into its "Federal" accounts. The federal rules pre-empt state law with respect to these accounts.
- $2,000 limitation on contributions to PACs. The limit on contributions to PACs was upheld by the court.
- No Limit on Out of State Contributions: Contributions from out of state will no longer be treated differently than contributions from in state. (17 V.S.A. §2805(c) was struck as unconstitutional.)
- Related expenditures (spending by a person or group other than the candidate, that the candidate has "intentionally facilitated, solicited or approved) count as contributions to the candidate and must be reported as such.
- Independent Expenditures made by an individual or group without a candidate’s intentional facilitation, solicitation or approval does not count as a contribution to or expenditure by the candidate.
- Reporting Requirements:
- Candidate Periodic Reporting: All candidates, political committees, and political parties, who have spent or raised $500 or more, must file reports with the Secretary of State 40 days before the primary, on the 25th of every month beginning in August of the election year, and then 40 days following the election, in addition to a report in July of the off-year.
- Reports of Mass Media Activities: Mass media activities totaling over $500, made within 30 days of a primary or general election must be made to the Secretary of State’s office within 24 hours of the expenditure. This only applies to activities that expressly advocate the success or defeat of a candidate.
- "Paid for by" requirements. All advertising (brochures, letters, ads, buttons, bumper stickers, etc) that expressly advocates the success or defeat of a candidate must have "paid for by" with the name and address of the treasurer or person who paid for the advertisement clearly legible on the advertisement. (17 V.S.A.§2881, 2882.)
It applies only to candidates for governor or lieutenant governor who do not raise or spend more that $500 before February 15th of the general election year. (17 V.S.A. § 2853). After February 15th but before July 15th of the campaign year the candidate must collect the required amount of qualifying contributions, in amounts no greater than $50 and not more that 25% from any one county: (Governor - $35,000.00 collected from 1,500 individual contributors. Lieutenant governor - $17,500.00 collected from 750 individual contributors.)
- Public Financing:
- Spending Limits: Publicly financed candidates can only spend public money which means they are bound by the spending limits for the race and no in kind contributions may be accepted.
- Amount Left in Fund: This year we spent approximately $320,000 in public finance grants. We currently have approximately $694,077. We anticipate that corporate annual fees will bring this fund up to $1,192,767 by early spring. Note that an earlier court case struck as unconstitutional the lobby tax that helped support this fund. The numbers above do not include $259,883 that is to be returned to the lobbyists in the event that the lower court decision is upheld. The fund is currently supported solely through corporate registration fees.
Critical Review of the Law:
There is no question that, despite the existence of the new campaign finance law more money that ever before was spent on this past year’s elections. It is important to remember, however, that because of the civil union issue there was unprecedented national interest in the outcome of our elections. There is no way of knowing what would have been spent without the campaign finance law in place. However our experience this year points to some obvious weaknesses in the law and suggests some strategies for improvement. The comments below focus on practical, legal and - in some instances - policy concerns for your committees’ consideration.
1. Preserving the Court Case: We suggest that the legislature consult with the Attorney General ’s office before making any changes to the law. The legislature should be aware that certain changes to the law, including repeal, could render the court case moot, frustrating the express legislative goal of giving the Supreme Court an opportunity to reevaluate its decision in Buckley v. Valeo. Note, however, that there are certain aspects of the law that can be changed without affecting the court case.
2. Political Party Loophole: In Landell et al v. Sorrell et al, Docket No. 2:00-cv-146 the court determined that the candidate contribution limits were too restrictive when they were applied to political parties. The court suggested that a higher limit might be appropriate. With no limit on what parties could contribute, we saw parties contribute an unprecedented amount of money to individual candidates this past election cycle.
We suggest that the legislature adopt higher contribution limits than those set out in the original law. These limits could vary depending on the race, allowing higher contribution limits in the governor’s race than for house or senate races or setting the contribution limit as a proportion of the candidate’s overall spending.
- Independent Expenditures: This year we saw independent groups raise and spend an unprecedented amount of money to influence the outcome of our elections. Direct mail and political advertising from groups identified only by their oblique PAC names inundated voters. This spending was partly the result of unparalleled national interest in Vermont’s elections, and was partly the result of the tight contribution limits that prevented individuals who were interested in the outcome of the elections from making significant direct contributions. In order to avoid the strictures of the contribution limits, groups spent money to influence the outcome of particular races without coordinating with candidates. Some candidates reported that mailings or advertisements made on their behalf attributed to them opinions they did not hold, or sent negative messages about their opponent, in violation of their stated intent to run a positive campaign. Because it is unclear whom these various groups represent (without calling our office for more information – and even then it is not always clear) independent expenditures create less accountability.
Perhaps the greatest challenge will be to figure out a way to control independent expenditures. The first amendment protects the rights of individuals and groups to send out mailings and to advertise to influence the outcome of elections. The due process clause of the constitution makes it impossible to hold a candidate accountable for expenditures he or she neither intentionally facilitated, solicited nor approved. However, we suggest that if the contribution limits to candidates were loosened it might create less of an incentive to participate in an election through independent expenditures. Contributors generally prefer to make direct contributions, and candidates much prefer being able to control how money is spent on their behalf. Contribution limits at $1000 to $3000 may create more direct accountability.
- Public Finance: Act 64 articulated two policy objectives for public finance of elections. The principal objective was to increase citizen participation in campaigns by de-emphasizing the need to fundraise. The legislature suggested that public finance of elections would leave candidates free to devote more time and energy to debating the issues and conducting grassroots campaigns, and it would enable elected officials to spend more time responding to constituents and performing official duties. As a second goal, the act states that "public financing of campaigns, coupled with generally applicable contribution and expenditure limitations, will level the financial playing field among candidates and provide resources to independent candidates, both of which will increase the debate of issues and ideas."
The public finance provision of the campaign finance law met these objectives in only a limited way. Public financing without spending limits does not work to level the playing field or to de-emphasize fundraising. This is because candidates who choose not to accept public money can raise and spend unlimited amounts while candidates who agree to public financing are may spend no more than the public finance grants. We also saw that while public financing does open the door to some independent candidates, it is only realistically available to candidates who already have a statewide organization to assist with obtaining qualifying contributions.
If the legislature chooses to leave the public finance provision in place there are issues that it should consider addressing:
- Exploratory Period. An individual becomes a "candidate" by, among other things, making expenditures of $500.00. According to the new campaign finance law a person cannot qualify for public financing if he or she becomes a candidate in this way before February 15th of the election year. 17 V.S.A. §2853(a). However, as a practical matter, individuals considering a statewide race always go through an exploratory period when s/he considers practical and personal matters before making a definite decision about running. During this period the individual who is considering running contacts people around the state to be sure that s/he will have the support necessary to run. This process can begin a year or more before the formal campaign begins, and result in travel and telephone expenses -- charges that can easily exceed $500.00 without much effort. (At the reimbursement rate of 31 cents per mile, a potential candidate who made four round trips between Swanton and Brattleboro would trigger her or his official candidacy, disqualifying them from receiving campaign finance grants.)
In order to make it possible for individuals to consider a publicly financed run for public office we suggest that the legislature consider amending 17 V.S.A § 2801(1)(A) as follows: "’Candidate’ means an individual who has taken an affirmative action to become a candidate . . . [by] accepting contributions or making expenditures totaling $500 or more, not counting the individual’s personal telephone and travel expenses during the period before February 15th of the election year." This change would make it clear that an individual who has personal telephone and transportation expenses associated with an exploratory campaign will not trigger a candidacy. The law should also make it clear that in the event the individual runs for office these expenses should count as an expenditure of the campaign and be reimbursed to the candidate from the qualifying contributions.
- Timing and Amount of Grants. The allocation of grants between primary and general elections ($75,000/$225,000 for Governor and $25,000/$75,000 for Lt. Governor) may dictate strategy of campaigns and limit primary challenges, particularly against incumbents or well financed primary challengers. One possible solution would be to allow a candidate to accept partial public financing in a primary. The candidate would be permitted to raise money in addition to the qualifier to supplement the primary election grant, and this amount would be deducted from the general election grant total in the event that he or she wins the primary election.
- Increasing Amount of Grant as Opponents Spend More. The legislature could also consider allowing candidates who accept public financing to get additional public money or to raise additional money in the event that privately funded spend more than the grant amount. The legislature should look at the State of Maine’s public finance law to see one way of accomplishing this goal.
5. Election Cycle Adjustments: According to 17 V.S.A. § 2801 (9), a two-year election cycle begins the day after a general election. This creates problems for candidates from the prior election who may want to run in the next election because there are invariably expenses associated with winding down the prior campaign (particularly in state-wide races where you have staff), or because fees and bills generated from the prior campaign continue to trickle in for some time after election day. Also, candidates may need to retire the debts of the campaign.
The issue of when the two-year election cycle begins is important because a candidate will not qualify for pubic financing if he or she has spent over $500 in an election cycle prior to February 15th of the election year. In addition, we do not believe that the legislature intended that payment of expenses and contributions to retire a debt associated with the prior election be charged to the next campaign.
We suggest that the legislature consider amending 17 V.S.A. § 2801 (9) as follows: "Two year general election cycle means the 24 month period that begins forty-one days after a general election." (When the final report of the campaign is filed by state wide and legislative candidates.) In the alternative the legislature might consider amending 2801(9) by adding "Expenditures related to a previous campaign and contributions to retire a debt of a previous campaign shall be attributed to the earlier campaign cycle." This would give a candidate longer than the forty days after an election to pay expenses and retire debts. Note that neither of these amendments would allow a candidate to circumvent the contribution limits of the campaign finance law.
6. Penalties for Minor Violations. Anyone who violates the campaign finance law is subject to a $10,000.00 civil penalty for each violation or a criminal fine of up to $1000. This is a very severe penalty and does not make it easy to sanction candidates who are late with filings or make incomplete filings, who fail to put "paid for by . . . ." on their bumper stickers, or who violate any of a number of minor provisions of the law. We suggest that the legislature consider setting late fees that can be assessed by this office and giving the Attorney General authority to assess smaller civil penalties for minor violations of the law. This would not prevent the attorney general’s office from bringing action under the other provisions of § 2806.
7. Identification of Political Advertisements. Section 2882 requires all political advertisements to include the name and address of the person or committee that paid for the advertisement, along with the name of the candidate on whose behalf the materials are being published or broadcast. This section goes on to say that "in the case of printed or written matter, the name and address shall be printed or written large enough to be clearly legible, except that this shall not apply to buttons or any written or printed matter attached to or displayed on any motor vehicle." On its face, this statute requires that buttons and bumper stickers include the required identifying information. However, given the size of many lapel stickers and buttons, this information cannot be easily included, and as a practical matter this was one of the most frequently violated provision of the campaign finance law. Accordingly, we suggest that the legislature consider exempting lapel stickers, bumper stickers and buttons printed by a candidate or the candidate’s committee in support of that candidate from the identification requirements.
8. Increased Reporting Requirements. We suggest the legislature re-think the current campaign-reporting schedule to create more accountability at the end of the campaign period. This year the last campaign finance report filed before the election was filed nearly two weeks prior to Election Day. The final report was not required to be filed until forty days after the election. Final campaign reports showed a large amount of contribution activity and expenditures occurring in the last two weeks before the election. In addition, reporters indicated that the long delay between the end of election and the final reports made the information less significant. Accordingly, we suggest the legislature consider requiring immediate reporting of large contributions during the last two weeks of the elections and restore the ten day post election filing requirement that was part of our prior campaign
Other Housekeeping Suggestions:
- Make the law clear that the candidate who rolls over his or her campaign account into a new campaign does not have to open a new bank account. 17 V.S.A. § 2807.
- Amend 17 V.S.A. § 2831 to make it clear that local political committees that form to support a local candidate (i.e. selectboard) or local ballot issue need only file finance reports ten days before and ten days after the election by deleting the phrase "in addition to other filings required by this chapter."
- Add language to 17 V.S.A. § 2883(a) to make it clear that mass media activities include newspaper advertisements.
- Add authority for the Secretary of State to require statewide candidates to electronically file their campaign finance reports to make it easier and more cost effective to put the information on the web page as required by law.
- Amend 17 V.S.A. § 2853(a)(3) to allow refunds or deposits due to publicly financed candidates but not received by the 40th day after the election to be repaid to the campaign finance fund when received.
- Require candidates who have not raised or spent $500 to file a statement at each campaign finance reporting deadline indicating that they have neither raised nor spent $500 so that no campaign finance report is due.
- Remove the provision in 17 V.S.A. § 2808 requiring the Secretary of State to prepare a list of accumulated expenses for every candidate filing reports with the office. This is a costly and time-consuming task, and the information is of limited value to the public. The limited value of the information is demonstrated by the fact that as of this time no requests have been made for this information.