Elections: C

Public Finance Fund Memo to House and Senate Appropriations Committees: January 9, 2002
 

To: House and Senate Appropriations Committees

From: Secretary of State Deb Markowitz

Re: Public Finance Fund

Date: January 9, 2002

This memo is a follow up to my testimony about the Governor’s proposed use of the Vermont Campaign Finance Fund to help balance this year’s budget as part of the Budget Adjustment Act.

As the legislature grapples with the question of whether to use money it has collected in the campaign finance fund it is important to look at the context in which this question has arisen, keeping in mind the goals of our campaign finance law.

The Governor’s Proposal: The Governor’s proposal, as I understand it, would be to temporarily take money from the campaign finance fund until a final decision is made in the court challenge to Vermont’s Campaign Finance Reform Law. He proposes to do this by appropriating money from that account to balance this year’s budget, and by sweeping the fee money that funds the account into the general fund until the court case is finally resolved.

This means that on a temporary basis very little money will remain in the campaign finance account. The money which remains will primarily be the money that individuals have contributed to the fund as part of a tax form check-off. This amount, at present, totals around $16,000. When the court case is resolved, money will flow back into the account, and individuals wishing to run for Governor and Lieutenant Governor will have public funds available for their races.

No change would be required in the campaign finance law to accomplish this.

Note that because of the court challenge, our current campaign finance law is very different from the one passed by the legislature in 1996. The question before the legislature today is whether the public financing provision accomplishes its objectives in light of changes to other provisions of the campaign finance law. In other words, if the legislature had adopted the campaign finance law that is in place today, would this have been the public finance law it would have included as part of that law? The governor’s proposal permits the legislature to revisit the question of public finance of elections when the question of what our campaign law looks like is finally settled by the courts.

Background Information. Public finance of elections was one component of Vermont’s campaign finance reform effort adopted by the Vermont Legislature in 1996. As passed, this law was the most comprehensive and aggressive campaign finance law in the nation. The law:

• limited campaign contributions to candidates, PACs and political parties,
• defined and limited related expenditures on behalf of candidates,
• limited out of state contributions,
• set limits on candidate spending, and
• 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 www.vtb.uscourts.gov.) That case is now on appeal to the Second Circuit Court of appeals.

In its decision, the Vermont District Court struck as unconstitutional candidate spending limits, and it held that although the State could restrict contributions by political parties to candidates, the limits established by this law were unconstitutionally low ($200-$400, depending on the campaign). As the result of these changes in the law (and some very competitive races) more money than ever before was spent on the 2000 elections.

Considerations: I have been a strong supporter of Vermont’s Campaign Finance Reform efforts. One of the most important ways we can address public cynicism about government and those who govern is to reduce the influence of money in the political process. Public finance of campaigns is one way to do this.

Over the years I have been in office, my elections division has worked hard to successfully implement Vermont’s campaign finance law, even as it changed in the middle of a campaign year. My staff and I have also worked closely with the legislature to look for ways to improve and strengthen the law, and to make it work as we wait for the court to take final action.

• In 1999 I made suggestions for technical corrections to the campaign finance law designed to improve implementation efforts and to close a few remaining loopholes in the law.
• Again in 2001 I submitted memos and testified about ways we might strengthen and improve the law, particularly in light of the legal challenge and court decision striking portions of the law as unconstitutional.
• In March of 2001 I also sent a memo to the House and Senate leadership suggesting that a conversation begin about whether to revisit the public finance provision of the campaign finance law in light of the court decision striking the campaign spending limits as unconstitutional. At that time, as now, I suggested that we look to Maine’s campaign finance law which funds legislative races and permits campaign finance grants to increase as non-publicly financed opponents spend more than the initial grant amounts.

It makes sense to take a fresh look at the public finance provisions of the campaign finance law. The stated objectives of the public finance provisions – to stop the money race, eliminate the influence of "big money" on politics, and to level the playing field among candidates – was far from met in the last election as we saw more money spent than ever before in Vermont.

Without spending limits, public financing in its current form cannot work to level the playing field nor can it de-emphasize fundraising in our campaigns or get rid of "big money." This is because candidates who choose not to accept public money can raise and spend unlimited amounts while candidates who agree to public financing may spend no more than the public finance grants. Serious candidates in a competitive race cannot take public financing and risk that a non-publicly funded opponent will be able to outspend them more than 2 to 1. Indeed, in the last race, the publicly funded candidate was limited to spending $300,000 while his opponents each spent more than $1,000,000. We also saw that, while public financing can open the door to some independent candidates, it is only realistically available to candidates for governor or lieutenant governor who already have name recognition and a statewide organization to assist with obtaining qualifying contributions

There are a number of ways in which the legislature could address this failure and meet the objectives of Vermont’s campaign finance law. These include:

1. Close the political party loophole. As I suggested in my memo to the Legislature in 2001, the best way to eliminate the influence of big money in politics and to even the playing field in Vermont’s campaigns is to close the political party loophole created by the Federal District Court decision. The loophole in the law permits the political parties to pour unlimited money into campaigns. In fact, in the last election the parties contributed more than $1,000,000 to the two major party candidates for governor. A reasonable contribution limit on political parties of $15,000 or $25,000 would meet the requirements of the court decision.

   With the political party loophole closed there would be no influence of big money on politics in Vermont. (Note that all other contributions in statewide races are limited to $400.) This would even the playing field since, with political party contributions capped at a reasonable amount, all candidates can play by the same rules and all have equal opportunity to fundraise to support their races.

2. Amend the Public Finance Law To Increase Grants as Opponents Spend More. The current public finance law can also be fixed by adopting a Maine-style public finance statute which permits publicly financed candidates to receive additional money as their opponents outspend them. This could be a costly fix, but if the political party loophole is closed, statewide races will go back to a more reasonable amount. (It is hard, afterall, to raise more than $500,000 in $400 increments!) The total grant could be capped at $500,000 – or high enough to create an incentive for all candidates to opt for public financing.
3. Amend the Law to Fund Legislative Races. As I suggested in my memo of March 2001, the legislature could choose to fund legislative races. The vast majority of these races spend within the proposed (non-mandatory) limits, so the fact that there is no spending limit will have less impact on the effectiveness of the law. By offering public financing for House and Senate candidates who demonstrate grassroots support we will enable broader participation, encourage more diverse representation and we will strengthen Vermont’s democracy.