Public Finance Fund Memo to House and Senate Appropriations
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 Governorís
proposed use of the Vermont Campaign Finance Fund to help balance
this yearís 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 Governorís Proposal: The Governorís 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 Vermontís Campaign Finance Reform Law. He proposes to
do this by appropriating money from that account to balance this
yearís budget, and by sweeping the fee money that funds the
account into the general fund until the court case is finally
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
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
governorís 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 Vermontís 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.
- limited campaign contributions to candidates, PACs and
- defined and limited related expenditures on behalf of
- 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 lawís 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
Considerations: I have been a strong supporter of Vermontís
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 Vermontís 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 Maineís 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 Ė to stop the money race, eliminate
the influence of "big money" on politics, and to level the playing
field among candidates Ė 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
There are a number of ways in which the legislature could
address this failure and meet the objectives of Vermontís campaign
finance law. These include:
- 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 Vermontís 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.
- 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 Ė or high enough to create an
incentive for all candidates to opt for public financing.
- 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 Vermontís democracy.
Conclusions: I am aware that this will be a very
difficult budget year, and that hard choices are going to have
to be made about funding for human needs and public safety.
While I feel strongly that public finance of elections is a good
way to reduce the influence of money in politics, in the event
that the legislature decides to use this money for other
purposes, I would urge them to have a corresponding commitment
both to close the political party loophole in our law, and to
revisit the issue of public finance of elections when we know
the form our campaign finance law is going to take after final
Thank you for the opportunity to address you on this issue.