ICPR to task force: Public financing is attractive and viable
The campaign contribution limits law created in the wake of the Blagojevich scandal created a special task force and charged it with studying various campaign finance-related issues. The first item on the group's to-do list is producing a report on public financing, and that is due by the end of the year.
ICPR, a strong proponent of public financing, provided the following testimony at this afternoon's hearing in the Capitol. (A second public hearing is scheduled Dec. 15 in Chicago.)
Check it out!
David Morrison
Deputy Director, Illinois Campaign for Political Reform
November 28, 2011
Good afternoon members of the Campaign Finance Reform Task Force. My name is David Morrison, and I am the Deputy Director of the Illinois Campaign for Political Reform. The late Sen. Paul Simon co-founded ICPR in 1997, after co-chairing a task force on campaign finance reform with former Gov. William Stratton. Between them, Simon and Stratton both had decades of experience in Illinois politics, from both of the two largest political parties. And the final report of the Simon-Stratton Commission worried about what they called a “startling growth and dominance of money” in political processes and elections. They concluded that people in Illinois increasingly felt unrepresented by their own elected officials.
In the years since ICPR’s founding, the state has taken several major steps forward to minimize the risks posed by private campaign contributions. Just two examples of recent changes:
• In 2005, Illinois created an on-line voters guide, which allows candidates for certain offices to speak directly to voters at a minimal cost.
• And in 2009, Illinois enacted contribution limits on candidates, political parties, and political action committees, which addresses the problem of people who write very large checks and then appear to receive benefits that the general public cannot receive – things like state jobs, appointments to boards and commissions, favorable regulatory rulings, and contracts.
These changes were designed to address specific threats or risks of corruption, or the appearance of corruption. Public financing is one more step that Illinois could take to address that risk. ICPR has long supported public financing for statewide, legislative, and especially judicial candidates, , and I commend this Task Force for exploring ways to use public financing to improve state government.
Let me acknowledge at the outset that no system of laws will prevent corruption. As long as government is staffed by mortals, there will be a risk of that our democratic republic will not reach its goals, and a concomitant risk that the public will understand that failure as proof that government is corrupt. But there are steps that Illinois can take to minimize those risks, to assure the public that elected officials are concerned mostly with the interests, wants and needs of voters.
There are two broad forms of public financing which I will outline: what might be called block grants, which candidates can opt to receive, and taxpayer-directed systems, in which the funds are given by taxpayers.
In block grant systems, candidates take steps to qualify for public funds and if they satisfy the requirements, they receive a sum or sums of money. This is how the US presidential system works, and is the model for systems in many states. These kinds of systems have been around for decades, and courts have regularly held that such programs are appropriate and constitutional exercises of state authority.
The key to setting up block grant systems is to find the right balance, so that there are adequate funds for candidates without spending too much from the public treasury. Giving candidates more than they need is a waste of public resources; not giving enough will discourage candidates from opting into the program. The initial allocation of funds should be adequate for a typical, “garden variety” race. Problems have arisen with candidates who opt into a public financing system and received an initial grant of funds, only to learn that they are not in a garden variety of race and need more money in order to remain competitive. Note that in any given year, the cost of running for the General Assembly, for instance, varies greatly from one district to another, and from the primary to the general.
It is well worth remembering, in instances where the cost of a particular candidate’s race turns out to be higher than expected, that it is not necessary to spend more than your opponent(s) in order to win the election. When one candidate starts spending much more than another, the practical result is not that other candidates must match them dollar for dollar. More often, the result can be that a candidate needs to spend more in order to be heard and considered by voters, but not as much as the other candidate is spending.
A widely-used solution to this problem of unpredictability was through the use of so-called “rescue” or “trigger” funds. The public financing program in Arizona was created in the wake of a huge corruption scandal, with broad public support. It provided an initial grant of funds, and allowed candidates to apply for additional funds based on spending by opposing candidates or interest groups. It was this trigger for additional funds, this idea of basing additional funds on oppositional spending, that was the subject of the recent US Supreme Court ruling from Arizona, in which the high court declared, by a 5-4 vote, that such triggers were an impermissible burden on that oppositional speech. However, the Court upheld public financing generally, recognizing it as a tool to address the fact or appearance of corruption.
So if oppositional spending cannot be used to provide additional funding to candidates who find themselves in races that are more complex than they expected, then how can a state design a program that assures candidates that if they opt in, they will have the resources to run a competitive race? Tracey Westen, founder and CEO of the Center for Governmental Studies, has outlined several options:
(1) The state could increase the initial grant of money. This solution increases the cost of the program and gives funds to candidates who in truth do not need it, but it is one way to ensure that candidates have enough to face any opponent.
(2) The state could allow the candidate to raise private donations in addition to the initial public grant. Public finance systems are often set up to address concerns that private money is corrupting or appears to be corrupting, and so set strict limits on how much private money a candidate may raise. Some systems prohibit private fundraising; many require candidates to prove viability by raising a set number of small donations, and cap those small donations to further limit the risk or appearance of corruption. One option would be to allow candidates to continue to raise small donations without a cap on the total number of private contributions. The more private money a system allows in, the greater the risk of actual corruption or the risk of the appearance of corruption, but allowing candidates to continue to raise private money within strict limits should reduce those risks.
(3) Somewhat related, the public financing system could combine allowing candidates to raise small amounts of money with a public funding match. I’ll talk more about public matching later, but giving candidates 4:1 or 8:1 in public funds for every dollar they raise in private money is another way of addressing the trigger issue.
(4) Opinion polling is another means of providing additional funds to candidates who need them. For instance, the election authority could conduct a poll of a district and use the polling results to make an additional allocation to participating candidates. If the poll finds that there is no clear favorite in the race, either because the candidates are close to each other or because a large block of voters is undecided, then they could give additional funds to participating candidates in those races. This approach would target money to races where additional outreach to voters would help them to decide whom to support.
Block grant systems like those I’ve just outlined represent one common form of public financing, programs designed to give candidates an option that may shield them from charges that they are overly dependent on a particular private donor. Another common system is to give taxpayers the option of allocating a portion of their annual tax bill to a given candidate or group of candidates. These systems offer a tax credit or other incentive to make campaign donations.
Illinois currently offers a tax check-off to raise money for charitable causes. This check-off raises the amount owed by the taxpayer – the check-off is on the tax form, but does not relate to the taxpayers’ income or the amount of taxes owed. The cause that raises the most money, the last time I checked, raised on the order of two hundred thousand dollars a year. While that is a significant sum, it is worth noting that $200,000 a year will not be enough to fund a public financing system for even one statewide race, let alone all statewides, legislators, or judicial candidates.
Other taxpayer systems, like the federal presidential system, allow taxpayers to allocate a portion of what they owe in taxes to the public financing program. Allowing taxpayers to direct a portion of the taxes they owe to a public financing program would generate more funds for candidates; additionally, offering a tax credit for small campaign donations would give taxpayers control over which candidates benefit from the program.
A few years ago, ICPR surveyed contributions to campaigns, and found that “In a state of 13 million people, where about five and a half million voters took ballots in the 2004 general election, it appears that fewer than 43,000, or roughly ½ of 1% of all adults, made a campaign contribution to a state political committee.”
A very small percentage of Illinoisans give to candidates. Increasing the number of people who give to candidates, even if they give small amounts, can change the dynamic of campaign financing in significant ways. Prof. Michael Malbin, of the Campaign Finance Institute at George Washington University and also a professor at SUNY-Albany, has done extensive research on these kinds of taxpayer-incentivising systems, including a thorough consideration of Illinois’ campaign finance records.
A system of public financing designed to encourage small donors to contribute to campaigns could greatly increase voter participation in campaign financing and change the dynamic of how races are funded. Affording voters an income tax credit for the first $50 that they give to candidates in any given year could encourage more Illinoisans to give money to campaigns.
Prof. Malbin found that in 2010, donors who gave less than $150 accounted for 3% of all fundraising by statewide and legislative candidates. Offering a tax credit for contributions of up to $50 could increase the number of small donors to as many as 200,000, raising the share of small contributions to 14%. Combining a tax credit with a 5:1 match would raise the percentage of money resulting from small donors to 62% of all money raised.
I realize that there are strict budget constraints on Illinois government, and so let me outline several possible funding sources:
General revenue: several states fund their programs with general revenue. I understand that general revenue is in short supply these days. The $50 tax credit outlined by Prof. Malbin could cost the state $10 million in tax receipts. Adding a 5:1 match could encourage more people to give, raising the cost to the state to $100 million. I will suggest several revenue sources used in other states, but I also want to point out that the lack of surplus funds in general revenue need not torpedo any public financing proposal, including plans that would offer a tax credit to taxpayer directed contributions. Illinois could establish a fund drawing on other revenue sources, and use that as a hold-harmless revenue source to replace funds lost to the general revenue fund from a tax credit program.
Penalty surcharges: Arizona and other states have used a surcharge on criminal and civil penalties. In Arizona, the surcharge is 10%, and it generates over $2 million each year. Massachusetts raised $5 million in speeding ticket surcharges and $1 million from DUI surcharges.
Attorney filing and appearance fees. ICPR has estimated that adding $1 to filing and appearance fees paid by attorneys in civil cases would raise almost $2 million each year.
Attorney registration fees: North Carolina charges all registered attorneys a set fee each year, a portion of which goes toward their public financing system. In theory, having judges who are not dependent on contributors benefits all lawyers who practice in North Carolina. There are almost 90,000 attorneys on the Master Roll in Illinois, and an addition of $20 per year, even if there were offsets for the increased appearance and filing fees, would generate well over $1 million each year. These registration fees, it should be noted, are set in Illinois by the Supreme Court, not the legislature, and so the General Assembly cannot design a program that relies solely on such fees. But, the General Assembly could create a program that allowed the Supreme Court to add such monies to a public finance fund at its discretion.
I applaud this Task Force for examining public financing. I recognize that the state faces a fiscal deficit, and that money is in short supply. I hope you also recognize that the state faces a credibility deficit, and that public support for government is also hard to come by. Too many voters think that contributors matter more than constituents. Instituting public financing would be one way to assure the public that contributors have no special access or influence. ICPR has long supported public financing for statewide and legislative candidates, but we also think that public financing is ideal for the judiciary.
Judges, after all, are different. They are elected to interpret the laws, not to write them. Judges do not represent either constituents or contributors; rather, they serve the constitution. But private financing of elections threatens that. The US Supreme Court recognized the threat to the public’s trust in the judiciary in their recent Caperton v Massey ruling. And here in Illinois, litigants have cited campaign contributions in their arguments for a justice of the state Supreme Court to recuse himself. Enacting public financing in any of the three branches of government would be good public policy; it would be particularly wise in judicial elections.
Public financing is one way to help candidates avoid the risk of corruption that can arise in the context of soliciting or collecting private campaign contributions. I commend this Task Force for exploring the possibilities, and I will be happy to answer any questions you may have.
