April 12, 2006
PUBLIC FINANCING OF CAMPAIGNS: CONSTITUTIONAL ISSUES AND IMPACT
By: Adam Wolkoff, Legislative Fellow
You asked (1) if courts have upheld the constitutionality of public financing programs, and (2) how public financing has impacted elections.
While other states have limited public financing systems, only Arizona and Maine offer full state funding for gubernatorial, statewide office, and legislative candidates. Thus, this report focuses almost entirely on these two states.
Both Arizona and Maine faced legal challenges to their public financing laws, both of which became effective in 2000. Those who have brought the lawsuits, including candidates, lobbyists, and civil liberty advocates, have argued that public financing programs coerce involuntary participation, limit the ability of individuals and organizations to exercise free speech rights, and force taxpayers to subsidize candidates whose views they may oppose.
Yet state and federal courts have upheld the constitutionality of these laws, holding that public financing does not place an undue burden on the free speech or equal protection rights of (1) candidates who do not participate (i.e., nonparticipating candidates) or (2) their supporters. The Supreme Court declined to hear an appeal from at least one of these cases.
While courts have upheld public financing laws, the extent to which these systems have impacted elections is not yet entirely clear. The Campaign Finance Reform Working Group, which met last year to study changes to the election system, summarized a number of research reports on public financing, including a review of the General Accountability Office's (GAO) 2003 report on the 2000 and 2002 elections in Maine and Arizona (See, OLR Reports 2005-R-0191 and 2005-R-0620).
In that report, the GAO used five goals to determine the effectiveness of these programs. According to GAO, public financing systems are generally intended to (1) increase voter choice, (2) increase electoral competition, (3) reduce the influence of special interest groups, (4) curb increases in the cost of campaigns, and (5) increase voter participation. Based on its research, the GAO concluded that it was too soon to determine the extent to which the public financing programs have met their goals.
This report summarizes two reports we located since publishing our August 2005 report. One study analyzes the effect of public financing on the amount of time legislative candidates spent fundraising. The other report studies public financing's impact on (1) the number of contributors and their economic, geographic, and ethnic diversity, and (2) the size of campaign contributions.
Given the limited amount of new research available on the public financing of campaigns, it still appears to be too soon to make definitive conclusions about its impact.
In 1996, Maine voters approved the Maine Clean Election Act by ballot initiative. The act established a voluntary system of full public financing for the primary and general election campaigns of gubernatorial and legislative candidates. To qualify for state grants, candidates must agree to forego private funding sources other than seed money and qualifying contributions, abide by spending limits, and comply with other program requirements. Under the act, participating candidates may receive supplemental funding, so-called “matching grants,” when their nonparticipating opponents exceed the spending limit. Finally, the act reduces the amount of money that individuals and political action committees, known as PACs, may contribute to any candidate, regardless of whether he participates in the program.
Daggett v. Commission on Governmental Ethics and Election Practices (2000)
In 2000, the First Circuit Court of Appeals affirmed a district court decision upholding the constitutionality of Maine's public financing statute (Daggett v. Commission on Governmental Ethics and Election Practices, 205 F.3d 445 (1st Cir. 2000)).
In that case, ten plaintiffs challenged the act's constitutionality, including the National Right to Life PAC, the Maine Libertarian Party, and a group of legislative candidates represented by the American Civil Liberties Union. They argued that the public funding system unconstitutionally burdened the First Amendment rights of candidates by coercing them to become publicly funded. They also contested the constitutionality of providing matching funds and reducing contribution limits (Daggett, 205 F.3d at 452).
The Daggett court rejected these arguments. First, it upheld the constitutionality of contribution limits based on Maine's interest in preventing the appearance of corruption. It concluded that the limits were sufficient to allow a nonparticipating candidate to raise adequate funds to run a competitive campaign.
Second, the court held that the matching funds provision did not place an undue burden on the free speech of nonparticipating candidates because this program did not limit the quantity of speech a nonparticipant could engage in or the amount of money he could spend engaging in political speech.
Third, the court held that Maine's public financing system, as a whole, did not have the practical effect of forcing candidates to seek public funding. It found that the Maine act provided “a roughly proportionate mix of benefits and detriments to candidates seeking public funding, such that it does not burden the First Amendment rights of candidates or contributors” (Id. at 472).
The court pointed to one example of this “proportionate mix” in the limited scope of Maine's matching funds provision. Maine's act offers participating candidates matching funds totaling not more than two times the initial grant amount. The court noted that once a participant reached this limit, his nonparticipating opponent would still be able to outspend him. The court also noted that nonparticipating candidates could control how much and at what time their participating opponents
received the matching funds. Such conditions demonstrated to the court that the act achieved a constitutionally-acceptable mix of benefits and detriments to participating and nonparticipating candidates.
Arizona voters passed a ballot initiative in 1998, known as the Citizens Clean Election Act (CCEA), which created a voluntary public financing system for election campaigns. Under the act, Arizona provides participating candidates with an initial grant and matching funds if their nonparticipating opponents exceed the spending limit. Participating candidates may also receive compensation for money that third parties spend on advertisements advocating their defeat or their nonparticipating opponent's victory.
Since the act's passage, several cases have challenged the constitutionality of the system, according to the Brennan Center for Justice at the New York University School of Law. We summarize two leading opinions below.
Association of American Physicians and Surgeons v. Brewer (2005)
In 2005, a federal district court for Arizona upheld Arizona's public financing law (Association of American Physicians and Surgeons v. Brewer, 363 F.Supp.2d 1197 (D.Ariz. 2005)). In that case, the court expressly adopted the reasoning of the Daggett court, holding that Arizona's public financing program did not violate the First or Fourteenth Amendment rights of nonparticipating candidates.
Considering the plaintiffs' First Amendment challenges to the act's constitutionality, the court held that the system was not “impermissibly coercive,” and that the state's interest in avoiding the appearance of corruption in elections was sufficiently compelling to warrant upholding the contribution limits required under the clean election law.
The plaintiffs also argued that the system violated the Fourteenth Amendment. They alleged that its system of classifying “independent expenditures” made by nonparticipating candidates and their supporters singled out certain forms of speech for disparate treatment, violating the fundamental right to political campaign speech. They also alleged that the system provided disparate treatment to nonparticipating candidates, violating their fundamental right to run as a privately supported candidate. The court rejected these arguments, holding that the government's interest in providing fair elections allowed the CCEA to pass constitutional scrutiny.
May v. McNally (2002)
In 2002, a state legislator challenged Arizona's public financing law on different First Amendment grounds than those in Daggett. Under the CCEA, Arizona imposes a 10% surcharge on criminal and civil fines to fund the public financing program. The legislator who brought the suit received a parking ticket but refused to pay the surcharge claiming it would violate his First Amendment right to free speech because the money could help pay for the campaign of a candidate with rival political views (May v. McNally, 203 Ariz. 245 (2002)).
Following the case's dismissal in federal court and a series of state court decisions, the Arizona Supreme Court held that the surcharge was constitutional based on two principles articulated by the Supreme Court.
First, the system was designed to further free speech, not impede it. The court cited the Supreme Court opinion in Buckley v. Valeo, 424 U.S. 1 (1976), which held that the government could use public funds to establish a system of campaign financing. The Buckley court reasoned that public financing was designed “not to abridge, restrict, or censor speech, but rather […] to facilitate and enlarge public discussion and participation in the electoral process, goals vital to a self-governing people” (Buckley, 424 U.S. at 92-93).
Second, the court held that the surcharge did not infringe on the First Amendment rights of the legislator because the government's policy was “viewpoint neutral,” or politically impartial. The court applied the Supreme Court's analysis in Board of Regents v. Southworth, 529 U.S. 217 (2000), which held that a state university could allocate part of a mandatory student fee to student organizations conducting “ideologically expressive activities” as long as the university was viewpoint neutral in providing that support. Likewise, Arizona could dispense the proceeds of the surcharge to candidates as long as it did not discriminate on the basis of the candidate's political views.
The Supreme Court declined to hear an appeal of this case in 2003 (May v. Brewer, 538 U.S. 923 (2003)).
RESEARCH ON PUBLIC FINANCING
This report summarizes additional research we have found since the publication of OLR Report 2005-R-0191. As we noted in that report, studies on public financing's impact remain inconclusive because of the short length of time the laws in Arizona and Maine have been in effect (i.e., 2000).
“The Impact of Public Finance Laws on Fundraising in State Legislative Elections”
Background. In their 2003 paper, “The Impact of Public Finance Laws on Fundraising in State Legislative Elections,” University of Maryland political scientists Peter L. Francia and Paul S. Herrnson assessed the impact of public funding on the amount of time candidates devote to fundraising. They predicted that candidates who accepted full or partial public funding devoted less time to fundraising than candidates who received no subsidy.
The researchers mailed a nationwide survey in March 2001 to a random sample of candidates who ran for statewide, congressional, state legislative, local, and judicial offices between 1998 to 2000. They asked the candidates, “[a]pproximately what percentage of your personal campaign schedule was devoted to fundraising?” For the purposes of this study, Francia and Herrnson only analyzed data from state legislative candidates. Of the 6,644 questionnaires they sent to state legislative candidates, they received 2,317 responses from 50 states, a response rate of 35%.
The analysis controlled for variables including type of funding (full or partial public funding, or private funding), candidate characteristics (incumbent or other political experience), party identification, level of electoral competition, level of chamber competition, state campaign finance laws, term limits, and legislative professionalism (i.e., how desirable were the contested seats?).
Conclusions. The researchers generally concluded that candidates who accept public funding devote less time to fundraising, but that this benefit only appears in states with full, rather than partial, public funding. We summarize the specific findings below.
1. A “typical” legislative candidate who ran in a state that did not provide full or partial public funding spent 28% of his campaign schedule soliciting contributions.
2. In Maine and Arizona, the typical candidate who accepted public funding devoted on average only 11% of his campaign schedule to fundraising, while a nonparticipating candidate spent 27% of his time raising money.
3. In states with partial public funding, such as Hawaii, Minnesota, and Wisconsin, candidates who accepted funding actually devoted more time to fundraising than candidates who did not accept any funding (27% to 24%, respectively).
“Reclaiming Democracy in Arizona: How Clean Elections has Expanded the Universe of Campaign Contributors”
Background. In its 2004 paper, “Reclaiming Democracy in Arizona: How Clean Elections has Expanded the Universe of Campaign Contributors,” the Clean Elections Institute, an Arizona non-profit organization, tracked the impact of public financing laws on Arizona's 1998 and 2002 gubernatorial campaigns, using data provided by the Institute on Money in State Politics. The 1998 campaign was the last gubernatorial race before the CCEA became effective.
Conclusions. The Clean Elections Institute determined that Arizona's public financing system, which requires candidates to collect $5 qualifying contributions to be eligible for funding, increased the number of contributors to gubernatorial campaigns. The total number of contributions to all candidates rose from 11,234 in 1998 to 38,579 in 2002. Meanwhile, the total number of candidates receiving “significant” numbers of contributors grew from two in 1998 to seven in 2002; of the seven, only one was a nonparticipant. The Institute also showed an increase in the geographic, economic, and ethnic diversity of the contributors.
The study found that the geographic diversity of contributors increased because participating candidates generally sought their required qualifying contributions from communities with which they had the closest ties. For example, one candidate garnered 54% of her contributions from her rural home county, which contained only 3% of the state's population.
Also, the study found that public financing increased the influence of lower income contributors, while decreasing the influence of higher income voters. It found that participating candidates secured up to 68%
of their contributions from zip codes with per capita incomes below $40,000, while the nonparticipating candidates in 1998 and 2002 secured less than 30% of their contributions from these zip codes.
Finally, the Clean Elections Institute found greater ethnic diversity among contributors, especially Latinos, than before the CCEA was effective. It pointed to a Hispanic candidate who secured 59% of his contributors from zip codes with above average Latino populations.
Notably, the winner of the 2002 gubernatorial election, democrat Janet Napolitano, was a publicly funded candidate. According to the data in this report, her average contribution per donor was $12 and comparable to most of her participating opponents whose average contributions per donor ranged from $6 to $13. By contrast, the only nonparticipating candidate in the 2002 race had an average contribution of $293 per donor.