OLR Research Report

November 5, 1999





By: Mary M. Janicki, Chief Analyst

You want information on the sources of public financing for political campaigns. You are particularly interested in income tax checkoff systems and the amount of funds they generate. You want to know the participation rate in the federal income tax checkoff program for presidential campaigns.


States use a variety of methods to fund their public financing programs, including:

1. legislative appropriations,

2. income or property tax checkoffs,

3. income tax add-ons,

4. voluntary contributions,

5. lobbyist and candidate filing fees,

6. corporation filing fees,

7. assessments on campaign contributions,

8. automobile or boat license and registration fee surcharges,

9. surplus funds from candidates who participate in the public funding program,

10. election law violation penalties and fines, and

11. interest on the fund principal.

With a tax checkoff, a taxpayer can designate a specified portion of his income tax liability (the tax he owes) to the fund. For a joint return, the amount may be doubled. The tax owed is not increased, but a portion of the tax paid is dedicated to the state's election fund. A tax add-on is a donation to the fund that the taxpayer makes from his refund when filing his return. In some cases, the taxpayer can increase the donation above the specified dollar amount. But the add-on is in addition to the tax owed.

In the eight states that provide public funds for political parties, four raise the money from a tax checkoff (Idaho, Iowa, Ohio, and Utah), three get the money from a tax add-on (Alabama, New Mexico, and Virginia), and Indiana uses the personalized or vanity license plate fees. Under those programs, the money collected is allocated to political parties in the state. But the fund has no set liability nor does it owe any party a particular amount.

With public financing programs for candidates, on the other hand, participating candidates are entitled to a state grant in an amount specified under the law and to additional funds if a nonparticipating opponent spends more than the limit. If the money in the fund is insufficient to meet these obligations, the money is typically distributed proportionally among qualifying candidates or according to a formula established in the law.

Funds that rely on tax checkoffs or add-ons, voluntary donations, or the assortment of other sources are usually inadequate when disbursements are due. Consequently, candidates are reluctant to participate in a public financing program if the grant fails to meet realistic spending needs or if they have nonparticipating opponents. Details of the taxpayer participation rates in Hawaii and Massachusetts (under its program in effect before the 2002 version that includes an appropriation) appear below.

No state funds its public financing program with an appropriation alone. But in some, the legislature must approve a supplementary appropriation to make up the shortfall from other sources. The programs that include appropriations from state revenues are the most viable.

States that fund public financing of election campaigns with appropriations are: Florida, Hawaii, Kentucky, Maine, Massachusetts, Minnesota, Nebraska, New Jersey, Rhode Island, and Vermont. Of these, the laws in Florida, Maine, Massachusetts, Nebraska, and Vermont are new and the programs have yet to be fully implemented. New Jersey's plan, applicable to gubernatorial races, has been in effect for several election cycles with high candidate participation rates and full funding.

Participation in the federal income tax presidential fund has been steadily dropping. Between 1976 and 1995 (the latest year for which participation rates are available), the percentage of tax returns processed indicating the checkoff designation fell from 27.5% to 12.9%.


Massachusetts has had public financing in place since 1978 and candidates for governor, attorney general, secretary, and auditor qualified for and received funds in 1998. At that election, voters also approved a ballot question (the “Clean Elections Initiative”) that will be in effect for the 2002 election cycle, changing the rules somewhat from the previous program and adding an appropriation for funding.

In its report on the program for the 1998 statewide office election, the Office of Campaign and Political Finance (the state elections enforcement agency) noted that

while a record $1.7 million was made available and distributed to candidates, that amount was far less than what was needed to fully fund the program. No candidate received the full amount to which he or she would have been entitled under statute due to limited funding. In fact, many candidates received no money at all, despite having taken the required pledge to observe spending limits in return for eligibility for public funds.

The report includes the following breakdown of funds available since its first application in 1978.

Table 1: Amount Available for Disbursement

State Election Campaign Fund, 1978-1998




$ 175,161.00











Source: “Report on the Limited Public Financing System for Candidates for Statewide Office in the 1998 Election,” Office of Campaign and Political Finance, January 29, 1999.

As with most state programs, the number of candidates who participate varies depending on the candidates themselves, the particular circumstances of the race, and the amount of funds available.

Massachusetts' program provides an interesting example of the differences in participation rates because at different times a checkoff and an add-on were used. At the beginning of its history, the sole source of funding was the add-on, that is, designating money to the fund meant a $1 or $2 increase in the taxpayer's liability. During that period, from 1976 to 1993, less than 5% of filers contributed. In 1994, funding switched to a checkoff, resulting in a substantial increase in participation, though the result was still an underfunded system.

Table 2: Taxpayer Participation in the State Election Campaign Fund

Tax Year

Participation Percentage

1993 (Last year of the add-on)










Source: “Report on the Limited Public Financing System for Candidates for Statewide Office in the 1998 Election,” Office of Campaign and Political Finance, January 29, 1999.

The new Clean Elections Act keeps the tax checkoff provision but adds a legislative appropriation to the funding sources to eliminate the shortfall in the grants to which qualifying candidates are entitled.


Hawaii's program applies to candidates for all nonfederal offices and typically candidate participation rates are high. Activity in the fund for 1998 includes total receipts of $582,967.26, of which 48.1% came from Department of Taxation revenue through the checkoff. Another 42.3% came from investment interest. As of December 31, 1998, $335,307.29 had been disbursed to candidates for the year. The closing fund balance as of January 2, 1999 was $4,787,517.32.

Hawaii's taxpayers can indicate on tax forms whether they want $2 to go to the Hawaii Election Campaign Fund. During the 1990s, the tax checkoff participation rate has stayed around 25%. It was 25% in 1991 and 23% in 1998, with a high of 27% in 1992 and a low of 21% in 1996.


Participation in the federal checkoff program for funding presidential campaigns has fallen in the past 20 years from 27.5% in 1976 to 12.9% in 1995. While the rate held steady around 26% in the six years from 1976 through 1981, it has dropped gradually since then. Interestingly, the biggest drop was from 18.9% to 14.5% in 1992 and 1993 respectively, after a presidential election year when voter turnout was unusually high. The chart below shows the 20-year trend.

Source: Federal Election Commission