The Independent View: NYC's Public Campaign Financing Matching Funds Problems

This is from an article in the New York Post by Stephen Eide, a Manhattan Institute senior fellow.

New York City Public Matching Funds

Public matching funds are intended to increase the value of small contributions from individuals, making candidates less dependent on large contributions and assisting candidates who do not have access to large moneyed sources. The overall purpose of matching funds is to reduce the role of money in politics and to help make elections more competitive. Due to a recent change in the law, the Program will match each dollar a New York City resident gives up to $175 with six dollars in public funds, for a maximum of $1,050 in public funds per contributor.

Only candidates who participate in the Campaign Finance Program and meet certain threshold requirements are eligible to receive public funds. Program participants must comply with the rules of the Program and abide by strict spending limits, which are different for each office. The total amount each candidate can receive in matching funds is capped at 55 percent of the spending limit. The limits and requirements that apply for each office are set each election year.

But Eide does not think it is working.

For all the idealism professed by advocates of taxpayer-financed campaigns, their brief is opportunistic: It tries to exploit public outrage over boodle into support for an ideological agenda that not only won’t address the root of the problem, it could easily make it worse.

Set aside the problem of cost, and look at the impact.

Taxpayer-financed campaigns put public funds in service of politicians’ personal ambitions, taking concrete form in robocalls, attack ads and big checks to lawyers and consultants whose livelihood depends on the complexity of campaign finance law.

And the proposed “match” — six taxpayer dollars to a campaign for every dollar it raises privately, should be seen as a floor, not a permanent ceiling. Following past precedent, pressure will build to boost the match.

More important, public financing definitely has not eliminated corruption from New York City government. All the local officials caught in scandal in recent years had participated in the matching-funds program.

Matching funds have even been the cause of corruption.

In 2003, Sheldon Leffler, a former candidate for Queens borough president, was found guilty of attempting to divide a large contribution into a series of small ones that would qualify for the public-funds match.

Al Baldeo and Ron Reale, unsuccessful candidates for City Council and Public Advocate, respectively, have also been convicted for attempted straw-donor schemes.

In May 2014, a Queens grand jury indicted City Councilman Ruben Wills for stealing $11,500 in matching funds via a shell company supposedly created to do campaign work.

If the question is how to address influence-peddling or “legal corruption” in state government, restricting organized labor’s political influence should be the top priority. But in the city, stricter campaign-finance rules and public financing have done nothing to weaken unions’ clout, and may have even enhanced it.

Union contributions to city campaigns are legal and eligible for the 6 to 1 match; corporate contributions have been completely banned since 1998. And each union local counts as a separate contributor, allowing for massive matching funds from a single union. Nor does a union’s organizational strength, its phone banks and legions of “volunteers”, count as a donation. The City Campaign Finance Board has long opposed such union “carve-outs.

But the politicians write the laws, and, in New York City, they’ve structured the system to give labor-friendly candidates the best of both worlds: government funds and undiminished support from unions’ formidable political machines.

Unions would likely receive similar, preferential treatment in a state-level system. After all, through the Working Families Party and other groups, they’ve been strong supporters of the push for public financing in Albany.

But even if state politicians resisted calls for New York City-style carve-outs, labor would be left with many other ways, outside of a newly restrictive campaign-finance system, to maintain their dominance, such as independent expenditures.

In fact, Gov. Cuomo has said that the only reason why public financing for all state races didn’t become law in the last legislative session is that unions wouldn’t agree to Senate Republicans’ demand that swear off independent expenditures.

In theory, campaign-finance reform isn’t inherently biased toward any special interest. Throughout US history, there may be just as many examples of new restrictions being passed to restrict unions as corporations.

It all depends on the political context, which is precisely the point. In New York state, labor has the upper hand, and therefore will likely end up even stronger as a consequence of any campaign-finance overhaul.

How would you implement a Public Campaign Financing system?

More important, do you think we should have such a system?