Impact of Citizens United on New York State's Campaign Finance System? Not So Much

By Kelly Williams and Ciara Torres-Spelliscy

Last week, in its 5-4 decision in Citizens United v. FEC, the United States Supreme Court ruled that laws banning independent expenditures by corporations meant to influence the outcome of political campaigns are invalid under the First Amendment. The decision has vast implications for campaign finance on the federal level and in many states, but our state’s campaign finance system is so lax to begin with that Citizen’s United appears to have no substantive effect on New York’s existing campaign finance laws. But as we have reported over the past two weeks, the Governor and the Legislature have proposed two different reform packages, each of which has components that would change existing campaign finance laws in this state. To avoid any doubt about the impact of the ruling on New York’s pending ethics and campaign finance reforms, we reviewed the proposed bills and came to the following conclusions:

First, both the Governor and the Legislature propose increased reporting of independent expenditures by corporations: reporting requirements in the case were ruled valid: “…disclosure requirements may burden the ability to speak, but they “impose no ceiling on campaign-related activities … and do not prevent anyone from speaking,”” wrote Justice Kennedy, citing earlier precedent (id at 51).

Second, the Governor proposes banning direct contributions by corporations. The Court noted that this issue was not presented in the case, leaving similar laws in place at the state and federal level unchallenged. “Citizens United has not made direct contributions to candidates, and it has not suggested that the Court should reconsider whether contribution limits should be subjected to rigorous First Amendment scrutiny.” (id at 43)

Third, the Governor proposes closing the housekeeping accounts loophole that allows unlimited contributions to political parties’ general funds. Citizens United does not directly address soft money contributions, and we have no reason to believe that Governor Paterson’s attempts to limit contributions to housekeeping accounts would come into conflict with this ruling.

Finally, after reviewing the ruling carefully, we see no reason to suspect that the Governor’s proposal for public financing would be challenged on the basis of the ruling (although technical issues with the proposal merit study; we will write more about this later), or that either proposal’s increased enforcement and disclosure requirements are undermined in any way.