Moreland Update: Hearing's Hits and Misses

Over the next several weeks, the Brennan Center for Justice at NYU School of Law will send regular updates to this list of Friends of Reform in New York State on efforts to secure comprehensive campaign finance reform centered on public financing of elections. These updates will be sent to good government advocates, allies of the Fair Elections New York campaign, legislative and opinion leaders, scholars and engaged students, reporters, and other advocates for reform. They will also be posted on the Brennan Center’s New York blog at ReformNY.blogspot.com.

Moreland Hearing: Current Campaign Finance Enforcement Structures are Failing

Last night’s Moreland Commission hearing focused on two main topics: the New York State Board of Elections’ failure to effectively enforce state election law and the success of public campaign financing systems in New York City and Connecticut. The first topic – the weaknesses of BOE enforcement practices, which were already well known – got most of the attention at the hearing and in the press. The equally important second topic – how we start to address the corrupting influence of big, special interest money in New York politics – was almost entirely ignored.

As they grilled BOE officials, the commissioners’ scathing questions revealed widespread problems with the agency’s current practices. Those questionable policies include refusal to investigate anonymous complaints, even those supported by documentary evidence. Commissioners also questioned the notorious LLC loophole that allows an individual or company to give many times the contribution limit through the use of shell companies. In a distressing example of the BOE’s impotence, the commissioners learned about one investigator, who after failing to receive work from his supervisors despite repeated requests for more to do, resorted to playing solitaire on his computer – as a backlog of hundreds of complaints awaited action.

Advocates of reform anticipated the hearing would examine not just bureaucratic incompetence or illegal activity, but also promising solutions to New York’s glaring campaign finance problems. Witnesses presented testimony in person and in writing about the highly successful enforcement systems in New York City and Connecticut, both of which include public campaign financing, which could serve as a model for New York State.

Connecticut Deputy Secretary of State James Spallone said “campaign finance reform has changed the culture in the Capitol.” Public financing, he said, “is becoming part of our political fabric and a model for the nation.” His written testimony further explained that the system has reduced the influence of special interest lobbyists.

New York City Campaign Finance Board Executive Director Amy Loprest submitted testimony discussing the ways that public financing improves enforcement. Candidates cannot take public funds unless the CFB’s audits and investigations establish that they are in compliance with the election laws. She wrote, “Candidates in New York City know that their campaign will be held to strict standards – and that their opponent’s campaign will be held to the same standards.”

Campaign Finance Institute Executive Director Michael J. Malbin, a nationally recognized campaign finance expert, submitted testimony detailing the financial aspects of a public funding system. Public funding would cost each New Yorker $2.12 per year and could save the state millions currently spent on special interest provisions large campaign donors currently secure for themselves. Professor Malbin highlighted the urgency: candidates need an alternative to being overwhelmed by large outside spending that threatens to become the new normal. Public funding “should be included in the Governor’s executive budget in January 2014.”

Latest News

In Pay-to-Play Albany, Contributors Win Favors

The New York Times’ Michael Powell reveals shocking examples of big campaign donors’ ability to buy legislative influence – and the corruption is completely legal. A tobacco wholesaler gave large contributions to legislators working on a bill that would increase his profits; meanwhile New York State ignores a reform that would increase tobacco tax collections enough to pay for public financing many times over.

Group Urges Anti Corruption Commission to Probe Big Pharma Campaign Donations

Karen Dewitt of New York State Public Radio reports on new Common Cause research raising suspicions of legal corruption. Common Cause hopes the Moreland Commission will investigate whether “there’s a link between the $5 million dollars spent by major pharmaceutical companies on lobbying and campaign donations to New York State politicians, and the failure to pass major consumer friendly bills regulating Big Pharma.”

Our Toothless Watchdogs

New York Daily News columnist Bill Hammond notes that the structure of the Board of Elections impedes its work. Since the commissioners and even the staff are split evenly between Democrats and Republicans, each party can veto decisions it regards as disadvantaging its side.

Moreland Update: Hearing Tonight

Over the next several weeks, the Brennan Center for Justice at NYU School of Law will send regular updates to this list of Friends of Reform in New York State on efforts to secure comprehensive campaign finance reform centered on public financing of elections. These updates will be sent to good government advocates, allies of the Fair Elections New York campaign, legislative and opinion leaders, scholars and engaged students, reporters, and other advocates for reform. They will also be posted on the Brennan Center’s New York blog at ReformNY.blogspot.com.

Moreland Hearing Tonight

Tonight, the Moreland Commission will hold a hearing at 5:00 p.m. in the Javits Center, 1E Hall Rooms 12-13, focusing on campaign finance reform. The invited speakers are:

• New York State Board of Elections Co-Executive Directors, Robert Brehm & Todd Valentine and Deputy Enforcement Counsel, William McCann
• New York City Campaign Finance Board Executive Director, Amy Loprest
• Connecticut Deputy Secretary of State, James Spallone & Demos President, Miles Rapoport
• NYC Council Members, Brad Lander and Carlos Menchaca

At this hearing the Moreland Commission will investigate current problems with campaign finance enforcement and hear about successful reforms in New York City and Connecticut. Unlike New York State, Connecticut and New York City have strong enforcement agencies created in response to public corruption crises. Both enforcement agencies are strengthened by public campaign financing systems: When disbursement of public funds is conditioned on compliance with campaign finance laws, candidates have a powerful incentive to stay in line.

While the hearing will necessarily emphasize the failure to enforce New York State’s current campaign finance laws, it would be unfortunate if that was the sole focus. In Albany the real scandal is what is perfectly legal. Contribution limits are sky-high and full of loopholes, disclosure requirements are lax, and a pay-to-play culture rewards the biggest campaign contributors while locking ordinary citizens out of the political process. If tonight’s hearing focuses only on high-profile bribery cases or how much money is in the Board of Elections’ budget, the Moreland Commission will have lost a crucial opportunity to examine changes that can profoundly transform Albany.

We are hopeful that commissioners will devote the necessary time and attention to these topics:

• The adequacy of the State Board of Elections’ current report filing schedule (January, July, and a few times during the fall), which limits the contribution information available during the legislative session.
• The adequacy of current State Board of Elections rules governing disclosure of independent expenditures, which is limited to express advocacy.
• The high rate at which candidates from both parties participate in New York and Connecticut’s public funding systems, and the reasons for that success.
• The ways that public campaign financing and effective enforcement support each other, through both powerful financial incentives and meaningful transparency.
• How public funding allows candidates to respond to independent expenditures.

The Moreland Commission will issue its first report in the beginning of December.

Relevant Clips and Links

How to Make the Impossible Possible with, Yes, a Government Commission. Karen Scharff of Citizen Action of New York argues that the Moreland Commission can change what’s possible if it makes the demand for change irresistible by showing just how bad the current situation is.

Moreland’s Next Hearing, Without Good-government Groups. Jessica Alaimo and Jimmy Vielkind give a preview of tonight’s hearing.

Start the Process for Meaningful Campaign Reform. Assemblywoman Didi Barrett calls for comprehensive campaign finance reform to address the insidious dominance of money in the halls of power.

Testimony to the Moreland Commission. Brennan Center Deputy Director Lawrence Norden’s updated testimony discussing tax credits for major political donors that have been repeatedly reauthorized by the legislature without any substantive, public analysis as to whether such tax breaks should be made permanent or eliminated.

Money in Politics This Week

The Brennan Center regularly compiles the latest news concerning the corrosive nature of money in New York State politics—and the ongoing need for public financing and robust campaign finance reform. We’ll also be linking to dispatches from around the country highlighting the national scope of this crisis. This week’s links were contributed by Syed Zaidi and Katherine Munyan.

For more stories on an ongoing basis, follow the Twitter hashtag #moNeYpolitics and #fairelex.

NEW YORK

Federal Court Lifts Contribution Caps on Independent PACs

A Federal Appeals Court has granted preliminary injunction to a conservative political action committee seeking to accept contributions of more than $150,000 from individual donors. The New York Progress and Protection PAC filed an emergency appeal to the Second Circuit Court of Appeals after a District Court denied its request. New York law imposes an aggregate cap of $150,000 on the contributions an individual may make to all candidates and political committees within a year. While New York Progress and Protection PAC can immediately start accepting and spending unlimited sums, a decision regarding the broader question – the constitutionality of New York State’s aggregate contribution limit on donations to independent committees – has yet to be rendered. However, in their verdict on the preliminary injunction, the appellate judges noted that NYPPP’s arguments had a “substantial likelihood of success.” Lawrence D. Norden, the deputy director of the Democracy Program at the Brennan Center, said that “If this decision holds, there should be real concern that what we’re going to end up with in New York State is what we have on the federal level, which is candidates being sponsored like racehorses by very wealthy individuals.”

Siena Poll: Voters Think Corruption is a Serious Problem

In the latest Siena Research Institute Poll of registered voters in New York, a large number of citizens indicated their frustration with business-as-usual politics in Albany. When asked if they find corruption in the New York State legislature to be a serious problem, 82 percent said that it is a “very serious” or “somewhat serious” issue. This figure includes large majorities across all demographics including political party affiliation, region, race and income. Seventy-two percent of New Yorkers think that the Moreland Commission, which was appointed by the governor following the legislature’s failure to pass any anti-corruption bills, should continue investigating political corruption rather than propose a constitutional amendment and disband. Again support was strong, at least 70 percent, among most of the groups surveyed. Voters said that Governor Cuomo, Attorney General Schneiderman and federal prosecutors are doing the most to address corruption and that the state legislature is doing the least.  

Niagara County Legislature Delays Legal Representation for Citizens Fighting Expansion of Hazardous Waste Site

For years, the Niagara County Legislature opposed CWM Chemical Services’ request for the expansion of a hazardous waste landfill in Porter, New York. But recently, the County may have had a change of heart; it has failed to renew a contract with Gary A. Abraham, an Allegany attorney who had represented the County in litigation surrounding the landfill. Residents for Responsible Government (RPG), an environmental group, distributed handouts at a press conference showing that CWM Chemical Services and its parent company have donated $71,750 to the Niagara County GOP Committee, the Niagara County Conservative Party, and the Town of Porter Republican Committee, based on state Board of Election records. Republicans currently control the Niagara County Legislature. A resolution sponsored by County Legislators William L. Ross (C-Wheatfield) and Clyde L. Burnmaster (R-Ransomville) that would extend the attorney’s contract was not voted upon but instead sent to the Administration Committee for further study. RPG members and some residents fear the delay may make it more difficult to address their case before upcoming state Department of Environmental Conservation hearings on the landfill expansion. “Any day the DEC could come out and say this is when the process starts and, right now, the people in Niagara County have no one to represent them,” RRG president April Fideli said.

Democrat & Chronicle Tells Corruption Commission to Press On

Following reports that the Moreland Commission to Investigate Public Corruption was shying away from examining legislators and political parties, newspapers across the state penned editorials pressing the commission to move forward with its badly-needed work. This week, the Democrat & Chronicle insisted that in order for the panel to meet its obligation of investigating potential instances of corruption, it must have wide latitude to do its job. Albany lawmakers, who are allowed to work outside of the legislature part of the year, have thus far refused to turn in records about income derived from such activities. The commission’s concern stems from the potential for conflicts of interest. Encouraging the immediate disclosure of this information, the editorial said that, “The honest ones have no reason to do otherwise.”

NATIONAL

California Fines Out-of-State Nonprofits $1 Million for Campaign Money ‘Laundering’

On Thursday, the California Fair Political Practice Commission (FPPC) announced a fine of $1 million against two out-of-state nonprofits for campaign finance law violations.  In the 2012 election, the Arizona-based Americans for Responsible Leadership and Center to Protect Patient Rights funneled $11 million into a campaign to defeat a ballot measure to raise taxes and to support a ballot measure to weaken union political power.  Both nonprofits kept their donors secret, in violation of a California law that requires nonprofits to disclose their donors if their contributions were intended for a state campaign.  After a legal battle, Americans for Responsible Leadership did name its donors—but only as other nonprofits.   The disclosure hid the original contributors, but revealed a shadowy network of nonprofits funneling anonymous donations around the country, with ties to the Koch brothers.  In addition to the fine, FPPC will require two California groups to hand over to the state the more than $15 million in secret donations they received. Meanwhile, in the 2012 elections, the governor’s tax proposal passed and the proposal restricting union activity failed, leaving even local conservative groups describing the out-of-state money as a harmful distraction from their cause. 

Outside Spending Heating Up for 2014 Kentucky Senate Race

Senate Minority Leader Mitch McConnell (R-Ken.) will be up for reelection in 2014 in a contest that is already attracting national attention—and national money.  Outside interest groups are jumping at the chance to unseat or support the party leader.  They have already spent $2.2 million in advertisements, more than a year ahead of the election. The spenders include both nationwide groups that will be active in elections across the country and groups formed to back a single candidate. McConnell’s Democratic opponent, Kentucky Secretary of State Alison Lundergan Grimes, raised $2.5 million in the third quarter.  Her contributors include Kentucky Democrats as well as national figures, such as George Soros and numerous Hollywood donors. Mitch McConnell raised $2.3 million in the same period, as he also prepares for a primary challenge from Tea Party opponent Matt Bevin.  Early spending is fueling estimates that the final tally for the 2014 election may reach $100 million. 

Lobbying Activity Declines This Year, with a Few Big Exceptions

Of last year’s top 100 lobbying entities, more than two-thirds spent less on lobbying during this year’s third quarter than they did in last year’s.  These companies span numerous industries, and include General Electric, the National Association of Realtors, the American Hospital Association, and defense firm Lockheed Martin.  However, pharmaceutical companies, gun issue advocates, and corporate agriculture interests are all outliers in this trend, increasing their spending this year. With the House and Senate preparing to negotiate a farm bill next week, lobbying efforts are intensifying for farm, anti-poverty, budget watchdog, and trade groups.  Facebook and Twitter also have increased their lobbying presence this year. Silicon Valley groups are also beginning a lobbying push for immigration reform. 

Money in Politics This Week

 The Brennan Center regularly compiles the latest news concerning the corrosive nature of money in New York State politics—and the ongoing need for public financing and robust campaign finance reform. We’ll also be linking to dispatches from around the country highlighting the national scope of this crisis. This week’s links were contributed by Syed Zaidi and Katherine Munyan.

For more stories on an ongoing basis, follow the Twitter hashtag #moNeYpolitics and #fairelex.

NEW YORK

Moreland Commission Will Issue Subpoenas to Legislators, Political Parties

The Moreland Commission to Investigate Public Corruption said Tuesday that it will issue subpoenas to lawmakers mandating disclosure of their outside income. New York State legislators are allowed to hold positions outside of public office during part of the year. The commission’s request earlier this year that the information be voluntarily released was rebuffed by lawyers representing state legislators. “In addition to the investigation into the legislature, the Moreland Commission has moved to look across the board at all housekeeping accounts,” commission spokeswoman Michelle Duffy informed the press.  “Housekeeping” accounts may only be used for party-building and administrative costs, and there is no limit on the amount that individuals may donate to them. Reform groups however, argue that housekeeping accounts frequently serve as a conduit to transfer funds to party-favored candidates, circumventing state contribution caps. For example, a Common Cause investigation demonstrated that the Senate Republican Party transferred $211,000 to the state Independence Party last year, which was ultimately spent on attack ads against Democrats. State Attorney General Eric Schneiderman has emphasized the importance of independence for the commission and instructed his staff to help the commission accomplish “whatever the commissioners want. Period.”

Buffalo News: Corruption Commission Should Remain Independent

Following allegations that the Moreland Commission to Investigate Public Corruption was being pressured by Governor Cuomo’s office to forgo certain investigations, the Buffalo News penned an editorial emphasizing the need for the commission to remain independent. The governor’s office has denied the claims of interference, stating that it has regular meetings with the commission but does not exercise inappropriate influence. Meanwhile, as of last week, legislators were still resisting the commission’s request for information regarding outside income. A subpoena drafted by the commission to examine contributions by the Real Estate Board of New York was never sent out, but commissioners have urged REBNY to turn over the information voluntarily or face a subpoena. Campaign finance reports of all state lawmakers, the editorial argues, should be scrutinized by the commission to examine and expound upon potential instances of corruption. The editorial was adamant in driving home this point: “Given the Legislature’s opposition to clean living, an independent investigation is the only way to go.” New recommendations can only be formulated after wrongdoings are examined and publicized.

Gambling Opponents Question Industry Contributions and Ballot Language Changes

Earlier this year, Albany legislators approved constitutional amendment language that would allow casino gambling in New York, sending the issue to the voters in a referendum to be decided this November. Currently New York permits gambling at five Native American-run casinos and electronic gambling at nine racetracks. The constitutional amendment, if it passes, would allow up to four new casinos in the Catskills, Southern Tier and Albany County regions. According to analysis by Common Cause New York, gambling and horse racing interests have spent $59 million on lobbying and political contributions in the state since 2005. And in just May and June of this year, the industry spent more than $1 million on lobbyists. Susan Lerner, executive director at Common Cause New York, said that “Albany is extra skilled in creating opportunities for the gambling industry to throw money at it.” Opponents of the measure have expressed concern about the language on the ballot, which was changed to describe supposed benefits such as “promoting job growth, increasing aid to schools and permitting local governments to lower property taxes.” Concerned citizens have argued that the language was deliberately changed to incline voters to approve the proposed constitutional amendment and question the likelihood of such positive results. A prior effort to legalize gambling in New York was defeated in 1997 by an unexpected coalition between faith leaders and Donald Trump, although that proposal never made it to the referendum stage.

NATIONAL

McCutcheon Decision May Affect State Laws

Last week, the Supreme Court heard arguments in McCutcheon v. FEC on the constitutionality of federal aggregate limits on campaign contributions to federal candidates and parties, which require individuals who have given a certain amount to stop giving altogether for the rest of the election cycle.  States with similar limits on state candidate contributions are watching closely.  Only nine states have aggregate limits on campaign donations. A case challenging Wisconsin’s limits is already pending in the federal courts. Wisconsin law sets an aggregate limit of $10,000 per year on individual donations to state-office candidates, political parties, and PACs.  In U.S. District Court, Wisconsin resident—and Koch brothers associate—Fred Racine, Jr. is fighting to strike down those limits.  Another case is pending challenging campaign finance laws in Hawaii, including donation caps, reporting rules, and a ban on government contractors donating to candidates. The 9th Circuit has already heard arguments in the case, but suggested it may delay ruling until the Supreme Court rules on McCutcheon.

Washington State Sues Food Lobbyists over Campaign Finance Law Violations

On Wednesday, Washington State Attorney General Bob Ferguson filed suit against the Grocery Manufacturers Association (GMA) over state campaign disclosure laws.  According to Ferguson, the GMA, a Washington D.C.-based trade association, illegally collected and spent more than $7 million without disclosing its contributors. The GMA became involved in Washington State to oppose an upcoming ballot initiative, I-522, that would require the labeling of genetically modified food and has become one of the state’s costliest initiative campaigns ever. The attorney general’s office is requesting the court to mandate that GMA immediately comply with disclosure requirements.  The GMA denies that it is in violation of state campaign finance laws.