Bad Legal Arguments Can't Stop Reform

 By Lawrence Norden

With Albany rocked by scandal over the last month, many believe that the time for comprehensive campaign finance reform, with better enforcement, lower limits, and public financing at its core, may finally have come. 

And why not?  The public -- Democrats, Republicans and Independents, all  --  strongly supports it.  With the endorsement of the Governor, Speaker Silver, Senate IDC Leader Klein, and Senate Democratic Conference Leader Andrea Stuart Cousins, we seem to have the votes to make it happen.

Unfortunately, not everyone is on board with bringing real reform to Albany.  Some opponents are resorting to rather silly arguments, in the apparent hope to slow things down. 

In today’s Daily Politics Ken Lovett reports that unnamed Senate Republicans “are raising potential constitutional roadblocks,” to this reform.  Specifically, they point to “Article VII, section 8 of the state Constitution that says that ‘the money of the state shall not be given or loaned to or in aid of any private corporation or association, or private undertaking.’” (emphasis added).

The theory, as we understand it, is that this provision somehow prevents matching funds from being used by a candidate running for public office.  

To be generous, this is a novel interpretation that is almost certainly wrong.  To be ungenerous, it is a desperate attempt by certain legislators to try to protect the status quo by hiding behind a misreading of the State Constitution.  Either way, it should not be taken seriously by those with the power to bring comprehensive campaign finance reform to New York.

As it happens, the New York Court of Appeals recently looked at this section of the State Constitution and made clear that for those who sought to challenge a statute on these grounds, the “burden is a heavy one” because “enactments of the Legislature—a coequal branch of government—enjoy a strong presumption of constitutionality.”  Bordeleau v. State, 18 N.Y.3d 305, 313 (2011) (internal citation and quotation marks omitted).  The burden is “exceedingly strong” where the expenditures are “designed in the public interest.”  Id.  “Indeed, we have recognized the need for deference involving public funding programs essential to addressing the problems of modern life, unless such programs are patently illegal.” Id. (internal citations and quotation marks omitted).  Id.

A public funding program at the core of comprehensive campaign finance reform, passed in reaction to a series of state corruption scandals, would seem to fall squarely into an expenditure “designed in the public interest.”

It is also worth noting forty-six states have a prohibition on the use of public funds similar to that of New York, including other states with public financing programs such as Arizona, Connecticut, Hawaii, and Maine.  None have been successfully challenged on this ground.

Nor has a similar provision been used to challenge New York City’s public financing system, which has existed for 24 years.  In fact, the State Constitution has an arguably stronger restriction on the use of public funds.  Pursuant to Article VIII, section 1 of the state Constitution, “No . . . city . . . shall give or loan any money or property to or in aid of any individual, or private corporation or association, or private undertaking . . . .”

Despite multiple challenges to the City’s program by some of the best anti-reform lawyers in the country, no one has brought this provision up.  Wonder why?  We’re guessing it’s because previous challengers to the City’s public financing system read the same case law we did, and decided they did not want to get laughed out of court.

David Early contributed to research related to this blog post

Money in Politics This Week

Every Friday, the Brennan Center will be compiling 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.

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

CAMPAIGN FINANCE REFORM AND ETHICS NEWS

NEW YORK

Financial Industry Heavyweights Join NY LEAD

The New York Leadership for Accountable Government (NY LEAD), a group of business, civic and philanthropic leaders organized to push for a citizen-funded elections in New York State, has added several prominent new members to its ranks. Delroy Warmington, managing partner of Delwar Capital Management, and Cynthia DiBarolo, CEO of Tigress Financial Partners and chairwoman of the Greater New York Chamber of Commerce, are two of the recent additions with impeccable business credentials. Dennis Mehiel, chairman and CEO of U.S. Corrugated and Battery Park City and former candidate for Lieutenant Governor in 2002, stated that “We must end the wasteful political arms race that forces so many businesses and business owners to siphon more and more money into election campaigns. A system of small-donor matching funds is a good answer. It will encourage business growth, help constituents hold candidates and officeholders accountable, and ensure fair legislation in Albany.” The complete list of new members is available here.

A Solution to the Corruption Crisis

In an Albany Times-Union op-ed, Jonathan Soros, CEO of investment firm JS Capital Management and co-founder of Friends of Democracy, discusses how the State Legislature can respond to the recent corruption scandal which has tarnished its reputation. Since 2000, twenty-six sitting New York State Legislators have been indicted, arrested, or implicated for corruption. Although enforcement of the law and prosecution of corruption can catch criminal offenses, altering systematic incentives in favor of transparency and responsiveness can take us one step further. Governor Cuomo’s proposal for comprehensive campaign finance reform is one such systematic change that can induce greater transparency and accountability from our elected officials. The proposal matches small political contributions from local residents with a limited amount of public funds in an effort to decrease Legislators’ dependence on big contributions and special interests. Consequently regular constitutions are empowered. Along with the disclosure of campaign funds and effective enforcement of the law by state agencies, matching small donations can increase constituent participation, and create disincentives for reliance on special interests, which breeds corruption.

Riverdale Press Editorial Calls for Campaign Finance Reform

This week, the Riverdale Press embraced campaign finance reform in a Wednesday editorial. Pointing to the recent scandals involving Assemblyman Eric Stevenson (D-Bronx), Malcolm Smith (D-Hollis) and Bronx Republican Party Chair Jay Savino, the editorial stated that this culture of corruption is generated in part by our elections system. “The pay for play culture that periodically crosses over into crime is far from surprising.” The concern is not only about illegal bribery but also about high contribution limits and big donations from a few special interests. The public would certainly be equally as appalled at campaign activities that are perfectly legal under current state laws as they were by corruption of their elected officials.

Pension Fund Wins Greater Disclosure from Companies

New York State Comptroller, Thomas DiNapoli, has reached an agreement with five Fortune 500 companies to disclose their political spending. The companies, including Southwest Airlines, Dr Pepper Snapple Group, Plum Creek Timber Company, Harley-Davidson and Noble Energy, have committed to publicly disclose all their direct and indirect monetary and non-monetary political contributions to campaigns and politically active trade associations. As the trustee of the New York State Common Retirement Fund, which holds millions of dollars of shares in numerous corporations, DiNapoli argues that such information is important for investors. “Shareholders have a right to know how companies are using corporate money for political purposes. These companies deserve credit for embracing transparency and reducing potential risk to shareholder value by disclosing direct and indirect contributions made with corporate funds,” DiNapoli said in response to the agreement. DiNapoli has filed 26 shareholder resolutions in 2013 on the issue of political spending disclosure, reaching agreement with eight companies, including Qualcomm, KeyCorp and PepsiCo.

Cuomo Proposes Criminal Justice Response to Corruption Scandals

Governor Cuomo has unveiled a series of tough reforms seeking to reduce corruption in Albany. The proposal, known as the Public Trust Act, would change the state’s definition of bribery to conform to federal standards to allow greater leeway for prosecutors and increase penalties for official misconduct and misuse of taxpayer dollars. Under the proposed law, elected officials as well as other state and local government workers could be charged with misdemeanors if they are aware of bribery schemes but fail to report them. The plan would also bar anyone convicted of public corruption felonies from holding public office, serving as a lobbyist or doing business with the state. Attorney General Eric Schneiderman and State District Attorneys have welcomed the proposal but request greater resources and authority to probe the executive and legislative branches. Good-government groups have similarly praised the plan but insist that the entrenched culture of corruption cannot change unless campaign finance reform is also instituted. Karen Scharff, executive director of Citizen Action, said she hopes the Governor will take the next step and reform the way campaigns are financed. Currently candidates have to rely on large donors and special interests for campaign contributions, which breeds a “show me the money” culture. “From day one, you’re stuck in this pay to play system,” Scharff stated.

NATIONAL

Governors’ Associations Turn to Dark Money Groups

Non-profit groups affiliated with the Republican Governors Association and the Democratic Governors Association have spent millions of dollars in state political battles without being required to disclose their donors. Non-profits do not have to disclose their donors if they spent less than half of their funds on political activities. The Republican Governors Association Public Policy Committee spent $10 million in 2011, and America Works USA, which is tied to Democratic Governors Association, funded ads worth $4.4 million. Both non-profits in turn channeled some of their funds to other non-profits creating a network of untraceable political contributions, which is being called the “Russian nesting doll” technique. For example, the Republican Governors Association Public Policy Committee gave $200,000 to a D.C. based non-profit called ReAL Action, an organization “dedicated to renewing America through the restoration and application of biblical values.” In turn, ReAL Action then dispersed funds to three conservative non-profits, one of which funneled the money to a political committee called Iowa for Freedom. Iowa for Freedom ran ads against “liberal, out-of-control judges ignoring our traditional values,” in an attempt to unseat three state judges in 2010.

Hawaii Public Financing Bill Continues to Advance

In Hawaii, a bill creating a comprehensive public financing program for state House elections has passed through both houses of the legislature. A conference committee must now reconcile differences between the House and Senate versions. According to House Bill 1481, candidates qualify for public funding by raising 250 $5 donations and collecting 200 signatures from voters in their districts. Participating candidates have to abide by lower contribution limits. The amount of public funds available will be determined by the average sum spent by winners across all districts in the previous election cycle; the current number is around $35,000. In defense of the cost, Kory Payne, executive director of Voter Owned Hawaii, stated that “The taxpaying public ends up paying for elections by not paying for them. We pay for them in the form of kickbacks to special interests, bad policies, corruption and infrastructure mismanagement.” A new poll by Public Campaign and Lake Research shows that 83 percent of voters in Hawaii think the state should “overhaul” or “make modest changes” to campaign finance laws.

Money in Politics This Week

Every Friday, the Brennan Center will be compiling 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.

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

NEW YORK

Six Arrested in Corruption Scandal Involving Senator Smith (IDC-Hollis) and NYC Republican Party Chairmen

Six individuals have been arrested for their role in a corruption scandal uncovered this week. At the center of the controversy,is Senator Malcolm Smith (IDC-Hollis). Smith, a Democrat, wanted to gain access to the Republican ballot in November for a shot at mayor of New York City. Getting on the ballot required signatures from a majority of New York City’s five Republican Party Chairmen. To persuade the Republican leaders in New York City, Smith promised to secure state funds for real estate developers, who in turn would funnel money to Joseph J. Savino, Bronx Republican Party Chairman, and Vincent Tabone, Queens Republican Party Chairman. New York City Councilman Dan Halloran III arranged meetings between the real estate developers and the Republican Party Chairmen and offered to divert City Council discretionary funds to the real estate company. In exchange, he received $18,300 in cash and $6,500 in campaign contributions from the real estate developers. The real estate developers were actually an undercover FBI agent and a cooperating witness. Over the past seven years, 29 state officeholders in Albany have been convicted of a crime, censured or accused of wrongdoing. The U.S. Attorney for the Southern District of New York, who unsealed federal corruption charges against Senator Smith and the parties involved, stated that “political corruption in New York is indeed rampant and that a show-me-the- money culture in Albany is alive and well.” Both the overhaul and enforcement of our state campaign finance laws is well overdue to change the culture of Albany and restore the public’s faith in our representatives.

Albany Times-Union: Smith Scandal Sheds Light on Need for Historic Reform

An Albany Times-Union editorial this week asks New Yorkers to demand reforms in light of the recent scandal involving Senator Malcolm Smith (IDC-Hollis). Although good government groups have been gathering momentum for the reform effort throughout the state, they have been upstaged by Senator Smith. “Exhibit A for tougher campaign finance laws, suddenly, is Malcolm Smith — now not just a state senator, but a criminal defendant.” The quid pro quo deals and mega donations in this corruption scandal are emblematic of the lax enforcement and high contribution limits that characterize the landscape in New York. New Yorkers deserve fundamental reform that will give them ownership of the political process. “Don’t let the Legislature get away with anything less than historic reform.”

At Press Conference, Fair Elections NY Coalition Calls for Immediate Reforms

At a press conference on Wednesday, advocates from the Brennan Center, the New York Leadership for Accountable Government, and the Fair Elections New York Coalition insisted that the latest string of political scandals shows the desperate need to remove big money from politics in Albany. The corruption scheme is indicative of the pay-to-play culture in Albany where big donors are awarded with plush state contracts, funds and tax breaks. “Corruption scandals in New York are, unfortunately, nothing new. The number of state office holders who have been arrested in the last decade is itself a scandal,” said Lawrence Norden, Deputy Director of the Democracy Program at the Brennan Center. According to a press release from the Fair Elections New York Coalition, the latest arrests and resignations deepen the “crisis of confidence and widen the gulf between the people and their government.” NY LEAD member Peter Zimroth, who served as a partner at Arnold & Porter reminded New Yorkers not to forget the lessons of history. “We have an opportunity today to harness this anger and make important change. It happened in 1988 after a series of political scandals in the city. The mayor and the City Council passed landmark laws to give a voice to citizens without access to large sums of money. Now it must happen in Albany.” Video clips are available here.

Former Congressman Mike Arcuri in Post-Standard: Slow the Money Chase

Mike Arcuri, former Congressman from Syracuse and a member of the New York Leadership for Accountable Government, wrote an op-ed this week in the Syracuse Post-Standard encouraging the New York Legislature to adopt campaign finance reform. Arcuri states he is deeply concerned about the corrosive role that large private donations play in political campaigns and the legislative process in both Washington, D.C. and Albany. “As a former member of Congress who witnessed firsthand the outsized influence that big donors and connected special interests have in Washington, D.C., I applaud the efforts of my fellow New Yorkers to create a more positive future for our politics.” Currently legislators spend an inordinate amount of time and energy courting special interests and wealthy donors. Matching small donations with public funds can flip this reality. Several states have already adopted some measure of public financing for their political races, and citizens in these states have already witnessed the enormous benefits. “Qualified people from all walks of life are able to serve, and the relationship between money and politics is greatly reduced. Voters have the opportunity to be in control of their government, not the connected few.”

NATIONAL

TED Talk on Campaign Finance Reform by Harvard Professor Lawrence Lessig

TED is a popular source for intriguing lectures on a wide variety of topics. This week, Harvard Law Professor and Founder of Rootstrikers, Lawrence Lessig delivered a TED Talk about the heavy dependence of Congressional candidates on funding from a tiny percentage of citizens entitled We the People, and the Republic we must reclaim. “When the pundits and the politicians say that change is impossible, [we must say,] ‘That’s just irrelevant.’ We lose something dear … if we lose this republic, and so we act with everything we can to prove these pundits wrong.”

North Carolina Legislature Trying to Gut Public Financing for Judicial Elections

Justice should not be put on sale to the highest bidder. Unfortunately, the North Carolina Legislature and Governor both seem poised to eliminate a successful public financing program for judicial elections. Prior to reforms, judicial campaigns were frequently funded by lawyers and parties that regularly appeared before the courts, creating conflicts of interests for judges and depleting public confidence in the judiciary. In the early 2000s, after witnessing multi-million dollar judicial races, the state enacted a voluntary public financing system. Supreme Court candidates who show they have broad public support and abide by low contribution limits receive $240,000 for their campaign. The program has been highly effective. Every candidate for the Supreme Court and Court of Appeals participated last year, and the percentage of campaign funds from attorneys and special interests decreased by 59 percent. A vast majority of North Carolina residents, 79 percent, think that judges receiving campaign contributions from a party with a case pending before the court is problematic. Despite these facts, the North Carolina House and Senate are moving bills to eliminate public financing. The relatively minor cost of the program is a “worthy investment in the infrastructure of democracy.”