Brennan Center Expresses Approval of the Substantial Baisis Investigation Report

 By Kelly Williams

The Brennan Center for Justice expresses its approval of today’s release by New York State Legislative Ethics Commission (LEC) of the Substantial Basis Investigation Report that was unanimously approved by the Joint Commission on Public Ethics (JCOPE) in February.  We note that release of the report is the clear obligation of the LEC as provided by reforms included in the 2011 Public Integrity Reform Act (PIRA).  Today’s release of the Substantial Basis Investigation Report by LEC demonstrates that this part of the new ethics oversight process established under PIRA can work – now it is up to the LEC to decide what the proper course of action will be.  We congratulate the JCOPE Commissioners and their staff on today’s important development and hope the remainder of this process will be handled fairly and expeditiously.

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

Jerome Kohlberg Explains Why Business Leaders are Standing Behind Campaign Finance Reform

In a Crain’s New York Business op-ed, New York LEAD member Jerome Kohlberg explains why the business community supports campaign finance reform. New York was recently reminded how rampant corruption is in the state after the arrest of two state lawmakers in separate bribery scandals. Business leaders understand that honest and open government is necessary for a prosperous business climate to thrive. Public policy decisions and electoral outcomes should not be decided by who gave the biggest check. Dysfunction, backroom deals, and influence peddling are far too often the norm in Albany. This is why 72 percent of business leaders support creating a system that matches small donations with public funds, along with other comprehensive reforms that can empower average citizens to participate in state government. In New York City, these reforms have already allowed a more diverse range of candidates to run competitive campaigns and involved more constituents in the electoral process. It is time for New York State to follow through.

Rochester Democrat and Chronicle Editorial Asks Cuomo to Propose Reform Legislation or Endorse Assembly Speaker Silver’s Bill

In a Monday editorial, the Rochester Democrat and Chronicle encouraged Governor Andrew Cuomo to propose new laws that ensure greater accountability from our elected officials. The governor has endorsed campaign contribution limits and matching campaign donations less than $250 with state funds as key reforms for the future of New York. These measures can go far to help regenerate public confidence in our state institutions. Cuomo should propose his own legislation or endorse Assembly Speaker Sheldon Silver’s bill for campaign finance reform. Campaign finance reform and early voting can help reduce the influence of well-heeled special interests and increase grassroots participation.

Daily News Editorial: Enforcement of Law is Key Component of Reducing Corruption

In late April, Governor Andrew Cuomo called for a new watchdog to enforce New York’s campaign finance laws. The indictments of former State Senator Malcolm Smith and Assemblyman Eric Stevenson for bribery led the Governor to propose new ideas to combat corruption including harsher punishments for corruption, giving prosecutors greater investigative powers and cracking down on campaign finance violations. The Daily News editorialized in favor of enforcement this week. The Fair Elections campaign has consistently called for enforcement as one of four key reforms, along with public financing, lower contribution limits, and disclosure. Currently, the State Board of Elections has no staff committed to conducting investigations. With such lax enforcement, former Bronx State Senator Pedro Espada got away with failing to disclose his finances for 15 years. Politicians and donors routinely violate contribution limits and disclosure rules without any consequences. The Daily News advised Governor Cuomo and the Legislature to create an enforcement agency that is (a) independent of the State Board of Elections, (b) has investigative authority, (c) is equipped with subpoena power, (d) can prosecute offenders in civil and criminal courts and (e) receives adequate funds and staff.

Richard Davis: Matching Small Donations Can Change Albany’s Culture of Corruption
Richard J. Davis, a former Watergate prosecutor and a member of the New York City Campaign Finance Board and New York LEAD, wrote an op-ed in Long Island Newsday advocating for the adoption of public financing in New York State. Although Governor Andrew Cuomo has unveiled legislation that will give prosecutors greater authority to punish corrupt politicians, without systematic changes to our campaign finance laws, Albany still remains the Wild West of money in politics. As a former prosecutor, Davis sees a connection between porous campaign finance laws and corruption. At a time when we should be enfranchising citizens so they can hold elected officials accountable, repeat scandals are tuning voters out of the political process. In the New York City small-donor matching-funds system, candidates can rely on their constituents for campaign expenses rather than a few wealthy special interests. By contrast, at the state level, sky-high contribution limits and a myriad of loopholes allow State legislators to fundraise outside of their home districts from lobbyists and special interests. A report last year showed that only three out of 575 donors to former State Senator Pedro Espada Jr.’s campaign – who faced federal and state corruption investigations – were residents of his district.

Public Financing Bill Introduced by NY Senate Independent Democratic Conference

The New York Senate Independent Democratic Conference introduced a campaign finance reform bill this week with Senate Co-Leader Jeffrey Klein as the chief sponsor. The bill includes public matching funds for small donations, restrictions on fund transfers between candidate campaign committees and political party committees, dramatically lower limits on contributions to campaigns and parties, ceilings on contributions by those doing business with the state, and greater disclosure of outside spending. The bill, S04897, would utilize unique sources of financing for the public matching component including transfers from the abandoned property fund to a campaign finance fund, an optional tax return check-off and a surcharge on securities fines that Speaker Silver’s bill also includes.

Hearings on Senate IDC Reform Bill

Hearings on the Independent Democratic Conference’s bill for campaign finance reform were held on Wednesday in New York City. A series of additional hearings are scheduled over the next month across the state. Before the hearing, the Fair Elections for New York coalition held a press conference with supporters to encourage Legislators to bring a bill to the floor for a vote. David Donnelly, Executive Director of the Public Campaign Action Fund, stated that “New Yorkers know that reforming the pay-to-play system in a way that lifts up the voices of everyday people is the best answer to the corruption scandals of the past months and years.” Susan Lerner, Executive Director of Common Cause New York, also present at the conference said that “One too many corruption scandals have finally tipped the scales of decency, and the voters are crying out for campaign finance reform built around a system of public matching funds.” Representatives from more than 10 groups testified at the hearing that followed. Ian Vandewalker, counsel at the Brennan Center, informed the lawmakers about the benefits of public funding systems as evinced by clean elections in states such as Arizona, Maine and Connecticut, as well as New York City. “At bottom, opponents of comprehensive reform are defenders of the status quo, champions of a system that works for lobbyists and special interests, but not every day New Yorkers,” Vandewalker stated.

NATIONAL

Senators Introduce Follow the Money Act to Disclose Political Spending

Senators Ron Wyden (D-OR) and Lisa Murkowski (R-AK) have introduced S 791, the Follow the Money Act, aimed at disclosing political spending. The bill would require groups spending $10,000 or more on election-related activities to disclose all contributions above $1,000. As Jonathan Backer, research associate at the Brennan Center, explains in The Hill, the 2012 election demonstrated the dire need for such a law: following Citizens United, spending by outside groups increased by more than 255 percent between 2008 and 2012. Fifty-nine percent of the $1 billion spent on television and radio advertisements by independent groups during the 2012 election cycle remains undisclosed, meaning we still have no idea who the donors behind all of those negative ads were. The Follow the Money Act has elements similar to the DISCLOSE Act proposed earlier this year, with a few exceptions. Under the new legislation, the floor for the disclosure of individual donations has been raised from $200 to $1,000. In addition, the FEC is required to set up a real-time reporting system for all independent groups and candidates, so that voters are informed about political donations and expenditures on a daily basis rather than every three months.

Lack of Transparency in Campaign Finance Laws Threatens National Security

Potentially serious consequences of our nation’s free-for-all campaign finance system are exemplified in K Street’s relationship with a Chinese telecommunications firm closely tied to the People’s Liberation Army. The Shenzhen-based Huawei Technologies has spent $1.2 million to build an in-house lobbying shop stocked with former members of Congress, and Congressional and White House staff, in an effort to gain prominence among tech and intelligence circles in the capital. Federal records illustrate that Huawei paid another $1 million to APCO Worldwide, a powerhouse Washington-headquartered public relations and lobbying giant. The excessive political spending comes after the U.S. House Intelligence Committee charged that Huawei was implicated in corporate espionage activities, including the insertion of malicious hardware and software into U.S. telecommunications networks that are critical to the American defense system. “Huawei, in particular, provided evasive, nonresponsive, or incomplete answers to questions at the heart of the security issues posed,” the committee said in its unclassified report on the issue. Charles Fried, a Harvard law professor and former U.S. Solicitor General said “I think it stinks… Everybody is entitled to a lawyer. I didn't know that everybody is entitled to a lobbyist.”

Special Election in South Carolina Attracts Mega-Donors

The May 7 special election for South Carolina’s 1^st District for Congress is drawing in several big money donors. Former South Carolina Governor Mark Stanford is the Republican candidate, with $284,000 in his campaign account. The Democratic nominee Elizabeth Colbert Busch has $254,000 on hand. Stanford’s disappearance from office during his governorship and Busch’s quasi-celebrity status due to her brother, Stephen Colbert, have attracted national attention, not only from late night comedians but also wealthy donors and PACs. The National Republican Congressional Committee has disowned Sanford’s candidacy after accusations that he trespassed on his ex-wife, Jenny Sanford’s property. Subsequently, the Democratic Congressional Campaign Committee has picked up steam and invested $458,000 in the election via independent expenditures, while House Majority PAC, a Super PAC that supports Congressional Democrats, has spent $90,000 already on television advertising and direct mail. Despite his trouble with the RNCC, Stanford is still receiving donations from prominent out-of-district contributors including $2,600 from Patrick Byrne, CEO of Overstock.com, $5,200 from Howard Rich, a major backer of the conservative 501(c)(4) Club for Growth and $5,200 from Richard Chilton, a Connecticut investor. Busch’s benefactors include Hollywood activist Peg Yorkin, who gave $1,000, the Teamsters PAC, which donated $2,500 and the American Federation of State, County and Municipal Employees PAC, which provided $5,000.

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

Syracuse Post-Standard Editorializes In Favor of Small Donor Matching Funds for First Time

On Tuesday, the Syracuse Post-Standard editorialized in favor of small donor matching funds for the first time. According to the editorial, when paired with spending limits and other electoral reforms, public financing of campaigns can help address the culture of corruption in Albany. “Public campaign financing will not cure all that ails the body politic. It cannot detect a larcenous heart. But it seems a relatively cheap and sensible step toward restoring confidence that state government – the Legislature, in particular – acts in the public’s interest.” Although opponents have expressed concern about the costs, the Post-Standard points to the $420 million in incentives that the film and television industries received in this year’s state budget. And film and television are only one special interest group out of many that are present in Albany. The editorial notes, “If we value our democracy, we should be willing to invest in it.” Engaging more small donors and making legislators more dependent on their constituents, rather than a few wealthy special interests, offers an added layer of defense against corruption.

Campaign Finance Reform Proposals by Assembly Democrats and Senate Independent Democratic Conference

New York State Assembly Speaker Sheldon Silver has unveiled a new campaign finance reform proposal. The bill, A4980B, includes a small donor matching component, where every contribution up to $250 by state residents is matched with public funds at a 6-to-1 ratio. “We cannot allow elected public service to become the exclusive domain of the wealthy and the well connected,” Speaker Silver stated. Stronger enforcement of the law and penalties for violations will be enforced by a new body, the Fair Elections Board, to be situated within the state Board of Elections. Organizations making independent political expenditures over $1,000 would have to disclose the name of the person or group behind the spending, and report all major contributors (those that donated over $1,000) to the Board of Elections. The Senate Independent Democratic Conference, headed by Senator Jeffrey Klein, criticized the proposal for failing to eliminate political party housekeeping accounts, and transfers between party committees and individual candidates. "Unless these measures are part of a more comprehensive plan to eliminate party slush funds and slash six figure contributions, we'll be right back to where we started.  Our members look forward to discussing these proposals alongside the more comprehensive plan outlined by the Independent Democratic Conference last week," IDC Spokesman Eric Soufer stated.

The Cost of Public Financing is about $2 per New Yorker per Year

Recently, the New York State Senate Republican Conference, which is opposed to publicly funded elections, finally explained how it arrived at its inflated estimate of the cost of public financing. The method was immediately assailed by campaign finance expert Prof. Michael Malbin, who called it “little more than back of the envelope arithmetic based on incredible assumptions.” The Campaign Finance Institute has used peer-reviewed methods to conclude that the cost of public campaign funding under current proposals would be between $26 and $41 million per year. Senate Republicans’ estimate is many times higher. The Republicans’ calculation unrealistically assumes that there would be two candidates in every general election and each would earn the maximum amount of public funds. For primary elections, the GOP analysis assumes that a quarter of senators would participate in a primary, with one candidate per race receiving the maximum amount of public funds. It is important to note that under Speaker Sheldon Silver’s bill, (1) receiving public funds depends on the candidate’s ability to raise money from numerous small donors, so only donations up to $250 are matched with taxpayer dollars and that (2) candidates are limited to a maximum amount of public funds ($400,000 for Senate candidates and $200,000 for Assembly candidates in the general election race). The Senate Republicans’ assumption, that two candidates in every general election would receive the maximum amount of public funds, does not jibe with the experience of New York City, where a multiple matching funds system is already in place. Between 2001 and 2009, only 51 percent of candidates running in New York City elections received the maximum amount of public matching funds. According to the Campaign Finance Institute, under the least expensive scenario, the cost would be $1.34 per New York resident per year, while it would be $2.08 per New York resident per year for the most expensive scenario—a small price to pay for cleaner elections.

Campaign Finance Reform Can Help Crack Down on Corruption

A 2011 report by the Center for Competitive Politics has been seized upon by opponents of Fair Elections to argue that the public financing system in New York City is characterized by consistent abuse of public funds and corruption. But the facts just don’t support that characterization. Since New York City adopted public financing in 1988 it has not faced a corruption scandal on the same scale as the 1980s. The CCP report outlines 24 scandals related to New York City elections in an attempt to argue that public funding does not deter corruption. Brennan Center counsel Ian Vandewalker’s detailed investigation of the report reveals that several cases have no relationship to public financing, including one involving a state legislator who never participated in city elections. Half the cases involve allegations or investigations that yielded no criminal or election law violation. Furthermore, several others listed describe instances where candidates attempted to violate the rules of New York City’s public financing system, but were caught by the city’s enforcement agency and fined or denied public funds. Enforcement is a necessary component of any effective campaign finance reform proposal. Along with vigilant enforcement of the law, disclosure of contributions, and lower contribution limits, public financing of elections can “end the mad chase for campaign cash that starts some elected officials down the road to corruption and … make candidates dependent on ordinary voters rather than special interests.”

Bad Legal Arguments Can’t Stop Reform

With the introduction of Fair Elections legislation in both chambers, and strong popular support for the effort among voters, opponents are attempting to raise legal barriers to the reform. Specifically, some are alleging that  the New York State Constitution forbids the use of public funds for election campaigns. The Constitution 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.” As Larry Norden, deputy director at the Brennan Center, illustrates, elections are, in any sense of the word, competitions for public office. In a 2011 case, Bordeleau v. State of New York, the New York Court of Appeals evaluated the section of the Constitution at issue and ruled that the “burden” of challenging any public financing statute on these grounds is “exceedingly strong.” This is because “enactments of the Legislature” enjoy the presumption of constitutionality, especially when Legislative expenditures are “designed in the public interest.” Furthermore, 46 other statutes that have a similar prohibition on the use of public funds for private undertakings, including Arizona, Connecticut, and Maine, are home to thriving public election financing programs.

New Demos Report Lauds Benefits of Public Financing in Connecticut

Demos has released a new report titled Fresh Start: The Impact of Public Campaign Financing in Connecticut. The study is co-authored by J. Mijin Cha, senior policy analyst at Demos, and Miles Rapoport, Demos president and a former Secretary of State for Connecticut. It chronicles significant changes in the Connecticut Legislature following the state-wide adoption of a public financing system. Public financing of elections has increased the number of small donors because Legislators receive incentives for raising small contributions from a minimum number of in-district donors. The influence of lobbyists has perceptively declined. As one former Legislator recalled, “Before public financing, during the session … there were ‘shakedowns’ where lobbyists and corporate sponsors had events and you as a legislator had to go. That’s no longer a part of the reality.” In addition, elections are more competitive, as new potential candidates are no longer deterred by the large war chests of incumbents. The 2008 election had the lowest number of uncontested seats since 1998, indicating that more candidates were running. Public financing has also proven to be immensely popular with voters, with 79 percent in favor of the clean elections program. Furthermore, voters understand that loose campaign finance laws and mega-donations breed corruption. They were three times more likely to agree with the statement,  “The state needs the Citizens’ Election Program because, in the past, lobbyists and state contractors received special deals in exchange for political contributions which has even landed some politicians in jail,” than an alternative criticizing the cost of the program.

Governor Cuomo Announces New Proposals to Anti-Corruption Agenda

Governor Andrew Cuomo has announced new proposals to his anti-corruption agenda, following the arrest of New York State Senator Malcolm Smith (D-Hollis). The Governor wants to revoke Wilson-Pakula, which governs the process by which candidates can run on a party’s ballot even if they are not members of that party. State Senator Malcolm Smith, a Democrat, is charged with trying to bribe Republican County Chairs in New York City to convince them to allow Smith to run on the GOP ballot for mayor. The Governor is arguing that Wilson-Pakula creates ethical conflicts, as candidates try to bribe or make large donations to political parties to gain ballot access. “You‘ve heard the expression ‘pay to play’,” Cuomo said. “This is pay to run.” The Assembly Democrats are not backing the repeal of Wilson-Pakula. “I don’t think we should preclude people from running on more than one [political party] line,” Speaker Sheldon Silver stated.