Category Archives: campaign finance

Why Charity and Public Financing Don’t Mix

Adam Pagnucco was very kind in his discussion of problems regarding County Council Candidate Brandy Brooks’s desire to split funds raised for her campaign with disaster relief charities. He ascribed positive motives to the candidate and described her idea as ethical but not legal in contrast to behavior by some that is not ethical but nonetheless legal.

Charitable contributions from campaign funds, however, are heavily circumscribed to charitable events that are closely related to campaigns, such as buying tickets for an event or an ad in a program, for a number of good reasons.

The first is to avoid the public having to fund a candidate’s chosen charities on top of funding their campaign—an idea that Our Revolution Montgomery County Ed Fischman thought was great in his original, later altered, post sharing Brooks’s idea. Beyond the considerable cost, the County did not adopt public financing to fund charities but to encourage behavior that limits the influence of large contributors and reins in spending.

Next, one can imagine candidates throwing fundraisers in the guise of raising money for charity as a means of meeting the threshold to receive matching funds for public financing. This would obviously subvert the intent of the law, which was to force candidates to raise money in relatively small amounts from a wide range of people. As a result, qualifying for matching funds would no longer demonstrate a certain level of grassroots support.

The definition of charity is also quite wide with many organizations engaged in activities much more controversial than disaster relief. One can, for example, set up 501(c)(3)—an organization that can accept tax-free charitable contributions—to educate people about the dangers of abortion or the benefits of abortion remaining a legal option.

On the other hand, how would government assess Brooks’s nice proposal to donate money for disaster relief in Sierra Leone if the charity is not a legally registered American organization and not subject to scrutiny? It’s a very worthy cause but hard for either officials or citizens to assess.

Donors might also start trying to claim a portion of campaign donations as tax write offs. My guess is they would be on shaky ground because there would be little concrete evidence that the money went to a legal charity beyond a candidate’s promise to spend it that way. Nevertheless, as Donald Trump has demonstrated vividly, not everyone fulfills promises to give to charity but many are willing to try to claim dubious tax benefits.

Unscrupulous people have organized charities in which the bulk of the money goes to employees, often relatives, rather to the charity’s avowed focus. Again, clearly not Brooks’s focus here, but a real problem that the State would need to guard against.

Relatedly, mixing charity and campaign finance would further burden government with trying to keep track of what portion of donations are charitable contributions and if they were then donated in a legal fashion. This is a task they are completely ill-equipped to conduct and would require more money and staff.

In short, this is a great example of how a well-intentioned idea can prove very problematic.

Brooks and Our Revolution Responses

Brandy Brooks gave a response on the Seventh State’s Facebook page that shows a candidate dealing with a campaign issue in a calm, measured way designed to reassure voters. Most will commend her commitment to adhere to the law and will (like Adam Pagnucco and myself) not think that she ever intended otherwise.

On the other hand, her plan to spend money on the legally allowed activities, such as buying tickets to events, does not comport with what most think of as disaster relief. A tendency to jump in without thinking through an idea can give voters pause, though her measured response and a willingness to correct problems shows character and limits any damage.

Our Revolution Montgomery County Chair Ed Fischman’s strong accusations against Adam Pagnucco and passionate use of naiveté as a defense on this page earlier today are less helpful. Voters like candidates with passion but also people and organizations, such as Our Revolution, to know what they’re doing.

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At-Large Candidate’s Proposal Breaks Campaign Finance Laws

By Adam Pagnucco.

Council At-Large candidate Brandy Brooks, who is participating in MoCo’s public financing system, would like to help natural disaster victims.  That’s a laudable goal.  But she is proposing to spend campaign contributions to do so.  The problem is that’s illegal under state and county campaign finance laws.

On her website and on Facebook, Brooks promotes an initiative that she calls “Power 100,” in which she invites 100 contributors to donate a combined $2,500 to her campaign, half of which would be paid out to a number of charities helping natural disaster victims.  The charities include organizations helping victims of Hurricane Harvey, Hurricane Irma, a mudslide in Sierra Leone and floods in South Asia.

Brooks supporter Ed Fischman went a step further in a posting on the Our Revolution in Montgomery County Facebook page, asserting that public matching funds would be used for disaster relief.  To be fair, it’s unclear whether Fischman speaks for Brooks and Brooks has not yet qualified for public matching funds.

State and county campaign finance laws prohibit these kinds of expenditures.  According to the State Board of Elections’ Summary Guide, there must be a nexus between campaign account expenditures and the promotion of a candidate’s campaign for those expenditures to be legal.  The guide specifically addresses charitable contributions, stating:

Generally, campaign funds may not be used solely for charitable purposes. Maryland law requires campaign funds to be used for the purpose of supporting or opposing a candidate, question, or political committee. Furthermore, it is important to keep in mind that contributors give to campaign committees for one important reason – they want to support the committee’s candidate, question, or political party. When campaign funds are spent for a non-campaign related purpose, it frustrates the intent of the contributor.

However, there are instances when a charitable donation is permissible because it is for a campaign purpose. For example, a candidate may permissibly use campaign funds to attend a charitable event since attending the event increases the candidate’s visibility and allows the candidate to network with potential voters and donors.

ง 13-247 of state election law does allow certain kinds of charitable contributions to be made by accounts that are closing and liquidating their assets, a case that clearly does not apply to Brooks.

Additionally, Montgomery County’s public campaign financing law states, “A participating candidate may only use the eligible contributions and the matching public contribution for a primary or general election for expenses incurred for the election.”  This statement is repeated in the county’s summary of the law.  No one could construe helping disaster relief victims as a primary or general election expense.  It’s noteworthy that the county’s language applies not just to public funds but also to individual contributions made under the public financing program.

Your author really hated to write this blog post but it had to be done.  Generally speaking, when we have examined campaign finance issues in the past, we have sometimes seen behavior that may not be ethical but is legal.  This case is the opposite: what Brooks is doing comes from the best of intentions but does not comply with the law.  Brooks is free to discuss the plight of disaster victims all she wants.  She could also organize a private fundraiser for victims separate from her campaign account.  But if she goes ahead and uses her campaign funds for disaster relief contributions, she will risk sanctions from the state, the county or both.

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Should You Take Public Campaign Financing? Part Three

By Adam Pagnucco.

In Part Two, we explored some reasons why a candidate may want to enter public financing.  Today we will look at some factors that would argue for staying out.

Reasons to Stay Out

  1. You Already Have Money

In January 2014, then-District 20 Delegate Tom Hucker had a war chest of $146,905.  He had accumulated it by raising money continuously and not having serious challengers since he was first elected in 2006.  Hucker, whose progressive credentials are beyond question and who had sponsored public financing legislation while in Annapolis, would have been crazy to enter public financing for his Council District 5 race had it been available.  He would have had his war chest frozen and would have had to start from zero while facing a strong opponent in Evan Glass.  Even with his starting balance, Hucker won by just 222 votes.

Other state legislators who are thinking of running for council this time are in the same situation as Hucker.  For them, getting into public financing means walking away from significant war chests and participating in a system that is brand new and might have some implementation hiccups.  Self-funding candidates are in a similar place.  It would be understandable for these folks to stay out.

  1. You are Unknown

Complete unknowns rarely win.  Our voters usually expect county-level candidates to have some record in the community before supporting them.  But this is compounded in public financing, which requires participants to hit the in-county thresholds below before distributing public funds.  This will be tough for many unknown candidates.

Even fairly well-known candidates could struggle to qualify for matching funds.  Over the last three cycles, candidates who would not have hit the match thresholds include Mike Subin, Bo Newsome, Hugh Bailey, Sharon Dooley and Bob Dorsey (2006), Nancy Navarro (2008), Duchy Trachtenberg and Royce Hanson (2010) and Duchy Trachtenberg, Vivian Malloy, Ryan Spiegel, Chris Barclay and Terrill North (2014).  Ben Kramer would not have qualified in 2009, but he is primarily a self-funder.  Note that this list includes two incumbents, two school board members, two City Council Members, a state legislator and a Planning Board Chair.  If you are less known than these folks, you could have a hard time in public financing.

  1. You Have Lots of Supporters Outside the County

Most new candidates tap their families, friends and professional associates for start-up funds.  If you’re a MoCo native and have worked in the local area for a while, chances are that you will start with a fair number of in-county contributors.  That’s a good thing for qualifying for matching funds.  But if you come from outside the area and got here recently, that’s a problem.  Your parents and childhood friends in California, your fraternity brothers on the coasts and your former co-workers in New York and Boston can all give you $150 contributions, but none of that will count towards the qualifying thresholds.

  1. You are Running Against an Incumbent

If you are challenging an incumbent in a one-seat race and you enter public financing, you are almost guaranteeing that the incumbent will outraise you.  If the incumbent stays in the traditional system, he or she will clobber you with corporate and PAC money.  If the incumbent also enters public financing and has done even a halfway decent job of constituent service, the incumbent will have more in-county contributors than you and therefore more money.  Either way, you lose.

  1. You Have Connections to the Business Community

If you have a professional background in the business community – especially in development, real estate and/or construction – the progressive left is going to target you.  Individual activists, left-wing groups and maybe even some opponents will label you as “pro-business,” a Democrat in Name Only (DINO) or worst of all, a “tool of the developers.”  It’s debatable whether enrolling in public financing will tamp down such criticism, but it will certainly cut you off from your financial base.  You might be better off sticking with the traditional fundraising system, tolerating attacks from people who won’t vote for you anyway and running a well-financed campaign targeting those voters who don’t care much about the issue.

There you have it, folks.  If you are running for county office, public financing might be a good way to go.  Or maybe not.  It’s all about you and your race.  The decision is yours.

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Should You Take Public Campaign Financing? Part Two

  1. By Adam Pagnucco.

There are a number of factors that argue either for entering the county’s public financing system or staying out.  Let’s list the things that might cause candidates to get in first.

Reasons to Get In

  1. You Won’t Take Corporate or Developer Money

If you don’t want to take corporate or developer money, public financing can be a great way to replace those funds with taxpayer money.  Your author ran a series of simulations of what county candidates would have raised in the 2006, 2010 and 2014 cycles if public financing had been available.  The huge majority of candidates would have raised less money with public financing than what they actually raised through the traditional system, but there were two big exceptions.  Phil Andrews would have more than doubled his take in his 2006 council race and his 2014 Executive race if he had had access to public funds.  And Marc Elrich’s receipts would have increased by 55% in 2006, 71% in 2010 and 66% in 2014 with public money.  Both Andrews and Elrich refused developer money and Andrews turned away PAC money as well.  It’s not a coincidence that Andrews was the author of the public financing bill.

  1. You Have a Large Pre-Existing Base of Supporters

Under public financing, the key determinant of fundraising is not connections to business or labor or self-financing capacity.  It’s the number of in-county residents you can convince to contribute to your campaign.  That’s it.  For funds received from those folks, the government will pay 75% or more of your campaign receipts, at least until you hit the public match cap.  See the thresholds and caps below.

Most incumbents start with supporter bases and should be able to meet the match thresholds if running for reelection.  Over the last three cycles, only two incumbents – Mike Subin (2006) and Duchy Trachtenberg (2010) – would have failed to meet them.  It is probably not a coincidence that this system was designed and passed by incumbents!  State legislators running for county office have a good shot at qualifying for matches too.

Evan Glass is a good example of a non-incumbent who could qualify.  Glass had 396 in-county individual contributors in his 2014 District 5 race, enough to qualify if he were running at-large.  He raised $159,235 through August 2014, but would have raised $183,382 if public financing were available.  With one election under his belt (a VERY close loss) and continued involvement in the community since then, public financing is a real consideration in his case.

  1. You Can Afford Seed Money

If you don’t start with a large base, you will need a mechanism to raise small contributions.  Otherwise, you will get trapped by not having enough in-county contributions to qualify, which means you won’t have the money to set up a campaign infrastructure, which makes it harder to raise small contributions and so on.  The public financing system allows candidates (including spouses) to self-fund up to $12,000.  You should do that as soon as you can and use the money to set up a website, buy an email list and start running social media ads.  That will help you meet the match thresholds and keep your campaign going.  Or, if you don’t mind having the incumbents hate you, you can get a big email list for free!

  1. You Will Benefit from an IE

During the District 20 Senate appointment process, a group of unions and liberal groups announced that they were joining together “to achieve a progressive sweep” in local elections.  That means there is a real possibility of a labor-backed independent expenditure (IE) campaign to support left-wing candidates.  That could help ease the financial burden on those candidates unlikely to attract significant business support.  But counting on the IE is risky – there’s no guarantee that there will be one, that it will be effective and that it will support you.  After all, there could be lots of progressive candidates for an IE to choose from next year.

  1. You Are a Republican

One would think that Republican candidates would collect tons of business money, but that has not been true recently in Montgomery County.  Most business interests are non-ideological.  They want to pick winners who will support their agenda once elected and they don’t care very much about party labels.  (One of the untold stories in this county is the significant volume of political money contributed by Republican business people to Democratic candidates.)  But public financing gives Republican candidates another option – they can go to their fellow party members.  There are more than 120,000 registered Republicans in MoCo and nearly 60,000 of them voted in the 2014 general election.  Good luck getting elected here during the Trump era, but you can at least be financially competitive in the public system.  Finally, let’s remember that the most successful user of public financing in recent Maryland history was none other than Republican Larry Hogan, who is now Governor.

So are you convinced that you should enter public financing?  Well, not so fast.  In Part Three, we will examine reasons to stay out.

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Should You Take Public Campaign Financing? Part One

By Adam Pagnucco.

Here’s a question that has come up over and over again with various candidates and potential candidates: should they take public campaign financing if running for county office?  Your author’s typical practice is to demand provision of food and/or liquor in exchange for answering this question.  But in the spirit of recent holidays, we are just going to give away our take right here.  Feel free to send liquor anyway!

First, let’s explore the basic characteristics of the county’s public financing system.  Candidates who wish to participate may opt in, but it is not required.  Candidates in the system must establish new public financing accounts with the State Board of Elections and any money in their old accounts cannot be used for current election expenses.  Contributions may only be accepted from individuals at a maximum of $150 per donor.  Corporate and PAC contributions are forbidden.  Self-financing is limited to $12,000 from the candidate and/or a spouse.  The county will match contributions made by in-county residents on a sliding scale with maximum amounts of $600 per donor for Executive candidates and $450 per donor for council candidates.  But to qualify for matching funds, candidates will have to meet certain thresholds in terms of number of in-county contributors as well as amounts contributed.  These thresholds are shown in the table below.

Now here’s the Big Question: do voters care about who uses public financing?  No one knows because 2018 will be the first cycle in which it will be available.  But while public financing is new, discussion of campaign financing is ancient.  Developer contributions to County Executive and County Council candidates were a huge issue in the 1990s and 2000s.  Citizen groups like Montgomery County Citizens’ PAC for the Future (CITPAC) and Neighbors for a Better Montgomery (NeighborsPAC) tracked and published them.  These groups, which have no successors today, formed a political base for anti-growth candidates who vowed to limit or entirely refuse developer contributions.  The result?  Most of the candidates who won the 1998, 2002 and 2006 elections took developer contributions freely, including Doug Duncan, Ike Leggett, Steve Silverman, Mike Subin, George Leventhal, Nancy Floreen and Mike Knapp.  Phil Andrews and Marc Elrich were the primary exceptions, though Elrich lost four straight times before finally winning in 2006.  If most voters viewed developer money as something that would determine their votes, candidates supported by CITPAC and NeighborsPAC like William O’Neil, Vince Renzi, Ann Somerset, Hugh Bailey, Cary Lamari, Sharon Dooley, Cynthia Rubenstein and Chuck Young would have been elected.  It’s unclear whether the politics around public financing will play out any differently.

And so the appropriate criteria for whether to enter public financing relate to the self-interest of the candidate.  In which system will you be better off?  That depends on your own circumstances and the nature of your race.  We’ll start addressing that in Part Two.

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Will Taxpayers Fund Ficker’s Next Campaign?

By Adam Pagnucco.

As MCM and Seventh State have reported, MoCo political heckler Robin Ficker is running for County Executive.  That’s not shocking – Ficker has a long history of running for office and almost always losing.  What’s new is that Ficker is planning on acquiring a new source of campaign funds.

You, the public.

Ficker’s campaign website explicitly refers to the county’s new public financing system, under which the county matches campaign contributions made by individual residents (but not PACs, corporate entities or non-residents).  The system is opt-in; candidates can use the traditional financing system if they wish.  Ficker created a public financing account to run for Executive on February 8.  But that doesn’t mean he will necessarily get public funds.

Ficker’s campaign website home page.

The county’s system does not distribute taxpayer money to everyone who participates.  Instead, it sets up a number of thresholds candidates must reach before they are eligible for public matching funds.  Under the law, a candidate for Executive must receive at least 500 contributions of $150 or less from county residents totaling at least $40,000 before he or she is eligible for public funds.  The candidate cannot accept money from PACs or businesses and cannot take individual contributions of higher amounts.  Once eligible, the candidate can collect up to $600 in taxpayer funds for each $150 contributed by an individual.  Lesser matching amounts apply to smaller contributions on a sliding scale.  Lower thresholds and different match levels apply to those running for County Council at-large and district seats.

Could Ficker get public money?  Ficker has used two campaign accounts over the last decade, the Robin Ficker for Homeowners Committee (which he used in two runs for County Council) and the Fickers for 15 Slate (which he used to run for the General Assembly along with his son in 2014).  The two accounts together raised $262,762.  Of that amount, Ficker self-financed $259,108, or 99% of his take.  A total of 33 individuals other than Ficker gave to the two accounts.  So Ficker has a long ways to go to get public money.  However, he does plan to use his term limits petition information to raise contributions.  Ficker gathered 17,649 signatures.  If just three percent of those folks contribute $150 or less to his campaign, Ficker will qualify for public matching funds.

And so here is the cost of public campaign financing.  If taxpayers are to fund the campaigns of candidates they might support, they may also have to fund the campaigns of those they do not.  Even the clown prince of political hecklers.  Even Robin Ficker.

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Council Provides Crucial Funds for Public Campaign Finance

The following is a press release from Fair Elections Maryland:

Montgomery County Increases Investment in Groundbreaking Fair Elections Program

(Rockville) – Today the Montgomery County Council made a critical investment in democracy by adding $5 million to its public election fund in its FY2017 budget. While this amount is only a fraction of a fraction of a fraction of the County’s overall budget, it represents a real commitment to amplifying the voices of small donors in county politics and diluting the influence of wealthy special interests. With adequate funding, the program will be up and running for the next county elections, encouraging more voters to participate in county elections and providing opportunities for a wider range of candidates to run for office.

A citizens’ task force suggested $10 million is needed for the program to succeed and recommended a $4 million installment for FY17, but County Executive Ike Leggett only included $1 million in his FY17 budget. The $4 million, added to the Executive’s $1 million and the existing $1 million from FY16, puts the Public Campaign Fund on track to be fully funded and successful.

“Montgomery County made history by creating the first program in Maryland for small-donor fair elections,” said Jennifer Bevan-Dangel, executive director of Common Cause Maryland. “We praise the action Council took today. They showed strong support for this critical program, and backed up their words with strong action.”

“In our democracy, the depth of your pocket should not dictate the volume of your voice,” said Maryland PIRG Director Emily Scarr. “We’re thrilled that the Montgomery County Council increased their commitment to getting big money out of local elections by making strong investment in their small donor matching program.”

“There is no doubt that national eyes are on this program in Maryland. By putting small donor incentives into action in Montgomery County, the public will get to see the effectiveness of the program, building the support and track record we need to pass state and federal reforms,” said Larry Stafford, Director of Progressive Maryland.

Concerned citizens had testified at the budget hearings and made hundreds of emails and calls into Council office asking the County Council to put $4 million into the budget to fund the fair elections program.

In a small donor fair elections system, candidates for County Council or County Executive who turn down large contributions and contributions from special interests can receive limited matching funds for small contributions from their county. Candidates must qualify to participate in the program by showing strong support from citizens in their district.

# # #

 Fair Elections Maryland includes Common Cause Maryland, Progressive Maryland, League of Conservation Voters, Every Voice, Maryland PIRG and many more state and local organizations who support good government. 

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LCV Supports Funding for Public Financing of MoCo Elections

Today, I am pleased to present a guest post from Karla Raettig, the Executive Director of the Maryland League of Conservation Voters.

A clean environment depends on clean elections. That’s why the Maryland League of Conservation Voters is urging the Montgomery County Council to allocate enough funds to ensure that the County’s publicly funded elections program succeeds. Two years ago, the Council unanimously established this voluntary system by which eligible candidates for County Executive and County Council can receive matching public dollars for their campaigns. To prove eligibility, candidates must first meet a reasonable threshold of low-dollar donations from individuals in their district, and agree not to accept contributions from corporations, PACs, or labor unions. All donations are capped at $150—as a result, the voices of small donors are empowered, and the playing field is leveled with wealthy special interests.

In jurisdictions from Hawaii to Maine, similar programs have proven effective in diluting the influence of wealthy special interests; refocusing legislators’ attention away from outside, moneyed interests and onto their constituents; improving democratic participation; and promoting greater diversity of candidates, including helping to elect women, minorities, and individuals from less affluent backgrounds.

In order for the program to succeed, however, it must be fully funded for the upcoming County elections. According to the recommendation of an independent task force of Montgomery County citizens, the Council needs to allocate $10 million over a four-year cycle—a fraction of the overall budget. Unfortunately, only $1 million has been set aside so far. Next week, the full Council will discuss whether to accept the recommendation by the Government Operations Committee to allocate $4 million in the FY ’17 budget for the program.

Maryland LCV strongly urges the full Council to accept the recommendation of Councilmembers Katz, Navarro, and Riemer.

Whether it’s federal, statewide, or county races, money is dominating the election process. Self-funded candidates are breaking records. Real estate, developer interests, and lobbyists are giving millions. And yes, even groups like Maryland LCV are in the campaign donation game. But our organization supports a system of public finance over the status quo that favors wealthy special interests over the voice of the voters. We know that voters care about climate change, about the safety of their drinking water and the quality of the air they breathe. It’s precisely these voters whose voices we’d like to see elevated in the electoral process.

According to New York University School of Law’s Brennan Center for Justice, “campaigns funded principally or entirely by private contributions distort democracy and pull elected officials away from the interests of ordinary, often unorganized citizens.”

It’s time to reduce wealthy special interest influence on our electoral process and equalize the playing field, and Montgomery County is the right place to start. Two years ago, the Montgomery County Council showed they are true leaders in working towards fair elections. Now, they must stay the course and ensure the program is fully funded for success.

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Edwards Refuses to Join Van Hollen in Rejecting Campaign Spending by Outside Groups

Both Chris Van Hollen and Donna Edwards support rolling back the tidal wave of independent expenditures unleashed by the Supreme Court’s “disastrous Citizens United decision,” as Edwards put it. Now, Van Hollen challenged Edwards to agree with him to practice what they preach and pledge to reject spending by outside groups.

But  despite stating that “Marylanders deserve a Senator who will lead with bold solutions in the fight for campaign finance reform,” Edwards quickly rejected Van Hollen’s proposal–one pioneered by Elizabeth Warren in her race in Massachusetts.

So why is Edwards saying one thing and doing another? Van Hollen is far outpacing Edwards in “hard money” donations that fall under the legal limits for direct contributions to campaigns under the Bipartisan Campaign Reform Act.

Edwards hope that “soft money” expenditures by outside groups –the same type of spending denounced on her website–in support of her campaign will help her close the gap. In other words, she is unwilling to campaign under the rules she claims to support.

 

VH LetterHere is the proposed pledge:

Free State Pledge_Page_1 Free State Pledge_Page_2

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Spare Annapolis D.C. Dysfunction

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Today, I am testifying at the House Ways and Mean Committee in favor of a bill sponsored by Chair Sheila Hixson (D-20) and Sen. Jamie Raskin (D-20) to establish a Blue Ribbon Commission on Voting, Openness, Transparency and Equality (VOTE). My opinion piece in today’s Baltimore Sun explains why:

It makes sense to get on the off ramp instead of heading directly into the blockages that plague the federal level. Reforms to the electoral system have the potential to encourage cooperation even as we respect the partisan differences that render our democracy vibrant. Happily, many of these changes can also encourage participation.

Capitol Hill looks like dysfunction junction. Let’s take a look at possible changes that could help prevent Annapolis from following that route.

The Committee for Montgomery, a broad-based alliance of business, labor, education, civic and community-based organizations played a key role in developing the ideas behind this bill.

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