Tag Archives: public financing

Public Financing Geography, Part Two

By Adam Pagnucco.

As we stated in Part One, we have examined nearly 9,000 records of contributions to thirteen countywide candidates in the public financing system who have qualified for matching funds: County Executive candidates Marc Elrich, Rose Krasnow and George Leventhal and Council At-Large candidates Gabe Albornoz, Bill Conway, Hoan Dang, Evan Glass, Seth Grimes, Will Jawando, Danielle Meitiv, Hans Riemer, Mohammad Siddique and Chris Wilhelm.  Today we begin to answer the question of where individual contributions in the public financing system are coming from.

First, let’s tally the aggregate sums collected by all thirteen candidates.

The largest source of money in the public system is public matching funds, which outnumbers private contributions by more than two to one.  But that understates the magnitude of matching funds because the contribution records do not include public funds requested but not yet disbursed.  We will examine that issue when we begin discussing individual candidates in Part Three.  One note: while candidates may not take corporate contributions, their accounts may accept vendor refunds, deposit returns and bank interest.  That accounts for the tiny amount in the “other” category.

Now let’s look at in-county contributions by local area.

Urban centers that are also Democratic strongholds tend to dominate here, especially Downtown Silver Spring and Bethesda.  We have previously identified an area we call “the Democratic Crescent” including Takoma Park, Downtown Silver Spring, Kensington, Chevy Chase, Bethesda and Cabin John that accounts for 23% of the county’s population, 29% of its registered Democrats and 37% of its Super Democrats (those who voted in each of the last three mid-term primaries).  That area accounts for 53% of in-county contributions in the public financing system.

Below we compare in-county contributions to population by local area.

Relative to their population, Downtown Silver Spring, Bethesda, Takoma Park, Potomac and Chevy Chase are over-represented in terms of in-county contributions.  Gaithersburg, Germantown, Glenmont-Norbeck (zip code 20906) and Silver Spring East County (zip codes 20903, 20904 and 20905) are under-represented.  The Democratic Crescent accounts for 23% of the county’s population but 53% of in-county contributions.  Upcounty, an area we define as including Ashton, Boyds, Brookeville, Clarksburg, Damascus, Dickerson, Gaithersburg, Germantown, Montgomery Village, Olney, Poolesville and Sandy Spring, accounts for 34% of the county’s population but just 13% of in-county contributions.

Here’s another way to look at the same data: in-county contribution dollars per resident.

Seven communities contributed one dollar or more per resident to publicly financed candidates: Takoma Park, Chevy Chase, Dickerson, Downtown Silver Spring, Kensington, Potomac and Bethesda.  Except for Dickerson and Potomac, all of these areas are in the Democratic Crescent.  Seven communities contributed less than 25 cents per resident: Burtonsville, Gaithersburg, Glenmont-Norbeck, Clarksburg, Montgomery Village, Germantown and Damascus.  The average contribution per resident in the Democratic Crescent was $1.26.  In Upcounty, it was 21 cents.

Finally, we compare in-county contributions to the distribution of Super Democrats.

The distribution of in-county contributions is a much closer match for Super Democrats than for the broader population.  But Super Dem-intensive areas are even more influential among contributors.  The Democratic Crescent accounts for 37% of Super Dems and 53% of in-county contributions.  Upcounty accounts for 20% of Super Dems and 13% of in-county contributions.  Downtown Silver Spring and Takoma Park are over-represented here even when factoring in how many Super Dems they have, while Glenmont-Norbeck, Silver Spring East County and Rockville are under-represented.

The bottom line is that public financing is amplifying the influence of heavily Democratic Downcounty areas above and beyond patterns of residency and voting.  That influence comes at the expense of Upcounty areas like Gaithersburg, Germantown, Clarksburg, Damascus and the smaller communities close to the Frederick and Howard County borders.  If corporate money and PAC money are thought to have outsize impacts on the actions of county government in the traditional system, then one wonders if the Downcounty dominance that some Upcounty residents complain about will be even more pronounced due to public financing.

In Part Three, we will begin examining specific candidates.

Share

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.

Share

Changes to MoCo’s Public Financing Law

Many thanks to Common Cause Executive Director Jennifer Bevan-Dangel for letting me know about the major changes made to the public financing bill by the full County Council before its passage. You can find a description of the bill here.

The major change was the repeal of Hans Riemer’s amendment that passed in committee, which allowed donations made outside the County to be matched by public funds. Instead, recipients of public funds can receive donations from outside the County up to the $150 limit but they will not be matched.

Bevan-Dangel also explained: “The bill was amended to allow candidates to declare their intent to be publicly funded and start raising donations at the beginning of the four year election cycle, instead of waiting to the last year of the cycle. (This is critical because otherwise candidates would have had an incentive to raise funds into those old, non-public funded accounts in the ‘off’ years.)” This amendment was sponsored by Hans Riemer.

A motion to add expenditure limits to the bill died for lack of a second. Due to the potential for self-funded candidates to spend enormous amounts, this was probably a good decision by the Council. It is impossible to limit expenditures by people who opt out of the public financing system, as the Supreme Court declared them equivalent to constitutionally protected free speech in Buckley v. Valeo (1976)

Outgoing Councilmember Phil Andrews must be enormously pleased with the unanimous passage of the bill he sponsored. Common Cause Maryland should also take great satisfaction in the passage of this bill, though I notice that they have been very careful to share credit with other members of the Fair Elections Maryland Coalition, such as Progressive Maryland, that worked for the bill.

 

Share

MoCo Passes Public Financing Law

Common Cause MD has issued a press release that the Montgomery County Council has approved public financing for County elections. I’ll let you know of any major changes to the bill as I find out. But for now here is Common Cause’s statement:

Rockville, MD – The Montgomery County Council today took a huge step forward for fair elections by passing with a unanimous vote Bill 16-14, creating a program for county council and executive campaigns that would fight big money interests by empowering small donors in County elections.

“Voters expect public officials to make decisions that advance the public interest. But the hard truth is that special interests too often get special attention from candidates and officeholders,” said Jennifer Bevan-Dangel, Executive Director of Common Cause Maryland. “Voluntary small donor, public financing systems like the one before the Montgomery County Council on Tuesday put big ideas, not big money, at the center of our elections and make it possible for people of modest means and lacking connections to established power structures to run and win elections. We are thrilled that Montgomery County is leading Maryland forward. The amendments added today only strengthened the bill, and this is truly a model piece of legislation for other jurisdictions to follow.”

“Montgomery County is the most populated jurisdiction in the state, home to one million people. Its total budget is nearly the same size as Los Angeles. Because of the County’s influence in Maryland and proximity to Washington, D.C., the passage of public financing here will reverberate across the state and the country!” said Kate Planco Waybright, Executive Director of Progressive Maryland.

Nick Nyhart, President & CEO of Public Campaign, said “Today, the Montgomery County Council stood up to big money politics. Their vote to raise up the voices of everyday people in politics is part of a growing movement of millions of Americans fighting for a democracy that’s truly of, by, and for the people.”

“In our democracy, the depth of your pocket should not determine the volume of your voice,” said Maryland PIRG Director Emily Scarr, “In the face of ever increasing election spending by mega-donors and corporations, the Montgomery County Council took a big step today by tilting the balance of power back to ordinary citizens.  More of our counties should quickly follow suit.”

Under the Fair Elections program, candidates for County Council or County Executive who agree to limit their fundraising by accepting only low-dollar donations from individual donors in their districts will qualify for matching funds.In jurisdictions from Hawaii to Connecticut, such small donor-based Fair Elections reform have improved the election process. The programs encourage prospective candidates traditionally shut out of the political process, including people of color and of modest means or those who lack connections to established sources of political power, to run for office. They make politics more competititv and stimulate more substantive legislative debates.

The Fair Elections Maryland Coalition is working to implement this important reform in other counties and in contests for the state legislature.

Share

Riemer Proposes Change to Public Financing Bill

In the public financing of elections, as in much legislation, the devil is in the details. And the legislation proposed by outgoing Councilmember Phil Andrews has a lot of details, so it can be hard to keep up.

During the Government Operations Committee’s review of the proposal, Montgomery County Councilmember Hans Riemer sponsored an amendment that altered the public financing bill  in a crucial way.

The original bill allowed only donations made within Montgomery  to be matched by public funds. Hans’s amendment eliminated that limitation so that donations made anywhere in the U.S. would be matched by County funds as outlined in the law.

Councilmembers Hans Riemer and Nancy Navarro voted for the amendment, and Councilmember Cherri Branson voted no. Of course, the full Council can reconsider the issue when it takes up the bill.

The argument against the change is that it makes it easier for individuals who don’t live in Montgomery County to influence the outcome of our elections. The amendment also aids the many MoCo residents who have good DC networks but fewer County ties. It further augments the power of interests within the County who have the ability to gather checks from people elsewhere.

For the other side of the argument, I asked Hans to explain why he sponsored the amendment:

I’m a strong supporter of publicly-funded elections and I am confident that this system will help revolutionize Montgomery County politics.  As I supported the bill at committee last week, I proposed several amendments to strengthen it and make it more attractive to potential candidates.

[One] amendment removes the requirement that donors be county residents, because I support a limited amount of fundraising from outside of the county. I believe the most important goal of this bill is to give candidates a viable alternative to raising large donations from corporations and special interest PACs.

In Montgomery County, we are part of a large metropolitan area where many people grew up somewhere else, and many residents work outside of the County. As any first time political candidate can attest, a lot of initial fundraising comes from family, friends, colleagues–the people that know you best and support you because they believe you will be a great public servant.  Removing this base of support from the matching system risks making public financing a nonviable option for some candidates, and they will either opt-out or not be able to run a competitive campaign.

At the same time, my proposal retains the provision that only in-county donations count towards the qualifying thresholds. This will ensure that no candidate can base their campaign on out-of-county supporters.  In order to qualify, a candidate will have to have a huge base of support in the county, because the thresholds are appropriately high.

As is no secret, Hans is originally from California and has benefited from financial contributions from outside the County so cynics might say he knows of what he speaks. However, he makes good points here. Moreover, Councilmember Riemer is now announcing a proposed new change to the legislation that would limit the impact of the committee amendment:

I also plan to propose limiting the amount of money that can be matched for out-of-county donors, to 10% of the total — the current law in the Connecticut public finance system, a model that advocates have pointed to as an example on many points.

I think these measures make the system more attractive to potential candidates, and thus strengthen the system.  The goal is to give candidates a good alternative to raising large checks from wealthy individuals, corporations, and PACs.

As I alluded in my original post on the bill, a balance is important to strike. On the one hand, goals include preventing any one interest or individual, particularly from outside the area, from gaining too much influence. But in order for the bill to work, the incentives to opt into the system need to be strong enough to dissuade candidates from just raising money on their own under the current arrangements.

As John outlined the other day, making hard for people to raise money can serve as a strong disincentive to opt in–not to mention result in the unintended consequence of increasing call time. No one wants candidates to spend even more time raising money rather than meeting with voters.

On the smart decision front, the County has already indexed the limits to inflation. This choice will help avoid the problem with the original Federal Election Campaign Act of 1974, which set fixed limits that inflated away before the were raised in 2002.

One major remaining flaw with the bill is that it fails to address the problem of self-funding candidates who can afford to drop hundreds of thousands of their own money on the race and avoid the system. There are solutions, such as substantially raising the match, so that candidates in the system find it easier to participate. The Council should address this problem when it takes up the bill.

Share

The Case Against Public Financing: A Manifesto

To a certain type of Goo-Goo liberal, public financing of elections seems like a splendid idea.

It isn’t. Here is why:

The New York Example
I’ve worked perhaps even more extensively in New York politics, where City Elections are publicly financed, than in Maryland. From my reading of the bill, it appears based upon the system used to finance New York City Council races. This isn’t a good thing.

In New York State Assembly races, you can effectively finance a campaign with the support of four donors. If you happened to be running for New York City Council, you need the support of hundreds of small donors to reach the match threshold to run an effective campaign. So candidates for City Council are forced to do congressional candidate level hours of call time (20-30/week).

I remember one of the most successful fundraisers in Democratic Politics once asked me whether I’d rather ask a  thousand people for a dollar, or one person for a thousand dollars. The answer for a candidate is obviously the second one.

I’m sure that if any sitting council members truly understood that come 2018, if they pass this, they will be spending six hours a day in a windowless room calling small time activists to beg for fifty dollar donations, this bill would die a swift death.

The New York State Legislature understands this perfectly well.

I remember having a long phone conversation with one of the head lawyers for the New York Senate Democrats on this topic. He vividly related to me the story of how he told the children of Billionaire Financier George Soros that no amount of money was going to buy him a public financing law. Why you ask?

Because most term limited New York City Councilman end up in Albany and will never go back to the nightmare that is raising small dollar donation for matching funds.

The Colorado Example
In Colorado, the max out donation is $400. Typically, a targeted State Senate race in Colorado maxes out at $200,000. (This cycle they will likely hit $225,000). However, $750,000-$1,000,000 is typically spent by the Colorado Senate Democratic Majority Fund in independent expenditure. This means that the real fundraising campaigns happen outside of the campaigns themselves.

Divorced of a candidate’s name or approval, this translates into lots of nasty, negative, no holds barred political advertising. To me this bill seems like a final attempt by Phil Andrews to kneecap Montgomery County business and union interests. While I find this a vile prospect, Phil’s plan is doomed to failure. At the end of the day, Real Estate Developers and Labor Unions are savvy people. They shall do in Montgomery and circumvent the system through independent expenditures.

The Second New York Example
Mike Bloomberg was elected Mayor of New York City as a Republican because his Democratic opponents were capped at $5  million dollars in spending while he dropped nine figures on his campaign. If you want Dana Buyer, Lou Simmons and Jonathan Shurberg on the Council–the top three self funders in Montgomery County in the 2014 Democratic Primary–please vote for this bill.

The Annapolis Example
Maryland Democrats consistently win districts that should send Republicans to Annapolis (with Democratic Performance indices giving Republicans up to a ten-point edge in many seats long held by Team Blue). This is not because we run better campaigns on the Democratic side in Maryland than anywhere in the country. We’re a decade behind New York, Virginia, California and dozens of others in that regard.

It’s because in Maryland’s one-party environment, traditional economic donors that would be inclined to support Republicans (think Comcast) donate to Democrats. Which explains why Jim Mathias, the most vulnerable Democrat in Maryland’s Senate, will face a Republican with less than $50,000 all in to spend. Mathias will have north of $300,000.

If you have Republican County Council candidates with $125,000 in the bank, Democrats should expect to have competitive general elections in districts 1, 2 and 3.

Share

Public Financing in MoCo

PF AtLarge PF DistrictPF Exec

The Cost and Impact of Public Financing

Montgomery County has moved closer to adopting a public financing system for county elections with approval of the bill by the Government Operations and Fiscal Policy Committee. As the Council packet explained, the bill proposed by retiring Councilmember Phil Andrews would encourage candidates to raise money in small amounts.

A candidate would need to obtain a specific number of small contributions from a County resident of between $5 and $150 in order to qualify for public funding. Each of these qualifying contributions must be received within 365 days before the primary election and at least 45 days before the primary. A candidate for Executive would need to collect at least 500 qualifying contributions and an aggregate total of at least $40,000 to qualify. A candidate for At-Large Councilmember would need 250 qualifying contributions and an aggregate total of at least $20,000. A candidate for District Councilmember must collect at least 125 qualifying contributions and an aggregate total of at least $10,000.

A candidate for Executive certified to receive public funding would be eligible for a matching contribution of $6 for each dollar of a qualifying contribution for the first $50 of the contribution; $4 for each dollar of the second $50; and $2 for each dollar of the third $50. The match for a candidate for Councilmember would be $4 for each dollar of the first $50, $3 for each dollar of the second $50, and $2 for each dollar of the third $50. . . . The maximum public contribution for a candidate for Executive would be $750,000 for the primary and $750,000 for the general election. The maximum public contribution for At-Large Councilmember would be $250,000 and the maximum public contribution for each election for District Councilmember would be $125,000.

A candidate who voluntarily accepts a public contribution must pay for all campaign expenses with the qualifying contributions, the matching public contributions, and a personal loan from the candidate and the candidate’s spouse of no more than $6000 from each.

But the really interesting part–the impact on the candidate funds–was placed at the far end of the report and has been highlighted in the screenshots at the top of the post. A key caveat in any examination of the Council analysis–and indeed, the point of the system–is that some candidates would change their behavior in response to the new incentives. So take these projections of its impact with a dollop of sour cream.

Would the Bill Achieve Its Goals?

The reason that the presidential public financing system died was the ability of candidates to raise far in excess of the amount available through the system. The rise of expenditures by outside groups and their legalization by the Supreme Court has also contributed to the demise of the system.

Not all candidates would necessarily want to participate in the system. The Council Staff report explained that only two district candidates and one executive candidate could have raised more through the proposed system than they raised without it. On the other hand, three of four at-large candidates could have raised more through the public financing system. Over time, the incentive to participate could decline and even disappear as in presidential elections. It will have no impact on candidates who can afford to self-finance their own campaigns.

Another issue that the bill cannot address is the participation of outside groups. Though the incentives to participate in the public financing system could constrain large donations and the total amount spent, it has no impact on expenditures by outside groups from MCGEO to the Koch brothers.

Moreover, it is not fully clear to me that it would necessarily level the playing field for candidates. In some cases, it might increase the advantage of incumbents or the person who has raised the most money. Challengers or less-well funded candidates might still like it because the initial dollars are the most crucial to viability. The marginal impact of expenditures tends to decline as the amount spent rises.

Some final potential quirky effects. First, potential donors might like if they cannot give such large amounts because they would not be asked to write such large checks. Second, candidates may perversely have to spend more time raising money if they have to raise it in small amounts rather than in large chunks from fewer people. The problem will get worse over time unless the limits are adjusted for inflation, like the federal limits in the Bipartisan Campaign Reform Act (a.k.a. McCain-Feingold).

Share