Reinvent Albany Calls for Lower Contribution Limits, Eliminating the Public Match Cap, and Increasing the Public Matching Rate at Charter Revision Commission Campaign Finance Issue Forum

Testimony to the 2018 NYC Charter Revision Commission on Campaign Finance Reforms

Campaign Finance Issue Forum

June 14, 2018

Good afternoon Chair Perales and members of the Charter Revision Commission. I am Alex Camarda, Senior Policy Advisor for Reinvent Albany. Reinvent Albany advocates for transparency and accountability in State government, and are leading champions for transparency in New York City government, especially strengthening open data and the Freedom of Information Law.

Thank you for the opportunity today to participate in this Campaign Finance Issue Forum to discuss the city’s campaign finance system and potential areas of reform.

In earlier testimony we characterized the city’s campaign finance system as generally good, and far better than most places, but with room for significant improvement. We voiced concern about the influence of money on city elected officials coming from outside the campaign finance system, especially via contributions to city-affiliated nonprofits.

Our understanding is this Commission intends to is seeking our feedback on three areas related to the city’s campaign finance system:

1. Increasing or eliminating the cap on public matching funds for campaign contributions;
2. Lowering the contribution limit; and
3. Increasing the match rate beyond the current $6:$1 match on the first $175 of any campaign contribution.

Reinvent Albany supports doing all three of these measures together because they will better incentivize fundraising from small donors. Candidates need more incentives to raise money from small donors because money raised from small contributions represents a small proportion of the funds raised by candidates.

We support eliminating the cap on public matching funds
Reinvent Albany recommends eliminating the cap on public matching funds, which is currently 55 percent of the spending limit for the office. Eliminating the cap would effectively increase the amount of public funds candidates could receive to up to 86 percent of the spending limit for the office (if a candidate raises all their campaign funds in small donations, 1/7 or 14% of the money would be private funds).

We believe eliminating the public match cap would encourage candidates to raise more from small donors. Currently candidates are incentivized to raise the maximum contribution from donors because they have to raise, at minimum, 45 percent of the spending limit for the office they seek in private dollars. Campaigns have limited time and resources, and candidates typically want to raise the most money as quickly as possible. Currently, the easiest way for candidates to complete their fundraising is to collect the largest contributions possible while receiving a match on the first $175 of every contribution.

An analysis by Reinvent Albany and Represent.us New York found Councilmembers received most of their funds from contributions larger than $175. The fifty-one Councilmembers elected during the 2017 election cycle raised a total of $9.6 million in private contributions and received $3.3 million in public matching funds. As shown on the chart below, most of the money raised in private contributions by Councilmembers is from larger contributions.

The analysis also found:
● Thirty four of 51 Councilmembers raised less than 20 percent of their funds from donations of $175 or less.

● Fifteen candidates chose not to participate in the public matching system altogether.

This data echoes findings from the 2013 elections which showed that while more than 2⁄3 of contributors to New York City candidates in 2013 were for $175 or less, only 10.5 percent of the total amount contributed to participating candidates came from small contributions.2

Even while incumbents rely on larger donors for most of their campaign funds, many Council candidates don’t have access to larger donors. They rely on small donors to fund their campaigns and frequently hit the public match cap. ​Our analysis found that of the 168 candidates running for City Council in 2013, 51 candidates – 30 percent of candidates – reached the then public matching funds cap of $92,400 in the primary election and 15 candidates hit the cap in the general election.3 Our conclusion is that lifting the public match cap entirely would make Council races more competitive.

For citywide and boroughwide offices, few candidates actually reach the public match cap as many candidates for these offices rely on large donors to bankroll their campaigns. Councilmember Kallos, in analyzing the 2013 mayoral race, found candidates raise most of their money from large contributions.4 According to Kallos’ analysis, just 5 percent of mayoral candidates’ funds came from contributions of $175 or less, or $3 million of $50 million raised. Forty nine percent of funds, or $24 million, came from the maximum contribution of $4,950.

We support further limits on the size of the contributions
We recommend lowering the contribution limit by 50 percent. We think this will increase the likelihood candidates will raise more money from smaller donors if the lower contribution limit is accompanied by other reforms, like an increased public match rate or eliminating the public match for the first $175 for large donations. We also believe the contribution limits are high considering the median annual household income in New York City is $58,8565 and typically more than 98 percent of individuals do not make any campaign contributions whatsoever. However, we don’t think limits should be lowered too much over concerns the money will flow to less regulated independent expenditures for which there are no contribution limits.

As shown on the chart below, New York City’s individual contribution limits for municipal office are now $5,100 for citywide office, $3,950 for boroughwide office, and $2,850 for City Council ​per election cycle​. Los Angeles, the nation’s second largest city which also has a public matching program, limits individual contributions to $800 for Council candidates and $1,500 for citywide candidates per election. Even doubling Los Angeles’ per election contribution limits for an apples to apples comparison with New York City to $1,600 and $3,000, respectively, leaves their limits well short of New York’s limits.6 Chicago, the nation’s third largest city, follows Illinois’ individual contribution limits. Candidates can raise $5,600 per election cycle for all municipal offices, which is higher than New York City’s for all offices.

According to the National Conference on State Legislatures, the median individual contribution limit for state office for the 39 states that have limits, is $3,800 for governor and $1,000 for the state senate and state house. The contribution limit varies from state to state as to how it is applied; in most states it is per election while in others it is per year or per election cycle. New York City, a municipality, has contribution limits that more resemble the permissive contribution limits imposed by states. Federal candidates running for the presidency of the United States can raise similar amounts of money from individuals as citywide candidates can in New York City. ($2,700 per election for president, whereas city limits are effectively $2,550 if a candidate has a primary and a general election).

We support increasing the size of the $6:$1 match on small contributions
Reinvent Albany supports increasing the public match on small contributions from $6:$1 but we think it should only be done for small contributions rather than the first portion of a larger contribution.

Increasing the size of the match will encourage candidates to raise more money from small donations, but will be greatly enhanced if done in addition to lowering contribution limits and lifting the public match cap. New York City over the years has increased its match rate for its public campaign finance program from $1:$1 for the first $1,000 to $6:$1 for the first $175. In 2009, the match rate increased from $4:$1 to $6:$1 which contributed to an increase in first-time contributors from 28,170 to 33,900, and the proportion of first-time contributors giving small contributions from 68.7 to 83 percent.

New York City already has the highest match rate of any public matching program in the country, although proposals in other places include a matching rate as high as $10:$1.9 Los Angeles has a public matching rate as high as $4:$1. A recently established public matching program in Montgomery, MD has a tiered public matching rate, with the highest match rate also $6 in public funds for every $1 in private donations.

In considering raising the public match rate, there are a number of different variations for the Commission to consider. The Commission could propose:

• increasing the public match rate uniformly across the program for all offices and all donations;
• increasing the public match rate for certain offices, like the citywide offices;
• increasing the public match rate only for the smallest contributions;
• providing a match rate that gradually phases out as the contribution increases in size;
• establishing a different public matching rate for different elections; and
• a combination of some or all of these approaches.

Montgomery County in Maryland, for example, provides different matching rates for County Executive races and County Council races. It also phases out the match for both offices as a donation increases in size. For County Executive, a $6:1 match is received for the first $50 of a contribution; a $4:1 match for the second $50 tranche; and $2 for the remainder of the contribution up to the maximum amount of $150 from individuals. For County Council, the structure is the same, but the matching amounts are $4:$3:$2 rather than $6:$4:$2.10 Los Angeles provides a different matching rate for different elections, $4:$1 for the general election and $2:$1 for the primary. It also provides a lower matching rate of $1:$1 if only 500 signatures are obtained on nominating forms.

In conclusion, Reinvent Albany supports these three proposals as a means of encouraging small donor fundraising, and believes doing all three together is essential. But we believe all three would be far more meaningful if matching funds were given only to contributions totalling up to $175, which also would save taxpayers and the campaign finance system millions of dollars. By only providing the match for smaller contributions, candidates are encouraged to focus on smaller donors rather than raising the maximum contribution. Taxpayers should not have their money used to reward candidates for soliciting large donors.