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HomeMy WebLinkAboutCOM 0528.002 2008-2010 ~ O F N BARBARA WONG h~ i rv PHONE: (808) 586-0285 EXECUTIVE DIRECTOR ~ cJ FAX: (808) 586-0288 /Q a:www.hawail.gov/campaign STATE OF HAWAII Z ' --a " CAMPAIGN SPENDING COMMISSION 235 SOUTH BERETANIA STREET, ROOM 300 1^. HONOLULU, HAWAII 96813 October 13, 2009 r n TO: The Honorable Guy Enriques, Chairperson of the Committee odT- ublicy~orks and Intergovernmental Relations Members of the Committee FROM: Barbara U. Wong, Executive Direc0~pz- W4J Campaign Spending Commission SUBJECT: Testimony on Resolution No. 238- 09; A Resolution Requesting the Hawai'i State Legislature to amend the Comprehensive Public Funding Program for the County of Hawaii'i Council Elections Thank you for the opportunity to testify regarding this Resolution. I offer my comments on several aspects of the Comprehensive Public Funding Program for.the County of Hawaii'i Council Elections ("Program"). Part I of Act 244, Session Laws of Hawaii 2008 ("Act 2447), established the Program. This is a voluntary pilot project for three election cycles beginning with the 2010 election. The public funds for these elections are provided by the Hawaii Election Campaign Fund; voluntary check- offs by individual taxpayers on their Hawaii income tax returns are the main source of current revenue for the Hawaii Election Campaign Fund. Act 244 provides a $300,000 cap on funding in the 2010 election. I. Costs Before a decision is made on this resolution to raise the cap on the Program, please consider whether Hawai' i taxpayers are able and willing to fund the Program for all races, which is what this pilot determines. In the year of a governor's race, full public funding for two candidates would be more than $40 million. Increased comprehensive public funding increases administrative costs. This is an unfunded mandate. In addition to $300,000 in public funding, there will be up to $100,000 in administrative costs. Costs include building this new Program, administering it, report reviews, follow-up letters, tracking and pursuing late report filers, investigations, conciliations, etc. Audits and investigations are time-consuming and expensive. Administrators of the Maine and Arizona Clean Election programs testified before a committee tasked with creating the Connecticut Clean elections program that their biggest problem was misuse and abuse of public funds. Comm. NO. -S ~b• 2- Ref. To.. _ _PTF1 ! t2[, Ref. Date OCT 2 0 2009 When the Working Group was presented with testimony by the administrators of the Maine and Arizona public financing schemes See Garfield Decl. I, Ex. 19 at 5-93 (testimony of Barbara Lubin and Jonathan Wayne) each testified that the problems each state had experienced with administering its program involved corrupt or inappropriate uses of public financing, rather than candidates seeking to splinter parties or generate destabilizing factionalism. (Green Party of Connecticut et al v. Jeffrey Garfield et al, 2009 WL 2730525 at *51 (D. Conn. 2009). (Emphases added.) Keep in mind that the Hawaii election campaign fund currently has $4.9 million. There were formerly three primary sources of revenue: $3 tax check-off, interest on the principal, and fines. In 2008, the legislature removed the fines to the general fund. Interest dropped from $240,000 in Fiscal Year 2008 ("FY08") to $99,000 in Fiscal Year 2009 ("FY09"). Tax check-offs have declined steadily since its inception in 1980, mirroring the decline in check-offs for the Federal Election Commission's public financing program. However, these are not self-sustaining numbers and eventually the Campaign Spending Commission will have to ask the legislature for annual appropriations. Arizona, Maine and Connecticut's funding is quite larger than Hawaii's funding. Arizona's clean elections program, which was adopted by initiative in 1998, derives its primary funding from a 10 percent surcharge on civil and criminal fines and penalties, with a current revenue balance in FY09 of $29 million. Maine's program receives a 2 million dollar appropriation annually from its legislature (which is most of its funds), and provided public funding to candidates in 2008 of $2.9 million. Maine projects needing $5.6 million for the governor's race alone in 2010. Finally, Connecticut's program started in 2006 with a budget of $15 million and a staff of 7. Staff increased almost fourfold to 27, primarily auditors, and Connecticut's projected budget was $45 million in 2008. Thus, increasing the cap will 'increase administrative costs. II. Empirical Objectives to Assess the Pilot This Resolution also proposes that Act 244 be amended to "address the lack of objectives with which this program can be properly assessed." In Standing Committee Report No. 1196, the House Committee on Finance stated that "[t]he purpose of this bill is to reduce the influence of private financing on campaigns by establishing a comprehensive public funding system for election campaigns of the county council." Likewise, the Senate Committee on Judiciary and Government Operations commented in Standing Committee Report No. 3116 of H.B. No. 661 HD1 SD1, that "[y]our committee finds that the comprehensive public financing of campaigns has promising potential and should be explored on a pilot basis to see if it fulfills its promise." Though the Committee did not state what that promise was, it is well known that the stated purpose of public funding is to reduce corruption or the appearance of corruption by limiting the ability of special interests to unduly influence legislators. 1 It did rise slightly in FY09 to $205,040 from $190,480 in FY08 when the tax check-off increased from $2 to $3, however the number of individuals checking off declined 28%. In 2007, a question was posed to a panel consisting of administrators of the Clean Election programs in Arizona, Connecticut and Maine at a national campaign finance law annual conference. No one could answer the following question: How have you measured the reduction in corruption since starting your clean elections program? Simply put, even with public funding for candidates, independent expenditures increase and lobbying expenditures increase.2 How is a reduction in corruption assessed? Can you assess a reduction in corruption if special interests are allowed to make independent expenditures (e.g., advertisements and mailers) for or against candidates? Can you assess a reduction in corruption if you allow lobbying expenditures? We provide our comments to assist the Committee members in making an informed decision on this resolution. 2 Source: 2007 Report on the Maine Clean Election Act, at p. 41, Maine Commission on Governmental Ethics and Election Practices. In 1996, Maine voters enacted low contribution limits and a voluntary system of public financing for legislative and gubernatorial races. One undisputed.goal of this legislation was to reduce the role of private money in state elections. Since these reforms, two trends have emerged: • The total of private contributions made directly to candidates has decreased sharply • Reported independent expenditures by political action committees (PACs) and political parties in state candidate races have increased. This is especially true of PACs organized by legislative leaders and caucuses. Some of the overall increase is due to improved reporting requirements for independent expenditures that the Legislature enacted in 2003. Some observers are troubled by the increase in independent spending by PACs and party committees. When responding to the Commission's surveys in 2004 and 2006, many legislative candidates expressed frustration with the volume of independent expenditures made in their races. As more mailers and advertising are paid for by independent groups, legislative candidates have come to believe that they have less influence over how the candidates and issues are defined in their races. They are frustrated that they lack control over the timing and content of these third-party communications, and they dislike that matching funds are triggered to their opponents as a result.