The Model State Campaign Finance Law
Joseph Zimmerman
Mandatory information disclosure by
candidates for elective office, lobbyists and public employees is essential for the
protection of the public interest against conflicts-of-interest and other unethical acts.
Of particular importance are corrupt practices acts establishing maximum permissible
amounts of campaign contributions and expenditures, and requirements for filing of reports
by candidates, their election committees and political action committees.
All state corrupt practices acts must
conform with the 1976 decision of the Unites States Supreme Court in Buckley v. Valeo
that held that the limitations on expenditures by a candidate from personal funds
contained in the Federal Election Campaign Act of 1971 were unconstitutional violations of
the First Amendment's freedom of expression.
In 1978, the Court in First National
Bank of Boston v. Bellotti invalidated a Massachusetts statute limiting contributions
to referenda campaigns by corporations on First Amendment grounds. Hence, candidates are
free to spend as much of their own money on their campaigns as they wish, and corporations
similarly may expend funds without limit on issue referenda affecting corporate interests.
Model State Campaign Finance Law
To guide state legislatures in the
enactment or amendment for corrupt practices acts, the National Civic League (then the
National Municipal League) in 1979 published a Model State Campaign Finance Law which
provides for a State Campaign Finance Commission responsible for administering the Law.
The seven Commission members are appointed
by the Governor with the approval of the Senate or Governor's Council for seven-year terms
and no more than four members may belong to the same political party. This provision
conforms with the Buckley v. Valeo decision holding that there must be a separation
of powers for appointments since appointees have regulatory and enforcement powers.
The Commission is required to investigate
the sworn complaints of citizens who subsequently may seek judicial review of any
Commission decision. The Law also authorizes the Commission to issue advisory opinions on
its own volition at the request of any person relative to his or her duties "in a
given factual situation."
Provided the individual requesting advice
on a contemplated action submits accurate information and follows the advisory opinion,
the individual is protected against civil and/or criminal penalties in the event he or she
is charged with a violation.
Regulatory Provisions
It is essential that a corrupt practices
act defines the term "contribution" very carefully. The Model Law defines a
contribution as:
a gift, subscription, advance, deposit of money or anything of value, a payment, a forgiveness of loan, and a payment of a third party made for the purpose of influencing the result of an election. A "contribution" includes that portion of a gift, etc. which exceeds the fair market value of anything received in return.
Included within the definition are
tickets purchased for fund-raising events, discounts or rebates not extended to the
general public and the money or property of the candidate used in the campaign. Excluded
are voluntary services provided by others.
A political party, campaign committee, or
other committee may not accept contributions or expend funds, according to the Model Law,
until a statement of organization, including detailed information on its officers and
purposes, is filed with the Commission.
The statement must include the name and
party affiliation of candidates, name of referendum issue the party or committee supports
or opposes, a list of bank safety deposit boxes and other information required by the
Commission. This provision seeks to prevent concealment of illegal contributions prior to
the official organization of a committee and to protect the contributors and the public.
The campaign contributions report must
include:
• a list of every person or
organization who made contributions exceeding $100, including name, home address, business
name and address, and fair market value of the contribution;
• all loans received by a party or
committee, name and address of the lender and name and address of any co-signer;
• a list of all pledges used to
obtain a loan or other goods and services containing the amount of each pledge and name,
home address, occupation, and business name and address of the pledger;
• total proceeds from sale of
campaign items and total amount of all other contributions not listed in one of the above
categories;
• the total amount of proceeds of
ticket sales to every dinner, luncheon, cocktail party, and other fundraising event so
long as the contribution per ticket (after expenses are deducted) does not exceed one
hundred dollars -- a separate listing is required for each contributor if the amount
exceeds $100.
The Model Law stipulates that the person
paying for printed materials, such as billboards and posters, must have his or her name
and address included on the materials and the person paying for a radio or television
advertisement similarly must have his or her name included in the advertisement.
Need for Model Law Provisions
The Model Law's provisions are very
detailed compared to earlier corrupt practices acts whose provisions were evaded with
ease. Limitations on individual campaign contributions differ in accordance with whether a
campaign is for a local government or statewide office and make it illegal for an
individual to use the name of another person in making a contribution. Any person
independently spending more than $100 on behalf of a candidate or a referendum question
must register with the Commission and file an expenditure report.
Campaign contributions by corporations and
labor unions are prohibited by the Model Law except for referendum issues allowable by the
Supreme Court's 1978 decision. These bodies, however, are allowed to organize and operate
political action committees which can contribute to candidates and referenda issue
committees.
Contributions to a candidate by business
firms which do business with a government and by public employees labor unions suggest the
possibility of quid pro quo arrangements. To address this problem, Congress
included in the Federal Election Campaign Act of 1974 a provision making it illegal for a
person "knowingly to solicit" a campaign contribution from a government
contractor and a second provision forbidding a government contractor to make contributions
to political campaigns.
Enforcement of Corrupt Practices Act
Corrupt practices acts, whether stringent
or lax, are effective only to the degree to which they are enforced. Unfortunately, the
responsible state commission typically lacks adequate staff and equipment to monitor
effectively reports of campaign contributions and expenditures, and to investigate
reported violations of the state rules and regulations.
Candidates and members of party committees
seldom are prosecuted for filing incomplete or false reports. Common Cause addresses this
problem in its Model Conflict-of-Interest Act by authorizing any citizen to file a sworn
complaint with the Ethics commission and granting standing to a citizen to sue in court if
the responsible officers refuse to enforce the act.
Loans to candidates and campaign
committees present a particularly difficult regulatory problem. On occasion, bank loans
are repaid one or more years after an election by the individual guarantors who often are
real estate developers and other businessmen. Loans by individuals to a candidate often
are forgiven after the election.
If the candidate who borrowed the money is
elected, the forgiving of a loan can be viewed as an attempt to purchase future favors. If
the loan is not forgiven, the elected officer may owe large sums to individuals and/or
firms that are regulated by or do business with the government.
A possible solution to this problem is a
requirement that all loans to a candidate or campaign committee be classified as
contributions from the maker or guarantor of the loan. The exception would be a loan made
by a bank on the same terms as are available to the general public.
To monitor these and other practices, the
Election Finance Commission must be granted broad regulatory authority to curb ingenious
attempts to evade existing campaign finance regulations.
Joseph F. Zimmerman is professor of
Political Science in the Graduate School of Public Affairs of the State University of New
York at Albany and a former chair of the Section on Representation and Electoral Systems
of the American Political Science Association. He co-edited the 1992 book United States
Electoral Systems: Their Impact on Women and Minorities and the 1994 book Electoral
Systems in Comparative Perspective: Their Impact on Women and Minorities.