Guest Post: C4I’s New Index Illuminates the Need for Reform of State-Level Campaign Finance Rules in the U.S.

Today’s guest post comes from Shruti Shah, President and CEO of the Coalition for Integrity (C41), together with Laurie Sherman, C4I’s Policy Advisor, and Stephanie Camhi, a C4I external consultant.

Anticorruption and good governance advocates, in the United States and elsewhere, have long been concerned with the potentially corrupting influence of campaign donations and other political spending on public policy. (Indeed, although the U.S. Supreme Court has deemed political spending to be a form of “speech” protected by the First Amendment of the U.S. Constitution, the Court has also recognized the prevention of corruption, or its appearance, as one of the few interests sufficiently compelling to justify campaign finance laws that limit such spending.) Much of the discussion of the campaign finance issue in the United States focuses on federal elections, yet concerns about the corrupting effect of campaign donations are just as important in state-level elections. State elected officials—legislators, governors, and other elected executive branch officials—play a vital role in creating and implementing public policy, and these officials decide how to spend trillions of dollars on roads, health, education, welfare, and other programs. And money continues to flow into state races in record-breaking amounts. Yet the potential for corruption—both illegal corruption and the “softer” corruption associated with undue access and influence for large donors—does not receive as much attention at the state level as at the federal level.

State-level political candidates must follow campaign finance laws written and enforced by the state, and states vary greatly in terms of the content and quality of their campaign finance systems. To highlight the variance across states in campaign finance laws, and to provide more information to voters and reformers, the Coalition for Integrity (C4I) created the first State Campaign Finance Index analyzing the campaign finance laws and regulations in all fifty states and District of Columbia. The Index assigns states scores based on several factors that, in C4I’s judgment, constitute best practices. The most important factors are as follows:

  • First, in order to ensure effective enforcement of campaign finance law, states should have an independent enforcement agency, led by officials statutorily protected from removal without cause, with wide powers to investigate and sanction violations in state and local elections. While many states have an election commission of some kind, in multiple states the commission lacks independence or has unduly circumscribed powers. For example, in Utah, the Lieutenant Governor is the Chief Election Officer—but the Lieutenant Governor’s office cannot conduct investigations, hold public hearings, or issue subpoenas. The Salt Lake Tribune reported that Utah’s state election office has only one full-time employee tasked to review tens of thousands of expenditures. Their analysis found that, since 2015, Utah lawmakers have millions of dollars in campaign cash with little transparency about where the money actually went. Utah received the third lowest score at 45.48, ahead of only South Dakota and Indiana.
  • Second, states should implement the federal limit for contributions by individuals and political action committees (PACs) as well as bar contributions by corporations and unions. Currently, five states have no limits on any contributions to candidates by individuals, corporations, unions, PACs, or other entities. In one of these states, Virginia, one of the state’s largest electric utilities, Dominion Energy, is one of the largest corporate contributors to Virginia’s elected officials, donating more than $13.4 million to legislators on both sides of the aisle since 1996. According to Virginia State Corporation Commission (SCC) reports, Dominion Energy overcharged customers by more than $2.3 billion over the past decade, but less than 5% of this money has been refunded. While proving a quid pro quo as a legal matter would be extremely difficult, the fact that Dominion can make such unrestricted donations may well contribute to its apparent ability to get away with little to no consequence.
  • Third, states must effectively regulate not only direct contributions to candidates, but also so-called “independent expenditures” on political messages—a problem that has gotten worse since the U.S. Supreme Court’s Citizens United decision, and subsequent lower court cases expanding on the logic of that ruling. Even though states cannot impose hard caps on these independent expenditures, they can and should prohibit coordination among candidates, parties, and these (allegedly) independent PACs. State law should specify the types of conduct and spending that qualify as coordination, in order to prevent wealthy special interests from skirting the limits on direct contributions. States should also require that vendors and other third-party service providers establish a firewall between those employees working for candidates or parties and those working for these supposedly independent PACs. Unfortunately, a dozen states do not have any law on the books to directly and specifically address the issue of coordinated expenditures.
  • Fourth, states should better regulate PACs by strengthening disclosure laws. For example, the entities that contribute to PACs, such as limited liability companies and nonprofit entities, should be required to disclose their beneficial owners and major donors, respectively, so voters can be aware of the actual sources of their funding.
  • Fifth, state law should ensure that voters receive timely information about who is funding and supporting each candidate’s campaign to help assess a candidate’s positions and understand the forces propelling the candidacy. Although most states require quarterly reports of contributions and expenditures, these quarterly reports alone are insufficient to disclose money raised and spent close to Election Day. State law should provide for reporting of contributions to candidates and expenditures by independent spenders in the weeks and days prior to an election so the information is available prior to Election Day.

Well-designed and effective regulations are key components to anticorruption architecture. By highlighting campaign finance best practices, and using these as criteria for assessing current state performance, C4I’s State Campaign Finance Index will provide transparency to voters and set the agenda for state-level reformers.

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