July 10, 2004

'Clean Money' Campaign Reform Proposal Nears Release

Draft Material Details Proposal From Blackmer, Sten

In early April, the City Council approved a resolution authorizing City officials and staff to develop a detailed proposal for instituting a so-called "clean money" campaign system for Portland elections.

That proposal is expected to be released next week. What follows is a discussion of some of the details as taken from a draft version obtained by us Friday. Previously, the City Auditor provided background material on Clean Money systems.

As in previous discussions of the "clean money" system, a joint proposal of City Auditor Gary Blackmer and Commissioner Erik Sten, the proposal fleshes out some historical information on election reforms, provides historical data on campaign spending and election results, and recaps previous efforts to reform campaign spending. On the matter of campaign spending and election results, the draft says:

Candidates who spend more money usually win elections. Of the 111 campaigns since 1970 with spending records, the highest spending candidates in 98 campaigns also received the most votes. Of those 13 exceptions, 8 involved open seats and 5 involved incumbents. Two occurred in the 2004 Primary. Nearly half the exceptions involve mayoral races, even though they represent less than 20% of the elections.

Of the 115 campaigns since 1970 only two incumbents lost their office – the 1984 mayoral race and the 1986 Position 3 Council race.

Reflecting back upon testimony on the proposal earlier this year, the draft offers a list of public values a Clean Money system is meant to address: Clean Money can improve access for minorities; everyone can be heard by incumbents; improve trust in government; attract talented candidates; encourage a more diverse Council; get candidates to spend less time on money raising; allow candidates to spend more time on issues and ideas; more ideas can be vetted with the public; reach out to more of the public; candidates can visit communities who had never seen a candidate; stronger connections in the community will help address poverty, racism, hunger; inspire individuals to roll up their sleeves and get involved in solutions; let public officials lead without pressure from contributors; stop the line of campaign donors at inauguration; and end spiraling campaign costs.

According to the draft, existing Clean Money systems reportedly have contributed to an increase both in the number of serious candidates and the number of candidates from historically under-represented communities. What follows are some of the specifics of the proposal for a Clean Money campaign here in Portland, at least as of the current draft.

Under the Clean Money system proposed, candidates who voluntarily "reject private contributions, limit spending, and collect a sufficient number of small qualifying contributions to demonstrate constituent support" would "receive a fixed amount of campaign cash from a publicly financed fund." Regular reviews would be conducted to determine if adjustments were necessary both in the qualifying contributions and in the Clean Money allocations.

Those qualifying contributions would vary depending on the office involved. While the amount of each contribution would be the same -- set at $5.00 per contributor -- a candidate running for City Auditor would need to collect 1,000 such contributions, a candidate running for City Council would need to collect 1,000, and a candidate running for Mayor would need to collect 1,500. The funds collected to qualify for the Clean Money system would be retained by the candidates and deducted from their Clean Money allocations.

Once qualified for participation in the Clean Money system, candidates would receive different amounts for the primary and general elections. For primaries, Auditor and City Council candidates would receive $150,000, and Mayoral candidates would receive $200,000. For general elections, Auditor and Council candidates would receive $200,000, and Mayoral candidates would receive $250,000.

Under the proposal, procedures would also be in place to provide a greater Clean Money allocation to participating candidates if they are running against a non-participating candidate who raises more money for their campaign that the participating candidates receive in their Clean Money allocation.

Specifically, the participating candidates would receive a share of what would have been the non-participating candidate's Clean Money allocation had they opted to participate in the system, although there would be an upper limit. To illustrate, the proposal offers the hypothetical of a primary race for City Council involving two participating candidates and one non-participating candidate:

For example, a commissioner candidate reports spending $200,000 which is $50,000 more than the limit. The two clean money candidates would get an equal share of the excess, or $25,000 each. No more than $150,000 will be distributed among the candidates.

In the general election (where only two candidates are on the ballot in a run-off), the participating candidate would receive an additional allocation equal to the additional amount raised by the non-participating candidate. Here, too, there is an upper edge: That additional allocation cannot be more than three times the initial Clean Money spending cap.

In addition, the draft proposal states that "[t]he amount of spending by independent groups in support of a non-participating candidate is added in for purposes of match for a Clean Money candidate."

What is less clear to us is what happens if an independent group spends money to support a participating candidate, thereby opening an apparent loophole through which supporters of that candidate could funnel additional money to that independent group since they can't contribute directly to the participating candidate. In theory, matching funds could be provided to the other participating candidates, but that would virtually guarantee that matching funds would always be needed, since there will almost always be independent groups supporting one candidate or another regardless of whether that candidate is personally participating in the Clean Money system.

As made clear in the original resolution which authorized the drafting of this proposal, the draft includes an overall cap on public funds into the Clean Money system:

Total amount of City resources contributed annually to the clean money fund shall not exceed an amount equal to 0.2 percent of the City’s direct expenditures. A cap controls the cost of the new system. Estimates are that a Portland clean money system will average about $1.3 million annually. The proposed cap language allows for additional costs during periods of high turnover among elected officials.

That $1.3 million figure is the middle-range estimate provided in a memo from the Office of Management & Finance regarding potential methods of funding a Clean Money system in Portland. The low estimate OMF reported was $700,000 per year, and the high estimate was $1.7 million per year.

The draft includes several "allowed" funding mechanisms including: a General Government Overhead Model, which would be charged across City operations; and voluntary contributions to the Clean Money Fund, which could be eligible for Oregon Income Tax Credits. It suggests that the "anticipated annual cost of the system is 0.075% of the Portland city budget or $2.45 per year per Portland resident."

In addition to the specified number of $5 qualifying contributions, the Clean Money system would allow for an initial period of "seed money fundraising" in order for a candidate to fund that process of collecting the qualifying contributions. This period would begin at the prior general election "to allow for grassroots efforts and to address the possibility of exploratory campaigns."

Under this seed money period, candidates would be permitted to to raise $100 per person ("from any individual, including the candidate and candidate’s family, or other entity allowed by state law to make campaign contributions including political committees, union, and corporations"), with total contributions not exceeding 10 percent of what would be their base allocation from the Clean Money system. As with the qualifying contributions, these seed money contributions would be deducted from their Clean Money allocation.

The draft also goes into some detail on how Clean Money funds can and cannot be used, and defining penalties for violation of the system. For example, they can not be accumulated into a campaign war chest for future use, and a candidate cannot participate in the system for the primary and then opt out for the general election. Under the proposal, the Clean Money system would be relevant to an entire election cycle (primary and general combined).

Also in place in the draft proposal are timeliens for reporting of contributions from non-participating candidates and independent groups (so that matching funds to participating candidates can be disbursed promptly), and provisions for appeals of various parts of the process to a Hearings Office.

Before we close there's one other element discussed by the draft proposal that we want to be sure to highlight. As mentioned above, fairly rapid reporting is required in order to trigger matching funds in a timely manner -- in additional to the general beenfits of increased transparency. Here is what the draft proposal says:

For participating and non-participating candidates, full and timely disclosure of contributions and expenditures will continue. Accountability to the public is a key element of any campaign process, and clean money systems impose greater accountability. Nonparticipating candidates are required to notify the Elections Officer when their spending exceeds Clean Money limits. These reports are necessary to ensure that additional matching funds are available to Clean Money candidates.

More frequent reporting with the current, publicly accessible paper documentation system is sufficient for a Clean Money system. However, internet reporting of contributions and expenditures is preferable, and feasible, but is not necessary to monitor clean money campaigns. The Oregon Secretary of State’s Office is proposing an electronic filing system, which could also be applied to local election reporting. City computer programmers who developed the Portlandonline software stated that it can be easily customized to allow campaign treasurers to report contributions and expenditures online, making the information available immediately. We have not yet requested estimated costs for the onetime programming, but were told that it could be accomplished in a few months of programmer time.

Finally, in order to ensure regular review of the entire Clean Money system, the draft proposal includes the creation of a Clean Money Commission, which would "review questions and issues that arise during the introduction of the system, and advise on strategies to address them."

As we stated earlier, our current understanding is that the proposal -- which includes an entirely separate document presenting actual proposed Code language to implement such a system -- is expected to be released to the community at large sometime next week. At this time, it's not clear when it will be presented to the City Council.

Once the Council takes up the matter, it must decide whether to adopt the Clean Money system itself or refer the matter to voters. There also appears to be some discussion over whether to simply adopt the system into the City Code, or refer a new Charter provision which would make the system's existence more binding upon future Councils, who would be unable to revoke it simply by repealing the relevant Code section.

If adopted as is by the City Council, the proposed Clean Money system would go into effect for all City offices beginning with the 2006 election cycle. If adopted by voters, it would go into effect for the 2008 cycle.

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