Open and Accountable Elections Portland would give city candidates the option to power their campaigns with small-dollar donations.
On November 3, the Portland City Council is holding a hearing on Open and Accountable Elections Portland, a proposal to tighten campaign reporting laws and introduce a public match option for local elections. Yesterday’s article described how Open and Accountable Elections Portland can reduce the influence of big money in local politics and let everyday Portlanders play a bigger role in funding campaigns, selecting candidates, and setting the city’s agenda. This article explains the mechanics of Portland’s proposed program.
The program in a nutshell
Open and Accountable Elections Portland would give city candidates the option to power their campaigns with small-dollar donations. Candidates could voluntarily accept a set of stricter campaign finance rules, including not accepting campaign contributions of more than $250, and receiving a public match of 6-to-1 on up to the first $50 of each campaign contribution from a discreet individual. In other words, candidates who agree to play by the program’s rules could collect $10 contributions from working-class Portlanders and each contribution would be worth $70 for their campaign. If a Portlander gives them $50, it would be worth $350 for their campaign.
How does a candidate qualify?
To demonstrate she is a viable candidate, someone running for Commissioner or Auditor must collect $2,500 in small contributions ($250 or less) from at least 250 Portlanders. A candidate for Mayor must collect a total of $5,000 from at least 500 Portlanders. The candidate files for certification, promising to adhere to strict limits on campaign contributions, caps on total fundraising, and other rules of the program.
The idea is to ensure qualifying candidates are viable, but not make the bar so high that prospective candidates can’t clear it.
What are the limits on campaign contributions?
Participating candidates may not accept any campaign contributions from individuals over $250 and no contributions from organizations—including PACs, parties, and unions—at all.
The only exceptions are that participating candidates may start out with up to $5,000 in seed money—from their own nest egg, a PAC or party, their inheritance from Great Aunt Mabel, or any other source—before filing to participate. And they may accept in-kind contributions—goods and services such as the use of office space or printing service—from organizations. These gifts may be valued at up to $20,000.
What are the caps on fundraising and access to public funds?
Participating candidates also agree to cap their overall fundraising and their total use of public funds. These caps are high enough to ensure that participating candidates can compete with opponents who did not opt in and can therefore solicit unlimited amounts of money from big donors, and also low enough to make prudent use of limited public funds.
Candidates for Commissioner or Auditor may not raise more than $550,000 total—$250,000 during the primary and $300,000 during the general election. Of that, only $360,000 may come from public match funds, with the rest coming from private funds—contributions of no more than $250 each, seed money, and in-kind contributions.
The fundraising caps for council candidates err on the high side, guaranteeing that candidates can run a competitive campaign, but risking spending more public funds than necessary. The graph below shows how much winning council candidates spent on their campaigns from the time they could declare their candidacy in September of the previous year until the time they won the election. There are few competitive council races in Portland—of the eleven races since 2008, only three have made it past the primary. But even candidates who won in the primary spent far less than the $250,000 primary cap, and only one candidate, in the ongoing 2016 race, has come close to spending $550,000. The public match program would likely lead to more council candidates duking it out in the general election, requiring more money. Nonetheless, the data since 2008 suggest that lower caps would still enable candidates to run competitive campaigns and could save the city a little money. Too-high spending caps for council races is the first of four weaknesses I’ll mention about the design of Open and Accountable Elections Portland.
Under the proposed law, candidates for Mayor may not raise more than $950,000 total—$380,000 during the primary and $570,000 during the general election. Of that, only $760,000 may come from public match funds, with the rest coming from private funds—contributions of no more than $250 each, seed money, and in-kind contributions.
The fundraising caps on candidates for Mayor are on the low side, carefully protecting public coffers, but risking low or no participation by candidates for Mayor because they will fear they can’t compete with privately-funded opponents who might outspend them more than two-to-one. The graph below shows that in 2012 the winning mayoral candidate spent $1.5 million ($800,000 during the primary alone), and in 2016 the winning candidate raised $840,000 in the primary—more than double the primary contribution cap for candidates who opt in to use the public match. That’s the second weakness I’ll mention.
The program does include an escape valve to protect a citizen-funded candidate who gets outspent by a privately-funded opponent: if an opponent collects more than the cap, the opt-in candidate can exceed the fundraising caps and start collecting checks up to $500. She cannot receive any additional public funds beyond the limits. This provision could help a mayoral candidate feel safer about opting-in, knowing she can raise more than $950,000 if her opponent does. Then again, it might be too little too late if the opponent passes the $950,000 mark in the last month of the campaign and the citizen financed candidate must scramble to seek $500 contributions, which is still paltry in comparison to the unlimited checks the opponent can collect.
Can these numbers change over time?
One of the important lessons from other public finance programs around the country is that the program administrators must have the independent authority and flexibility to change based on experience on the ground. For example, if too many candidates opt-in to the program in the primary, the city may want to reduce the primary contribution limits the next time around. If no Mayoral candidates opt in because the caps are, as described above, too low, the city may need to increase the caps to make the program competitive with private financing in the next election cycle. If several candidates opt in but none raise enough to even reach the caps, the city might need to increase the match.
Without the ability to evolve over time, programs can be become obsolete and unused. Open and Accountable Elections Portland creates an oversight committee to create compliance rules and penalties, and also a seven-member Public Finance Commission with the power to make recommendations on adjustments to contribution limits, matching ratio, and other details. Unlike in Seattle, though, the commission does not have staff to help parse the data and cannot change the rules itself; it is dependent on the city council to adopt rule changes. That’s the third and most important weakness of the proposal. Unless the Public Finance Commission has independent authority, the whole program may grow obsolete, killed by the first unsupportive council majority that refuses to make recommended adjustments.
What other rules would candidates have to abide by?
Limited use of campaign funds
Participating candidates agree not to spend any of their campaign money—whether from private or public sources—to travel out of state, throw expensive parties, or fund other candidates. They cannot hire their family members, and they cannot go into debt.
Additional Reporting
Participating candidates must file additional contribution and expenditure reports to enable the oversight committee to monitor their compliance with all rules.
Strict Penalties
Participating candidates face stiff penalties, up to $10,000, if they break any rules. And if a candidate faces a penalty, she may have to return all public funds .
Is this Voter Owned Elections all over again?
No. Voter Owned Elections, passed in Portland in 2006 and sunset in 2010, was a type of public finance reform called a lump-sum grant program. In lump-sum grant programs, qualifying candidates receive a large chunk of money at the beginning of the campaign with no further requirements to continue building support. Open and Accountable Elections Portland would implement a different kind of program—a matching grant program. Matching grant programs have a proven track record in cities such as New York and Los Angeles. Instead of getting a one-time large sum of money, candidates would get a match for every small contribution they receive from a Portland donor. Candidates must continue running a viable campaign and convincing Portlanders to support them in order to continue receiving public money.
What about fraud?
When Portland’s Voter Owned Elections program was first introduced in 2006, candidate Emilie Boyles abused the program. Boyles’ campaign manager falsified Portlanders’ signatures and Boyles used public funds to pay personal expenses and to pay her teenage daughter a salary. Portland learned from that experience and designed Open and Accountable Elections Portland with more protections in place. An oversight board will:
- set criteria for verifying matchable donors reside in Portland and can legally contribute to campaigns under state and federal law;
- audit contributions to ensure they are legitimate;
- audit participating campaigns’ books to ensure they are spending campaign funds only on allowed activities; and
- impose strict penalties if anything is amiss.
Devoting 0.2 percent of the General Fund to building a more responsive, reflective, and inclusive democracy is a small price to pay.
How much will it cost?
The program caps expenses at 0.2 percent of the city’s General Fund, or about $1.2 million per year. The actual cost of administering the program and funding the grant match will depend on how many candidates participate. For example, i one candidate in each race opts in and qualifies for the maximum amount of public funds, the annual cost to the city will be around three-quarters of a million dollars per year, less than 0.15 percent of the city’s General Fund.
The final weakness I’ll mention is that the program does not have dedicated funds, like Seattle’s Honest Elections program. Without dedicated funds, the program risks falling victim to the annual budget process.
Why should Portland spend money on this?
If everyday people don’t have a voice in city elections, the city’s civic life and decisions suffer. Devoting a maximum of 0.2 percent of the General Fund to building a more responsive, reflective, and inclusive democracy is a small price to pay.
Conclusion
Portland learned from its missteps and from other cities’ experience in designing Open and Accountable Elections. The result is a program that can mitigate the influence of big money in Portland politics, keep elected officials accountable, and empower everyday Portlanders to participate in the democratic process.
Notes about methodology for graphs
- Campaign costs include all campaign expenditures from the time a candidate can file to run, September 10 of the previous year, through the end of the year of the election.
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The 2016 city council race shows Steve Novick’s expenditures through October 30, 2016.
Steve
Don’t you mean a discrete individual, not discreet?