New York CIty Council Member Ben Kallos

City Limits City Campaign Finance System Charts Path—and Highlights Challenges—for State Reform by Kate Pastor

City Campaign Finance System Charts Path—and Highlights Challenges—for State Reform

Then-Assemblyman Mark Gjonaj at a campaign forum in the 2017 race for a Bronx Council seat. Marjorie Velazquez, on the left, used public matching funds to mount a fierce campaign against the favored Gjonaj.

When then-Assemblyman Mark Gjonaj ran for a City Council seat in 2017, he injected $1.3 million into the contest, and the race set a new record for the most money spent in the more than 30 years the New York City Campaign Finance Board has been in existence. In that primary for the 13th District in the Bronx, Gjonaj spent five times that of his closest competitor, Marjorie Velazquez, according to the CFB.

Velazquez, on the other hand, participated in the city’s campaign finance program, which matched the first $175 of her donations 6:1 and she received the maximum public funds payment in the Democratic primary of $100,100 and public funds payments totaling $71,898 in the general election.

In exchange for a shot at the funds, she agreed to abide by spending limits of $182,000 each for the primary and general elections and other CFB requirements for documenting fundraising and spending.

“We knew that we needed to play the numbers game. We knew that we were going to be against this monster,” Velazquez says. “We were prepared to participate because we knew that he wasn’t going to participate because of the additional oversight.”

She said the search for small-dollar donations encouraged her to place a heavy focus on door-knocking and speaking directly to contributors who would then become likely voters.

“That’s the kind of game that I played, whereas Gjonaj just had big huge fundraisers,” she says, adding, “You literally had me walking around with contribution cards and registration cards at all times.”

Not only did the public funding guide the way she sought donations, she credits it with giving her a real shot. “It gave me a voice, it made me competitive and it showed how to quantify and qualify a candidate beyond dollars. It shouldn’t be about money,” she says.

On primary day, Gjonaj won with fewer than 400 votes — a remarkably close call for a deep-pocketed candidate already in elected office.

The 2017 race for the 13th District embodies many of the defining features  of the city’s campaign finance program, which a state commission is now using as one blueprint for  a new statewide campaign finance system. While it broke a record in terms of spending — much of it sourced from large, private donations — public funds created a path for two candidates (the general election was also in play)  to run competitive campaigns against Gjonaj. Velazquez, for her part, was encouraged by the program to reach out to donors in her district for small donations, and those every day New Yorkers were empowered in the process.

While advocates seem to agree that a statewide matching system would benefit the body politic, questions abound about how it should be implemented. A look at some of the city’s recent races, like the 2017 race in the 13th district, illustrates the many successes of the campaign finance system, as well as limitations that the state system will also have to deal with.

A system grows

Making elections more competitive, reducing the impact of large special interest donations — thereby reducing instances of corruption— and amplifying the voices of regular citizens are all goals of the Campaign Finance Board’s program, which has grown tremendously over the last 30 years.

The city’s campaign finance law applies to campaigns for City Council, Borough President, Public Advocate, Comptroller and Mayor. For all candidates, it restricts where donations can come from—contributions from LLCs, for instance, are banned—and limits how much any donor can give to a particular campaign. It also requires all candidates to disclose where every donation came from and how it was spent.

 


At The Races
City campaign finance data from the past 30 years reflect changes in the political landscape, like the enormous spending by Michael Bloomberg in 2005 and 2009 (his 2001 expenditures were not tracked by the city’s system) and the rise of term limits. They also reflect an increasingly important role for public matching funds.

 

Campaign Year Private funds raised Public funds distributed Total campaign spending
1989 $31,997,740 $4,200,000 $34,255,912
1993 $31,239,394 $5,296,192 $37,432,760
1997 $30,624,342 $6,420,742 $37,133,370
2001 $60,242,192 $36,230,457 $95,619,336
2005 $127,541,448 $23,768,127 $147,343,919
2009 $155,015,842 $27,229,074 $179,035,918
2013 $94,804,132 $32,689,833 $121,880,939
2017 $41,874,413 $16,620,011 $51,686,726

 

The system also offers public matching funds to candidates who choose to participate in the program. So long as they meet threshold private-fundraising requirements and agree to spending limits, participating candidates receive matching funds for donations from city residents.

The matching ratio has risen from  1:1 on contributions up to the first $1,000 per contributor in 1989, to the current rate of 8:1 on the first $175 per contributor for City Council and borough president, and on the first $250 for other offices.

The percentage of candidates participating has grown from 64 percent of candidates on the primary ballot and 27 percent in the general election participating in the matching funds program in 1989, to 84 percent of primary candidates and 64 percent of general election candidates joining the program in the 2017 elections.

Recent City Council legislation sponsored by Councilmember Ben Kallos also brought up percentage of the spending limit that can be publicly funded to 88.89 percent, meaning that a candidate only needs to raise 11.11 percent in match-eligible private contributions in order to max out the spending limit.

The proposal for the statewide campaign finance system is due by Dec. 1. That’s the deadline given to a nine-member commission set up in the state budget to devise a set of recommendations including program eligibility, thresholds for participation, as well as public financing limits and contribution limits. The system must have a maximum fiscal cost of no more than $100 million and will become law unless modified within 20 days.

“For more than 30 years, the matching funds program has helped ensure that voters, not money, have the final say in who runs New York City government. This program has been the blueprint for recent reforms across the country and, we hope, the basis for a new system in Albany starting this year,” said Amy Loprest, executive director of the New York City Campaign Finance Board in a statement.

Leveling the playing field through small donations

Rafael Espinal, who represents the 37th district in the City Council, says matching funds gave him a shot in the 2019 special election for public advocate.

When it comes to getting big money out of politics to level the playing field, a clear victory can be seen in the 2019 public advocate special election — the first with an 8:1 match on small donations. The race attracted a wide range of contenders, with 11 of the 17 candidates receiving matching funds and all but one opting for the higher match (there were two options in this election). Together, they received $7,178,120, accounting for more than 72.25 percent of the funding in the race, according to Kallos’ office and the CFB respectively.

The high public match also seemed to encourage candidates to seek out small donations, with contributions of $250 and under making up 93.82 percent of donations and 60.78 percent of the private money raised. Compare that with the last competitive public advocate election in 2013 in which small contributions made up only one-quarter of the private money raised, according to Kallos’ office. In the 2019 special election, the most common donation was just $10, according to the CFB.

Councilman Rafael Espinal, who came in seventh in the 2019 special election for public advocate, said especially coming from a district — covering East New York and Bushwick — where larger donations would be hard to come by, the match helped him become a serious contender by amplifying the impact of small-dollar donations.

“For someone who’s running in East New York, the possibility of getting a $1,000 check from a constituent is slim to none,” he said, supporting the idea floated for the state of introducing a higher matching rate for lower-income districts.

Large political donations “come from an overwhelmingly white, wealthy, and male donor class,” according to Fair Elections for New York, and the recipients of industry donations are also mostly white, according to the organization.

“I think it’s encouraging to donors that their dollars are stronger,” Espinal said of the program, adding, “I think as a candidate it also encourages you to put the leg work in and reach out to people.”

The shift of incentives away from monied donors allowed him to be more focused on the issues facing the city, he said.

“I think there’s less pressure for you as a candidate to focus on fundraising rather than focus on the issues of the platform you’re running on,” he said, comparing the experience to when he ran for assembly on the state level. Then, he said, he was inclined to seek out big-dollar donations because there was no matching fund program and the contribution limits were very high.

The magnification of small-donor influence is a clear advantage of the city’s program over the current state system. In the 2017 Council elections, people who gave less than $175 were the most significant source for Council candidates and the least significant source for Assembly candidates who ran within the city limits, according to a Brennan Center for Justice study that analyzed the fundraising of New York City Council and State Assembly candidates who campaigned to represent New York City districts in 2017 and 2018 respectively. In New York State elections in 2018, small donations of $200 or less amounted to a minuscule 5 percent of funds raised by candidates for state office.

Of course, the matching program isn’t the only difference between the city and state systems. The state’s contribution limits (individuals can give up to $69,700 to a candidate for statewide office, $19,300 to a state Senate candidate and $9,400 to a state Assembly candidate in an election cycle) are higher than the federal limits and those of most states, according to the Brennan Center for Justice. It’s also much higher than the city’s limits of up to $5,100 per election cycle for citywide office, up to $3,950 for borough president and up to $2,850 for City Council. (For the first time, coupled with the shift to an 8:1 match, there are now lower limits for participants than non-participants).

And it isn’t only the size of contributions that vary between the state and the city, it is also whose pockets from which they came. According to the Brennan Center report, while entity donors — such as business corporations, LLCS and PACS — were the least significant source for Council candidates in 2017, they were the most significant source of Assembly fundraising for candidates running in city districts. In a study of 21 geographically overlapping districts, the median publicly-financed City Council candidate got funding from 23 percent more in-district donors than privately funded local counterparts in the Assembly and City Council. They also received 30 percent more of total campaign funds from in-district donors.

Of the 11 candidates on the ballot who received matching funds in the public advocate special election, Melissa Mark-Viverito was the only one for whom public money was less than 65 percent of total spending, and the victor, Jumaane Williams, was able to overcome her, in part, by accumulating enough matchable donations (excluding real-estate interests completely) — and related matching funds — to turn an almost $118,000 private fundraising disadvantage against her into an almost $626,000 advantage in total spending.

Other races in 2017 shared the same dynamic. In District 32 in Queens, incumbent Councilmember Eric Ulrich faced three serious challengers over the course of the campaign season, and he privately raised 45 percent more than the three of them combined. But even though Ulrich took in more public money than his rivals, in the end, their combined spending was 60 percent more than his. In the election for the 44th District in Brooklyn, Yoni Hikind didn’t participate in the public-financing system but brought in an extraordinary $500,000 in private donations — only five candidates citywide, all of them incumbents, raised more. Public matching funds didn’t put Kalman Yeger on equal footing, but they did provide Yeger with $100,000 to close the gap — likely one factor in Yeger’s landslide victory.

But the goals of limiting the role of private money and empowering small donors are neither absolute or perfectly aligned. Private money — albeit in small amounts — is still very important in the system, as evidenced by the 2019 public advocate special election. In recent years, there has been an overall increase of private money in city elections — from $65 million in 2001 (excluding Michael Bloomberg’s self-funded campaign) to $95 million in 2013. Those are the two most recent elections where term limits were in broad effect.

Balancing the power of incumbency 

Proponents of campaign finance like to make clear that the program is not meant to facilitate the unseating of incumbents. But it is supposed to give insurgent candidates a shot by balancing the impact of monied contributors and every day New Yorkers. And there is perhaps no more entrenched advantage than incumbency.

In the 2017 race between Elizabeth Crowley and Robert Holden, the matching program helped Holden overcome a two-term incumbent who was part of a powerful political family and had gotten an endorsement from Gov. Andrew Cuomo.

Crowley early on took herself out of the running for matching funds because, she said, she was a successful fundraiser and didn’t want to take the public’s money unless she had to.

And successful she was. In the primary and general races combined, she raised a total of $532,242 in private funds compared with Holden’s $59,877, according to the CFB. His average campaign contribution of $141 paled in comparison to her $532.

She spent almost four times as much as him in the primary ($169,276 to his $45,137) and won a relatively low turnout race handily with 63.7 percent of the vote, according to the Campaign Finance Board.

But the general election was a different story. Holden ran on the Republican, Conservative and Dump the Mayor ballot lines and eked out a win with 50.2% of the vote.

Between the primary and general election, he brought in two full payments from the public matching program at $100,100 each.

A leader in the community for 30 years who had a hotline in his basement for the local civic association, he first ran his campaign headquarters out of his garage, he said.

In the end, despite Crowley going into the general election with monetary and other advantages — “I felt like David against two goliaths almost, the machine and my opponent,” Holden said — her spending for the two races combined amounted to just slightly more than double what Holden reported, according to the Campaign Finance Board.

“I am exhibit A on why it works,” Holden said of the program.

Overall, the city system gives challengers a chance against incumbents, and many take it. According to the Campaign Finance Board, only five of 41 incumbents (12 percent) seeking re-election to the City Council in 2017 did not face any opponent in either the primary or general elections. As a point of comparison, on the state level in 2016, 26 percent of state legislative incumbents seeking reelection did not face any opponent.

Although Holden was the only challenger to best an incumbent in 2017, Councilwoman Debi Rose did it in 2009 when she ran for her District 49 Staten Island seat. She raised slightly more — $17,000 — in private funds than incumbent Ken Mitchell, but she claimed $100,000 more in public funds, helping her beat Mitchell in the primary and again in the general.

The same year, incumbent Kendall Stewart and top challenger Jumaane Williams brought almost identical amounts of private money to the table in the race for Brooklyn’s 45th District. While Stewart didn’t get public funds, Williams received nearly $150,000 worth. That forced the incumbent to take out loans and go into the red to keep up, and come Primary Day, it wasn’t enough.

In her 2013 City Council race, incumbent Sara Gonzalez enjoyed a 24 percent private fundraising advantage over Carlos Menchaca in the race for District 38 in Brooklyn. But his 60 percent advantage in public funds more than offset that, and he beat her.

While more incumbents were ousted in the last election on a state level than in the city, the power of incumbency in Albany is strong and long-lasting, with no term limits to force seats open and fewer competitive races than in the city.

Advocates argue that a matching funds system program, while not designed to unseat incumbents but rather to make elections more competitive, will make them better legislators by forcing them to rely more on their constituents.  In the last election cycle, leaders in the Assembly raised only 16 percent of contributions from residents in their districts, according to a Reinvent Albany report, nearly half from corporations, associations, and unions — many doing business with state government. Speaker Carl Heastie got just one donation from within his district out of 430 contributors.

Stamping out corruption

Nearly two years after the New York City Council election of 2017, an article surfaced in Crain’s depicting the appearance of a pay-to-play scandal related to a big campaign donor of Gjonaj’s—the big spender in the Bronx’s 13th District race.

According to the article, he allocated along with Council Speaker Corey Johnson $1.4 million toward a project of a developer whose relatives gave $11,000 to Gjonaj’s campaign. The necessary rezoning to make the project possible had been rejected by two community boards and James Vacca, the former councilman for the district.

The city’s matching-fund system developed in part as a response to Koch-era scandals, which didn’t feature campaign finance shenanigans but highlighted the importance of transparency. It’s because of the system’s transparency that issues like the one highlighted by Crain’s are easily brought to light.

To be sure, there have been some city scandals. For example, former Councilman Miguel Martinez had to return $128,786 in public funds for his 2001 election and was fined by the CFB for violations including creating a fake paper trail for $27,506 worth of spending, according to the New York Daily News. He was eventually sentenced in 2009 to five years in prison for stealing over $100,000 from his council office and nonprofit groups funded by the city, according to The New York Times. Sheldon Leffler, a former Queens councilman, was convicted in 2003 of seeking to quadruple $10,000 in campaign contributions in his bid for borough president, claiming the money was matchable with public funds, The Times reported.

But for the amount of public money spent over eight citywide general elections and dozens of primaries, special elections and off-year races, the amount of misuse of the CFB that has been documented is extremely modest. What’s more, the city campaign finance system’s exacting disclosure requirements permit a degree of transparency that allows reporters, watchdogs and others to root out conflicts or potential ones.

Meanwhile, scandals on the state level occur with regularity. According to a Citizens Union 2015 report, “legislators are more likely to leave office due to ethical or criminal issues than to die in office, or be redistricted out of their seats.” And the Moreland Commission report in 2013 found that “Albany’s pay-to-play political culture is greased by a campaign finance system in which large donors set the legislative agenda.”

Money isn’t everything

Elizabeth Crowley lost her Queens Council seat in 2017 after a fierce controversy over a proposed shelter in the district.

Sometimes, campaign-finance reform is presented as a panacea for all that ails our politics; or, even more crudely, that it means only the “good guys” will win. But the obvious bears remembering: Money, whatever the source or amount, is just one factor in any electoral contest.

The 2017 Holden-Crowley field was not just about money; it was also a lesson in the complexity of electoral politics. Holden held himself up as a man of the people who got a necessary boost from the matching funds he received. But Holden also contends that it was his grassroots appeal that pushed him over the edge. “In my spare time, I did all the day-to-day constituent work that Crowley should have done,” he said.

Jo-Ann Benini 77, a retired constituent who lives in Middle Village, who gave Holden two contributions of $100 each, said she donated to his campaign because she knew him well from the civic association. Her son mentioned the public match to her, but she said “I would have given anyway, matching or not, doesn’t matter.” Her experience with Crowley was that she was “behind closed doors” and inaccessible to constituents, she said.

For her part, Crowley says she regrets “any constituent of mine feeling like I wasn’t responsive to their needs.”  She argues larger political factors were at work in her defeat. “I think it was that de Blasio was very unpopular,” she said, explaining that she was the only Democrat ever elected in her district. “He was able to win with the votes he got from the Republicans because I handily beat him in the Democratic primary,” she added.

And there was a local issue stirring deep passions: “Mr. Holden’s campaign was propelled by opposition to homeless shelters and to housing those who are homeless in hotels, both of which are unpopular in the district he will soon represent,” The New York Times wrote in 2017. Another article says that “anger over the city housing homeless in neighborhood hotels; fear that the eventual closing of Rikers Island would mean a local jail; and a virulent dislike of Mayor Bill de Blasio” within the district all propelled the race into a close contest.

Still, the matching funds Holden received helped him capitalize on these political realities in a way that he wouldn’t have otherwise been able to.

Will candidates participate?

The Gjonaj race, while a key example of public funds creating a competitive election, also points to some of the program’s limitations, especially when races involve nonparticipants.

Despite public funding making the race more competitive, money played an outsized role. Velazquez’s average contribution size in the primary was $183 compared with an average $670 received by Gjonaj, who declined to be interviewed for this story.

The fact that it is a voluntary program provides an opening for well-heeled candidates like Gjonaj, or former Mayor Michael Bloomberg for that matter, to operate outside of its rules and spending limits — and sometimes win.

Perhaps encouraged in part by his competitor’s ability to raise matching funds (in total, the CFB paid out $372,198 over the course of the election), Gjonaj flooded the race with private money, exactly the type of spending the Campaign Finance Board aims to reduce.

And the Gjonaj race is just one in which non participants’ money ruled the day. The same can be said for at least two other Council races in 2017.

There was the election for the 45th District in Brooklyn, in which none of Williams’ four opponents raised more than $10,000, and like Williams, three of them didn’t participate in the campaign finance system. Williams spent $226,000 to their combined $11,500 to win.

In another contest, non-participant Councilmember Andy King raised $145,000 to his opponents’ combined $13,600 for a District 12 seat in the Bronx. Even though one of them qualified for CFB funds of $34,000, King was still able outspend the pack by a 3:1 margin. And in Manhattan’s race for District 10, one of Councilman Ydanis Rodriguez’s several opponents quadrupled his war-chest with public funds. But the incumbent Rodriguez was still able to outspend his closest rival by $188,000 and win the race.

A state campaign finance system that doesn’t entice candidates to participate will be likely to fail, advocates warn. Some have suggested further limiting campaign contributions so that candidates, especially ones who have access to wealthy donors, like incumbents, are forced to change the way they fundraise, making the program more appealing. Another idea has been floated to not impose a spending cap on participants so they can keep up in competitive elections against wealthy candidates and independent expenditures.

Exacerbating disparities

Sawn Smalls for nY

Dawn Smalls during the 2019 public advocate special election.

Public funds can give a grassroots candidate the chance they need to be successful, but it doesn’t always help level the playing field. In the race for Kallos’ City Council seat in 2017, the incumbent raised $202,870 in private funds and was the only candidate to qualify for matching funds — which amounted to $125,125.

He faced two opponents in the primary. Neither challenger came close to raising the kind of private money he did (Kallos’ share of private fundraising in the contest was 83.87 percent) and neither got matching funds. Kallos was only granted 25 percent of the maximum public funds in the primary because he faced a “minimal opposition” candidate. And Kallos notes that his private fundraising excluded real estate, lobbyist and corporate money.

But the insurgent certainly wanted a chance to make his own argument to voters. “The bar is pretty high for first-time candidates, low-income candidates, working-class candidates, basically anyone who isn’t self-funded or can’t quit their job for six to 24 months,” says Patrick Bobilin, the candidate who challenged Kallos during the 2017 primary.

According to the CFB, on average more matching funds are allocated to challengers than incumbents.  But in order to qualify for matching funds, City Council candidates have to reach two thresholds — raising $5,000 in match-eligible contributions and 75 in-district donations of $10 or more. Because of these requirements, meant to safeguard the taxpayer dollar from frivolous candidates without a base of community support, lesser-known candidates sometimes don’t make the cut.

Bobilin, who moved to New York from Chicago in 2016, said he got into the race because he had worked for Bernie Sanders’ campaign and was inspired by him. He participated in the program but didn’t qualify for the matching funds. He noted that Kallos also got a major head start. The Councilman began fundraising in 2014, a year after he was first elected to office.

“If you just started from scratch the fact that you have to meet a threshold is very challenging,” Bobilin said, adding that it “just makes an already successful campaign more successful.”

Kallos’ office says the final fundraising numbers don’t tell the full story of the race. At the outset, they thought Bobilin posed a more serious threat. Since that didn’t materialize, Kallos is returning at least $23,893.13 in public funds that his campaign received received for the primary because he ended up spending that much less than the limit. (Returning unused funds is a requirement of the program.)

His challenger in the general election, Frank Spotorno, ran against former Congressman Joe Crowley and who Kallos said was known to have a significant war-chest. That prompted more fundraising by the incumbent. In the end, however, Spotorno didn’t run a serious campaign, though Kallos did get the full public funds in the race. Kallos’ spending in the race overall accounted for 94.23 percent of the total.

That wasn’t the only contest where public funds stretched rather than shrunk fundraising gaps.  There was the 2017 Council race in the 42nd District in Brooklyn, where Councilwoman Inez Barron outraised challenger Mawuli Hormeku by a mere $1,380. She received $52,000 in public financing; he received nothing. She ended up outspending him by $54,000.

In the District 22 race in Queens, Councilman Costa Constantinides raised $217,000. His two opponents raised a combined $3,300. The $14,000 in public funds Constantinides were not a major factor in the race, but they padded an enormous financial advantage. And in Brooklyn’s 47th District, Councilman Mark Treyger raised more than three times what his lone opponent did from private sources, received more than 2.5 times as much in public money and outspent his foe better than four to one.

A complex system

Dawn Smalls, who came in sixth in the 2019 special election for public advocate, also found meeting the program’s two-part threshold for receiving public matching funds challenging. In that race, the requirement was to raise $62,500 from 500 match-eligible contributors. In order to meet the match thresholds, she ended up cold calling people for donations of $10 — which put the onus of small donations, but also forced candidates into the same kind of fundraising-focused activity that the CFB program is supposed to disincentivize.

She, like other candidates interviewed, found meeting the stringent requirements of the matching program difficult and resource-intensive. Smalls also felt the CFB’s debate program somewhat undermined the program’s purpose. The special election saw two debates, and the second one, for “leading contenders,” required that candidates receive an endorsement from a city, state or federal elected official who represented all or a portion of the city and/ or  an endorsement from one or more organizations with over 250 members in New York City. Some people who qualified for matching funds didn’t make the debate stage.

Several possibilities have been raised for the state system that would make it more user friendly, including random or spot audits (rather than mandatory ones for each candidate participant as is done in the city), and penalties that distinguish between one time offenders, type and amount of the infractions.

On the state level, the uneven footing at the start of a campaign is even more pronounced. Since there are no term limits, some candidates will also have hefty campaign accounts accumulated over many years. Advocates have floated restrictions on money accumulated over time and warn that the state system must find the right balance between protecting public money and setting the threshold too high for many candidates to meet.

Taken together, campaign-reform advocates believe the New York City system charts a path that the state should follow—perhaps with tweaks to address shortcomings, or just to adapt public financing to work everywhere from Montauk to Niagara Falls.

“There’s a path blazed,” said Blair Horner, executive director of New York Public Interest Research Group, referring to the city’s system. “The question is will they follow it.”

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