A National Model Faces New Challenges: The New York City Campaign Finance System and the 2013 Elections

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Introduction: New York City as a National Model  I. The Rules of the Game: The Origins of the New York City     Public Matching Fund System  II. Campaign Finance Jurisprudence and New York City      A. Citizens United and New York City's Response      B. SpeechNow. org v. F.E.C. and the Rise of Super PACs      C. McComish v. Bennett and Trigger Funds      D. Ognibene v. Parkey. "Pay to Play" On Trial      E. McDonald Challenges New York City Contribution     Limits  III. The Spenders: Newcomers and Repeat Players in New York City Elections      A. Self-Funding      B. A New York City Super PAC      C. The Education Wars      D. The Long Reach of Unions and the Working Families     Party      E. The Real Estate Industry: Builders and Bundlers      F. Citizens United, Ray Kelly, and Joe Lhota  IV. Regulations, Penalties, and Loopholes     A. The CFB Metes Out Meek Punishments     B. More Matching Fund Misuse     C. The Department of Sanitation and New York City    Campaigns     D. The "Doing Business" Loophole     E. Regulating Political "Charities"  F. The "Member-to-Member" Exception  Conclusion 

INTRODUCTION: NEW YORK CITY AS A NATIONAL MODEL

In the aftermath of Citizens United v. Federal Election Commission (1) and other campaign finance decisions that have made the regulation of money in politics more difficult, advocates of campaign finance reform have turned to New York City as a potential model to emulate. (2) New York City's generous public matching fund system allows candidates to compete in elections without raising large sums of money, and strict contribution limits--particularly for those who do business with the City--are designed to prevent donors from having excessive influence. (3) New York City has not held major citywide elections since 2009, however, and campaign finance law has changed considerably since then.

The much-publicized Citizens United and its progeny, McComish v. Bennett (4) and SpeechNow.org v. Federal Election Commission, (5) have been accused of opening the floodgates to unprecedented campaign spending by outside groups. The 2012 presidential election featured "Super PACs," well-endowed political action committees funded by small groups of individuals. (6) These groups accounted for nearly half of all political advertisements aired during the presidential election, a substantially higher percentage than in past years. (7) As New York City proceeds towards the 2013 municipal elections, it will not only elect a new mayor for the first time since 2001, but will also replace many of its citywide office-holders, borough presidents and local council members because of term limits. (8) Given the stakes, New York City's campaign financing system will likely be tested by the infusion of significant third-party spending.

The New York City Campaign Finance Board's (CFB) reflective report on the 2009 city elections anticipated the different playing field that unlimited independent expenditures would create in 2013, observing that "[i]ndependent expenditures are of particular concern in jurisdictions with public financing programs, because those candidates who agree to limit their spending are faced by independent expenditure committees without limits." (9) Even before Citizens United, independent expenditures had increased significantly during the City's previous two election cycles. (10) Campaign finance reformers should watch to see whether such a model can survive in the post-Citizens United legal and political landscape. Given the explosion of outside spending during the 2012 Republican presidential nomination, the Scott Walker recall election in Wisconsin, and the 2012 presidential election, they have reason to be nervous. (11)

If the New York City model is to be the standard-bearer for the nation, then there are issues beyond whether it can properly withstand the influence of outside spending. Even though the public matching fund system is credited with increasing and diversifying small donor participation, special interest groups like the real estate lobby and unions play outsized roles in funding local campaigns, and are already significantly impacting the 2013 election. …