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Gotham Gazette

The Place for New York Policy and politics


Campaign Finance Board, City Council Respond to Unprecedented Outside Spending

IE vs Lisyanskiy

IE-funded mailer against council candidate John Lisyanskiy (via toxictodemocracy.tumblr.com)

Not only are the 2013 New York City elections memorable for moving the city into the post-Bloomberg era, they stand out for the unprecedented levels of outside spending, or independent expenditures, by non-campaign organizations that vied to influence electoral outcomes.

Due to gaps in disclosure requirements around election advertisements, the sources of much of last year's spending, which rattled the election's financial playing field, were largely obscured to voters. Lawmakers have since sought to quash that trend with the passage of new city laws in August. In the new normal after the Supreme Court's Citizens United ruling, though, there is little the City can do about the existence and expansion of independent expenditures, leaving officials to look for ways to ensure that there is as much transparency to those expenditures as possible.

According to the New York City Campaign Finance Board's (CFB) recently released analysis of the 2013 election cycle, independent entities not directly associated with any candidate campaign, such as political action committees (PACs), limited liability corporations (LLCs) and unions, spent a remarkable $15.9 million to sway voters, mostly through mass mailings and television and radio advertisements.

"The last election cycle saw a flood of outside money that threatened to overwhelm the spending by the candidates themselves, especially in individual Council races," recounted Brooklyn Council Member Brad Lander, who was a driving force behind one of the disclosure laws passed last month.

In a bit of irony, the City is able to limit the amounts spent by candidate campaigns (by offering public matching funds in exchange for buy-in to the rules of the system), but not amounts of independent expenditures, or IEs, made by non-campaign entities.

While the presence of IEs in elections is not new, and unlimited political spending by outside entities is constitutional, according to the U.S. Supreme Court's ruling in Citizens United v. FEC, many of the organizations behind last year's blitz used ambiguous titles that provided voters with little to no indication of what the organizations represent and where their money comes from.

"The only information most voters had about where these ads were coming from was that they were paid for by vague, positive sounding, anonymous entities," Lander said by email. "Some were viciously hostile, which was encouraged by the fact that they were effectively anonymous."

On September 2, the CFB published an extensive analysis of how money was raised and spent during the mayoral, city council, and other races of the 2013 election cycle. The report draws particular attention to what it calls the "remarkable influx of independent spending" throughout the election cycle. Its data shows that outside groups spent about $8 million to promote and detract from candidates in the mayoral race and $6.2 million in city council races.

The race in Brooklyn's 38th council district, for example, attracted more outside investment than any other council race. Several groups spent a total of $548,740 on the Democratic primary, most of which went toward bolstering incumbent Sara Gonzalez through mailings and internet ads. Jobs for New York, a PAC, spent $56,197 on mass mailings that disparaged her challenger, Carlos Menchaca, who would defeat Gonzalez and go on to take her spot in the Council.

Although independent expenditures did not necessarily translate into electoral success - Menchaca won the primary with 59% of the vote - their presence posed a challenge to the CFB in its mission to define and regulate the financial playing field during elections.

The CFB administers a "small-dollar matching funds program" in order to encourage engagement of more voters by campaigns, allow those with less personal wealth to compete as candidates, and propagate regular voters and their modest contributions against the greater financial and political prowess of corporations, unions, PACs and other big organized interests. For each dollar that a New York City resident donates, up to $175, candidates participating in the CFB program receive six dollars in matching public funds.

"The program provides candidates with the resources to effectively communicate their message to voters without relying on big contributions," CFB Press Secretary Matthew Sollars told Gotham Gazette. Yet, "candidates who feel they must match large independent expenditures may opt not to participate in the program only to spend more time raising money and less time with voters," he explained.

Participants in the campaign finance program abide by strict spending limits, while all candidates, whether program participants or not, must comply with New York City campaign contribution limits and release their campaign finances to the CFB for review.

Furthermore, the 2013 election cycle marked the first time that outside groups spending $1,000 or more had to disclose their expenditures, and those spending $5,000 or more were mandated to reveal the sources of their funds to the CFB. Yet despite these new transparency protocols, outside spenders managed to mask what many say are important details from voters regarding the sources of their money when communicating with the public directly.

For example, Jobs for New York, which was one of two PACs responsible for half of all 2013 election spending, aggregated $6.9 million from "over 120 LLCs and partnerships associated with specific [real estate] development projects" to influence city council races, according to the CFB. Voters received mailings financed by Jobs for New York, often portraying candidates negatively, with no more than a "Paid for by Jobs for New York" label on them, essentially revealing nothing about those LLCS or the fact that the PAC was founded and backed by the Real Estate Board of New York (REBNY).

United for the Future, another PAC, channeled more than $2.7 million into Bill Thompson's bid for mayor. The organization is a proxy for the New York City teachers union, the United Federation of Teachers (UFT).

Lastly, anyone who followed last year's elections should recall the demise of early Democratic front-runner and then-City Council Speaker Christine Quinn. Several groups opposed her bid for mayor and, under the slogan "Anybody but Quinn," independent groups New York City is Not for Sale (NYCN4S) and New Yorkers for Clean, Livable and Safe Streets (NYCLASS), an animal rights group which opposed Quinn for her support of the local horse and carriage industry, invested almost $1 million to damage Quinn's candidacy. According to the CFB's Post-Election Report, "this amount was by far the highest devoted to opposing any candidate in the primary."

In order to ensure that New York City voters can better evaluate and interpret election materials, the City Council passed and Bill de Blasio signed Local Law 2014/041 on August 28. The law stipulates that any political communication (print, radio, television, or phone call) financed by an independent expenditure must mention the financing organization's top three contributors, the C.E.O of the sponsoring organization, and the link to a government tracking site for more information: nyc.gov/FollowTheMoney.

"The goal is to ensure that we get the maximum information possible to voters, when they hear or receive an ad, about who is behind it and make clear that it is not approved by any of the candidates," Lander, the primary sponsor of the bill, told Gotham Gazette.

Enacted into law that same day was a second bill, sponsored by Council Member Dan Garodnick, which bans anonymous campaign communications. The new law requires all campaign-generated advertisements to include a "paid for by" name and label. Last election cycle, there were several candidates who sent voters anonymous advertisements attacking their opponents. While federal law already requires congressional candidates to include these disclaimers on campaign communications, local candidates for office are being mandated to do so for the first time.

The passage of these bills was the culmination of months of post-election dialogue between the CFB, lawmakers, good governance groups, and even the outside spenders themselves. "We have been discussing such changes with lawmakers for many months," said Sollars of the CFB. "We were happy to work with City Council members and Council staff on a law that will significantly improve disclosure for New York City voters."

In February, the CFB held a hearing to solicit feedback on its finance program's performance during the 2013 elections.

Calls for greater campaign finance reform and efforts to enhance voter understanding of the interests behind many entities and their communications are not issues confined to the municipal level, of course.

"Independent expenditures at the state level are only newly being regulated by the state." said Rachael Fauss, director of public policy at Citizens Union, a good governance group. "As a result of the 2014 budget negotiations, increased disclosure is now required for independent spenders in state elections," she explained.

In fact, many good government advocates and lawmakers have been calling for the state to fully enact campaign finance rules akin to the city's. Relevant reforms have been promised by Gov. Andrew Cuomo and were a key plank in the platform of his Democratic primary challenger Zephyr Teachout.

The state's budding disclosure requirements do not begin to match up to those codified in New York City in August. Although outside spending in state races must now be reported to the State Board of Elections, there are no additional mandates about revealing the contributors to those entities on actual campaign communications. The onus is on voters to seek out the information with the Board of Elections themselves.

by Katrina Shakarian, Gotham Gazette

Note: Gotham Gazette is published by Citizens Union Foundation, sister organization of Citizens Union

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