Gotham Gazette

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Hochul Raises Massive Sum in Final State Election Before New Campaign Finance System Kicks In

Then-Gov. Cuomo and Lt. Gov. Hochul (photo: Governor's Office)

Since Kathy Hochul became governor in August 2021, 47 people have given the maximum amount – $69,700 – directly to her campaign, according to campaign finance filings through October 3.

In total, the governor's campaign has brought in $46 million in her first 14 months in office. That massive sum will not be as easy to accumulate in future elections thanks to a new state campaign finance system that will lower individual contribution limits and establish a small-dollar public matching program for state-level offices.

The system, intended to help reduce the influence of big money in politics by amplifying the value of everyday donors, will match small donations to participating candidates with public funds, allowing them to rely less on large checks from wealthy individuals and special interest groups. It will also lower contribution limits across the board, making it more difficult, by design, for politicians to raise huge sums of cash from individual contributors.

The new system, passed in 2020, goes into effect immediately after Election Day this year for the next state election cycles and will apply to statewide offices -- Governor, Lieutenant Governor, Attorney General, and Comptroller -- and the entirety of the State Legislature, 63 State Senate seats and 150 Assembly seats.

Then-Governor Andrew Cuomo and the Democrat-controlled Legislature passed the system after a commission they had established outlined many of its parameters. Cuomo, a prodigious fundraiser who vastly outspent his opponents, insisted the new rules not go into effect until after the 2022 election, when he expected to win a fourth term as governor. Hochul has only continued this style of massive fundraising, including from many wealthy people with state business, trouncing her primary opponents in spending and raising flags among government watchdogs.

In the 2018 election cycle, Cuomo raised $37.5 million and spent $36.3 million.

Advocates can't wait for the new system to go into effect.

"One of the best things about the design of this system is that it gives the most power to the smallest donations, meaning the people who most need the government to start representing their interests finally have a real say," said Karen Wharton, an organizer with the grassroots advocacy group Citizen Action of New York, which was among many groups who pushed for the creation of the new campaign finance system somewhat modeled on New York City’s long-standing program.

According to Chisun Lee, an elections expert at NYU's Brennan Center for Justice, contribution limits and public matching have the potential to increase civic engagement. "Candidates will have the option to spend more time connecting with the people they want to represent instead of courting big donors," she told Gotham Gazette.

The Brennan Center has pointed to other jurisdictions that have enacted a public matching program, like New York City and Washington, D.C., which have seen an increase in the number of candidates who are women and people of color since implementing their systems. And studies show that women and people of color running for Congress rely more on small-dollar contributions.

Experts widely agree the system will limit the potential for pay-to-play politics by making it more difficult for well-heeled donors to pour money directly into campaign coffers. But the new system won't require officials, like Hochul, to return already-amassed sums.

When the new system goes into effect after the 2022 general election next month, contributions from individuals will be capped at $18,000 for statewide offices, still higher than many reformers wanted. In just over a year, 518 individuals gave more than that sum to Hochul's campaign committee.

"Ultimately, we expect the new law to increase the number of competitive primaries in senate and assembly races and empower candidates who raise small donations in their districts," wrote John Kaehny, executive director of the good-government group Reinvent Albany, in an email. "Currently, many state legislators get most of their campaign contributions from businesses and unions trying to influence state action."

"We expect the new rules to have the least effect on statewide races, and ironically, may even benefit Governor Hochul – if she wins her first election – because she has amassed such a huge warchest under the current rules," Kaehny told Gotham Gazette.

The new system establishes a public matching funds program that candidates for state office may opt into, similar to New York City's model. Participating candidates for statewide office will receive six tax dollars for each eligible campaign dollar raised. Candidates for State Legislature can get anywhere from an 8-to-1 to 12-to-1 match depending on the size of the donation. Only contributions between $5 and $250 are match-eligible and they must come from within the state, or the district in the case of legislative candidates.

To qualify for the public match, candidates must show they have a viable fundraising operation to begin with. Gubernatorial candidates must raise half-a-million dollars from 5,000 separate in-state donors. Candidates for the other statewide office must bring in $100,000 from 1,000 in-state donors. And candidates for State Senate must raise $12,000 from 150 in-district contributors and candidates for Assembly must raise $6,000 from 75 in-district donors (those thresholds are reduced for lower-income districts).

The system will cap public matching funds at $7 million (across a primary and general election season) for statewide offices – a figure dwarfed by the massive sums already in Hochul's campaign account. The match for Senate candidates tops out at $750,000 and for Assembly candidates at $350,000 for each the primary and general election.

There is no limit on how much a candidate can raise or spend as long as they adhere to the lower individual donor limits.

Some contributions will not be matched, including from corporations, lobbyists, and campaign vendors. But, unlike New York City's system, there is no prohibition on raising funds from people with state business. Hochul has recently come under scrutiny for doing just that: awarding a lucrative $637 million state contract to a major campaign donor, tech magnate Charlie Tebele, after she had suspended competitive bidding requirements. Hochul has denied having personal involvement in the deal.

The system will require participating candidates to take part in at least one public debate for each election in which the candidate receives public funds. The question of whether Hochul and her Republican opponent, U.S. Rep. Lee Zeldin, will participate in a debate and how many has been a point of contention this cycle, with Hochul agreeing to only one debate, while Zeldin continues to push for more.

The new program will do nothing to limit the huge amount of independent expenditure and Super PAC spending that pours into each election, which is protected by the 2010 Citizens United decision as a form of free speech.

It will be in effect for state legislative elections in 2024, the next gubernatorial and other statewide races in 2026, and any special elections held after this November. A new Public Campaign Finance Board, housed within the State Board of Elections, will administer the program.

This is the last election under the old rules. Hochul has made the most of it. As part of the prolific 14-month fundraising spree, the governor has raised $11 million in the last three months alone. That spree came after her campaign spent $26 million on the primary, far more than any of her Democratic opponents. As of the early October filing, Hochul had almost $10.9 million on hand. She has continued to aggressively raise and spend ahead of Election Day, November 8.

Zeldin, on the other hand, has raised a total of $19.4 million – less than half of Hochul's total haul – as of the early October filing, including $6.4 million in the last filing period (from mid-July to early October). He had about $4.5 million left to spend as of the filing, while he continues to raise as well.

Far more of Zeldin's fundraising has been from small-dollar donors, according to their campaigns. Last week, Hochul's campaign reported 60% of her contributions were from donors giving under $200, compared to the 91% announced by Zeldin's camp.

Neither the Hochul nor Zeldin campaigns responded to requests for comment for this story about how the new system would impact their approach to fundraising.

State law requires New York to establish a campaign finance fund to pay for the public match though it does not specify how much it should hold. The state commission that made the first attempt at establishing the system in 2019 – before courts struck it down on jurisdictional grounds leading lawmakers passed a bill to create it – would have set the fund at $100 million per four-year election cycle.

This year, Hochul and legislative leaders set aside $10.5 million for the new campaign finance board's operations and another $10 million for public matching funds. That fiscal year ends in March 2023 and there will need to be further discussion in the state budget ahead about funding the program for the bulk of the 2024 elections. New York City paid out $127 million in matching funds in the 2021 election season, though its system has different criteria and thresholds.

"Whether the new program realizes its potential depends on sound implementation by the state agency in charge, sufficient funding in the next state budget, and, above all, public awareness," said Lee of the Brennan Center.

by Ethan Geringer-Sameth, reporter, Gotham Gazette

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