April 26, 2006

RALEIGH – In the name of “clean elections,” an N.C. House committee is considering expanding North Carolina’s public financing of judicial campaigns to cover other campaigns as well. That would only hurt taxpayers and the democratic process, a new John Locke Foundation report shows.

Under North Carolina’s Judicial Campaign Reform Act of 2002, candidates for the N.C. Court of Appeals and Supreme Court can choose to pursue public funding of their campaigns instead of raising their own money. Some election reformers, thinking this system would keep candidates independent and not shackled by special interests, want to make this system the standard for elections in the state. But their idea wouldn’t solve any problems and actually would result in higher taxes, said the report’s author, JLF legal and regulatory policy analyst Daren Bakst.

“The idea of having taxpayers finance campaigns is based on the assumption that policymakers know how much campaigns should cost,” Bakst said. “This is impossible. One size does not fit all. One candidate may need much more money than another candidate.”

Rather than promoting democracy, Bakst said, taxpayer-financed systems chill speech and hurt the democratic process. “What’s more democratic than allowing citizens to choose for themselves which candidate they want to give money to?” he asked. “If a candidate has no popular support, he won’t be able to raise money. Letting citizens choose whom they will support financially ensures that only credible candidates are on the ballot.”

Taxpayer-financed systems have historically been riddled with problems, and North Carolina’s judicial campaign system is no different, Bakst said. They are designed to allow taxpayers to contribute a portion of their income taxes voluntarily. Since so few taxpayers choose to participate, legislatures invariably end up diverting other tax funds into the system.

The General Assembly has already diverted money to shore up its judicial campaign fund, Bakst said. “The Judicial Campaign Reform Act specifically states that the system will not be supported from money in the General Fund,” he said. “Despite this, the legislature in 2004 allocated money from the General Fund to support the system.”

Since tax money is being taken away from other programs, legislators will likely raise taxes to cover any shortfalls, Bakst said. And these publicly funded campaign systems also lead to forced speech. “Taxpayer-funded campaigns essentially force each taxpayer to support some candidates and speech they oppose,” he said. “That’s constitutionally problematic. At the minimum, it’s unethical.”

North Carolina’s system sets a spending limit on subsidized candidates. However, if a “traditional” candidate with no public funding spends money beyond a certain level, the state releases “rescue funds” to even the score.

That raises a significant constitutional problem, Bakst said, because it could place an artificial limit on a traditional candidate’s spending. The candidate’s speech would be chilled because he no longer would spend the money necessary for political speech. This is one reason cited in current lawsuits challenging North Carolina’s existing system.

Bakst said another problem with N.C.’s system is that it makes it possible for a subsidized candidate to receive rescue funds even when he’s outspending a traditional opponent. Here’s how. “Rescue funds are triggered not based on the traditional candidate’s spending alone,” Bakst said. “Instead, the sum of the traditional candidate’s spending and independent expenditures spent by outside groups trigger rescue funds.”

Proponents of public financing argue that candidates will no longer feel beholden to special interests under these systems. Bakst strongly disagrees. “There is an assumption that if less money goes directly to candidates through contributions, candidates will not feel beholden to outside groups and individuals,” he said. “This is a false assumption. When organizations and individuals spend money on behalf of candidates, as opposed to providing contributions, candidates who would have felt beholden because of contributions are still going to feel beholden.”

Bakst disputes several other arguments supporting public financing. One is the argument that public funding leads to less overall spending on campaigns. “This is contrary to reality,” Bakst said. “Money simply shifts from contributions to independent expenditures and issue advocacy.”

Supporters also argue that public financing would allow candidates to spend less time dealing with the nuisance that is fundraising. “Fundraising is an integral part of the election process,” Bakst counters. “Private contributions are a measure of a candidate’s support and help to ensure that only qualified candidates are on the ballot. Also, this argument fails to take into account that candidates have incredible fundraising advantages over candidates from even a decade ago, including the Internet and cell phones.”

North Carolinians can already see problems with taxpayer financing in this state, Bakst said. “The bottom line is, North Carolina should repeal the current judicial system and return to traditional campaign financing,” he said. “We shouldn’t try to fix ethical problems by building a bigger, more unethical system that’s likely unconstitutional.”

Daren Bakst’s Policy Report, “Political Welfare: Why Taxpayer-Funded Campaigns Are Bad for Taxpayers and Democracy,” is at the Locke Foundation’s web site. For more information, please contact Daren Bakst at 919-828-3876 or [email protected]. To arrange an interview, contact JLF communications director Mitch Kokai at (919) 306-8736 or [email protected].