Public Campaign Financing & Election Law Enforcement: Testimony

TESTIMONY OF THE ELECTION LAW COMMITTEE AND
THE GOVERNMENT ETHICS AND STATE AFFAIRS COMMITTEE

New York State Public Campaign Financing Commission
September 10, 2019

Good afternoon.  My name is Edward Murray.  I am an attorney testifying today on behalf of the New York City Bar Association’s Election Law Committee and Government Ethics and State Affairs Committee.  The Committees strongly support this Commission’s task of establishing a system for public financing of elections that curbs the influence of money in elections and helps level the playing field for candidates.  I would like to testify about who should regulate the public financing system and the procedures by which the Election Law should be enforced.

Today the Committees released a report entitled “Safeguarding New York’s Elections: The Unfinished Business of the Moreland Commission to Investigate Public Corruption.”  A copy of that report is appended to our written testimony.  As you may recall, in 2013, the Moreland Commission found that the enforcement policies and practices of the New York State Board of Elections (“BOE”) were designed for inaction and thus recommended the creation of an independent enforcement agency.  The Legislature subsequently created the position of the Chief Enforcement Counsel or “CEC” to exercise sole authority within the BOE to investigate Election Law violations.

As detailed in the Committees’ report, the adoption of the CEC position and related reforms has failed to safeguard the integrity of New York’s elections.  From 2015 through 2018, and with oversight of more than 16,000 state and local candidates and committees, the CEC obtained fines in 20 matters in total.  Nearly all of the enforcement activity during this period was against persons who failed to file disclosure reports.  Notably, the question of whether a person filed a disclosure report presents a simple factual and legal question, yet these matters could take up to two years to resolve – typically by settling for a small fine.

To a certain extent, the lack of enforcement is a product of the limited resources available to the CEC.  However, it is also the result of the statutory scheme.  The statute sets out a cumbersome, two-step process for imposing civil penalties: an administrative hearing to assess whether a violation has occurred, followed by a court proceeding to impose a penalty where a violation is found.  The two-step process is required regardless of the severity or complexity of the violation.

Incorporated into the administrative hearing is a three-factor analysis by which a hearing officer can dismiss a complaint.  To dismiss a complaint, a hearing officer can consider whether the subject of the complaint made a good faith effort to correct the violation or has a history of similar violations.  These factors are designed to slow or stop enforcement activity.  For example, the Election Law has long provided that the BOE notify a non-filer no later than ten days after a reporting deadline of its reporting obligations and that a failure to file within five days of receipt of such notice is “prima facie evidence of a willful failure to file.”[1]  Yet, under the current framework, before enforcement action against non-filers arguably becomes conceivable, committees are not only notified on multiple occasions to file a report even after the deadline, but also afforded multiple opportunities to disregard filing obligations altogether.

Finally, the civil penalties in the Election Law do not cover much of the conduct that the CEC is authorized to address, including filing inaccurate or untrue disclosure reports and improperly converting campaign contributions to personal use.

Under this statutory scheme, with its many holes and hurdles, robust enforcement is simply not feasible. The Committees encourage the Commission to undertake a broad review of the Election Law and consider the following reforms:

1. First, in lieu of the two-step process for imposing civil penalties (administrative hearing, followed by court proceeding), the administrative hearing officer or, upon the hearing officer’s recommendation, the regulatory authority, should be empowered to make a final determination as to the violation and proper penalty, subject to CPLR Article 78 review. This framework is consistent with other administrative enforcement regimes in New York State and further recognizes the capability, competence, and experience of the regulator in crafting the proper penalty.

2. Second, the Election Law should include traffic ticket-like procedures for enforcing routine violations, such as failing to file a disclosure report. Such streamlined procedures are used in other states and by the Federal Election Commission.

3. Third, the Election Law must provide comprehensive civil penalties, so that there are actually consequences for illegal activity.

4. Finally, candidate and committee violations should be publicly reported. The efficacy of monetary penalties, alone, to deter campaign finance violations has been questioned, as fines can simply be “internalized [by campaigns] as the ‘cost of doing business.’”[2] Thus, public reporting of violations, which occurs in other states, may play an important role in bringing about compliance.

The Commission may be able to adopt some of these reforms as “reasonably related to the administration of a public campaign finance program”[3] and so improve enforcement measures against not only participating state candidates, but also independent spenders, political parties, and local candidates.  However, to the extent it cannot, the Commission must devise procedures for more robust enforcement than what currently exists.  Yet absent a recommendation by the Commission for a new non-partisan agency, the state Legislature can simply sit idle while the Commission’s recommendation for placing oversight of the public financing system in an existing agency, likely the BOE, becomes law, and a two-tiered enforcement system inexplicably takes hold.  Accordingly, the Committees further support a recommendation by the Commission for a new non-partisan agency, one that would ultimately regulate all aspects of campaign finance, not simply the public financing system.  The creation of such an agency would not only best safeguard taxpayer dollars, but also encourage the development of a more coherent and consistent enforcement of the campaign finance rules against all regulated parties.

The Committees believe that election law enforcement should not necessarily be excessive or punitive.  However, at a time when democratic elections are being undermined by threats near and far, from dark money to foreign influence campaigns, more robust and transparent enforcement of the state Election Law is necessary.  These reforms, and others recommended in the Committees’ report, we believe, can bring a greater measure of integrity and public trust to the electoral process.

Thank you for your consideration of our recommendations.