Budget Deal Includes Campaign Reform

July 3, 2002

The budget repair bill addressing Wisconsin’s $1 billion budget deficit includes a comprehensive campaign finance reform plan (link requires Adobe Reader).

The budget deal comes as a surprise to most Capitol insiders and special interest lobbyists who insisted campaign finance reform had no chance of passing this session. But it is less a surprise and more a telling indicator of the impact of Wisconsin’s growing political corruption scandal. With criminal charges already filed against one legislator and more indictments sure to come, lawmakers were backed into a corner and had little choice but to pass reforms.

The legislative leaders who hammered out the budget deal spent the session fighting tooth and nail against campaign reform, but they ultimately relented and hammered out a compromise that could yield a vastly improved campaign finance system. But the agreement remains an IOU for reform because it doesn’t take effect until July 1, 2003 and there are questions about the reliability of the funding source for the new system as well as its prospects for passing muster in court.

Based on our initial review of the plan, highlights include:

  • Spending limits for all state races that sharply reduce campaign spending in the highest-spending races ($50,000 for Assembly, $100,000 for Senate and $2 million for governor) and are adjusted for inflation every two years.
  • Public financing grants for candidates who agree to limit their spending. The grants are equal to 40% of the spending limits for legislative races and 35% of the limit for the governor’s race. The source of funding is a $20 income tax checkoff (up from $1 in the state’s old public financing system).
  • A ban on fundraising during the state budget process.
  • An explicit prohibition on so-called "pay to play" activity where public policy is traded for campaign donations.
  • Elimination of the partisan campaign committees under the control of legislative leaders.
  • A ban on PAC-to-PAC transfers that lead to the creation of "SuperPACs" that special interests use to bundle money for the purpose of running independent campaigns for or against candidates.
  • Disclosure of issue ad activity. Issue ads run by special interest groups would be subject to regulation. However, the legislative leaders who negotiated the reform compromise included reporting requirements that unnecessarily expose the plan to risk of being overturned in court. Under the plan, issue ad groups have to give advance notice of planned activities 30 days prior to an election. This provision makes the plan vulnerable to legal attack by opponents who will claim the reporting requirement amounts to prior restraint of speech. By contrast, the Wisconsin Democracy Campaign’s "Voters First" plan requires issue ad groups to immediately report activity once money is spent or an obligation to spend money is incurred.
  • Matching grants for candidates who agree to limit their spending but who have issue ads or other independent campaigns run against them, or who face opponents who refuse to abide by the spending limits. However, the matching grant money goes to the political parties and not directly to the candidates, so the parties would decide which candidates would be able to respond to special interest attack ads or high-spending opponents.
  • Contribution limits are the same as current law ($500 for Assembly, $1,000 for Senate, $10,000 for Governor), but allowable contributions to candidates who do not agree to the spending limits are cut in half.

Weaknesses in the plan include:

  • Unlike the Wisconsin Democracy Campaign’s "Voters First" plan and Senate Bill 104 (which is largely based on Voters First), there is no guaranteed source of funding for the public financing grants. WDC doubts expanding the income tax checkoff from $1 to $20 will produce enough revenue over the long haul to provide candidates with the grants they are promised under the plan. If it doesn’t, the system won’t work.
  • It doesn’t take effect until July 1, 2003. That means the 2002 elections will be conducted under existing rules, and the current system will still be in effect when the new legislature crafts the next state budget. So the next state budget will be bought and sold in the same way this one was.
  • The matching grants to allow candidates to respond to special interest attacks or high-spending opponents are funneled through the state political parties, so the parties can determine who receives matching grants. That makes candidates unduly beholden to party leaders.
  • So-called "nonseverability." What this means is that if a court finds any part of the plan unconstitutional, the whole plan is void.