Opinion ID: 767873
Heading Depth: 2
Heading Rank: 4

Heading: Public Financing System

Text: 81 Throughout this litigation, the Daggett appellants' overarching argument has been that the public funding scheme embodied in the Maine Clean Election Act is unconstitutional because it is impermissibly coercive - that is, it provides so many incentives to participate and so many detriments to foregoing participation that it leaves a candidate with no reasonable alternative but to seek qualification as a publicly funded candidate. We have already addressed the independent constitutionality of contribution limits and matching funds for independent expenditures, and now turn to consider whether the elements of the system, considered as a whole, create a situation where it is so beneficial to join up and so detrimental to eschew public funding that it creates coercion and renders a candidate's choice to pursue public funding essentially involuntary. Because the parties present only issues of law, we review the district court's judgment de novo. See Vote Choice, 4 F.3d at 31, 38 (citing LeBlanc v. B.G.T. Corp., 992 F.2d 394, 396 (lst Cir. 1993)). 82 The Supreme Court established conclusively in Buckley that Congress may engage in public financing of election campaigns and may condition acceptance of public funds on an agreement by the candidate to abide by specific expenditure limitations. Buckley, 454 U.S. at 57 n.65 (determining that public financing scheme for federal elective offices was not inconsistent with the First Amendment). 83 Although public financing is not inherently unconstitutional, it may be so if it burdens the exercise of political speech but is not narrowly tailored to serve a compelling state interest. See Austin v. Michigan Chamber of Commerce, 494 U.S. 652, 657 (1990) (considering restrictions on corporate political expenditures, citing Buckley, 424 U.S. at 44-45); Vote Choice, 4 F.3d at 39 (suggesting that the court first considers whether First Amendment rights are burdened, and if so, determines whether the burdening statute is narrowly tailored to support a compelling governmental interest). Thus, we determine in the first instance whether appellants' First Amendment rights are burdened. 84 In Vote Choice, this court's primary public funding case, we indicated that the appropriate benchmark of whether candidates' First Amendment rights are burdened by a public funding system is whether the system allows candidates to make a voluntary choice about whether to pursue public funding. See Vote Choice, 4 F.3d at 38 ([V]oluntariness has proven to be an important factor in judicial ratification of government-sponsored campaign financing schemes. (citing Buckley, 424 U.S. at 95; Republican Nat'l Comm. v. Federal Election Comm'n, 487 F. Supp. 280, 285 (S.D.N.Y.), aff'd mem., 445 U.S. 955 (1980)); see also Rosenstiel v. Rodriguez, 101 F.3d 1544, 1552-53 (8th Cir. 1996) (upholding public funding system when it did not impose a burden on candidates because it was not coercive). We explained that the government may create incentives for candidates to participate in a public funding system in exchange for their agreement not to rely on private contributions. See Vote Choice, 4 F.3d at 38-39. 85 A law providing public funding for political campaigns is valid if it achieves a rough proportionality between the advantages available to complying candidates . . . and the restrictions that such candidates must accept to receive these advantages. Id. at 39 (Put another way, the state exacts a fair price from complying candidates in exchange for receipt of the challenged benefits.). [A]s long as the candidate remains free to engage in unlimited private funding and spending instead of limited public funding, the law does not violate the First Amendment rights of the candidate or supporters. Republican Nat'l Comm., 487 F. Supp. at 284. 86 Appellants argue that Maine's public financing system is involuntary because it not only deprives non-participants of the benefits of participation, but also penalizes them for not participating. They contend that the balance is weighted too heavily in favor of encouraging participation, and that, in practice, it provides no meaningful choice. Appellants highlight the matching funds provision and the potential labeling of participating candidates as clean by the Commission as particular elements of the public funding scheme that are too beneficial for publicly funded candidates. 28 Appellants also argue that the funding formula will leave participating candidates with funding that is woefully inadequate, stating that it is barely sufficient to run an unsuccessful - much less competitive - campaign in the great majority of cases. They assail us with statistics as to the average amount spent by various gubernatorial and legislative candidates over the last decade, in comparison with what they claim are the paltry sums disbursed to participating candidates. This line of reasoning, however, cuts strongly against appellants' argument that the statute is coercive because if the sums are unreasonably low, they will not attract, much less coerce, participation. We look at the provisions highlighted as problematic by appellants first, then evaluate the statute as a whole.
87 We have already addressed the specific argument that providing matching funds to correspond to independent expenditures unfairly burdens a speaker's First Amendment speech and association rights. We now address appellants' claim that the matching funds provision penalizes non-participating candidates for raising money beyond that amount initially distributed to their participating opponents and allows participants to effectively bypass the spending limitation which is the only significant burden of participation. 88 Appellants argue that the matching funds provision is intended to thwart attempts by non-participating candidates to outspend their participating opponents. Appellants contend that non-participating candidates are unlikely to receive as many direct contributions because donors will not wish to give, knowing that their donations could result in additional funding for the participating opponent. They also complain about the fact that matching funds are allocated based on contributions to, as opposed to expenditures by, the non-participating opponent. They suggest that this is illegitimate for several reasons, all reflective of the fact that a non-participating candidate might spend contributions on something other than her campaign or create a reserve and the matching funds allegedly remove flexibility in the use of surplus funds. 89 Appellants also claim that, in the context of the scheme as a whole, allocating matching funds to correspond to independent expenditures is unfair because the participating candidate, by receiving funds to correspond to expenditures over which the non-participating opponent has no control, effectively procures a larger pool of funds to work with than the non-participating opponent. They allege that this provision will result in fewer independent expenditures on behalf of non-participating opponents. 29 90 We cannot say, however, that the matching funds create an exceptional benefit for the participating candidate. Maine's Act does not provide an unlimited release of the expenditure ceiling - it allocates matching funds for the participating candidate of only two times the initial disbursement. Thus, a non-participating candidate retains the ability to outraise and outspend her participating opponent with abandon after that limit is reached. Further, the non-participating candidate holds the key as to how much and at what time the participant receives matching funds. 91 The appellants' expert on campaign strategy, Jay Hibbard, revealed a downside of the matching funds bonus. He attested that [c]ontributions and spending can be easily timed to avoid the effective release of matching funds, and therefore, thwart the objectives of the MCEA. Indeed, he added, heavy expenditures take place in the last ten days of a campaign. This is when attack ads occur and direct mail is timed to preclude a response before election. Moreover, the participating candidate, not having any way of foreseeing the timing or amounts of any matching funds, is unable to budget, to commit time for radio or television, or to plan, produce, or distribute printed material. Although we may deem an overstatement Hibbard's opinion that the matching fund mechanism has been rendered meaningless, we can acknowledge the diminished utility of a belated trigger. Finally, in view of the initial moderate allowance, without the matching funds, even though they are limited in amount, candidates would be much less likely to participate because of the obvious likelihood of massive outspending by a non-participating opponent. As the state explained, the matching funds provision allows it to effectively dispense limited resources while allowing participating candidates to respond in races where the most debate is generated. 30 92 Although no two public funding schemes are identical, and thus no two evaluations of such systems are alike, we derive at least general support from other courts' evaluations of trigger provisions. In Gable v. Patton, 142 F.3d 940 (6th Cir. 1998), the Sixth Circuit upheld a Kentucky statute that was clearly more beneficial than Maine's - participating candidates received a two-for-one match for private contributions raised, without any limitation. See id. at 947-49. Moreover, the Kentucky statute released a slate of publicly financed gubernatorial candidates from both expenditure limitations and a ban on accepting contributions within twenty-eight days of an election if non-participating opponents raised more than the initial expenditure limit for the participating candidates. See id. at 944. Even though the trigger provision provided a substantial advantage for publicly funded candidates, the court concluded that it did not rise to the level of coerciveness. See id. at 948-49 (Absent a clearer form of coercion, we decline to find that the incentives inherent in the Trigger provision are different in kind from clearly constitutional incentives.). 31 93 Other systems include trigger provisions that waive a participating candidate's expenditure limit once her non-participating opponent reaches a given threshold of contributions or expenditures, but allow the candidate to seek private funding rather than disbursing additional public funding. In Rosenstiel, the Eighth Circuit characterized the waiver of the expenditure limit in Minnesota's campaign finance law as simply an attempt by the State to avert a powerful disincentive for participation in its public financing scheme: namely, a concern of being grossly outspent by a privately financed opponent with no expenditure limit. Rosenstiel, 101 F.3d at 1551. The court determined that the trigger provision was not coercive because it allowed a non-participating candidate to control his participating opponent's funding in a sense because it enabled him to raise funds up to a certain level before the matching funds were triggered. See id. In Wilkinson v. Jones, 876 F. Supp. 916 (W.D. Ky. 1995), a district court denied a request for an injunction against Kentucky's election financing statute that contained a similar waiver provision. See id. at 926-28 (assuming for the purpose of argument that the trigger provision chilled speech to some degree, the court found that the statutes were narrowly tailored to a compelling state interest). 94 With regard to matching funds corresponding to independent expenditures, we think that this contributes to any alleged coerciveness in only a minuscule way - that is, it will not play a measurable role in a candidate's decision to seek public funding because it is of such minimal proportion to the other aspects of the system. Further, if the state structured public funding with a blind eye to independent expenditures, such expenditures would be capable of defeating the state's goal of distributing roughly proportionate funding, albeit with a limit, to publicly funded candidates.
95 Next, appellants prophesy that the Commission will label participating candidates as clean, thereby creating an impermissible government endorsement that skews electoral dialogue by violating a principle of neutrality. They argue that the plain language of the statute requires the Commission to certify a candidate as a Maine Clean Election Act candidate, and they declare that the labeling of participating candidates as clean is the most ominous aspect of the system. 96 Our review of the statute clarifies that it does not require the Commission, or anyone else, to classify candidates as clean, and in fact, it refers to candidates as participating and non-participating. See, e.g., 21-A M.R.S.A. § 1122(5) & (6) (defining nonparticipating candidate and participating candidate). The statute merely requires that a candidate be certified, presumably either as a Maine Clean Election Act candidate or a participating candidate, see id. § 1125(5), and further, the Commission has attested that it does not intend to tout participating candidates as clean. 32 Others may use pejorative labels for non-participating candidates, and they may just as easily use derogatory terms for participating candidates; on the other hand, participating candidates might call themselves clean candidates. Be that as it may, such labeling is not required or sanctioned by the statute nor within the authority of the statute to control. For these reasons, any labeling performed by the Commission will not serve as a substantial benefit to participating candidates.
97 We now step back and look at the Maine public funding/matching funds/contribution limits system as a whole to see if the cumulative effect can be said to be impermissibly coercive. We have previously expressed that a state need not be completely neutral on the matter of public financing of elections and that a public funding scheme need not achieve an exact balance between benefits and detriments. See Vote Choice, 4 F.3d at 39 ([W]e suspect that very few campaign financing schemes ever achieve perfect equipoise.). In fact, a voluntary campaign finance scheme must rely on incentives for participation, which, by definition, means structuring the scheme so that participation is usually the rational choice. Gable, 142 F.3d at 949. Nevertheless, there is a point at which regulatory incentives stray beyond the pale, creating disparities so profound that they become impermissibly coercive. Vote Choice, 4 F.3d at 38, 39 (Coerced compliance with any fundraising caps and other eligibility requirements would raise serious, perhaps fatal, objections to a system . . . .). The question before us is whether the tilt rises to the level of a coercive penalty. 98 In determining whether the net advantage to a participating candidate is so great as to be impermissibly coercive, we look both to cases where coerciveness has been found and those where the funding and contribution limits system has been upheld. In Wilkinson, a district court enjoined the enforcement of contribution limits that were lower, by a ratio of five-to-one, for non-participating candidates than participating candidates because the limits were so low for non-participating candidates that they constituted an unacceptable penalty for foregoing public financing. See Wilkinson, 876 F. Supp. at 929. 33 In Shrink Missouri Government PAC v. Maupin, 71 F.3d 1422 (8th Cir. 1995), the Eighth Circuit held that a ban on contributions from political action committees and other organizations to privately funded candidates was unconstitutional because it prevented privately funded candidates from gaining access to funding sources to which they would be entitled but for the choice to eschew public funding and its expenditure limitations. See id. at 1425-26. The statutes at issue in both of these cases, however, created much harsher repercussions for non-participating candidates than the MCEA. 99 On the other hand, statutes creating an array of benefits even more enticing to candidates than the MCEA have been upheld. In Vote Choice, Rhode Island's public funding system was upheld when it disbursed matching funds for private donations up to a given ceiling, it waived the expenditure ceiling to the extent that a non-participating candidate exceeded it, it allowed a participant to raise donations in increments double that allowed for a non-participant, and it granted a participant free air time on community television stations. See Vote Choice, 4 F.3d at 38-40. In Gable, the court upheld Kentucky's arrangement, which granted participants a two-to-one match for all private dollars raised up to a certain expenditure limit and released the limit and continued to match funds at the two-to-one ratio after non-participating opponents collected more than the expenditure limit. See Gable, 142 F.3d at 947-49. In Rosenstiel, the Eighth Circuit upheld Minnesota's public funding system, which disbursed public subsidies for up to half of the expenditure ceiling, allowed taxpayer refunds of up to $50 for donations to participating candidates but not for donations to non-participating candidates, and completely released participants from expenditure limits after a non-participating opponent raised more than a certain percentage of the limit. See Rosenstiel, 101 F.2d at 1546-57. 100 Turning to Maine's system, we first observe that the benefits for a participating candidate are accompanied by significant burdens. The benefits to the candidate include the release from the rigors of fundraising, the assurance that contributors will not have an opportunity to seek special access, and the avoidance of any appearance of corruption. More peripheral benefits include the ability to bypass a small number of additional reporting requirements, see 21-A M.R.S.A. § 1017(3-B), and the opportunity to be free of the reduced contribution limits imposed on private contributions. 101 In order to gain these benefits, however, the candidate must go through the paces of demonstrating public support by obtaining seed money contributions as well as a substantial number of $5 qualifying contributions. Additional detriments include the limited amount of public funding granted in the initial disbursement; the uncertainty of whether and when additional funds will be received based on an opponent's fundraising; the ultimate cap on matching funds; and the foreclosure of the option of pursuing any private campaign funding or spending any monies above those disbursed by the Commission. 102 With regard to the contribution limits, we do not believe that they serve as a coercive penalty for non-participating candidates. Until the privately funded candidate reaches the funding level equivalent to the initial disbursement granted to his participating opponent, the contribution limits may serve to the disadvantage of the privately funded candidate. Nevertheless, once the privately funded candidate exceeds that initial disbursement level of his opponent and until he reaches the level at which his opponent's matching funds run out, the contribution limits work to the detriment of both candidates because the less the privately funded candidate raises the less his participating opponent receives in matching funds. 103 In conclusion, the incentives for a Maine candidate, as the district court characterized them, are hardly overwhelming. Despite appellants' contention that a participating candidate cedes nothing in exchange for public funding, there are in fact significant encumbrances on participating candidates. The constraints on a publicly funded candidate, we think, would give significant pause to a candidate considering his options. In fact, appellant Representative Elaine Fuller has attested that she will not seek certification and appellant Senator Beverly Daggett has not yet decided. We also take note of the Commission figures that, as of February 8, halfway through the qualifying period, 27.5% of 142 legislative candidates have filed declarations of intent to seek public funding; on the other hand, at least 38, or roughly 26.7%, of the candidates have received contributions or made expenditures in excess of seed money limitations, signaling a desire not to seek certification. Thus, we hold that Maine's public financing scheme provides a roughly proportionate mix of benefits and detriments to candidates seeking public funding, such that it does not burden the First Amendment rights of candidates or contributors. 104 We add a final call for vigilant monitoring. In this case we necessarily regard appellants' claims as facial challenges to the public funding system and contribution limits. Although we indicate no opinion as to the success that an as-applied challenge would meet in the future, that door remains open. See Citizens for Responsible Gov't State Political Action Comm. v. Buckley, 60 F. Supp. 2d 1066, 1073 (D. Colo. 1999) (An 'as applied' challenge . . . asserts that the statute is unconstitutional as applied to a particular plaintiff's speech activity, even though the statute may be valid as applied to other parties.). Experience, after all, will be our best teacher.