The "clean" campaign finance idea

Six years into its brave new world of publicly financed campaigns, Arizona's "clean money" elections system already is creaking with signs of age.

Backers of California's Proposition 89, which would provide $200 million a year for public financing of California candidates, point to the success of the Arizona system as an example of what could happen in California. But many of the political pros who work every day with the system have curbed their enthusiasm.

"On the whole, it has opened up the political process to a new pool of candidates,'' said Michael Frias, campaign director for the Arizona Democratic Party. "But we need to look and see where it can be improved.''

Some Republican leaders have harsher feelings about Arizona's public financing system.

"There are a lot of good things California and other states could pull from Arizona, but this isn't one of them,'' said Glenn Hamer, executive director of the Arizona Republican Party.

Critics complain that the spending limits set in Arizona's 1998 campaign finance initiative are too low and that the clean money rules give too much power to the five-member Arizona Citizens Clean Elections Commission, which referees disputes involving campaign funding.

But voters who know about the public finance rules increasingly like the idea. Although it passed by 51 percent to 49 percent in 1998, a January survey done for the state commission found that 85 percent of those familiar with the system now believe it is either very or somewhat important to Arizona voters.

"It's much more popular than it was,'' said Todd Lang, executive director of the clean elections commission. "People see that it allows strong candidates who don't have access to special interest money to run competitive campaigns."

The commission's survey, however, found almost 50 percent of the electorate remained unfamiliar with the system.

By any measure, the 1998 initiative has taken plenty of special interest money out of statewide and legislative campaigns. Participation is voluntary, but the prospect of having the state pay all campaign expenses, combined with strict limits on private fundraising, are persuading more and more people to "run clean."

"There are a lot of Republicans who are running under clean money because the system does provide benefits,'' admitted Hamer, the GOP leader. "They believe that if they don't, they'll be running at a disadvantage.''

In 2000, the first year the new rules took effect, 26 percent of the primary election candidates agreed to run under the clean election rules, which meant abiding by the state spending limits and accepting no outside money for the campaign. In 2002, the number of candidates running clean jumped to 56 percent. It was 60 percent in 2004 and about 65 percent in last Tuesday's statewide primary.

Of the 134 candidates last week, 98 of them advanced to November's general election, including Democratic Gov. Janet Napolitano and her GOP opponent, Len Munsil.

Napolitano and Munsil each will receive $680,774 in state money for their general election campaigns.

Under the clean money rules, if a privately funded candidate raises more money than the limit, Arizona matches those excess contributions, dollar for dollar, for the publicly funded opponent.

The rule can slash the value of independent fundraising.

In 2002, for example, Matt Salmon, the GOP candidate for governor, ran as a privately funded candidate. President Bush visited Arizona to raise money for Salmon's campaign and generated $750,000. After paying $250,000 for expenses, Salmon was left with $500,000 for his campaign.

Because Napolitano was running under the clean election rules, the state commission gave her $750,000 to match what Salmon had raised, meaning she made more from Bush's Arizona visit than the Republican candidate did.

Even Napolitano's campaign team sees the problem that type of clean money spending can create.

"It makes it virtually impossible for a challenger to beat a well-known incumbent,'' said Andy Gordon, Napolitano's campaign attorney. "Every time you raise a buck for yourself, you raise a buck for your opponent.''

And those bucks often don't mount up quickly. Individuals now can give up to $22,300 to candidates for governor in California; the limit is $760 in Arizona, where Republicans and Democrats complain the spending limits set in the original bill don't recognize the state's surging growth and the soaring cost of campaigning.

The $680,774 Napolitano will receive for her general election campaign this fall is "enough to run one TV ad,'' said Gordon, but nowhere near enough to cover all the campaign expenses.

It's even harder in other campaigns. The Arizona secretary of state and the attorney general candidates each receive $143,325 to run their statewide campaigns in the fall; legislative candidates get $17,918 in public funds.

By contrast, Fiona Ma spent about $1.2 million to win the Democratic primary for a San Francisco Assembly seat, and that doesn't count more than $500,000 in independent expenditures that helped carry her to victory.

"There has to be a balance between just providing access for a candidate and at the same time giving them enough money to communicate their message,'' said Frias, Arizona's Democratic campaign director.

California's clean money backers seem to have acknowledged the concerns about Arizona's expenditure limits. Prop. 89 would provide a candidate for governor with $10 million for the primary and $15 million for the general election. Assembly candidates would receive $250,000 and $400,000.

That's not enough to cover a battle like Ma's or the $80 million war between Phil Angelides and Steve Westly in June's Democratic primary for governor, but it's closer to the reality of campaign costs.

But the rules don't cover everything. About a week before last Tuesday's election, a number of Arizona voters received a call from a purported pollster asking them if it would make a difference if they knew that Munsil had "fathered an illegitimate child."

The poll took on statewide significance when Munsil, a social conservative who had headed a group calling for abstinence from premarital sex, was forced to admit to reporters that his wife was pregnant when they were married 20 years ago.

Munsil, who ran a publicly financed campaign, immediately appealed to the state's clean money commission, saying he needed extra money to counter the effects of the poll.

Although the board did not know the source of the poll, the cost of the survey or how many people were called, members voted to give Munsil $80,000 for last-minute advertising to counter the effect of the negative publicity. His opponent, Don Goldwater, received nothing, even though he was not believed to be responsible for the poll.

"People involved in a statewide election deserve more than unelected commissioners throwing darts at a dartboard'' when deciding how money is allocated, said Hamer, the Arizona GOP chief. "It feels like a high school political science project run amok.''

World Bank/International Monetary Fund

The 2007 final report by the Bank and the Fund on Aid Effectiveness and Financing Modalities noted that the IFF is “technically feasible” and the “most advanced proposal to frontload aid”. At the Spring Meetings in April 2005, the World Bank Development Committee Communiqué noted: “… negotiations among interested parties on the proposed pilot IFF for Immunization are well advanced; and the analysis of technical feasibility of the IFF has created the conditions for the necessary political decisions on participation. We encourage interested donors to proceed with these proposals.”

Finance and lawyer

Support for the International Finance Facility
The IFF is building real momentum and is a central feature of the Development agenda for the UK Presidencies of the G8 and EU in 2005. The IFF proposal has received support from more than 80 countries, including France, Italy, Sweden, Brazil, China, and South Africa, as well as from faith leaders, the business community and NGOs.

G8
At the 2005 G8 Summit, that took place in Gleneagles, Scotland, on the 5-6 July, Ministers agreed that: that: “A group of... countries... firmly believe that innovative financing mechanisms can help deliver and bring forward the financing needed to achieve the Millennium Development Goals. They will continue to consider the International Financing Facility (IFF), a pilot IFF for Immunisation and a solidarity contribution on plane tickets to finance development projects, in particular in the health sector, and to finance the IFF .”

International Finance Facility

HM Treasury and the Department for International Development launched a proposal for an International Finance Facility (IFF). The IFF is designed to frontload aid to help meet the Millennium Development Goals (MDGs).

Estimates suggest that the poorest countries in the world need an increase in aid of at least $50 billion a year if the MDGs are to be met. The confirmation by the G8 in July 2005 that international donors will provide an additional $50 billion a year by 2010, compared with 2004, is an important step towards this. However, traditional increases in donor aid budgets will not be enough to provide these additional resources and meet the aid targets that have been set. Innovative financing mechanisms are needed to help deliver and bring forward the financing urgently needed to achieve the MDGs. The IFF will specifically support efforts to bring forward donor commitments. Using existing and new resources, the IFF will be able to increase aid to the levels required to achieve the MDGs.

Based on donors’ legally binding, long term commitments, the IFF will leverage money from international capital markets by issuing bonds. Bondholders will be repaid from future donor payment streams. Pledges made by donor countries will not score on balance sheets until donors make actual cash payments to the IFF.

The Millennium Development Goals represent different indicators of the same basic poverty. Investments in different sectors must take place simultaneously to ensure sustainable progress. Education, health, access to water, roads and other infrastructure for growth must be tackled at the same time to ensure a lasting exit from poverty. Funding for debt relief should reinforce, not replace, funding to build a skilled work force and the infrastructure and capacity to trade. The IFF, as a stable financing vehicle, could provide the critical mass of additional and predictable funding needed to make lasting progress in all these areas.

The IFF:

is a financing mechanism which would provide up to an additional $50 billion a year in development assistance between now and 2015;
would leverage in additional money from the international capital markets by issuing bonds, based on legally-binding long-term donor commitments;
would be responsible for repaying bondholders using future donor payment streams; and
would disburse resources through existing multilateral and bilateral mechanisms.
The September 2005 proposal document is designed to facilitate the ongoing process of consultation and is available to download in Adobe Acrobat Portable Document Format (PDF). For alternative ways to read PDF documents and further information on website accessibility visit the HM Treasury accessibility page.