NEW JERSEY PUBLIC FINANCING 1981 GUBERNATORIAL ELECTIONS CONCLUSIONS AND RECOMMENDATIONS New Jersey Election Law Enforcement Commission June 1982 State of New Jersey COMMISSIONERS: ELECTION LAW ENFORCEMENT COMMISSION ANDREW C. AXTELL NATIONAL STATE BANK BLDG., SUITE 1114 SCOTT A. WEINER CHAIRMAN 28 W. STATE STREET, CN-185 EXECUTIVE DIRECTOR M. ROBERT DECOTIIS TRENTON. NEW JERSEY 08608 VICE CHAIRMAN (609) 292-8700 EDWARD J. FARRELL HAYDN PROCTOR ALEXANDER P. WAUGH, JR. COUNSEL June 1982 Dear Governor Kean and Members of the Legislature: In 1977, New Jersey conducted its gubernatorial general election financed in substantial part with public funds. In 1981, the program was expanded to include the primary election. As the agency responsible for the administration and enforcement of the public financing statute, the Election Law Enforcement Commission has prepared this report of the Commission's evaluation of the program. This report presents the Commission's analysis of the public financing program and its evaluation of the program's effectiveness in achieving the public policy articulated in the legislation. In addition, the Commission addresses specific proposals to modify the program and presents suggestions for improving the statute. With the publication of this report, we gratefully acknowledge the invaluable contribution of former Chairman Sidney Goldmann and former Vice Chairwoman Josephine Margetts who retired from the Commission following the 1981 gubernatorial election. Their work during both the 1977 and 1981 elections contributed in large part to the success of New Jersey's public financing program. It is our belief that New Jersey's public financing program has served as an important component of our State's electoral process. It remains our hope that the work of the Commission will contribute to further improvement in this process in New Jersey and elsewhere. ANDREW C. AXTELL, CHAIRMAN M. ROBERT DeCOTIIS, VICE CHAIRMAN HAYDN PROCTOR, COMMISSIONER ALEXANDER P. WAUGH, JR., COMMISSIONER ACKNOWLEDGEMENT The successful administration of New Jersey's public financing program, as well as the preparation of this report, represents the collective efforts of numerous individuals. Included among those is William Schmidt who, as the Commission's Assistant Executive Director, was responsible for the management of the 1981 public financing program during both the primary and general elections. Additionally, former Commission Chairman Sidney Goldmann, Dr. Herbert E. Alexander, and Neil Upmeyer, provided valuable insight and perspective during the analysis of the program by their participation as consultants to the Commission. Finally, any discussion of public financing in New Jersey would not be complete without acknowledging the contribution of Lewis B. Thurston, III who served as the Commission's Executive Director at the time of the program's implementation in the 1977 general election and through the completion of the 1981 gubernatorial primary. In recognition of the collective efforts of the Commission's staff, listed below are those individuals who, as present or former staff members, directly contributed to the success of the 1981 public financing program. S.A.W. COMMISSIONERS: Scott A. Weiner Executive Director Andrew C. Axtell Edward J. Farrell Chairman Counsel M. Robert DeCotiis William R. Schmidt Vice Chairman Assistant Executive Director Haydn Proctor Juana M. Schultz Director of Compliance & Review Alexander P. Waugh, Jr. Gregory E. Nagy Staff Counsel Sheila E. Becker Peter D. Nichols *Janice A. Cesino Carolyn E. Jones Kay M. Niles *Lynne M. Davidson Dorothy K. Kerr *Alexander S. Parks Gail E. Davis Debra A. Kostival Linda Pi1jar Frank A. Fillat *Helen Letts R. David Rousseau Denise Gonzalez Celia L. Minich *Eileen Smith *Patricia M. Grygo Frederick J. Moore Shirley Thorpe Michele Hoffman Carolvn Neiman *J. Keith Wilson *Former staff members. TABLE OF CONTENTS Page No. INTRODUCTION ........................................................................................................................................... 1 PART I GOALS, OBJECTIVES AND PUBLIC POLICY........................................................................ 6 PART II CONCLUSIONS AND RECOMMENDATIONS #1: THE CONTRIBUTION LIMIT SHOULD BE RAISED TO $1,200 ....................................... 11 #2: THE CONTRIBUTION AND EXPENDITURE QUALIFICATION THRESHOLD SHOULD BE RAISED TO $100,000. IN ADDITION, A CONTINUING THRESHOLD SHOULD BE ADOPTED REQUIRING A CANDIDATE TO MAKE ADDITIONAL SUBMISSIONS FOR PUBLIC FUNDS ONLY IN UNITS NOT LESS THAN $25,000 AFTER THE CANDIDATE HAS RECEIVED $125,000 IN PUBLIC FUNDS ............................................ 14 #3: THE MATCHING RATIO SHOULD BE CHANGED FROM TWO FOR ONE TO ONE FOR ONE. THE DOLLAR AMOUNT OF CONTRIBUTIONS WHEN MATCHING BEGINS SHOULD BE $50,000.......................................................................... 16 #4: THE CAP ON PUBLIC FUNDS PER CANDIDATE SHOULD BE $500,000 FOR THE PRIMARY AND $1 MILLION FOR THE GENERAL ELECTION .................................. 19 #5: THE EXPENDITURE LIMITATION SHOULD BE REPEALED.............................................. 21 #6: THE LIMITS ON THE USE OF PUBLIC FUNDS SHOULD NOT BE CHANGED .................................................................................................................................. 25 #7: THE $50,000 LIMIT ON BANK LOANS AND THE 20 DAY REPAYMENT REQUIREMENT SHOULD BE RETAINED. THE LIMIT ON INDIVIDUAL LOANS SHOULD BE RAISED TO $1,200...............................................26 #8: THE LIMIT OF $25,000 ON CONTRIBUTIONS BY PUBLICLY FUNDED GUBERNATORIAL CANDIDATES FOR THE PRIMARY ELECTION AND AN ADDITIONAL $25,000 OF SUCH MONEYS FOR THE GENERAL ELECTION SHOULD BE RETAINED....................................................................................... 28 #9: THE AGGREGATE AMOUNT ANY PERSON CAN CONTRIBUTE TO GUBERNATORIAL INAUGURAL FUND RAISING EVENTS SHOULD BE INCREASED TO $500 ........................................................................................................ 29 #10: THE AMOUNT COUNTY COMMITTEES AND MUNICIPAL COMMITTEES OF ANY POLITICAL PARTY MAY SPEND IN AID OF A GUBERNATORIAL CANDIDATE IN A GENERAL ELECTION SHOULD REMAIN AT $10,000 AND THE AGGREGATE OF ALL SUCH COMMITTEES SHOULD REMAIN AT $100,000 ............................................................................................................. 30 #11: THE PROVISION PERMITTING THE STATE POLITICAL PARTY COMMITTEE TO SET UP A SPECIAL GUBERNATORIAL ACCOUNT SHOULD BE REPEALED .......................................................................................................... 31 #12 THE PERIOD AFTER AN ELECTION DURING WHICH A CANDIDATE MAY RETAIN PUBLIC FUNDS SHOULD BE INCREASED TO NINE MONTHS.....................................................................................................................................32 #13 THE LAW SHOULD BE AMENDED TO SPECIFY CLEARLY THAT ALL MONEYS, REGARDLESS OF SOURCE, REMAINING AVAILABLE TO A CANDIDATE WHO ACCEPTED PUBLIC FUNDS SHALL BE REPAID TO THE NEW JERSEY GUBERNATORIAL ELECTION FUND ...................................................32 PART III FISCAL IMPACT OF RECOMMENDATIONS ....................................................................... 34 Table A Estimated Effect on Public Funds, Total and By Candidate Resulting From Applying Recommended Changes in Financing Formula ...................... 43 Table B Estimated Effect on Candidate's Total Receipts Resulting From Applying Recommended Changes in Public Financing Formula ................... 44 Table C Estimated Effect on Percent of Total Funds Represented by Public Funds From Applying Recommended Changes in Financing Formula .......... 45 APPENDICES List of Appendix Tables ........................................................................................ preceding 1.1 Interim Report No. 1 - "THE $800 CONTRIBUTION LIMIT"............................................. 1.1 Interim Report No. 2 - "THE $50,000 THRESHOLD"......................................................... 2.1 Interim Report No. 3 - "LIMIT ON PUBLIC FUNDS AND TWO-FOR- ONE MATCHING FORMULA"........................................................ 3.1 Interim Report No. 4 - "EXPENDITURE LIMIT"................................................................. 4.1 Interim Report No. 5 - "$50,000 LIMIT ON BANK LOANS"............................................. 5.1 Interim Report No. 6 - "LIMITS ON PURPOSES FOR WHICH PUBLIC FUNDS MAY BE SPENT".............................................................. 6.1 Interim Report No. 7 - "THE $25,000 LIMIT ON CANDIDATE'S OWN FUNDS"............................................................................................ 7.1 Interim Report No. 8 - "REPAYMENT OF PUBLIC FUNDS WHEN CANDIDATE FAILS TO RECEIVE 5 PERCENT OF PARTY'S VOTE".............................................................................. 8.1 Interim Report No. 9 - "FUNDING OF POLITICAL PARTIES".......................................... 9.1 Appendix No. 10 - "ANALYSIS OF A PROPOSAL TO MATCH ONLY A PORTION OF A CONTRIBUTION"............................................. 10.1 Appendix No. 11 - Bibliography .................................................................................... 11.1 INTRODUCTION In 1981, New Jersey elected its Governor through the State's second publicly funded general election and first publicly funded primary election. The State spent approximately $8.7 million for both elections-$6.3 million to aid 16 of the