They Can Keep The Money

(Updated) A federal court panel ruling Tuesday limited the ability of publicly financed candidates to keep up with the spending of millionaires who finance their own campaigns. But two candidates most immediately affected by that ruling—Dan Malloy and Michael Fedele—can keep an extra $2 million they got for the upcoming gubernatorial primaries.

That’s the word from legal observers as the state political community raced to make sense of two separate, important rulings issued Tuesday affecting the state’s clean elections program.

One ruling came from state Superior Court Judge Julia L. Aurigemma. She rejected a bid by Republican gubernatorial candidate Tom Foley to stop Fedele, his main opponent in an Aug. 10 primary, from receiving $2.18 million public money under Connecticut’s Citizens Election Program. This is the first year that statewide candidates can qualify for the program, which offers matching public money for candidates who agree to limit how much money they raise. Click here to read Judge Aurigemma’s ruling. (Later Tuesday, the State Supreme Court agreed to hear an appeal of the ruling.)

The second ruling came from the U.S. 2nd Circuit Court of Appeals panel, on a challenge to the states clean elections law itself. The three-judge panel (in two related, simultaneous decisions) upheld the law overall. But it ruled that it may not ban contributions from lobbyists. (It OK’d the law’s ban on contributions from contractors who do business with the state.) The panel, which included Judge Jose Cabranes of New Haven, also ruled against a provision of the law that allows candidates to receive “supplemental” money—a second infusion of cash when a wealthy opponent continues to spend above certain amounts in a campaign.

That last part had the most immediate implications for Connecticut. Democrat Dan Malloy has received $2.7 million in matching funds for his primary campaign against self-financed candidate Ned Lamont; $1.2 million of that money came in the form of such a supplemental matching infusion; Lamont is expected to spend $6 million. Fedele, too, received a supplemental match, of just under $1 million.

Malloy campaign senior adviser Roy Occhiogrosso said his camp isn’t worried about having to return that $1.2 million.

“That money has been spent or has been committed,” Occhiogrosso said.

What did he mean by “spent or committed”?

“Spent is the old English definition of ‘spent,’ as in ‘We don’t have it anymore,’” Occhiogrosso explained

“The definition of ‘committed’ is that it is under contract. We have money in the bank, but we have contracts to pay staff, we have contracts to pay vendors.”

Neither Malloy nor Fedele probably needs to worry about the ruling having an impact before the Aug. 10 primary, said State Sen. Andrew McDonald, co-chairman of the legislature’s Judiciary Committee, a supporter of the clean elections law, and a partner at the Stamford law firm of Pullman & Comley.

He noted that the Second Circuit ruling doesn’t immediately take effect. The panel returned the case to a lower court judge who originally decided it, Stefan Underhill, for review. That can take weeks or months. And the gubernatorial campaigns were not parties to the federal suit.

In addition, the State Elections Enforcement Commission, which administers the law, intends to ask the the Second Circuit Court of Appeals to review Tuesday’s decision en banc (before all 25 judges); and barring a victory there, to appeal the decision to the U.S. Supreme Court.

Attorney General Richard Blumenthal advised candidates to proceed under the current law’s rules for now.

“Our office will continue to fulfill its obligation to defend the statute. In the meantime, publicly financed campaigns may continue to operate pending Judge Underhill’s ruling without previous prohibitions against lobbyist contributions,” Blumenthal said in a statement released by his office. “Public finance payments already made to candidates remain valid and may be retained and spent.”

Beyond Aug. 10

While the rules for the Aug. 10 primary appear unperturbed, Tuesday’s rulings create uncertainty for the general election in November, and for the long term. It’s unclear if the matter will be decided before November. It will certainly be decided by the next election season.

Supporters of the law breathed relief that the combined state and federal rulings overall preserved the basic thrust of the laws. But some expressed concern about the decision against supplemental grants. The federal panel echoed an argument offered by the U.S. Supreme Court in a recent decision involving Arizona’s public-financing law (the Citizens United v. Federal Election Commission case) that such supplemental grants violate a self-financing candidate’s constitutional right to free speech. Here’s the logic: If a wealthy candidate’s own campaign spending (now considered “speech”) triggers more public money for a taxpayer-financed opponent, that will affect the wealthy candidate’s decisions about how much money to dole out to broadcast a message, thereby restraining the candidate’s exercise of free speech.

State Sen. McDonald was dismayed to see that logic get a second thumbs-up in Tuesday’s decision.

If it’s upheld, he argued, “we’ve cracked open our election process to allow the wealthiest amongst us to purchase any office that they wish. That’s dangerous to our democracy, especially in an election cycle when in which we have several examples of Greenwich millionaires seeking to self-fund their personal ambitions.”

He was less concerned about the ruling knocking down the provision of Connecticut’s law that bars candidates participating in the public system from accepting lobbyists’ donations. That can be fixed, he said.

During negotiations with Gov. M. Jodi Rell on crafting the law, McDonald and other legislative supporters of the law warned against including the ban. They warned that the Supreme Court was likely to strike down the ban because of how the court has come to define free speech in campaigns. They instead suggested putting, say, a $100 limit on lobbyist bans. Rell on Tuesday suggested the legislature “fix” the law based on the new ruling, and that change is likely to occur then.

“Campaign financing is alive and well,” Rell told reporters Tuesday morning after a meeting of the Bond Commission. “This issue needs to be dealt with on a short basis and it needs to be dealt with before the primary. By lifting this injunction we can move forward.”

State ACLU chief Andrew Schneider praised the federal court for striking down the lobbyist ban.

“Today’s decision makes clear that the government cannot ban speech and association by silencing certain voices such as those of lobbyists,” said Schneider said in a statement. “The Connecticut financing law, which was meant to increase the ability of more people to participate in the democratic process, actually made it harder for some people to do so.”

Foley Fails

Meanwhile, the ruling in the state case Tuesday means Connecticut could have a competitive Republican primary for governor.

Frontrunner Tom Foley, who’s spending millions of his own dollars on his campaign, went to court to try to stop Fedele, his main challenger, from receiving any public money. If he had succeeded, Fedele would not have had enough money to wage a competitive race.

Foley made three main arguments:

• Fedele qualified for matching funds by combining his contributions with those of the campaign of his running mate, lieutenant governor candidate Mark Boughton. That’s impermissible under the state law, Foley claimed. Judge Aurigemma disagreed, saying Foley cited only one relevant part of the statute, while leaving out a crucial second part that specifically allows the two candidates’ funds to be combined.

• Foley is the Republicans’ endorsed candidate in the primary; Fedele is not. Meanwhile, Boughton is the endorsed candidate for lieutenant governor. So they shouldn’t be able to combine their campaigns for purposes of qualifying for matching funds, Foley argued. The judge ruled that the statute contains no such prohibition.

• A supplemental match for Fedele should be based not on how much Foley has spent to date on his campaign, but only on how much he has spent since the state convention, Foley suggested. The judge responded in her ruling that such a “loophole” would open the door to wealthy candidates spending massive amounts of money before a convention in order to avoid opponents’ receiving the match.

Caitlin Emma contributed reporting to this story.

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posted by: KEN on July 13, 2010  7:46pm

Pullman Comley is, and has been for about 100 years, a BRIDGEPORT (not Stamford) law firm.