The price of politics: 20 years of campaign finance reform in New York City.

I. The test

Four thousand nine hundred and fifty dollars is more money than most New York families make in a month. It's greater than the per capita annual income of 70 countries. It's twice what a person can legally donate to a campaign for president, U.S. Senate or the House of Representatives for a single election. In New York City, It's the maximum contribution that an individual can make to a Candidate for mayor, public advocate or comptroller. As of September--with the 2009 municipal elections more than a year away--the city's Campaign Finance Board has recorded at least 1,932 donations of $4,950. Some people have already maxed out to more than one candidate. Together, those maximum donations represent a quarter of the $37.8 million that city candidates have raised so far.

Twenty years ago, New York City restricted the size of donations to local campaigns after a series prominent politicians to prison and one to his grave. Rebuffed by state legislators who didn't want to tinker with a campaign finance system that offered virtually unlimited cash, and navigating within constitutional confines that sanctify much political spending as a form of free speech, the administration of mayor Ed Koch and the City Council devised a system that offered public matching funds to candidates who agreed to abide by contribution and spending limits. It was the most significant reform to sweep the five boroughs in generations. Since then, hundreds of candidates have mixed millions in taxpayer money with their own private fundraising. Thousands of news stories have reported information from the Campaign Finance Board's database on who donated how much to whom. The voter Guide and pre-election debates--both of which are produced by the Campaign Finance Board, or CFB--are now familiar parts of New York City's election landscape.

In 2009 the campaign finance system will oversee its sixth citywide campaign and face new challenges. A record number of candidates could--depending on where term limits are offered--run, and the CFB has been charged with enforcing new, strict rules on donations from lobbyists, contractors and others who have business dealings with the city--rules that are being challenged in federal court by a conservative legal activist. And once the 2009 election is complete, the board will face new deadlines audits that often trigger stiff fines against campaigns for alleged infractions. The CFB says it's prepared for the test that looms next year.

But some doubts go deeper. In a year when presidential candidate Barack Obama has made history by opting out of public financing, when wealthy businessman Tom Golisano can affect State Senate races from Brooklyn to Buffalo with a promise of reform and a wave of his checkbook and when a certain billionaire mayor is planning a third self-financed run for City Hall, The debate over whether campaign finance reform at any level of government works--and what kind works best--is on. After two decades and more than $109 million spent in matching funds, the CFB faces the same questions it asked in its report on the 1993 elections: "Leveling the Playing Field: Are elections more competitive? Has the program been successful in helping candidates without significant resources wage competitive campaigns for public office?"

II. Scandal's child

New York's campaign finance regime wasn't born in a vacuum. There have been federal campaign finance laws on the books since 1867, but enforcement was usually weak. In 1971, Congress passed the Federal Election Campaign Act, which required disclosure of campaign contributions to federal candidates. In the aftermath of Watergate, that law was strengthened in 1974 to limit donations, restrict spending and offer public financing to presidential candidates; a young congressman named Ed Koch pushed for public financing for congressional races as well, but that measure failed. In its landmark Buckley v. Valeo ruling in 1976, the U.S. Supreme Court ruled that the spending limits in the 1974 law were unconstitutional unless they were part of a voluntary system of public financing. That decision has shaped every attempt at campaign finance reform at every level for the past three decades, including the New York City Campaign Finance Act.

As Watergate prompted to Congress to act, so did controversy push New York's leaders to reform the way campaigns were paid for. "We had a terrible scandal in city government," Koch, who served as mayor from 1978 through 1989, recalled at a Fordham University conference earlier this year. "The names you might remember: Donald Manes, Stanley Friedman." Manes, the Queens borough president and head of that borough's Democratic machine, killed himself in early 1986 as an investigation unfolded. At issue was a stream of illegal payments to Manes by people seeking contracts to collect parking violations. Friedman, then the Bronx Democratic leader, served time in prison for racketeering and conspiracy. Manes and Friedman were the two big names among many who were found to have cashed in on their influence over city business.

The investigations didn't actually involve campaign money, but "there was a sense at the time that the scandals represented something broader," says Gene Russianoff, an attorney at the New York Public Interest Research Group. "I guess it was a concern about the culture. In '85, Ed Koch ran against Carol Bellamy. Whatever you think of the candidates, he outspent her 11-to-1, which made the contest kind of a joke." While there were state campaign finance laws on the books, they were laughably lax--the limit on contributions was $100,000. In the '85 race, Russianoff says, mayoral candidates "did receive donations of $50,000 from individuals, particularly in the real estate community." He adds, "There was a feeling that something needed to be done. There was political pressure on Koch to do something."

The Koch administration at first thought that any new campaign finance scheme would have to be imposed statewide. But when City Hall-backed reform measures failed in Albany, Corporation Counsel Peter Zimroth re-examined what the city could do on its own. Zimroth and his staff came up with a voluntary system requiring contribution and spending limits and offering public financing. Koch credits Zimroth with creating a system that passed legal muster and Council leader Peter Vallone, Sr., with getting the City Council to pass a law that applied to its own membership.

For Vallone, the issue was personal. Manes had helped advance Vallone's career; shortly before his suicide, Manes was the one who had cut the deals that elevated Vallone to majority leader of the Council, the most powerful position in the days before there was a Council speaker. Manes wielded much of his power through the Board of Estimate, a now-de-funct entity on which the three citywide officials and five borough presidents sat. The Board of Estimate's portfolio, Vallone recalls, was lucrative. "It was all land use, which is gold in this city, and people would bring in enormous amounts of money--'Here's $5,000'--and that's what happened to Don [Manes]," he says. Manes' demise pointed to the need to reduce those temptations. "It was shocking to us that someone like Donald would sentence himself to death because of that money. We had to get it out." According to Vallone, during a floor debate about the campaign finance law, City Councilman Michael DeMarco, a powerful member from the Bronx, recoiled at the estimated $28 million cost of the proposed system of taxpayer-funded matching money for campaigns. "'I'm a firm believer in good government when we can afford it, and I'm telling you, we can't afford it, '" Vallone recalls DeMarco (who died in 2001) saying. Vallone adds, "It gave me an opportunity to say, 'Can we afford not to have good government?'" That argument helped win the day; the Campaign Finance Act passed in February of 1988.

Supporters of the law speak of it in historic terms. For Koch, 83, and Vallone, 73, "the birth and creation of this program is going to stand as their greatest accomplishment," Russianoff says. "We think of it as a politician liberation act." Miriam Friedlander, a former city councilwoman from the East Side who enthusiastically backed the campaign finance bill, says that people still stop her in the street to talk about the law. Wayne Barrett, the veteran Village Voice reporter who exposed many of the Koch-era scandals, says the law stands as "the single most important reform in my lifetime at the city or state level."

The Campaign Finance Act was the first in a wave of change after those 1980s scandals In 1989, the U.S. Supreme Court ruled that the Board of Estimate was unconstitutional because it violated the rule of "one man, one vote" by giving Staten Island equal power to the other, much more populous boroughs. That same year, the city elected its first black mayor. The City Council expanded from 35 to 51 seats in 1991. And in 1993, the city's voters approved term limits for municipal officeholders and elected the first Republican mayor in 28 years.

[ILLUSTRATION OMITTED]

"That period of time was the most significant event in New York City political history because campaign finance reform and the elimination of the Board of Estimate transformed New York City from backroom, county-machine-dominated politics into a legitimate, democratic, mayor-dominated, legislatively controlled system," says Richard Emery, the litigator behind the suit against the Board of Estimate.

III. "It could have flopped"

Carole Campolo was not a campaign finance junkie when she signed up in 1988 to be the deputy director of a new agency called the Campaign Finance Board. "I thought it was an OK job, but what interested me was seeing if you could do it, build an agency from scratch," says Campolo, a veteran of several city agencies before she joined the CFB, from which she retired last year. "We had six months to get the whole thing set up." That challenge also attracted Nicole Gordon, a lawyer who had been working for a state commission on government integrity. Gordon took the helm of the nascent CFB and held it for 18 years, retiring in 2006. Creating a functioning agency to perform a brand-new task in time for the 1989 elections, when the CFB disbursed more than $30 million in matching funds, was no small task. Laurence Laufer helped Zimroth draft the campaign finance measure at the New York City Law Department, then moved to the CFB, where he served as counsel until 2000. Of those early days, he says simply: "It could have flopped."

It didn't, and that was the board's first success. The CFB proved in that 1989 race that it was not only competent, but also nonpartisan--a reputation that has survived over its 20 years and of which current and former members and staff are justifiably proud. The five-person board is composed of two members from different parties appointed by the mayor and two people from different parties named by the speaker of the City Council, with a chairperson whom the mayor selects in consultation with the speaker. The board interprets city campaign finance law and decides on penalties for candidates found to have breached it.

The law isn't the product of one act of Council in 1988 but, as Laufer puts it, of "20 laws over 20 years." After each election, the CFB publishes a report that examines how the system performed and makes recommendations for how to improve it. Its post-2005 study, for example, suggested that the Council clarify the rules on how much candidates can spend on gathering signatures to get on the ballot. It also asked for the law to be changed to address the disparity between corporations--which were barred from contributing to candidates--and other organizations like partnerships, LLCs and unions, which were able to give freely. The Council addressed the spending issue and barred donations by partnerships and LLCs, but ducked the question of union donations.

While the CFB doesn't always get the stricter laws it wants, the City Council is credited for repeatedly tightening the rules under which its members play. Indeed, the campaign finance system's constant evolution since its launch--from adding a Chinese edition of the Voter Guide in 1993 to restrictions on lobbyist donations in 2006-has been one of its most admired attributes, even if the board didn't seek all the powers it has received. "In 1996, we got the responsibility for doing debates, which we didn't want," Campolo recalls. "Even though we were nonpartisan, we were concerned about what the perception would be." That worry dissipated over time.

Despite the changes since 1988, the underlying idea of the CFB is the same now as it was then--using the offer of matching funds to entice candidates to limit their campaign spending and reach out to small donors, and restricting all contributions to reduce the power of large donors. It applies taxpayer money to offset the disparities inherent in a system where private money funds campaigns for public office.

Today's campaign finance system consists of two sets of rules. One batch of regulations that applies to all candidates--even those who don't want to receive public matching funds--requires regular reporting and full disclosure of campaign contributions and spending. It also bars contributions from corporations and partnerships, and limits the size of contributions that an individual or entity can give. Every transaction--be it a contribution or an expenditure--is recorded on a searchable online database and audited.

[ILLUSTRATION OMITTED]

Those who want to qualify for matching funds must comply with additional rules that constrain their total campaign spending. And candidates running for mayor, public advocate or comptroller who accept matching funds must participate in televised debates.

To receive matching funds, candidates have to get a minimum amount of donations from a threshold number of contributors; a City Council candidate, for example, has to raise $5,000 in small donations from 75 people in his district. Once a candidate has qualified, the CFB in 2009 will match at a 6-to-1 ratio the first $175 donated by a New York City resident. The system is designed to amplify the power of small donations. If you donate $175, the CFB matches it with $1,050, so the campaign ends up with $1,225. Say someone else donates $1,750. Matching money still only applies to the first $175, so the CFB pays out $1,050, the candidate ends up with $2,800--and donation 10 times the size of your contribution has only about twice the financial impact. Campaigns can only spend matching funds on a specific set of campaign-related activities, like buying ads or paying workers, not on paying off debts or as some CFB literature goes so far as to warn, costs like "funeral expenses."

Emery, the lawyer who sued to scrap the Board of Estimate, calls the city's campaign finance system "the most rigorous and fulsome campaign disclosure and regulation scheme" in the country. "There have been virtually no scandals since 1989 in New York City of a political nature. Prior to 1989, there was a political scandal of monumental proportions where the public treasury was robbed every few years. That just hasn't happened." Hank Sheinkopf, a leading political consultant, agrees that the CFB "has removed a lot of taint from the way campaigns are funded."

Besides keeping scandal largely out of city politics, the matching funds system has brought more people in. "Over the course of time, the average size of contributions has gone down, the number of people contributing has gone up and the number of people running for office has increased," says CFB executive director Amy Loprest, who replaced Nicole Gordon in 2006.

Matching funds have also changed the way campaigns operate. Jesse Schaffer, who worked with Ruth Messinger's campaigns for borough president in 1989 and 1993 and her mayoral run in 1997, says public financing allows candidates to think about something other than money. "You see candidates spending less time fundraising and more time campaigning," he says. "It changes how you staff your campaign. You don't have to hire as many fundraising staff members; you don't have to spend as much time fundraising; you can spend more time talking to voters rather than just dialing for dollars."

And that's good news for candidates whose social circles don't include people who can write big checks. As Council Speaker Christine Quinn has put it, "It's very exciting to be a public official in a city with a public financing system where schoolteachers and coaches at Little League can run for City Council."

It's an inspiring picture, and it's absolutely true: In today's New York, regular Joes and Jills can run for City Council. Whether or not they can win--or stand any chance of winning--is another question.

IV. Swimming in Niagara

Sal Albanese was a schoolteacher once, and then a city councilman--a liberal who'd somehow managed to represent conservative Bay Ridge, Brooklyn for 15 years--before he mounted a run for mayor in 1997. Media coverage of his campaign usually included the word quixotic, and as a largely unknown figure from the outer boroughs, he was exactly the kind of candidate that public financing was supposed to help.

Most politicians hate raising money, and Albanese was no exception. "One of the things I despised about running for citywide office was calling people whom I did not even know. I always felt very leery of it. Did this person expect a quid pro quo?" he says. His fundraisers wanted him to spend the day making calls. "You almost feel like a beggar, not someone advancing public policy--people ducking you on the phone. It's a very distasteful experience. People who are the major contributors become the major players in the candidate's life. You spend time massaging their egos. It's a pretty dehumanizing process, if you ask me."

[ILLUSTRATION OMITTED]

Albanese managed to raise $770,000 on his own--enough to qualify for $258,000 in matching funds. That money helped: When it came in 12 days before the primary, Albanese was able to afford a week's worth of TV advertising. "I went from 11 percent to 22 percent in a week," Albanese says, comparing preelection polls with the primary results. "If I had two more weeks of television I would have won the primary."

As it was, he was outspent 5-to-l by Messinger. Albanese, now a financial adviser, says that the prominent role private money still plays in the city's system undermines the intentions behind the Campaign Finance Act.

"The purpose was to eliminate the influence of special interests and basically democratize the process," says Albanese, who was in the Council when the campaign finance law passed. 'The fact of the matter is, you still have to raise millions of dollars from people who do business with the city. It's not undoing the problem of undue influence but abetting it by matching it."

Eight years later, another unknown candidate, Andrew Rasiej, ran for public advocate. He became associated with an idea to make wireless Internet available across the entire city; that proposal was part of a larger plan to increase citizen involvement. Rasiej, who entered the 2005 Democratic primary against incumbent Betsy Gotbaum and civil liberties lawyer Norman Siegel, did not enjoy his campaign experience. "The general disdain people have for politics--you feel like you're trying to swim against Niagara Falls," he says. "One of the things that I hated doing was fundraising. I was basically making phone calls all of the time. Once you're a candidate, you're no longer in control of your campaign. My staff was telling me I had to spend three hours making phone calls. I was in a box. I'd come out of the box to make a speech and then go back into a box. It was very, very painful."

[ILLUSTRATION OMITTED]

SEAT TAKEN

Since 1989, New York City incumbents have won 96 percent of contested primary and general elections for city offices and have run unopposed dozens of times. On only 13 occasions have incumbents lost since the campaign finance system began operating:

1989 * Ed Koch lost the primary for mayor. Councilman Hilton Clark lost both the primary and general election.

1991 * City Councilwoman Miriam Friedlander lost a primary, and her colleague Carol Greitzer lost in the general election.

1993 * Mayor David Dinkins, Comptroller Elizabeth Holtzman and councilmen Rafael Colon and Walter Ward were unseated.

1997 * City Councilman Federico Perez lost both the primary and general elections.

2001 * Pedro G. Espada lost the primary for his 17th District Bronx Council seat.

2005 * Queens' Allan Jennings failed to retain his Council seat.

Sources: Campaign Finance Board, Board of Elections, news accounts. Calculations by City Limits.

Rasiej says the $785,000 in matching funds he received, which brought his war chest to $1.6 million, allowed him to run a campaign operation. "But I couldn't run ads. I don't think anybody can run in a city of 8 million people with anything less than $3 million." Rasiej loaned his campaign a half-million dollars to try to compete. He ended up placing a distant third.

Albanese and Rasiej, both relative unknowns, may have faced particularly long odds, but their fate is common. Even under the city's campaign finance system, better financed candidates are much more likely to win. And while incumbents like Ed Koch and David Dinkins have fallen in elections since the Campaign Finance Act, they are the high-profile exceptions. Since the campaign finance system has been in place, incumbents at the citywide, borough or Council level have faced 350 contested primary or general elections in New York City. On a mere 13 occasions has an incumbent lost, for a 96 percent win rate. In 2005, for example, the only incumbent who didn't win re-election was Allan Jennings, a councilman who'd been excoriated in the press over sexual harassment complaints by two ex-staffers. Often, incumbents faced no opposition at all. Since 1989, incumbents have avoided primaries 178 times and faced no general election opponent 48 times. In 2005, seven incumbents faced no primary or general election challenger. Over 20 years, in all possible races, incumbents have a winning percentage of 97.5 percent--equivalent to the Yankees losing four games over an entire season. That's about how they fared before the CFB: In 1985, the last city race before public financing, officeholders went 57 for 58.

It's a political truism that incumbents stand a good chance of being reelected, but public financing might be expected to dent that advantage some what. In fact, New York City's rate of incumbent survival is right in line with that for New York State legislators (98 percent) and Congress, where the rate is estimated by the Center for Responsive Politics to have moved up and down between 79 percent and 98 percent over the past 20 years.

Officeholders enjoy advantages besides money--like name recognition--that campaign finance laws can't do much about, but incumbency does confer a financial edge as well. Statistics from the CFB show that incumbents consistently raise more money than challengers or people running for open seats, and also get a larger proportion of their money from large donors. Incumbents often spend more, too--even when they face no opponent: Councilmen Simeha Felder and Leroy Comrie spent about $200,000 each in 2005 to win their elections against nobody. (Felder's staff says he raised and spent aggressively to discourage potential candidates from getting in the race, and Comrie was trying to become Council speaker.)

Felder, Comrie and many other incumbents (like Councilwoman Melinda Katz and Councilman Eric Gioia, who spent more than $300,000 each despite facing token opposition) did not accept matching funds in 2005. But some incumbents did get matching funds, even in cases where they faced very poorly financed opponents and had to submit so-called "statements of need" justifying their receipt of taxpayer money. Seventeen sitting Council members filed such statements in the last two elections. Councilman Charles Barron, for one, accepted about $141,000 in matching funds in 2005 and raised $66,000 on his own--against an opponent who managed to scrape together $15,000. In asking for matching funds, Barron claimed his opponent had the support of local political clubs. Councilman Larry Seabrook, who pled for public funds saying his opponent had "a base of support in Coop City," used $71,000 in public money; his foe reported no donations or expenditures on his campaign.

[ILLUSTRATION OMITTED]

There are situations in which a well-funded incumbent might indeed need public money to compete, such as when facing a celebrity candidate. (Would campaign spending matter in a race between Councilman Alan Gerson and Madonna?) Still, the use of matching funds by popular incumbents has been a long-standing target for critics of the campaign finance system. Henry Stern, the former Parks commissioner and civic observer, speaks of "sham elections" in which incumbents "took thousands of dollars for elections that weren't real challenges."

After recent changes in the law, candidates who face poorly funded opposition will have to convince the CFB that they need matching funds. It's unclear whether this will diminish the problem. Says CFB executive director Loprest, "We'll have to see how it will work in 2009."

Loprest isn't fazed by the poor showing of insurgent candidates under public financing. "I don't think that it is a purpose of the program to throw incumbents out of office," she says. "In cumbency really is the single greatest predictor of electoral success."

And winning--or losing--isn't everything, says Loprest's predecessor, Nicole Gordon, now a vice president at the JEHT Foundation, a public policy advocacy organization. "The importance of the program is much deeper than that. It means incumbents always have to worry about having a meaningful opponent, which means that incumbents have to worry about their constituents and not just donors. The power of our system is that [an incumbent] can always be turned out," Gordon says. "And I think that that specter, that factor out there, is the single most important thing about public funds. It's not just about having a competitive election. It's about knowing that a real challenger could emerge."

Of course, if incumbents never lose, the threat of a real challenge might not have as much bite. In all 2005 elections, incumbents averaged 80 percent of the vote.

But Loprest is right: The campaign finance act wasn't meant to legislate defeat for officeholders. It's not an affirmative action program for insurgent candidates. And in fact, many candidates credit the CFB with allowing them to make a run for office, like Marty Markowitz, who beat better-funded or machine-backed candidates in the 2001 race for Brooklyn borough president, and Virginia Fields, the former councilwoman and Manhattan borough president, who has often attributed her success to the campaign finance system. "I feel like someone who has grown up with the campaign finance program," she said after the 2001 elections, "and without it I know that my ability to have the necessary funds to have run for City Council two terms and borough president now two terms would have been greatly impacted. And a lot of that is still due to small donors, people who feel that they have an opportunity to participate. When you tell a person, 'Give me $20,' that becomes $20 times four, so that has made a signigicant difference in terms of people wanting to give."

This spring, however, Fields filed suit against the CFB over $180,000 that the board says she owes it from her 2005 run for mayor.

V. Following the money

Danny King lost his 2005 race for City Council, ending up with about 9 percent of the vote in a 10-candidate field for an open seat in Brooklyn. One day this past August, King and his wife, Gwendolyn, took their seats in a hearing room at 40 Rector Street. They were about to lose again.

The Kings stood accused of 10 violations of the campaign finance act, including "failing to report an in-kind contribution," "maintaining a petty cash fund greater than $500" and, more seriously, "making $20,000 in non-campaign-related expenditures" and "falsification of contribution documentation." CFB auditors found that 58 of the contribution documents that Kings submitted had been "altered with WiteOut" and that six people named on those cards claim "they didn't contribute or didn't contribute the amount stated."

King, a retired police officer and a community activist, blamed some of his campaign's missing invoices on a consultant who, King claimed, "had a nervous breakdown and ... cannot write anything down." But King's main plea was ignorance: "We thought this basically would be a mom-and-pop operation. It was more complicated that that. What we found out after the campaign was you need experts on this stuff." The board fined King $14,600, for which he and his wife are personally liable.

[ILLUSTRATION OMITTED]

King's alleged infractions were more serious than most, but the CFB fines a substantial number of candidates. To date, the CFB has fined at least 85 candidates a total of $382,130 for infractions during the 2005 race. Levying fines has always been part of the CFB's job, which is to both distribute and protect taxpayer money. From the start, supporters of public financing in the city sought to shield the program against any scandals that might erode public support. "One of the hallmarks of the strength of the operation under Father O'Hare was that every major candidate got fined," former Mayor Koch said in February, referring to the long-serving first chairman of the CFB, former Fordham University president Joseph O'Hare." Koch was hit with a $35,000 penalty for infractions during his failed 1989 re-election bid. In 1993, after the CFB fined David Dinkins' campaign $320,000 for exceeding spending limits during that year's primary, a lame-duck Dinkins removed O'Hare from the CFB. Rudolph Giuliani reinstated him. But in 1997, in the midst of a hearing during which the CFB was considering a fine of $220,000 against Giuliani's own re-election campaign for accepting illegal contributions, a new Giuliani-appointed member showed up to replace a holdover from the Dinkins era who was still on the board. The move was seen as an attempt to defeat the fine. O'Hare blocked the ploy, and the fine was approved.

These actions all predated what was arguably the most important change in the campaign finance system's 20-year history--the move in 1998 from a 1-to-1 match of donations up to $1,000 to a 4-to-1 match of donations up to $250. "There began to be a sense that the level of public financing wasn't really bringing about the competition it was instituted to bring about," recalls Laufer, the former counsel for the campaign finance board. There was a push by outside advocates for a ballot measure to approve clean elections, which would involve almost total public financing. To resist that, the City Council approved the higher matching ratio.

This move had an impact on more than a candidate's bank accounts. "We really got a very different program once that match came in," says Laufer, who now represents campaigns before the board. In its early years, he says, the CFB saw its primary mission as encouraging candidates to join the program. The enforcement function grew up over time--after incidents like 1993 public advocate candidate Ron Reale's attempt to obtain matching funds fraudulently--but it was secondary. In 1998, when the more lucrative match came in, however, the risk of fraud increased. "I think the dynamic of the process shifted to the idea that vigorous enforcement became the paramount issue."

The CFB maintains that getting people into the process is still its top Concern. But Laufer's not the only one who says that the board's enforcement operation has become too onerous. Peter Vallone Sr., the former speaker who was instrumental in getting the campaign finance law passed, is another critic. "Now elected officials are considered the enemy," he said in February. "You can't find an elected official who has something good to say about the CFB. It was to stop corruption, not technical violations," At least five sitting members of the City Council have sued the CFB at some point in their careers.

Tony Avella, the Queens councilman and 2009 mayoral candidate, says the CFB recently rejected documentation for several $10 donations to Avella because each donor forgot to note that the contribution was in cash. "This is a little ridiculous. I think it's a bureaucracy run amok," Avella says. "There's always criticism in the media to crack down on illegal contributions. They see the criticism and go crazy. It doesn't eliminate the abuse, but it does drive people crazy."

And that, Avella says, could turn off potential candidates as much as matching funds might lure them in. Dan Quart, who ran and lost a race for City Council in 2005, believes he had enough money to compete in the race, and credits the CFB with being fair. But he says his background as a lawyer helped him contend with the post-election process. "I was lucky. I was able to do a lot of the work myself. There are many candidates out there who aren't attorneys. For the average candidates it becomes very difficult and expensive to go through this process," quart says, but adds, "No one forced me to enter the system and take $82,500."

Consultant Hank Sheinkopf, who feels the board's enforcement is generally reasonable, says the real problem has been the length of time it takes the board to close the books on a campaign. The board didn't finish its audit of Mark Green's 2001 mayoral campaign until 2006, slapping Green with a $21,000 fine in the middle of his candidacy for statewide office. Fernando Ferrer is still waiting to find out what he owes from 2005 (or is owed--some campaigns end up receiving a final matching funds payment when the CFB discovers that a candidate has been shorted. The 2001 mayoral campaign of Herman Badillo, for one, received a payment of $357,000 toward campaign expenses in April 2002, seven months after he lost the Republican primary).

[ILLUSTRATION OMITTED]

It's unpleasant to have the possibility of tens of thousands of dollars of fines hanging over your head for several years. But the passage of time causes even more direct problems for enforcement: It makes it harder for candidates to prove their cases. Volunteer staffers go back to their day jobs. Documents get lost. Businesses close. People die. Virginia Fields, whose lawsuit concerns a CFB claim that she did not spend her public funding properly and there-fore must repay it, claims a computer crashed. "Two years after a campaign, it's difficult to put records together. Three weeks after a campaign, it's difficult to put records together," Sheinkopf says. "Campaigns are entities that come together for a single purpose, and then they disband."

Supporters of the CFB see little the agency can do to ease the burden. "Any campaign finance agency, if they're going to put some teeth into it, they're probably going to be about as popular as the Internal Revenue Service," says Gene Russianoff. "There's this tension between people wanting to enter political life and making sure public funds aren't misspent. They can't just hand the money over and hope for the best. It is a controversial notion to use taxpayer funds."

Board staffers make no apologies for being careful with the public's money. "I know candidates bitch and moan about enforcement," says Campolo, the recently retired deputy director of the CFB, "but let me tell you, that is your tax money, and the staff and board take that very seriously."

Under new legislation, the CFB will face time limits for the completion of audits after the 2009 elections-14 months for City Council and borough president races and 16 months for the three citywide offices. The step is a boon for candidates. But with so many City Council members seeking re-election or higher office, Campolo worries that the Council has mandated a less thorough review of its own campaigns. "These are people who don't want people looking at their finances, and they're putting a time limit on it?" she asks. "That's outrageous."

VI. We interrupt this election ...

A number of candidates and political professionals contacted by City Limits said they did not wish to comment on the record about the CFB's enforcement practices because the agency might retaliate against them. Executive director Loprest denies that the staff would ever do so. One candidate who was not reluctant to describe his experience was Stephen Kaufman, a Democrat and former assemblyman from the East Bronx who ran for City Council in 2005. "The board is a horrible creature that stifles free speech and is the tail that wags the dog of city government," he says. "They fucked me over."

People tend to have three kinds of complaints about the CFB. One, as Vallone mentioned, is that it nitpicks. Another, pertaining to the audits, is that it moves too slowly. But some critics believe that where the board has gone most dangerously wrong is when it moves too soon--like in the heat of an election, when the board runs the risk of affecting the outcome at the polls.

Candidates who join the campaign finance program must adhere to spending limits in exchange for matching funds. In 2005, the limit for a candidate for City Council was $150,000 for the primary and another $150,000 for the general election. Someone running for mayor could spend $5.7 million on the primary and that again on the general. That spending limit included any matching funds. But some costs were exempt from those limits, including the expense of circulating petitions to get on the ballot.

CFB enforcement is particularly strict when it comes to spending limits, because you can never unspend money. When a campaign collects an illegal contribution or falsifies a form, it can be forced to return the money or pay a fine. But if a campaign overspends, and by doing so gains an edge at the ballot box,that can't be corrected after the votes are counted.

So exempt expenditures often posed a problem: Were a campaign to disguise costs for real campaigning as exempt, it could violate the spending limit and gain an advantage over other campaigns. On three occasions in the past two elections, the CFB has accused campaigns of doing just that.

In September 2001, just days before the scheduled primary, the board invalidated about $296.000 that Alan Hevesi, the comptroller who was running for mayor, claimed in exempt expenditures. The disallowed amount included costs associated with literature that was handed out during Hevesi's petition drive, when workers gather signatures to put their candidate on the ballot. The ruling theoretically limited what Hevesi could spend in the stretch run. On Primary Day, he placed fourth.

In 2005, just 12 days before that year's primary, the CFB met to examine whether Kaufman had violated the spending limit by claiming too many exempt expenditures. Like Hevesi, Kaufman had his petition carriers hand out literature. But Kaufman didn't claim the cost of printing the literature as exempt, as Hevesi had. Kaufman claimed only that the petition-carriers wages were exempt. It was unclear whether that issue had been addressed in the Hevesi decision. Pointing to the contracts Kaufman used for his petition workers, which mentioned literature distribution as a work duty during petitioning, the CFB decided that 50 percent of Kaufman's claimed petitioning expenditures would actually count against his spending limit.

That ruling posed a serious problem for Gifford Miller's mayoral campaign. Miller, then Council speaker, had claimed some $1 million--far more than his opponents--in exempt expenses because he had collected a substantial number of petition signatures for both the Democratic primary ballot and his own third-party general-election ballot line. His petition team had also handed out literature. After the Kaufman ruling, Miller asked the CFB for guidance. The board sought public comment, asking campaigns to weigh in on the distribution of literature: "Is it always, never, or sometimes exempt? And, if the answer is sometimes, then when and to what extent should it be considered either exempt petitioning or non-exempt campaigning?"

Some of Miller's rivals for the mayoralty jumped at the chance to highlight what they saw as cheating by the speaker. Anthony Weiner's campaign submitted comments that accused Miller of using the petition drive to poll voters and develop information on where to target advertisements. Virginia Fields' lawyers labeled some of Miller's petitioning efforts "Classic ... campaign activity." But Fields' letter acknowledged that there was no "bright-line rule" on such expenditures.

[ILLUSTRATION OMITTED]

It was a judgment call, and in the week before the primary, the call went against Miller. The board refused to accept all Miller's petitioning expenditures as exempt, but didn't say how much it would allow. That forced his campaign to pull some $800,000 in last-minute TV ads to avoid violating the spending cap, which would have put. Miller in jeopardy of major fines. The CFB also withheld the Miller campaign's final payment of matching funds. Even on the CFB board, there was disagreement over whether its actions against Kaufman and Miller were right. "There is no rule or decision directly on point rendered by this board, "CFB member Dale Christensen wrote in a rare dissent." Arguments to the contrary ... have the wholly unfair effect ... of changing the rules in midstream." In the primary, Miller placed fourth. Kaufman also lost.

This September, the CFB closed the books on Miller's 2005 campaign, finding that Miller had been $10,410 over the $5.7 million spending limit. It fined him $13,800.

Miller, who is a board member of City Limits' parent organization, City Futures, declined to comment for this article. For his part, Kaufman says that the board's withholding of $18,000 in matching funds meant fewer poll workers and last-minute mailings. He insists that his complaint is not mere sour grapes and that he does not regret his loss to James Vacca. "I had no business being in that race," Kaufman adds. "He's very competent."

Kaufman is now suing the CFB over the fine of $21,000 it imposed in April. . Kaufman says the use of literature during a petition drive was standard practice. "What I did was something that if you didn't do you'd be guilty of political malpractice," he says. Since Kaufman's audit was issued, the CFB has sent letters to two other 2005 campaigns whose audits already closed, saying that if the auditors had known that those candidates' petition carriers had distributed literature--the same thing Kaufman's workers did--the board would have sought to impose penalties. "It's more evidence of massive confusion on the board's part," Laufer, the attorney for both Kaufman and Millet, says of the letters. "It's an example of the risk of error. When they make a ruling before the election, you can just go into a death spiral. How intrusive do we want an agency with this power to be before an election? What is the lesser of two evils? What if the agency is wrong?"

New regulations have eliminated almost all exempt expenditures, and spending limits have been raised to allow campaigns to afford their petition drives--moves that the CFB hopes will simplify compliance. It won't be clear until November whether the change will obviate the need for the board to intervence on the eve of the election.

VII. Paying their dues

While some candidates from the 2005 elections gripe about how long it has taken the CFB to decide penalties, the CFB itself is waiting--waiting for $322,621 in outstanding fines and public funds repayments from 2001 City Council Candidate Ethel Chen, as well as $144,416 from Garth Marchant, who also sought a Council seat that year. In 2003, Everly Brown ran for the Council, lost the race and has $74,278 outstanding to the CFB. Felipe Luciano's Council race racked up $73,530 in penalties in 2005, and he still owes them. The CFB has a lien on former councilman Allan Jennings' house; he owes $50,200.

There's little doubt that some candidates have tried to rip off the system. Ron Reale went to jail for it. Sheldon Leffler, a respected Queens city councilman who lost his race for borough president in 2001, was convicted of it and subsequently disbarred. Ann English's 1991 Council campaign tried to count her tenants' rent checks as donations; it was also prosecuted. But Rev. Joseph Parkers, the current chair of the CFB, believes that most violations are more negligent than nefarious. "People in the hustle and bustle of the campaign, they don't pay attention, or usually it's their treasurer. There can be a temptation to make up invoices post factum and so forth," he says. But he adds, "We can say they didn't mean to do this or to defraud us, but in point of fact they did, and we have to send a message to future candidates."

The board sent a strong massage to City Councilman Miguel Martinez this year, ruling that his 2001 campaign owes $45,000 in fines and has to return $129,000 in matching funds. The board found that the campaign created receipts after the fact to account for expenditures, but there was no accusation of fraud. Martinez has sued over the matter, claiming that the campaign created the receipts at the advice of CTB Staff.

In late 2006, a state appeals court ruled that candidates and campaign treasurers who participate in the city's campaign finance system can be held personally liable for fines but not for the repayment of public matching funds, a blow to the CFB's enforcement efforts. The 2007 update to the campaign finance act strengthened personal liability under the system--if a candidate's campaign lacks documentation for its spending, he and his treasurer are liable for misspent public funds. That move is designed to protect the public's money, but the threat of personal financial ruin might also discourage some potential campaign workers. You'll never get a treasurer, because they're on the hook too," Kaufman says. For Tony Avella, the complexity of the campaign finance program is a barrier to candidates, as well. "In terms of enabling more independent candidates to run for office, to do that you should make the system easier," he says, "and what they've done is actually make it more complicated for independent candidates to run."

[ILLUSTRATION OMITTED]

Of course, governing the largest city in America and overseeing a $56 billion budget is fairly complex, too. It's fair to wonder if the challenges of the campaign finance system merely weed out people who aren't suited for public office. And CFB director Loprest notes that while "some professional candidates run afoul of the law," many grassroots campaigns do not. "I think we try to provide as much assistance as possible," she says.

That assistance begins with a mandatory training session at the CFB offices, where candidates or treasurers are briefed on the law and C-SMART, the CFB-designed computer program that allows campaigns to log contributions and expenses in order to ease reporting to the board. The sessions for 2009 are already running. At one class in August, a CFB staffer warned campaigns to

Councilman Sheldon Leffler in 1988, when he opposed the campaign finance law as too expensive. He was later convicted of defrauding the matching funds system. But maintained his innocence. Photo: Cindy Reiman look carefully at the forms they submit to the CFB. "Please read it, because it contains the phrases 'Class A misdemeanor,' 'Class E felony,' "he said. But he also mentioned that C-SMART offers campaigns a range of tools that have nothing to do with campaign finance act compliance--like generating thank-you letters for donors and creating mailing lists based on issues that donors have indicated are most important to them. Those extras are part of an effort to lure candidates into the program and to persuade them to use C-SMART.

The bells and whistles don't make complying with the program easy, however. Campaigns have to send copies of their finance reports to the city Board of Elections, which accepts them on paper, and the state Board of Elections, which takes only electronic files. If a business donates, the campaign has to check a state database to see if the firm is a corporation, partnership or LLC--entities that are banned from contributing. When returning money to a donor who gave too much or is barred from giving, a campaign has to use a certified or bank check because the donor could fail to deposit it, leaving the bad contribution on the candidate's books. Campaigns must keep copies of all documents for six years. A campaign can't coordinate with outside groups on any spending they do on its behalf if the CFB suspects collusion, the burden is on the campaign to prove that there was none.

As the PowerPoint slides of dos and don'ts fly by, one trainee shakes her head, "It's tough," she mutters. Bloomberg had the right idea."

VIII. The $150 million elephant

When the city's Democratic establishment--or at least those parts of it that had supported their party's nominee--crowded into a ballroom at the Waldorf-Astoria Hotel on Election Night 2005, the slogan of the hour was "Dignidad Contra Dinero," or Dignity Against Money, a reference to the fact that former Bronx borough president Fernando Ferrer was wrapping up a campaign in which he was outspent 8-to-l by the person whom CFB literature often names only as "a self-funded candidate," as in, "In each of the past two mayoral elections, a self-funded candidate with seemingly unlimited resources has challenged the ability of New York City's ground-breaking Campaign Finance Program to create a level playing field for all candidates."

[ILLUSTRATION OMITTED]

Early returns showed Ferrer losing to Michael Bloomberg but getting 41 percent of the vote. His supporters cheered, telling one another that by avoiding a true landslide, Ferrer had scored a moral victory. As the tally continued, however, even that consolation prize was beyond Ferrer's reach: The mayor ended up prevailing by a margin of 57 to 38 percent, a victory of wipeout proportions.

In an April 2001 article in New York Magazine that mentioned a possible outlay of $30 million on his first mayoral race, then-long-shot candidate Bloomberg remarked, "At some point, you start to look obscene." As that 2001 campaign wore on, the mayor's press team knocked down reports that he was spending as much as $35 million. But in the end, he spent at least ' million. In 2005 as an incumbent mayor, Bloomberg spent $84.6 million to Ferrer's $10.5 million.

Bloomberg has said he ran outside the campaign finance system in part because the spending limits it imposed made it impossible for an outsider to make a credible run for citywide office. He has also contended that it would have been inappropriate for a man with his resources to accept public matching funds. "I have absolutely no intention of brushing aside the city's campaign finance reforms," he told CNN in 2001. "For me, somebody that's as lucky as I've been, to take city money that could go for police and fire and education and health and to spend it on trying to get a better job would just be obscene."

Of course, many candidates--67 people in 2005--have opted not to participate in the matching funds program and still spent modest amounts. But the mayor has also argued that the city's campaign finance system doesn't do enough to beat back special interest influence, saying in a 2004 speech that "the fact of the matter is [the CFB] magnifies it because if a special interest gives $250 to a candidate, the city comes along and gives a match, another $1,000, so rather than take away special interests, we've empowered special interests in a way that's probably not done in any other place in the country."

But while he has steered clear of the campaign finance system as a candidate, Bloomberg is no stranger to it as a donor, having written checks for at least $53,000 since 1989-a period during which his company held several small contracts with the city. Bloomberg sent $7,700 (the maximum city-wide contribution before the law established a lower ceiling) to Rudy Giuliani in 1997 and cut checks to future rivals Alan Hevesi, Peter Vallone and Mark Green. Even after swearing off the CFB in 2001, the mayor donated $3,850 to Staten Island borough president James Molinaro in 2005. And like those of any other New Yorker, Bloomberg's contributions were matched--to the tune of $8,250 over the years. (Bloomberg has also donated more than $300,000 to federal candidates and committees, and another $4 million to state campaigns and committees.)

Those outlays, of course, are dwarfed by what Bloomberg spent on his own electoral ventures. Comparisons with other campaigns underscore the scope of Bloomberg's spending. In 2005, he spent more merely on advertising than the combined campaign spending of all 30 other candidates for mayor, comptroller or public advocate. The $12.7 million Bloomberg devoted that year to developing his voter list--a roster of people whom the campaign targets with mail and phone calls--was more than Ferrer's entire $10.6 million campaign, and the mayor's spending on direct mail swamped Virginia Fields' and Anthony Weiner's combined spending. Bloomberg paid $4.7 million in wages and benefits, along with $923,000 in rent, and his campaign's $359,000 food bill surpassed the total spent by all but one City Council campaign. Bloomberg's re-election outlay was greater than the annual budget of seven city agencies, including the Departments of City Planning and Emergency Management as well as 30 other city offices, boards and commissions. It exceeded the military budget of 50 countries.

The question, of course, is what difference all those dollars made. Ferrer had problems besides a wealthy opponent, from the furor over his nuanced (or vacillating, depending on whom you ask) answer to a question about the police shooting of Amadou Diallo, to a hostile press corps; the New York Post actually depicted him on its cover in a dunce cap. Four years earlier, Mark Green had troubles, too: His and Ferrer's bitter runoff campaign divided the party along racial lines and the September 11 attacks made Giuliani's endorsement of Bloomberg priceless. "Despite the money, without 9/11, Bloomberg never would have won," argues Joseph O'Hare, who was CFB chair at the time. Indeed, Bloomberg's first victory was a narrow, 2 percent win. Nicole Gordon, the longtime CFB director, concurs. "It may well be that it was a necessary condition for Bloomberg to spend a large amount of money, but it was not a sufficient condition," she says.

Gordon and others argue that despite Bloomberg's resources, his publicly-financed challengers had enough money to run a credible campaign. "Mark Green, with the help of public financing, spent more money on his mayoral campaign in 2001 than any candidate in the history of New York City, except for Bloomberg," Gordon says. Green benefited from a bonus provision in the campaign finance act that provided a higher rate of matching funds and allowed higher spending for a candidate whose opponent spends a massive amount of money. She and others argue that with $17.3 million on hand, Green had enough money to get his message out.

Green was, however, dialing for dollars into the last days of that race, while his opponent campaigned. Four years later, even though the bonus provision had been adjusted to be even more generous, Ferrer never raised enough money to fully enjoy its benefits. To some observers, the 2001 and 2005 races left scars on the campaign finance system.

"The phenomenon of wealthy, self-funded candidates opting out of the public financing program represents perhaps the greatest challenge that this program has faced to date," Rachel Leon of Common Cause, a government integrity watchdog group, said in testimony to the CFB in 2005. "In two consecutive elections, the Campaign Finance Program was seriously undermined."

No one blames the CFB for Bloomberg's spending. But the mayors outlays "exposed the inherent weakness of providing limited government resources to enable fair competition," says Laufer. What's more, "to the extent that there had been a litmus test that editorial boards applied 10 participation in public financing, that's been exposed as hollow," Laufer says. "In the end, if you have a process that's not seen by the public as applying fairly across the board, it undermines people's faith in that process."

The New York Times editorial board, for one, long had been a stalwart defender of the campaign finance system. Recalls Gene Russianoff: "In 1993, [City Council president and mayoral candidate] Andy Stein pushed forward with a campaign where he got these big contributions and he got excoriated in the press, and his campaign melted down." In 2005, Bloomberg avoided that fate. In its endorsement editorial, the Times reduced the mayor's spending to a multimillion-dollar caveat. Mentioning that there was "one great flaw in his political resume--his out-of-control campaign spending," the Times nonetheless "enthusiastically" backed the mayor. News-day, the Daily Neivs. the Post and the Sun all endorsed Bloomberg as well.

The Times' argument was that Bloomberg's competent performance outweighed the sin of his "obscene" spending. The question critics raise is whether Bloomberg has paved the way for other rich men--perhaps less competent, maybe downright unqualified--to spend their way into City Hall. Whether or not money was the decisive factor in the 2001 or 2005 race, it was an important factor and one with which the city's matching-funds system never could have kept up.

Rich candidates do not always win. Ronald Lauder spent $14 million but did not make it to City Hall in 1989. California's Michael Huffington blew $28 million in a losing bid for a U.S. Senate seat in 1994. Would-be presidents Steve Forbes and Ross Perot spent their own millions and came up short. Tom Golisano is not New York's governor, despite a $74 million attempt in 2002. But these candidates typically have not enjoyed the combined advantage of an 8-to-l financial edge and incumbency, which Bloomberg had in 2005. Huffington, for example, faced incumbent Di-anne Feinstein and her own $15 million war chest. As 2009 looms, one question in New York is how much Bloomberg might spend on his third run. Another is whether a second deep-pocketed candidate will emerge to try to succeed Bloomberg. Supermarket tycoon John Catsimatidis is the most likelv to enter the fray, and if he does, hell probably ape Bloomberg's two-pronged rationale for election: that hell bring hardheaded business experience to the running of the city and that because he is self-financed, he cannot be bought.

[ILLUSTRATION OMITTED]

The latter notion has skeptics. "I think the last eight years show that special interests have a variety of ways to influence the political process other than campaign contributions," Russianoff says. The mayor certainly bucked the tide on the smoking ban and congestion pricing; a traditional politician might have been cowed by campaign-contributing bar owners or trucking companies. But other Bloomberg policies, particularly on some development issues, mirror the decisions that some special interests would have hoped to encourage with their campaign checks, Russianoff says. "You could argue that Bloomberg's unfettered, but he comes from an economic class and a view of the city that benefits a lot of the same people."

Bloomberg still depicts his first two runs outside the campaign finance system as part of a campaign against influence peddlers- When the CFB marked its 20th birthday at the Fordham conference in February, the mayor's office sent an aide, Patrick Wehle, to read a proclamation declaring it Campaign Finance Board Day. Wehle had worked at the CFB before he joined the mayor's staff. He summed up that shift with a canine metaphor: "You can say I went from working for the watchdog to working for the dog--a dog that respects the watchdog but prefers to take a bite out of special interests in his own special way."

IX. Reform, take six

Even if wealthy candidates stay in their boardrooms and away from the stump, there's no shortage of ideas on how to improve the campaign finance system as it enters its sixth citywide election cycle. Some candidates say that matching-fund payments come too late--after the ballot is set, which occurs late in the summer; the CFB, however, is nervous about giving out money to campaigns that might not make it onto the ballot The threshold to qualify for matching funds needs to be lowered, says Tony Avella, in order to give independent candidates a chance. Maximum contributions ($4,950 for city-wide campaigns, $3,850 for borough president candidates and $2,750 for Council races) are fairly high, meaning big donors still wield enormous power in the system. They could be reduced.

On the other hand, some say that the spending limits imposed on candidates who accept matching funds--pegged at $322,000 for upcoming City Council races--are too low. 'They don't give you enough opportunity to mail and do television," says veteran political strategist Joseph Mercurio. Spending limits pose a particular problem for a candidate running from behind, lacking name recognition; even if she could raise more money, she wouldn't be able to catch her opponent because they'll both spend the same amount. "It doesn't really level the playing field," says one candidate. "It sort of freezes it." What's more, the spending limits often ignore differences from one race to the other. A candidate for Brooklyn borough president, with 1.3 billion voters to reach, faces the same spending constraints as a B.P. candidate on Staten Island, with about 260,000 voters on the rolls.

The alternative view, articulated by Sal Albanese, is that "you could spend less." It's a fair question whether the 2005 race was worth the $65 million that candidates other than Bloomberg spent, with 23 percent of it going to campaign consultants.

Worries about the city's spending limits and the timing of payments seem trivial compared with the problems in New York state's campaign finance system. A donor can give up to $37,800 to a general-election candidate for statewide office. During the last election cycle, at least 1,000 donors gave more than $10,000 to state candidates. To address the massive loopholes in Albany, advocates are lobbying for the state to adopt a clean-money system, in which candidates collect small amounts from a threshold number of voters, then stop raising private money altogether and run their campaign using flat grants from the state treasury.

STARK VICTORY

In 2005's general elections, 14 candidates ran unopposed. But even in
"contested" races, truly competitive battles were the exception. In
most of that year's primary and general election contests, the winner
claimed more than 60 percent of a the vote--a landslide margin.

MARGINS OF VICTORY, 2005

A.  80-99 percent of the vote
B.  60-79 percent of the vote
C.  Less than 60 percent of the vote

Source: Campaign Finance Board. (Calculations by City Limits.)

[GRAPHIC OMITTED]

In 1998, clean-money advocates tried and failed to hold a referendum on whether New York City should shift to such a system. Clean-money rules are now in place for some state offices in Arizona, Connecticut, Maine, New Jersey and North Carolina and for municipal races in Albuquerque, New Mexico, and Portland, Oregon.

"Around the country, as systems en-act campaign finance reform, they're moving away from New York City-style systems to more of a clean-elections approach," says Jessica Wisneski from Citizen Action, a progressive advocacy group pushing for the change. "Under the New York system, or any matching-funds system, you still have to raise a lot of private money to get public matching funds. You can still go out there and get a large donation; they're just not matched." A candidate in New York City's system is supposed to get about half her funds from private donors. Clean money would all but eliminate private donations; they would serve only to qualify a candidate for public money. Wisneski says the clean money system that Citizen Action has proposed for New York state would cost up to .$40 million annually for statewide races. If the state Senate changes hands in November, clean money could arrive at the state level. The question would then be whether the city should follow suit

As attractive as clean money might sound, it has its limitations- One is that the private donations that people make under the city's current system are believed to encourage people to volunteer for campaigns; that "buy-in" could be lost in a system with virtually no private money. Another is that putting all candidates on an equal financial footing could invite fringe candidates, or people who just want free money. "Not all things that candidates spend their money on will be acceptable to the taxpayers," says Nicole Gordon, pointing to stories of candidates who spent campaign cash on lap dances and booze. Then there's the cost argument: Are taxpayers going to want to the full bill for campaigns?

And would such a change buy the kind of elections the city wants? Gloria Mattera, for one, isn't sure that the financing apparatus is the only thing wrong with the city's politics. A Green Party member, Mattera had run for City Council twice (in her 2001 campaign, she wrestled with the CFB over whether child care was a legitimate campaign expense) when she decided to campaign for Brooklyn borough president in 2005. She made qualifying for matching funds a central goal of her candidacy, raised $100,000, received twice that in public funds and nabbed 7 percent of the vote against popular incumbent Marty Mar-kowitz. All were major achievements, the latter particularly so since Mattera did not have enough money to mail literature to the entire borough.

"I think money was a big, big factor," in the race, Mattera says. But there was also the difficulty getting on the ballot and the lack of any coverage by the mainstream media. Needing 4,000 signatures to get on the ballot, Mattera collected 7,000 through a completely volunteer effort. But it wasn't easy. "You have to give candidates the ability to get on the ballot and have access to the media. If you did, I'm not sure money would play such a big role."

The Democratic Party's dominance is another obstacle to many candidates, and is reflected in the dearth of competitive November elections for many offices. In 2003, voters defeated a ballot initiative backed by Bloomberg that would have made city elections nonpartisan. The party's hegemony, says Andrew Rasiej, is symptomatic of a lack of public interest "More important than money are the relationships within the Democratic Party," he says. "To win in New York City, you really have to get into that culture because that really is the grassroots of the political system. The only people who pay attention to it are the junkies, the club members."

The CFB, however, doesn't have time to worry about the broader political environment. As of July, 131 participants had signed up for the 2009 races, com pared with only 88 at this point in the 2001 cycle, when term limits cleared out much of the City Council. Besides dealing with the bumper crop of candidates, the CFB will also have to enforce new "doing business" rules on contributions from people who have business dealings with the city, and must complete post-election audits under a tight time frame. The agency, whose funding was increased by 53 percent to $6.4 million in the fiscal 2009 budget, is bulking up on staff--from 67 employees to 89--to prepare for the heavy workload ahead.

[GRAPHIC OMITTED]

But there's some doubt whether the "doing business" law as it stands now will still be in place on Election Day. From the earliest days of campaign finance reform in the city, there were concerns about the reality or appearance of corruption when contractors, vendors and lobbyists donated to municipal campaigns. When the campaign finance law was passed in 1988, the hope was that general contribution limits and full disclosure would address that "pay to play" problem. But the worry continued. In 1998, city voters approved a Charter revision that directed the CFB to draft rules addressing doing-business contributions, but the technical difficulties of enforcing the law discouraged quick action. In 2006, a CFB report found that 27 percent of all contributions in 2001 and 22 percent in 2005 were from people who had business dealings with the city. Last year, the City Council passed a law that imposed a sharply lower limit on contributions from those donors--instead of a $4,950 maximum on donations to a mayoral campaign, for example, a doing business contributor can only give $400, and it is not matched. An online database of contributors to whom the restrictions apply is being rolled out in stages; already, according to the New York Sun, there are 12,000 names on it.

In February, conservative legal activist James Bopp, who successfully challenged campaign finance restrictions in Vermont two years ago, filed a federal lawsuit alleging that the new "doing business" law impinged on the civil rights of minority candidates to seek office because it choked off an important stream of campaign funding. That case, in which Councilman Leroy Comrie is one plaintiff, will take months to decide. But already, some supporters of the campaign finance system have raised doubts about having a separate set of contribution rules for people who do business with the city. "I don't think it's a great thing when someone who knows what's going on in government isn't able to give as much as someone else," Peter Vallone Sr. has said. Carole Campolo is also skeptical. "I felt that was way off the charts," she says. "Anyone who does campaign finance knows that doing business has nothing to do with campaign finance." Nicole Gordon says lower contribution limits across the board might be an easier way to address worries about pay-to-play.

Next year's race will be more rewarding for smaller donors as the matching ratio shifts from 4-to-1 up to $250 to 6-to-1 up to $175. When the votes are counted, it's likely that the campaign finance system will again be amended with an eye to improvement. But Walter McCaffrey, a former city councilman who voted against the 1988 law and now works as a lobbyist, doesn't think it will make much difference. "I didn't believe that it would result in the type of significant changes to the quality of government that the advocates were claiming," McCaffrey recalls of his stance 20 years ago. "I think we've seen situations where people come into a race thinking they can generate the kind of money they need through the campaign finance system and learned it was a cruel hoax. Much of their efforts go into fundraising and compliance. Six-to-one. Eight-to-one. It will be 10-to-1 next and won't come near to solving the problem."

Whether McCaffrey is right or wrong depends on what problem New York City's campaign finance system is supposed to solve--what exactly it means to "level the playing field."

X. Early results

Gordon believes the campaign finance law was intended to level the field for small donors and draw more of them into the system, and draw more of them into the system, and she feels it has succeeded: The number of small donors has increased. (A case in point: Peter Vallone, Jr.'s recent fundraiser at the Bohemian Hall and Beer Garden in Queens, where a mere $250 qualified you as a Sauerkraut Supporter.) CFB chairman Joseph Parkes says the board is supposed to keep the field level enough to get more people to run for office, and indeed, more people are running--names on the ballot increased from about 140 in 1985 to 211 in 2005.

[ILLUSTRATION OMITTED]

Still others look to the voting public for signs that the law has worked. Laurence Laufer, who helped author the 1988 law, recalls that "combating corrosive citizen cynicism" was a central goal back then, and on that point progress is less clear. Turnout for city elections has slipped, from 1.8 million in 1989 to 1.4 million in 1997 to 1.3 million in 2005. Two-thirds of registered voters did not cast a ballot for mayor last time around.

In 1993, the CFB asked if elections had become more competitive as a result of the law. Three elections later, the same question is begged. At the citywide level, among candidates who participate in the system, matching funds have indeed limited the financial advantage of the better-funded: In both 2001 and 2005, matching funds brought four Democratic primary rivals closer to financial parity. But in both years, the story changed when Bloomberg spent tens of millions of his own money to win. Still, says one former mayoral candidate who asked not to be named and is highly critical of the board, "I think we're better off with [the CFB] than without them."

School teachers and Little League coaches aren't expected to run for mayor, but they're supposed to be able to try for City Council. Matching funds have allowed an increasing number of candidates to seek Council seats and have helped reduce the fundraising advantage that well-funded candidates enjoy. But incumbents still enjoy near certain re-election. And competitive elections are hard to find: In most 2005 races, the winner took 75 percent of the vote or better.

The campaign finance system seems to have made insurgent candidates more likely to run but no more likely to win. So gauging the system's success in leveling the playing field--and fostering healthier, more responsive politics--hinges on whether one thinks a good election is one in which the underdog has a real opportunity to prevail or merely one in which he or she has a chance to fight.

For some, however, the value of the campaign finance system has little to do with the way election contests play out. There is, says past CFB chair Joseph O'Hare, a more limited but vital role that the CFB has played--through the Voter Guide, the televised debates and reporting on who donates how much to which candidates--even as it has strived toward a more ambitious goal.

"I think the stated purpose was to level the playing field to reduce the role of money in the campaign. I'm not so sure that we ever succeeded completely in doing that," O'Hare says. "I was more persuaded that what we had done was provide a lot more information to the voting public."

MEETING THEIR MATCH

Mayoral candidate's use of matching funds. 1989-2005

CANDIDATE                 FUNDS USED

Mark Green * 2001        $5.5 million
Fernando Ferrer * 2005   $4.3 million
Fernando Ferrer * 2001   $3.3. million
Gifford Miller * 2005    $2.8 million
Ruth Messinger * 1997    $2.6 million
Rudolph Giuliani * 1993  $2.5 million
Rudolph Giuliani * 1989  $2.2 million
David Dinkins * 1993     $2 million
Anthony Weiner * 2005    $1.9 million
Peter Vallone * 2001     $1.9 million
Rudolph Giuliani * 1997  $1.8 million
David Dinkins * 1989     $1.6 million
Virginia Fields * 2005   $1.5 million
Ed Koch * 1989           $587.088
Herman Badillo * 2001    $436,620
Richard Ravitch * 1989   $395,553
Sal Albanese * 1997      $346,298

Source: Campaign Finance Board. (Calculations by City Limits)

Notes: All amounts inflation-adjusted to 2008 dollars and do not include
funds that were awarded by the CFB but returned by the candidate.

RELATED ARTICLE: VOTE VALUES

City Councilman Al Vann's 2005 re-election bid didn't make much news, but it was a real bargain--with Vann spending $30,107 overall and receiving 12,460 votes in the general election, he paid a rock-bottom price of $2.42 per vote. Most candidates had to spend a little more to get voters to pull the lever, especially recent mayoral hopefuls:

[ILLUSTRATION OMITTED]

Michael Bloomberg

2001

$121.72 per vote

Mark Green

2001

$30.22 per vote

Michael Bloomberg

2005 $125.80 per vote

Fernando Ferrer

2005

$23.50 per vote

Source: Campaign Finance Board. (Calculations by City Limits.) Note: All amounts adjusted for inflation to 2008 dollars.

RELATED ARTICLE: RAISING, BEFORE THE RACE

The 2009 municipal elections might be far off the radar screen, but fundraising is already well under way. As of the July reporting deadline, Rep. Anthony Weiner led all hopefuls. Here's a look at who's leading the money hunt, and the offices they are likely to seek--if a possible change in the term limits law doesn't alter their plans:

Photos: NYC Council, U.S.House, NYC Comptroller, Tracy Collins, and Manhattan BP

[ILLUSTRATION OMITTED]

[ILLUSTRATION OMITTED]

[ILLUSTRATION OMITTED]

[ILLUSTRATION OMITTED]

[ILLUSTRATION OMITTED]

[ILLUSTRATION OMITTED]

[ILLUSTRATION OMITTED]

[ILLUSTRATION OMITTED]

[ILLUSTRATION OMITTED]

[ILLUSTRATION OMITTED]

RELATED ARTICLE: REFORM, REDUX 

The city's system evolves

Since its creation 20 years ago, the Campaign Finance Act has had a tumultuous Journey, undergoing its share of changes and reforms:

1988 * The Campaign Finance Act is passed on February 29. Within a few months of its enactment, public officials and lawyers begin to seriously question loopholes in the law, including its failure to restrict candidates who reject public financing, and the lack of restriction on contributions from corporations and law firms. In November, the public overwhelmingly approves a City Charter revision that establishes a nonpartisan and independent city agency known as the Campaign Finance Board to regulate and enforce the Campaign Finance Act.

1989 * This year's citywide election marks the first test of the campaign finance reform program. During the election, the CFB matches private contributions from city residents at a rate of 1-to-1 up to the first $1,000 per contributor. Corporate donations can also be accepted but are not eligible for matching funds. In total, $4.5 million in public matching funds is distributed to the 36 participating candidates.

1993 * In the second citywide election since its creation, the CFB distributes $6.5 million in public matching funds to 65 candidates. For the first time, candidates can also organize and file their financial disclosures electronically, thanks to new computer software created by the CFB.

1996 * New legislation is enacted that requires citywide candidates who seek public matching funds to participate in a series of public debates.

1998 * Contribution limits are lowered, donations form corporations and unregistered political committees are banned and the public matching rate is increased to 4-to-1 up to the first $250.

2001 * Under term limits approved by voter referendums in the 1990, all citywide officials and 37 of the 51 Council members are unable to run for re-election, prompting an unprecedented 199 candidates to join the campaign finance program, which distributes $42 million in public matching funds.

2004 * New legislation requires all candidates to disclose their financial activity, regardless of whether or not they receive matching funds from the program. Anyone running for public office must also adhere to the CFB's contribution limits and ban on corporate contributions.

2006 * Contributions form lobbyists and their spouses or domestic partners are made ineligible for public matching funds.

2007 * Another round of legislation severely restricts campaign contributions from people doing business with the city (reducing the maximum allowed contribution to $400 form $4,950 for citywide office, to $320 from $3,850 for borough president, and to $250 from $2,750 for City Council). The ban on corporate contributions is extended to include limited liability corporations and partnerships, and the matching rate is increased to 6-to-1 up to the first $175.--Kalyn Belsha

RELATED ARTICLE: LESS UNEVEN

Money and power in 2005

In 2005, many city races were marked by stark fundraising disparities among the candidates. In several cases, matching funds helped to dramatically narrow the gaps, although lesser-funded candidates often remained on very unequal footing. For instance:

[ILLUSTRATION OMITTED]

* Domenic Recchia's 20-to-1 fundraising advantage over general election opponent Russell Gallo was shrunk to 7-to-1 by matching funds.

* Were it not for matching funds, the vast gap between Melinda Katz and her primary opponent, Joseph Nocerino, would have been five times larger. As it was, Nocerino went into the primary with $94,000 to Katz's $634,000.

In a few instances, matching funds actually increased the financial disparity between candidates, usually because a challenger failed to get the maximum public payment. For example:

* When Brooklyn councilwoman Letitia James received matching funds, it increased her financial advantage over challenger Eric Blackwell (who did not participate in the campaign finance program) from 3-to-1 to almost 8-to-1.

* John Whitehead raised less than a fifth as much as the incumbent he challenged, Charles Barron. But Barron's matching funds stretched the gap to 12-to-1.

More money didn't always equal more votes: In seven of 27 primary contests in 2005, the candidate who spent the most did not win. Among them:

* Gifford Miller spent more than his three main rivals for the Democratic mayoral nomination but placed fourth in the primary.

* In the 28th Council District in Queens neither the incumbent Allan Jennings nor the biggest spender, Albert Baldeo, won. Returning councilman Thomas White, who spent $5,000 less than Baldeo, prevailed.

One purpose of the campaign finance system is to empower small donors--those who give $250 or less to a candidate.

TOTAL FUNDS

As a group, when matching funds are combined with private money, small
donations had about as much financial impact as large contributions in
2005:

Small donations  47%
Large donations  53%

Note: Table made from pie chart.

FUNDS PER DONATION

But individually, even with matching funds added on, the average large
donation was still worth a lot more to campaigns than the average small
donation:

Small donation   $416
Large donation  $1703

Source: Campaign Finance Board (Calculations by City Limits)

Note: Table made from bar graph.

[GRAPHIC OMITTED]

RELATED ARTICLE: UNCERTAIN TERMS

Reform and reality at the races 

Five years after the city launched the campaign finance system, voters approved a ballot measure in 1993 that limited city officeholders to two consecutive terms. Since then, term limits and matching funds have interacted in complex ways, especially in City Council races.

By forcing seats open, term limits removed incumbency as a factor in many campaigns. Incumbents tend to raise more money, so their absence from the race would be expected to depress campaign costs. But the resulting open races tend to attract several candidates--sometimes as many as 12--who each raise and spend some amount of money. The overall impact is often higher spending.

Supporters of the campaign finance law claim that matching funds have persuaded more people to run for office. But term limits also make races more inviting, because contenders don't have to face incumbents. Says election lawyer Laurence Laufer: "It would be interesting to see how either term limits or public financing works in isolation from the other."

The number of candidates in some races has altered the math on what it takes to win. "Because of the matching funds you wind up having, especially in minority neighborhoods, piles of candidates running, splitting up 15,000 votes or less. So the winner doesn't need that many votes," says political strategist Joe Mercurio, who is not convinced that voters are actually learning much about the candidates in these crowded races. Term limits and public financing get people into the race, Mercurio says," but they don't have enough money to do voter communication, so it's in some ways a lottery. If you go into a race and know 1,000 people in the neighborhood, you could win."

In such races, name recognition is crucial, and that favors people who are related to or work for people already in office.--JM

RELATED ARTICLE: TRADING UP

When city officials seek higher posts

For his triumphant 1997 re-election run, Mayor Rudolph Giuliani collected the maximum individual contribution of $7,700 from 233 people--lawyers, homemakers, developers, businesspeople and even Annette de la Renta, wife of the famous fashion designer. At least 140 of those maximum donors (including de la Renta) later sent checks to Giuliani's Senate campaign, which he launched in 1998 before pulling out in mid-2000. Many of these dual donors gave the maximum $2,000 to Giuliani's federal fund, so they maxed out under both systems

[ILLUSTRATION OMITTED]

It's not surprising that people who admired Giuliani as mayor wanted to see him win another office. But to the extent that the city's campaign finance laws are intended to reduce the influence that large donors can wield--especially with a politician who, through seeking state or federal office, still occupies a city seat--federal and state fund occupies a city seat--federal and state fund-raising present a large, and probably irreparable, loophole.

While city officeholders have often shown interest in higher posts--Mayor John Lindsay ran for president in 1972 and Mayor Ed Koch for governor in 1982-term limits encouraged more widespread office shopping. From 2005 into this election year, at least 10 City Council members have sought or are seeking seats in Congress or the state legislature.

A survey of campaign finance records shows that Giuliani's 2000 run is not alone in seeing crossover between federal and city contributors: Then-councilwoman Yvette Clarke and current councilman David Yassky both had dual donors during their race for Major Owens' congressional seat in 2006. Councilman Michael McMahon, now running for Congress from Staten Island, has also benefitted from some crossover between his city and federal donors.

Candidates for Congress, however, operate under somewhat stricter contribution limits than the city system sets--the maximum federal donation per election is $2,300 (it's been raised since 2000); a person could give twice that amount if one donation was for a primary race and another for the general election. In Mew York City, Council campaigns can now receive a maximum individual donation of $2,750. Candidates for borough president can accept up to $3,850 from one person, and mayoral campaigns can take up to $4,950.

The limits for state office are much looser. Assembly candidates can accept $7,600 per person in combined primary and general election funds; for the state senate, an individual could cut checks totaling $15,500. Not all candidates are affected equally by this disparity. When City Councilman Andrew Lanza was an odds-on favorite to win election to a state Senate seat last year, he collected 51 donations that would have been too large for him to accept as a City Council candidate, including $29,000 from a state Republican committee and several individuals' donations exceeding $8,000. Kendall Stewart, a councilman who challenged an incumbent state senator in this year's Democratic primary, collected only three donations that would have been no-nos under city rules.--JM

RELATED ARTICLE: REPEAT EXPENDERS

Two decades of top donors

Since 1989, the Campaign Finance Board has recorded more than 816,000 transactions between donors and candidates. Some donors consistently rank among the top givers. Here is a look at some of the big players in the city's campaign finance system and what they want out of city government:

[ILLUSTRATION OMITTED]

1199 SEIU * Health-care union claiming 300,000 members. The city's No. 1 donor in 2005, 1199 has been among the top 10 donors in every election since 1997. What it cares about: Health-care funding and living-wage legislation. The tally: 232 donations to 100 candidates totaling $508,071. Most recent donation: $1,250 on July 11,2008 to Councilman Vincent Gentile. Top recipient since 1989: Bronx borough president and two-time mayoral candidate Fernando Ferrer ($29,000)

United Federation of Teachers * With more than 200,000 active and retired members, the UFT has ranked among the top 10 givers in five of the seven cycles from 1989 through 2005. What it cares about: Education funding and favorable contracts. The tally: 544 donations to 125 candidates totaling $457,693. Most recent donation: $250 to councilman and public advocate candidate Eric Gioia on July 11,2008. Top recipient since 1989: Comptroller and 2001 mayoral candidate Alan Hevesi ($18,500)

New York State Laborers' PAC * A statewide union of 40,000 people who work in construction. The Laborers were the No.2 donor in 2001 and ranked fourth in 2005. What it cares about: Workplace safety and prevailing wages. The tally: 289 donations to 115 candidates totaling $415,150. Most recent donation: $1,000 to Councilman James Vacca on July 3,2008. Top recipient since 1989: Hevesi ($27,450)

Plumbers Local Union No. 1 * Representing plumbers and gasfitters in the five boroughs Local 1 topped all other donors in 2001 and was near the top in 2003 and 2005. What it cares about: Building codes. The tally: 273 donations to 99 candidates totaling $354,307. Most recent donation: $1,000 to Gentile on July 10,2008. Top recipient since 1989: Hevesi ($19,650)

Leonard Litwin * The president of Glenwood Management, a building and parking garage operator, Litwin was among the top 10 donors in 1989, 1993, 1997, 2001, 2003 and 2005. What he cares about: Zoning exemptions and land use decisions. The tally: 276 donations to 104 candidates totaling $330,408. Most recent donation: $2,000 on May 2, 2008 to Councilman David Weprin. Top recipient since 1989: Mayor Rudolph Giuliani ($20,200)

District Council 37 * Claiming 125,000 members in 56 locals, DC37 was the top giver in 1993 and has ranked highly in elections since. What it cares about: City budget, jobs and contract terms The tally: 334 donations to 103 candidates totaling $292,265. Most recent donation: $300 to Weprin on July 11,2008. Top recipient since 1989: Hevesi ($17,550)

Transport Workers Union * The union for subway and bus workers, starved for money since a judge suspended its ability to automatically deduct dues from members' paychecks, has shied away from giving since its strike in late 2005. What it cares about: Transit issues and contract terms. The tally: 283 donations to 107 candidates totaling $220,945. Most recent donation: $1,000 to assemblyman and possible Council candidate Herman Farrell on October 25, 2007. Top recipient since 1989: Ferrer ($26,550)

Uniformed Firefighters Association * The union for rank-and-file firefighter's endorsement is sought for not just the union's money, but also its manpower for get-out-the vote operations. What it cares about: Contract terms, budget and work rules. The tally: 304 donations to 103 candidates totaling $213,264. Most recent donation: $1,000 to Council candidate Elizabeth Crowley on May 23, 2008. Top recipient since 1989: Giuliani ($17,200)

Real Estate Board of New York * The landlord lobbying group was among the top 10 contributors in 1991, 1993 and 1997, but has made only a single donation since then. What it cares about: Taxation, zoning, landmarks and building code. The tally: 162 donations to 57 candidates totaling $167,361. Most recent donation: $500 to councilman and mayoral hopeful Tony Avella on January 2, 2007. Top recipient since 1989: 1989 mayoral candidate Harrison Goldin ($16,181)

Melinda Katz * The Queens councilwoman's campaign fund was among the top 10 givers in 2003 and 2005 as she looked beyond easy re-election to helping other Council candidates who might in turn support her for speaker. She was not successful. What she cared about: Council leadership position. The tally: 94 donations to 46 candidates totaling $119,165. Most recent donation: $1,000 to Manhattan Beep hopeful Keith Wright on September 12,2005. Top recipient since 1989: Speaker and mayoral candidate Gifford Miller ($7,565)-JM