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limits seem aimed at the Democratic-leaning labour PACs and certain other membership PACs, which have tended to contribute the maximum allowed under law. Some have complained that the Democratic proposals for aggregate limits would enable a candidate to accept large amounts of early “seed money” from well-endowed PACs, thus preventing the smaller PACs from contributing at all if the candidate reached the limit early.

      Two provisions faced almost certain judicial challenges if the Senate package had become law: a ban on PACs and a system of contingency public financing. In fact, the Senate bill contained a stand-by scheme for limiting PAC contributions in the event that the ban on PACs was found to be unconstitutional. (Besides corporate, trade association and union PACs, the prohibition included covered “non-connected” or ideological or issue PACs, a move potentially in conflict with constitutional rights.) During the Senate debate, contingency public funding was challenged as a coercive measure because it serves to punish a free-spending candidate by giving public money to his or her opponent.

      The House bill, passed several days after the Senate legislation, emerged only after fierce infighting among House Democrats. Those from states likely to lose districts as a result of the 1990 decennial census feared that spending limits would harm their chances for political survival. To satisfy them, the spending limits were loosened for House candidates who survived primary elections with less than two-thirds of the vote. Those complying with the limits were to be rewarded with broadcast and postal discounts.

      In contrast to the Senate ban on PACs, the House-passed bill allowed candidates to accept an aggregate amount of PAC contributions equal to half of the spending limit. This clearly reflected House Democratic dependence on PACs: almost 52 percent of the money received by the House Democratic majority during the 1988 campaign came from PACs. The House legislation also gave favoured treatment to those PACs that limited donations from their members to no more than $240 per year. Critics charged that this was simply a move to benefit labour PACs, which rely largely on small contributions.

      Negotiations between the House and Senate on the issue were never convened, leaving the future of the matter to the 1991-92 session of Congress. But given the differences between the two houses - along with threats that President Bush would veto any bill calling for spending limits and public finance - few are certain of action in the near future. Nevertheless, both houses of Congress demonstrated in 1990 their ability to pass bills.

THE STATE OF THE STATES

      The reforms at the federal level during the 1970s spurred numerous changes at the state and local levels. But recently, the states have often taken the lead while the issue remains stalemated in Congress. The push for reform at the state level comes at a time when many of the problems plaguing the congressional finance system, including heavy reliance on PACs and a shortage of financially competitive challengers, are increasingly present in the campaigns for statewide office and for seats in state legislatures.

      As of the end of 1990, all 50 states had some form of campaign disclosure. A majority of states had restrictions on individual donations to a candidate, while half had limitations on PAC contributions.¹⁷ In addition, almost half the states featured direct or indirect public financing for candidates and/or political parties through tax checkoffs or voluntary tax add-ons. Many of the programs provided only modest amounts of public financing.

      Several major municipalities, including New York and Los Angeles, the nation’s largest cities, provide for public financing (Alexander and Walker 1990).¹⁸

      Following is a look at three political units - New Jersey, Minnesota and New York City - that have put extensive systems into place.

      New Jersey

      New Jersey adopted public financing of gubernatorial elections in early 1974, six months before Congress expanded the current system of presidential public funding. New Jersey’s move also was a reaction to scandal. At the time, New Jersey suffered from a reputation as one of the country’s more corrupt states, and public funding was adopted following a period in which several high-ranking public officials were convicted of campaign-related abuses.

      New Jersey’s program, first implemented in the 1977 general election, later was extended to cover primaries as well; the gubernatorial races of 1981, 1985 and 1989 featured public funding during both the pre-nomination and general election periods. The New Jersey system is the most generous state program in the country. After raising a “threshold” of $150 000 in private donations, a candidate is eligible to receive $2 in public funding for every $1 raised, up to a prescribed ceiling. In return, he or she must abide by limits on individual contributions as well as overall expenditures and agree to participate in two debates each in the primary and general election.

      Beginning in 1989, the expenditure limits and public subsidies were indexed to inflation, mirroring the presidential public funding system. The New Jersey legislature also tied the contribution limits to the consumer price index.

      Advocates say that the generosity of the New Jersey system is directly related to its success; gubernatorial candidates of both parties have found it worth their while to accept limitations on spending in return for the substantial public subsidies offered. Of 40 major candidates who have run for the governorship since public funding was enacted, 38 have sought and received the subsidies (Alexander 1989, 9). And, unlike other states, the New Jersey legislature has been willing to appropriate money to supplement receipts from an income tax checkoff.

      In the 1989 gubernatorial primary election, public funding accounted for 58 percent of the money spent within the expenditure ceiling (Alexander 1989, table 2, 14). During the general election, the Democratic and Republican candidates each received a public subsidy equal to two-thirds of their spending limits.

      Nonetheless, the New Jersey system has not been without its problems; to some extent, it is a case study in the difficulty of seeking to impose expenditure ceilings. In 1977, the spending limit was set at a relatively low level. This ended up placing state Senator Raymond Bateman, the Republican challenger, at a significant disadvantage in his campaign against his better-known opponent. Democratic incumbent Brendan Byrne. “As the public support for the candidates shifted toward Governor Byrne, Senator Bateman, solely because of the expenditure limit, was unable to react and mount an alternative campaign to counteract the growth of support for Governor Byrne,” the New Jersey Election Law Enforcement Commission (ELEC) later reported (1982, 17-18).

      Based on that experience, ELEC has quadrennially advocated repealing the expenditure ceilings and instead, providing candidates with a base of public funding sufficient to mount a viable campaign. In 1980, the New Jersey legislature voted to do away with the spending ceiling. Byrne, who had benefited from it, vetoed the measure. In 1989, the legislature raised the ceilings substantially.

      As with the presidential candidates, New Jersey gubernatorial nominees have increasingly sought to legally evade spending limits through the use of soft money. In 1989, the state political parties financed a variety of “generic” campaign ads and activities that redounded to the benefit of the gubernatorial candidates (Fitzpatrick 1990, 14-18). In addition, independent expenditure campaigns, used to skirt presidential limits, played a role in the last two governorship races.

      In New Jersey, the governor is the only official of the executive branch of government to be popularly elected. To date, the legislature has not chosen to extend public funding to their own election contests. In fact, unlike the gubernatorial race, there are now no limits on how much individuals, businesses, unions and PACs may contribute to legislative candidates. Consequently, much of the special interest money kept out of the governorship election has been diverted into the races for the legislature.

      Minnesota

      Like the New Jersey system, Minnesota’s public funding program also dates back to 1974. However, it owes its creation not to scandal, but to a political tradition of idealistic populism that has made this state one of the most liberal in the United States.

      The Minnesota system, although not as well funded as New Jersey’s, is more extensive in several respects. It assists political parties as well as candidates. While limited to the general election, it covers all statewide candidates (excluding judicial office). Minnesota also is one of only three

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