Fund struggles to define role in city

Diana Li, a staff reporter for the News, traveled to Arizona over spring break to look at how Arizona’s public finance system, one of the first of its kind in the nation, sheds light on the issues faced by New Haven’s Democracy Fund. This is part two of a three-part series. (Read part 1 and part 3.)

PHOENIX — In 1991, seven Arizona legislators were indicted after being caught on camera taking bribes from an undercover government agent, promising to support state legislation in favor of legalizing gambling.

The scandal sparked outrage across the state and pushed Arizona voters to pass the Citizens Clean Elections Act in 1998. The program, which offers public financing for all statewide offices, aims to fight the influence of money in politics and enable candidates with substantial support to access funding and run competitively against more heavily sponsored opponents.

On the other side of the country and almost a decade later, New Haven held its first publicly financed mayoral election in 2007. According to then-Board of Aldermen president Carl Goldfield, the city looked to other systems as models around the country when it established its own public finance program in 2006; Arizona’s was one such system. The Fund’s first participant was someone who had helped create the program itself: Mayor John DeStefano Jr.

As mayor, DeStefano is partially responsible for the program’s funding and maintenance. But, after abandoning public financing in 2011, he has been slow to fill vacancies on the Fund’s board, and some worry that the Fund will be rendered ineffective or may not be financially viable in the long run. With three of four declared mayoral candidates for this year’s election pledging to use the Fund and no incumbent running for the first time in almost 20 years, the Fund is being forced to consider a number of issues Arizona has been tackling ever since its public finance program took off about 15 years ago. City officials say this year’s election could either provide the impetus to institutionalize the program in the eyes of the Elm City’s residents or prove that the Fund is ultimately a flawed endeavor.

“I think we’re going to see a good test of the Fund’s strengths and limitations this year, and we’re going to see a very good test of what it’s capable of,” said Ken Krayeske, the Fund’s administrator. “It’s acknowledged that the ordinance isn’t very well-written, and it’s acknowledged that it has holes. But if we want our chief elected official in New Haven to eventually rely on this, we should go into this election seeing what we can learn from it.”

 

FINANCING THE FUND

The Clean Elections program in Arizona has funded over 600 candidates in the years since its public finance system was created. In New Haven, that number is just three — DeStefano in 2007 and 2009, and two of his 2011 challengers, Jeffrey Kerekes and Tony Dawson.

By the end of this year, the total number of New Haven candidates that will have used the Democracy Fund may double. Ward 10 Alderman Justin Elicker FES ’10 SOM ’10, state Rep. Gary Holder-Winfield and plumber Sundiata Keitazulu have committed to using the program, and Hillhouse High School Principal Kermit Carolina, who announced the formation of an exploratory committee on Tuesday, has committed to using the Fund if he runs. Only candidate Henry Fernandez LAW ’94 has chosen to opt out, and the race may see even more people enter.

With more candidates using the Fund this year, the total cost of the program, funded directly from New Haven’s already tight budget, is expected to increase dramatically.

Candidates aiming to participate in the Democracy Fund are limited to contributions of $370 or less. Those who raise 200 qualifying donations of at least $10 from New Haven residents, participate in a contested election and meet other qualifications automatically receive a $19,000 grant from the Fund. The program also matches double the first $25 of each eligible donation, meaning a $10 donation becomes a $30 donation, a $25 donation becomes $75, and $50 becomes $100.

New Haven appropriated $400,000 in total in the years 2006 and 2007 for the Fund. In March, Krayeske reported that about $270,000 remained in early March, cautioning that heavy participation in the Fund this coming election cycle could quickly deplete the remaining funding. DeStefano allotted another $200,000 for the Democracy Fund in his proposed fiscal budget for 2013–’14, but future leaders may not be so generous, as debates about where money is best spent often change from year to year.

“We were always worried about funding — this thing is only going to exist as long as it gets funded,” said former Alderman Joe Jolly, who along with Goldfield and former Alderman Elizabeth Addonizio helped create the Fund. “It’s extremely easy for this to just fall out of favor for a year, and I’ll tell you: Once the line item is gone from the budget, it’s really hard to get back. It’s gone.”

Unlike New Haven, Arizona’s Clean Elections law does not rely on the Legislature passing yearly budgets. Instead, Arizona finances its program through surcharges on civil penalties, such as parking tickets, as well as with penalties for candidates who are found to misuse the public finance program. The program gives whatever leftover money it has at the end of each election cycle to the Arizona General Fund. To date, it has given over $74,000,000 to the General Fund, meaning the program is revenue-positive.

“Public campaign finance programs need to be financially independent, because otherwise, legislatures could shut them down by just not funding them,” said Todd Lang, the executive director of Arizona’s Clean Elections Commission. “Independence is incredibly important.”

But financial viability may not be enough to convince legislators and voters that the program is worthwhile. A bill in Arizona that has passed the state House and may move to the state Senate floor will ask voters to decide in November 2014 whether they want to transfer the funding currently used for Clean Elections to fund education instead. Rep. Paul Boyer, R-Ariz., the author of the bill, said he does not believe that Arizona should be using “public money to fund political campaigns” on a philosophical basis, but Lang called the bill “misleading.” Voters need to consider issues separately, he said, and forcing voters to choose between the two issues poses an unfair choice.

“In other words, this bill asks voters, do you want Clean Elections or rainbows and unicorns?” he said

Though there is currently support for the Democracy Fund in New Haven, Jolly said a simple majority of the Board of Aldermen could quickly repeal the program altogether. For Ward 7 Alderman Doug Hausladen ’04, the best way to give the Democracy Fund the chance it deserves is to include it in the New Haven charter, the city’s constitution, which is currently undergoing a once-a-decade revision process. A commission is now examining the constitution and considering changes to a number of issues, including establishing the Democracy Fund permanently in the city’s charter, which would make the program much more likely to survive in the long run in the Elm City.

 

COMPOSING AN EFFECTIVE BOARD

While the Elicker campaign met the 200-contribution threshold to qualify for public financing just five days after Elicker filed paperwork to run for mayor, it had no idea when exactly it was going to receive the $28,400 expected from the program’s grant and matching funds. With only three of seven slots on the Democracy Fund’s board filled, there were not enough members to meet quorum for a meeting, and without a quorum, it was literally impossible for the board to meet and create a schedule of disbursements.

“We tried to meet monthly, but we couldn’t get quorum, so we kept rescheduling,” said Patricia Kane, board treasurer and member. “You can tell [Krayeske] comes in with great energy, optimism and enthusiasm, and not to have a quorum is just like hitting the gas pedal and the brake at the same time.”

Elicker will finally be picking up his first check from City Hall tomorrow, Krayeske said, 64 days after he qualified for the program.

“It can be difficult not to know the calendar for the schedule [of disbursements],” said Melanie Quigley, treasurer for the Elicker campaign. “If you’re depending on public financing because you’re not getting big-shot donors, you’re really depending on the [Democracy Fund] board.”

Though the board originally had a full seven members, as members left, City Hall did not fill the open slots. The board lost quorum when Anna Mariotti, current spokeswoman for City Hall, left her position as chair of the board to work for the mayor in January. Kane’s nomination and approval took months, and the process “dragged on interminably” and was “disappointing,” she said. It took a month after filing her application with City Hall to receive an interview and an extra two months to be approved by the Board of Aldermen before she could sit on the board.

“With the mayor’s office, I truly don’t understand why [getting an interview] takes so long. He’s got paid people, and you expect them to move stuff,” Kane said. “Maybe they don’t feel the Democracy Fund is quite as important, as it’s an action for mayoral elections every two years, so maybe it’s not a priority.”

Mariotti said that a month is “not actually a long time” for City Hall to follow up with someone who is interested in a board or commission.
Caleb Kleppner, one of the board’s inaugural members who has finished his term, said that reaching quorum was a “big problem for several years” when he served on the board. He said he “beseeched” the mayor’s office to appoint more people and could not understand why there were not more appointments made.

 

PURSUING AN IMPARTIAL BOARD

Both Krayeske and Robert Wechsler, the previous administrator of the Fund, believe that the mayor should not have the power to appoint people to the Democracy Fund. The Fund disburses money for mayoral campaigns, and having the mayor appoint people to the board represents a conflict of interest, they said.

“I think DeStefano did a good job, and the people on the board were not pro-DeStefano, so it’s not an issue of him stacking the board or anything,” Wechsler said. “But the issue is that it looks like [stacking the board] could happen and is happening, and when the board doesn’t even have enough people to meet and the mayor decides not to participate, it looks like he’s trying to undermine the program, and that is the worst thing you can do.”

Wechsler said this was particularly problematic when the Fund discovered that DeStefano’s 2009 campaign had filed late reports to the Democracy Fund. In July 2011, the board had a controversial meeting in which they discussed whether to pursue an investigation regarding the late filings. Kleppner and Mariotti voted to pursue an investigation, while board members Steve Kovel and Richard Abbatiello voted not to continue with it, and the motion did not pass.

Mariotti explained that her vote was a result of her simply following the rules. The details of the Democracy Fund dictate that if there is a question of whether a mistake was made, whether it was intentional or not, she felt the correct response was to pursue an investigation to obtain more information. Kovel, however, said that the long debate about the past election seemed to be having “relatively little impact in the real world.”

“It was long after the election, and it was long after the due date,” said Kovel, who added that he felt the late filing was not intentional and thus did not vote to pursue an investigation. “To some extent, it was really this battle over whether the DeStefano campaign had misbehaved, and it soured my taste a little bit.”

John DiManno, a current member of the board, suggested that the Fund’s board could instead be appointed by community organizations and groups, such as the Chamber of Commerce, the Bar Association and local management teams. Wechsler, Krayeske, and Kane all echoed similar sentiments about how to reform the board.

Elicker and Tyrone McClain, a member of the Fund board, however, said they felt there was no conflict of interest: The Board of Aldermen still has to approve mayoral appointments, which should solve for any partiality, they said.

Arizona’s answer to the question lies in the appointment process. When a vacancy on the commission opens up, the highest Republican statewide officeholder — which is usually Arizona’s governor — appoints someone to the commission. For fairness’ sake, the next time a vacancy opens, the highest Democratic statewide officeholder appoints a board member. The alternation allows for a balance of appointments.

In both New Haven and Arizona, no political party is allowed a majority on the Fund — a requirement that can often prove difficult given that New Haven is overwhelmingly Democratic.

Jennifer James ’08, who served on the Fund’s board and assisted with the creation of the program, said that requirements and the structure of the Fund were meant to make it impartial.

“It’s hard in a city that is very heavily dominated by one party to figure out a process that’s fair and allows a lot of voices to be heard,” James said.

But while the Fund’s board may be impartial, the difficulty of filling the board may have an impact on this year’s race beyond a delay in fund disbursement. None of the board’s members — Kane, DiManno, McClain and Tiana Ocasio — have ever been through a full election cycle, with Ocasio being the only member who was on the board before 2012. Krayeske is also facing his first election as administrator, and the process has been as much of a learning process for him as it has been for the candidates.

This year’s election may begin to answer questions about whether the board will continue to be viewed as impartial, how quick the Fund will manage to turn around the disbursement of funds and just how much money this program will cost the city. Krayeske and the board are still discussing how to improve the Fund as soon as the Elm City declares a new mayor, whether he used the system or not. For now, however, the present incarnation of the Democracy Fund — and the issues that it faces — remains.

“Every time I have a conversation, there’s something else that has to be done.” Krayeske said. “But changing the ordinance is a process that’s going to take a couple of months, and you don’t want to change the rules in the middle of an election. So our window of change will be the end of the election until January 2014: That’s when we have to make improvements.”

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