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 three of a three-part series. (Read part 1 and part 2.)

PHOENIX — The first time John McComish ran for a seat in the Arizona House, he had no idea what he was doing.

It was 2002 and McComish, who is now the Arizona State Senate majority leader, chose to use Arizona’s public campaign finance system to fund his election. Though he lost the election, when running again two years later, he decided once more to use public finance. That year, he received over three times the amount he had received in 2002 and won the election.

It would be the last time the candidate would run for office with public financing.

Seven years after his first election win, McComish was the named plaintiff in a Supreme Court case after the Goldwater Institute asked if he wanted to help take Arizona’s public finance program, Clean Elections, to the highest court in the nation. The Supreme Court decided McComish v. Bennett in 2011 and ruled that a major provision of Arizona’s public campaign finance program — the one McComish himself had used — was unconstitutional.

“I never really liked the idea of public funding as a concept,” McComish said.

With recent years bringing landmark court decisions about election financing like McComish v. Bennett and Citizens United v. Federal Elections Commission — a 2010 decision that denied the government the ability to restrict independent political expenditures by corporations — the future of public campaign finance is uncertain.

New Haven’s public finance program, the Democracy Fund, is still being tested. It has yet to establish itself as a potent force: The only person who has won using the system is Mayor John DeStefano Jr., who was the incumbent both times he used the Fund in 2007 and 2009. In 2011, DeStefano turned away from the system, claiming the Citizens United decision had “neutered” the Fund.

Across the nation, public finance programs implemented in places like Portland, Oregon, New Jersey and Massachusetts have been repealed. Arizona’s Clean Elections program is now facing the same danger.

With three of four declared mayoral candidates this year pledging to use the Fund, this fall’s election will be the toughest test yet of the program’s capabilities. The jury is still out about the long-term viability and ultimate success of programs like the Democracy Fund and the Clean Elections system from which it drew inspiration.

CONSTITUTIONAL DECISIONS

McComish said his experience in his third election turned him against Arizona’s Clean Elections fund.

Arizona’s Clean Elections program would match the difference if a candidate participating in the public finance program was outspent by a candidate who opted out, McComish said.

“I ran in a primary against three people, and the three of them all ran clean [using Arizona’s public campaign finance program] and I did not. I spent money beyond the cap, and all three of them got matched [the same amount],” McComish said. “So if I spent $5,000 beyond the cap, it was $15,000 being spent against me.”

These “triggers” were meant to protect participating candidates from big spenders who opted out of the program, said Todd Lang, the executive director of the Clean Elections Commission in Arizona. But McComish said that this was unfair.

The McComish v. Bennett decision struck down this provision on the grounds of the First Amendment. But while the Supreme Court case originated in Arizona, the impact was felt in New Haven.

The Democracy Fund originally promised to provide participating candidates another grant if they spend 85 percent of their $340,000 cap and non-participating opponents exceeded the cap. Participating candidates in this situation could choose to take a $25,000 grant or exceed the $340,000 expenditure ceiling that limits the spending of candidates using the Fund.

But similar to Arizona’s provision, the Democracy Fund “trigger” was rendered unconstitutional by the Supreme Court’s decision in McComish v Bennett in 2011.

“The Arizona case neuters some aspects of the Democracy Fund. The Supreme Court knocked out [the trigger provision], so when someone else comes in and just spend a lot of money, there’s nothing the candidate can do about it,” said Ken Krayeske, the Fund’s administrator.

Still, the New Haven model is unlike any other municipal public financing system in the country. Even after the trigger provision was struck down, New Haven’s system remains the only program utilizing both a flat $19,000 grant and a matching program that matches donations candidates receive: the program doubles up to the first $25 of each donation, meaning a $10 donation turns into $30 and $25 becomes $75.

Kim Hynes, senior organizer at Common Cause, a group that promotes good governance, explained that instead of limiting candidates to one single flat grant, New Haven’s system allowed candidates to continue raising money when  necessary.

But sometimes matching funds may not prove sufficient. In the 2011 mayoral election, mayoral candidate Jeffrey Kerekes’ raised $53,000 through the Democracy Fund. DeStefano raised $750,000 without it.

Combined with the Citizens United decision, McComish v. Bennett has altered the decision calculus candidates are using regarding whether to use the Fund. Probate judge Jack Keyes, who has expressed interest in running for mayor, has said he is unsure whether he will participate in the Democracy Fund. He explained he was “bitterly disappointed” by the Citizens United decision and that he is unsure if the Democracy Fund is still effective following the decision.

During a presentation about the Fund’s rules by Krayeske to the Board of Aldermen in March, Ward 22 Alderman Jeanette Morrison expressed disappointment that the Fund can only encourage but not mandate that candidates participate.

“Say [Alderman] Brenda [Foskey-Cyrus] ran and she participated in the Democracy Fund and she got that $19,000, but I have $1 million personally to just spend. She’s not going to have a chance in this race,” Morrison said. “It really does become survival of the fittest.”

SAME ELECTION, DIFFERENT RULES

Choosing to opt into the Democracy Fund does not simply mean receiving public funding. With public money come a number of restrictions about how they can spend their public dollars.

One particular restriction is that no donation the candidate accepts can be higher than $370. The limit set by the state for traditional candidates, however, is $1,000.

“When DeStefano opted out of the program, he didn’t get public funds, but he also opted out of a voluntary contribution limit of $370. Whatever he might have said about the Democracy Fund, he was clearly interested in raising $1,000 checks from donors,” said Caleb Kleppner, one of the original members of the inaugural Democracy Fund board. “We should have the same contribution limit for candidates who participate as for those who don’t, and $370 is a much more reasonable limit than $1000.”

While the Fund is helpful for candidates who may not have the ability to raise money without the program, people like the Fund’s administrator, Krayeske, say that the Fund hopes that in the future, all candidates will participate in the program.

Mayoral candidate and State Rep. Gary Holder-Winfield, however, explained that the difference in caps explains why some, such as DeStefano in 2011, would choose to opt out of the Fund. The $25 matching provision of the Democracy Fund may seem insignificant to candidates compared to $630 extra a candidate can get from each donation if they opt out, he said.

Public finance supporters in Arizona have also discovered, to their displeasure, that raising expenditure ceilings for non-participating candidates can drastically change the candidates’ decision to use public financing.

Arizona State Rep. J.D. Mesnard, who opposes Clean Elections, is the author of a bill that would raise the amount individuals can donate in Arizona legislative campaigns from $488 to $2,500. He argues thatincreasing the amount individuals can contribute will enable people to be transparent instead of donating through PACs. But Lang believes the increase will directly undermine Clean Elections by making participation in the program less attractive.

“I’d be handed money from the public system even if I were a KKK member but qualified for [Clean Elections],” Mesnard said. “That means other people would have paid into a system that gives a voice to some KKK member. They don’t even have a choice in the matter.”

Here in New Haven, Krayeske thinks that the overall ceiling for mayoral candidates — $370,000 — is more than high enough, calling it an “almost statistical impossibility” that someone will raise more than that using the Fund. But without the Fund, campaigns can grow increasingly expensive. In 2001, DeStefano and Sen. Martin Looney raised over $1 million combined in their race for mayor.

EXPANDING THE DEMOCRACY FUND

Though the Democracy Fund has been in existence for almost seven years, it has yet to propel a non-incumbent candidate to the Elm City’s top seat. The two times the Fund was used successfully were by DeStefano, and even when he opted out of the fund in 2011, DeStefano won regardless.

Still, the 2011 election was inspiring for some, such as Robert Wechsler, the previous administrator of the Fund, because it showed that a relatively new candidate in New Haven could still run a competitive campaign against an 18-year incumbent. The close margin of the election — under 10 percentage points — showed the potential the Democracy Fund could have in New Haven politics.

“DeStefano opting out actually looked good for the program in a way,” Wechsler said. “Here was a candidate [Kerekes] who used the Democracy Fund that nobody thought had a chance, and he got a huge percentage of the vote against someone like [DeSteano]. He did much better than anyone expected because of the program, and without the program, he wouldn’t have.”

Though the Democracy Fund may not have enabled a challenger to win using public financing, it did accomplish its overarching goal, Wechsler said: to help a candidate with support spread his message and ideas during a competitive race against a well-financed candidate in a way he may not have without the program.

The early successes of the Fund have sparked questions about what the Fund will look like years from now. Ward 7 Alderman Doug Hausladen ’04, a vocal supporter of the Fund, wants to expand it beyond the mayoral race to the Board of Aldermen. In 2011, a slate of union-backed candidates took a number of seats from long-time incumbents, including former Board of Aldermen President Carl Goldfield.

“Just because a ward is small, does not mean it’s above the influence,” Hausladen said. “I think it’s no secret that there is a very large influential group that takes a lot of money per race. There was over $10,000 in some [aldermanic] races, and that’s the same thing to me as the mayor going and getting $1,000 checks from donors and developers.”

Many argue that a move to support aldermanic races would be too expensive. In March, Krayeske predicted that offering public financing for aldermanic elections would cost $648,000. Mayoral candidate and Ward 10 Alderman Justin Elicker FES ’10 SOM ’10,said he thinks that while having public financing for all elections would be “ideal,” the program would still be too expensive to be realistic. It is unclear whether New Haven — a city with a particularly tight budget — can expand itself to cover more than the single race it currently funds.

With over a decade of experience with its public financing system, Arizona may soon see the dismantling of Clean Elections, as a bill that would allow voters to take away funding from the program is currently passing through the state legislature. Down the road, the same fate could befall the Democracy Fund.

Still, with this year’s mayoral election in close contention, many say the possibility of expanding the program will largely depend on how the Fund performs this coming fall, the first instance the system will be utilized in a competitive election. With three out of four declared candidates pledging to use the Fund and one potential candidate — Hillhouse High School Principal Kermit Carolina — pledging to use the Fund if he runs, this year’s election may become the first in which the norm is clearly to opt into the program.

This year, the question of whether a candidate will use the Democracy Fund has become a standard for those interested in the race for Elm City’s highest office. The Fund has become a campaign issue in and of itself, and this fall’s election will help determine whether using the Fund will become expected — or impractical.

“I think this coming election will be a real test for public financing, especially if someone enters the race and doesn’t participate in [the Democracy Fund],” Elicker said. “If someone doesn’t participate and they end up losing, it really will show that participating in public financing can even the playing field.”