TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
Ralph D. Karpinos, Town Attorney
SUBJECT: Response to Petition Regarding Town Providing Financial Assistance to Candidates for Town Elective Office
DATE: March 24, 2003
On February 24, 2003, the Council received a petition proposing a “Voter-Owned Election” program for Town elective office to begin with the 2003 Town elections for Mayor and four Council seats. The Council referred the petition to the Manager and Attorney for evaluation. This report provides information in response to that referral.
SUMMARY
The Petition for “Voter-Owned Elections” (Attachment 1) proposes a plan for the Town to provide public funds to candidates for Town Office to help pay for their campaigns for Town office. We believe there are several key issues related to the timing of this proposal and the prospects for implementing a public financing program for Town election campaigns this fall:
1. The development of a program and enactment of an ordinance under which the Town would provide public funding to candidates for Town elective office would likely take several months.
2. The filing period for candidates for the fall Town elections officially begins at noon on the first Friday in July.
3. The Council is not scheduled to meet in the period after the fourth Monday in June until the fourth Monday in August.
4. One or more bills may be introduced in the North Carolina General Assembly authorizing local governments to provide tax revenue to candidates for elective office.
5. The prospects for such legislation being enacted during the current session of the General Assembly are not knowable at this time.
6. The Wake County Superior Court is scheduled to consider during the week of March 24 an appeal from a decision by the North Carolina State Board of Elections regarding a public campaign financing program established by the Town of Cary.
7. The State Board of Elections decision in the Cary case may have implications for the plan proposed for Chapel Hill in light of current Town limits on campaign contributions.
8. The development and adoption of a Town budget normally should be completed by June 30, 2003.
9. The “Voter-Owned Election” program put forward by the petition proposes duties for the Orange County Board of Elections, an organization not under the jurisdiction of the Town government.
Each of these issues is discussed further below.
BACKGROUND
Regulations pertaining to the conduct of municipal elections in North Carolina are established by State Law and are generally uniform. In the past, when the Town of Chapel Hill has wanted to modify the rules governing Town elections, it has requested and received special enabling legislation. In 1987, the Town sought and received legislation to make applicable to the Town certain regulations regarding campaign reporting previously applicable by State law only to larger municipalities. (Chapter 1023, 1987 Session Laws) In 1999, the Town sought and received legislation that made two other changes to the law applicable to Town elections. The 1999 legislation authorized the Town to set a limit on contributions to candidates at an amount lower than the limit set by State statute. The Town set a limit of $200 on contributions. The legislation also authorized the Town to require disclosure of the names of contributors of smaller amounts. The Town requires that names of contributors of amounts of more than $20.00 be reported. (Chapter 255, 1999 Session Laws)
We are aware of only one municipal program in North Carolina under which Town revenues are provided to candidates for municipal office. That program was enacted in 2000 by the Town of Cary. Under Cary’s program, funds were provided to some candidates in the 2001 Cary municipal election. Attachment 2 is a copy of an article from the North Carolina Law Review (previously distributed to Council) describing and evaluating the Cary Ordinance.
Following the fall, 2001, municipal election in Cary, a legal proceeding was brought before the North Carolina State Board of Elections regarding the Cary program. The State Board of Elections determined that the Town of Cary was subject to the same State imposed limitations that apply to other contributors to candidates ($4,000 maximum contribution). The Board entered an Order directing that two candidates for Cary municipal office who received amounts from the Town exceeding this limit return the excess to the Town of Cary. Review of the Board’s decision by the Superior Court in Wake County is scheduled for hearing during the week of March 24, 2003. Attachment 3 is a copy of the State Board’s Order. Attachments 4-6 are the Petition for Judicial Review and the Briefs of the parties to the Cary case set for hearing in Wake County Superior Court.
DISCUSSION
The Proposed Voter-Owned Election Program for Chapel Hill: The draft proposal submitted by the Petitioners on February 24 would require candidates to establish their eligibility to receive public funding by agreeing to certain limits on raising funds and spending and by actually raising a certain number of small, qualifying contributions from Town voters. According to the proposal, in return candidates for Town Council would receive $5000 in Town funds and could be eligible for an additional $2500 if outspent by candidates not participating in the voluntary program. Limits for Mayoral candidates are proposed at $10,000 with an additional $4000 if a candidate is outspent by a candidate not participating in the program.
Making reasonable assumptions regarding the number of candidates based on previous Town elections, we estimate that the total amount of Town funding that would be needed for such a program could be in the $70,000 - $100,000 range. The Petition estimated the figure in this range as well. The actual amounts that could be needed would depend on the number of candidates, the number of candidates choosing to participate, the exact terms of the program as established once an ordinance is developed for consideration by the Council, and other factors.
Key Issues: We believe there are, as summarized above, several key issues that need to be considered in deciding how to proceed in response to this petition.
We believe, based on our review of the Town of Cary’s experience in developing a public financing program for elections that it could take several months to develop and implement a program for the Town. We further believe that this is not a subject matter that should be handled by staff, but needs the direct involvement of members of the Town Council. In Cary, an initial public full Council work session was conducted on February 17, 2000. Attachment 7 is a copy of the minutes of that work session. We understand that there were several meetings over the subsequent months involving Cary Council members.
The Cary Ordinance was enacted in December, 2000 and was modified in July, 2001. According to Cary’s Brief to the Wake Superior Court:
“the public funding debate was public, vigorous and extensive. A proposed ordinance was posted on the town’s web site and argued in the newspaper; citizens spoke up at council meetings; and the council wrestled with the question.” (Attachment 5, page 3.)
2. The filing period for candidates for the fall Town elections officially begins at noon on the first Friday in July.
3. The Council is not scheduled to meet after the fourth Monday in June until the fourth Monday in August.
In order for citizens to consider fully the financial implications of running for office, we believe that it would be reasonable, if a public campaign finance program is to be implemented, to try to have any program for public financing in place prior to the deadline for candidates to file for Town elective office. In light of the Cary experience and the Council’s work schedule, we believe that it would be difficult to complete work on an ordinance this spring. Implementing such a program in early fall, in the midst of a campaign for Town office, would likely lead to some confusion and difficulties for candidates making decisions on campaign strategies.
A bill has been drafted which, if enacted, would authorize local governments in North Carolina to sponsor public financing programs for their elections. Attachment 8 is a copy of an early draft of the bill proposed by State Senator Wib Gulley. We believe it would be reasonable to consider waiting to enact a local program until the General Assembly has considered the proposed legislation.
Although the question of whether Cary now has the legal authority to enact its ordinance is not raised directly in the pending appeal to Superior Court, it appears from the public record that there has been some concern expressed about this issue. See the comments of the State Board of Elections in its Order in the Cary case:
“12. The Board has concerns as to whether the Town of Cary, or any other North Carolina municipality, has the power to establish a plan of public financing of election without enabling legislation from the North Carolina General Assembly.” Attachment 3, p. 3.
See also:
a) the comments of Ellis Hankins, Executive Director of the North Carolina League of Municipalities, at the Cary work session, Attachment 7, p. 4;
b) the Brief of the State Board to Wake County Superior Court, Attachment 6, p 5: “(T)he question of whether the Town of Cary had the statutory authority to adopt a public financing scheme” was a “legal elephant in the room” at the time the State Board made its decision.
Because the question of legal authority could be resolved by proposed legislation, we believe that it would be reasonable to consider deferring implementing an ordinance until after such legislation is enacted so that the program could be adjusted to comport with any standards established by the new law.
The question before the Superior Court, in reviewing the Board of Elections Order, is whether the Town of Cary is an entity under State Law that should be subject to the same limit on contributions as any other non-governmental entity. The limit for any contribution by any other entity to a candidate under State Law is $4,000.
The outcome of this litigation could have a significant impact on how the Town of Chapel Hill might pursue the proposed Voter Owned Election program. Even if the Court in this Cary case does not address the issue of legal authority for such programs (which issue does not now appear to be before the Court) the question of whether Cary is limited to providing $4,000 is significant. If Cary is determined to be subject to the $4,000 limit, then it is possible that the Town of Chapel Hill would be limited by its own maximum, set by the Town Council, at $200. If limited to that level, there is some question as to whether Town financing would be too low to make the voluntary program attractive to a candidate. Moreover, if the Cary case does uphold the State Board’s ruling and Chapel Hill were to wish to raise its limit to $4000, but only for contributions it makes, (leaving others subject to a $200 limit) it is possible that there would be other legal issues raised that would need to be considered.
Alternatively, the Town could consider eliminating its $200 limit on contributions for all contributors, but that could serve to defeat other objectives the Council has sought to establish.
If the Court reverses the State Board and rules that Cary public funding is not subject to the State contribution limit of $4,000, then Chapel Hill would logically not be subject to its own $200 limit.
The Town and prospective candidates might find it desirable to have these issues clarified before committing to expenditures that could create personal hardships for candidates if funds provided by the Town to candidates were required to be returned.
The Town is in the midst of developing a budget with the goal of enactment of a Budget Ordinance by the Town Council prior to the beginning of the 2003-04 Fiscal Year. If the Council believes that it may wish to consider the implementation of some sort of public financing for candidates for Town elective office for the fall, 2003, elections, we recommend that the Council instruct the Manager to bring back a proposal identifying ways to fund such a program. Because of the potential legal risks in implementing such a program, we recommend that the budgeted funding include an amount to provide funds for candidates and an amount to cover legal expenses. (We note that the Town of Cary retained the services of an attorney in private practice with expertise in elections law to help develop their ordinance and to represent them before the State Board of Elections and in Superior Court.)
We understand, based on conversations with staff at the Town of Cary, that during and following the 2001 Cary Municipal election campaign, a significant amount of staff time was required to answer questions and administer the Cary program. We are not able to predict what the demands on staff time will be if a program is implemented in Chapel Hill.
The petition for “Voter-Owned Elections” submitted to the Town Council on February 24, 2003, set out certain responsibilities that it proposed would be handled by the Orange County Board of Elections under the Ordinance enacted by the Town Council. We do not believe that the Town by ordinance can establish responsibilities for an agency not under the Town’s jurisdiction. We forwarded the proposal to the Orange County Attorney with a request that the County provide some response regarding the assumptions made in the proposal regarding the County’s role in implementing the Town program. Attachment 9 is a letter addressed to the Orange County Attorney. Attachment 10 is the response to that letter.
According to that response, the County Attorney believes that the supervisory role proposed by the program for the County Board of Elections is not authorized by North Carolina law. It would appear, based on this response that the Town should not expect the County to assume the duties outlined in the proposed program.
We note that under State Law (N.C.G.S. 163-285), County Boards of Elections are now responsible for administering municipal elections. A local act would be required to modify this. The assumptions of duties by Town staff that were proposed by the Petition to be handled by the County Board of Elections could also have budgetary implications for the Town and require funding for overtime salaries and contract employees.
Alternate, interim approach: Because of the timing and uncertainties discussed above, we believe it may be reasonable to consider alternatives if the Council wishes to take some action in response to the petition. If the Council wishes to take some steps toward “leveling the playing field” in the upcoming election, we believe it might be possible to consider providing funding that could be used to make an equal amount of time available on the Town’s cable channel to all candidates. A fair, unbiased system for scheduling candidates on the air would also need to be established. The amount of funding for such a program could be presented as part of the proposed budget for Fiscal Year 2003-04.
CONCLUSION
Because of the timing of the petition, the pending Cary case in Superior Court, unanswered legal questions regarding the authority of a municipality to spend public funds for such a program, and the prospects that development of a public campaign finance ordinance will take longer than the time available to have one in place for the 2003 Town Elections, we recommend that the Council defer any further action to establish a “voter-owned election” program in Chapel Hill. If the Council wishes to further consider this matter, we recommend that the Council establish a committee of Council members to work on developing a program, monitor the Cary case and pending and potential legislation, with the goal of determining whether a program could be in place for the 2005 election, if determined by the Council to be in the best interests of the Town.
RECOMMENDATION
That the Council consider this report and discuss what further steps it wishes to consider at this time.
ATTACHMENTS