Committee Hearing, June 1, 2000

COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE THE COMMITTEE ON LAW AND GOVERNMENT - - - Room 400, City Hall Philadelphia, Pennsylvania Thursday, June 1, 2000 2:30 p.m. - - - Campaign Finance Reform Legislation: Bill No. 000356 Bill No. 000357 Res. No. 000380 (Full text of above attached hereto.) - - - PRESENT: COUNCILMAN DAVID COHEN, Chair COUNCILMAN ANGEL L. ORTIZ, Vice Chair COUNCILMAN JAMES KENNEY COUNCILMAN RICHARD MARIANO COUNCILMAN MICHAEL A. NUTTER COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN FRANK RIZZO COUNCIL PRESIDENT ANNA C. VERNA - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 6/1/00 LAW & GOV'T. - FINANCE CAMPAIGN REFORM I N D E X H. Fernandez, Former Mayoral Candidate . . . . 9 * Katherine Rutherford, National Civic League 19 * B. Dietrich, Phil. League of Women Voters 29 * M. Petro, Committee for Economic Development 34 * R. Avila, L.A. City Ethics Committee . . . . 45 * N. Gordon, NYC Campaign Finance Board. . . . 62 * M. Goldman, Americans for Democratic Action 90 * Ed Schwartz, Inst. For Study of Civic Values 96 * Angus Love, National Lawyers Guild . . . . . 109 * D. Kulp, Lesbian and Gay Democratic Club 114 Kathy Miller, President, Philadelphia NOW. . . 118 * Darlene Cradle, Philadelphia ACORN . . . . . 120 * Larry Frankel, Executive Director, PA ACLU 131 * Glenn Moramarco, Brennan Center. . . . . . . 157 * R. Wingert, B. Kauffman, Common Cause. . . . 163 Inja Coates, Cable Access. . . . . . . . . . . 174 Phyllis Gilbert, Sierra Club . . . . . . . . . 179 * L. Townsend, Citizens for Consumer Justice 180 * David Masur, Penn PIRG . . . . . . . . . . . 187 C. Juntikka, NYC Bar Association . . . . . . . 198 (* Also provided handout(s) or written testimony.) Other Attached Written Testimony By: Dennis Pollard Jerome Kohlberg, Lai Har Cheung 3 /00 LAW & GOV'T - BILL 2 P R O C E E D I N G S

To all members of the Law and Government Committee, the committee is about to begin the hearings, which are scheduled for 2 o'clock this afternoon. - - -

Councilman Nutter, Councilman Goode, Councilman Rizzo, you're all requested to come to the chambers so that we could get started with the scheduled 2 o'clock hearing. Councilman Mariano is here, Councilman Ortiz is present, I'm Councilman Cohen, and I'm here. - - -

We're sorry for the delay but Councilmembers are recovering from the lunch they had in the Mayor's office. Now I'll call the Council President, who's agreed to be the fifth member. City Council is now in session for the purpose of hold a public hearing and a public meeting on Bill No.'s 356 and 357, and Resolution 23 No. 380. A quorum of the Law and Government Committee is present. At my extreme left is 4 /00 LAW & GOV'T - BILL 2 Councilman Rizzo, to my immediate left is Councilman Mariano, to the far right is Councilman Ortiz -- no one would ever accuse him of being there. And to my immediate right Council President Verna, and myself, David Cohen. The committee is now in session, a quorum hasn't been established. And I'm going to ask Councilman Ortiz, who is one of the two principal sponsors of the bill, to make a short statement.

Thank you, Mr. Chairman. Campaign finance reform is something that usually is discussed at the national level, but as Mr. Kohlberg, a corporate leader of this country said in a letter to this committee, change has to come at the local level so that it can germinate, grow and impact and give courage to those that in Washington that are afraid to end the pay-for-play situation. Tragically enough, in Philadelphia, pay-for-play has become a part of the political lexicon, it has become a part of our culture. We no longer find it unreasonable when people go and 5 /00 LAW & GOV'T - BILL 2 ask and request, and almost demand, fund-raisers of 5, 10, 25,000 dollars a pop per person. We are no longer surprised when a District Council race can cost up to three-quarters of a million dollars. We are no longer surprised when the municipality and the County of Philadelphia and the Commonwealth of Pennsylvania holds the most expensive municipal election in history. People can become candidates without having any public policy, background or philosophy or vision. We have seen that in our past primary for mayor, where persons became viable candidates, not because of their public policy visions, not because of what they offered as a candidate in terms of bringing the City into the 21st century, but because a few very well-to-do individuals got together and decided to raise a huge amount of money to make candidates viable. Money is becoming the pervasive undermining force of the democracy in the United States. We spend more money in political campaigns, and the sum total of voters coming out is less and less every year. In the last election that we've had this year, candidates for senator 6 /00 LAW & GOV'T - BILL 2 of the United States running, other candidates, two very important offices at the State level, and we get 16 percent turnout. But money was spent in bundles. We need to grab hold of that so that the days of pay-for-play can end, so that the politicians who want and people who want to serve in government and want to enter politics can have a level playing field. So that what will count will be not how much money you have in your campaign account, but what you have in your mind, your heart, and the vision that you want to bring to the people of the city. It should start here in Philadelphia, it should start here. Other cities have done it. New York has big political machines and stronger than we have. L.A. has done it and they're bigger. Over 75 cities across the nation have said we have to take the money out of the public discourse and bring back government to the people. Government has gone from the people. And don't kid yourself that every time there's a TIF, that there's a development, that there's something going on, that those people that sit at 7 /00 LAW & GOV'T - BILL 2 that table in front of City Council are usually individuals that have contributed great gobs of money to political races. And those are not the issues upon which we should decide public policy. We have, and I hope that we have, the courage in this Council to be able to move forward, to have the vision that we will no longer tolerate money controlling elections, but let people and issues be the controlling factor in electing people to public office and public service. Thank you, Mr. Chairman.

Thank you, Councilman Ortiz. Like all things in life, campaign finance is a complicated question, because what Councilman Ortiz said is certainly, in my judgment, valid and true in 95, maybe 99 percent of the cases. I would like campaign reform to get rid of the embarrassment I always face. I'm always very fearful that the press will go and examine my return sheets because I would be embarrassed at the report of how little I raised and how little I spend. I'm always at the very 8 /00 LAW & GOV'T - BILL 2 bottom of the list and I dread looking up and reading the reports of the press. But I have to tell you that I suspect if somebody tried to raise some of the sums of money that Councilman Ortiz told us about, I would be very concerned, because money and the big bundles that we're beginning to get used to -- imagine $27 million in the mayoral race in Philadelphia was spent -- you say it was twice that?

$27 million.

Yeah, $27 million is outrageous. Because one thing we know, a good businessman -- and much of the money, maybe almost most of it, comes from large business groups, and good businessmen never pay without being sure that they get a return. We couch that return politely in the media in terms of access. What access means differs in different people's minds. Some people maybe only want to talk to a legislator, others say, We expect results. Everybody says businesses are bottom- line breeders, that it's the bottom line that counts and the bottom line is results. That's 9 /00 LAW & GOV'T - BILL 2 kind of terrifying, because results politically mean results in support of the interests represented by the money-givers. And politics should never be that. And so I think we're embarking are here in Philadelphia is a very important matter, particularly when we've seen that the lack of legislation permits huge sums of money to influence outcomes. The first panel -- why don't you both stay at the table, but because there are time restraints -- and we're delighted she's here, she's a former colleague, and we'll introduce her as "Councilwoman Happy Fernandez." She was a strong candidate for mayor of the City in the last election. She did not get those huge contributions represented by the $27 million represented that I spoke about. She is now president of the Moore College of Art. We're happy to welcome you back, Happy, to your original home. City Council -- that is not counting the Temple professorship before. Thank you.

It's great to be here. 10 /00 LAW & GOV'T - BILL 2 This seat is maybe a little higher than my seat over here, but it's great to be here, particularly to testify on this campaign finance reform bill. And let me begin by complimenting Councilman Ortiz, and I think Councilman Kenney was a lead sponsor --

Yes.

-- along with others who have signed on 'cause I think it is an excellent bill. Again, Councilman Ortiz, I think it's much improved over the one that was in last session where, as you recall, I felt couldn't put my name to it 'cause I thought it needed to be strengthened, and I think you've done that with this bill. My first reaction to campaign finance reform finance bills is, no bill is better than a bad bill. But I am here today to say I think this is a very well-constructed bill. There may need to be a few amendments, but I think it has many of the elements in it that's strong enough and comprehensive enough to try to level the playing field so that people can again believe in democracy and have greater trust and respect for 11 /00 LAW & GOV'T - BILL 2 their elected officials because they feel they have a chance to run for office and that it's not totally controlled by people who can make sometimes obscene contributions to people who are running. So the thrust of your bill, the basic grounds of it, I think, are excellent. And so I do not feel that this is a bad bill; I think this is a good bill and should be supported. I'm sure, through these hearings, that you will probably agree to make some small changes and amendments?

We're already doing that.

And I'd be glad to talk with you as you consider those amendments. But overall, I just had a few points to make, and that would be, I think the limits you're trying to set are reasonable. But, as you know, I think you really need to look at all of those loopholes where people use soft money at the national level, or the other big loophole is people who are multimillionaires and who are buying elections and feel they don't need to abide 12 /00 LAW & GOV'T - BILL 2 by campaign finance reform laws. I think we have that happening at the federal presidential level, and we're all very aware of what's happening over in New Jersey right now. And I think there is a backlash among the citizens. They really don't like the idea that people can buy their way into public office. So I think it's very important to look at all of the little details in this bill to try to close as many of those loopholes as you can. And that would lead to the strength of your proposed independent campaign finance board. I would like to suggest that instead of having those five members appointed only by elected officials, I would suggest that you have three to four other citizens who are respected in the community, perceived as independent, and could be nominated by some of the citywide respected civic business labor groups in the City, 'cause I think that, again, would add to hopefully the reality, but at least the perception, that this campaign finance -- or this independent campaign finance board really is there looking out for the interest of the citizens and would have the clout it needs 13 /00 LAW & GOV'T - BILL 2 to keep people in line. 'Cause I think the biggest danger with this bill is that if it's drawn too tightly, there will be people who will want to run for office outside of these rules and use their fortunes or their friends' fortunes to get them in. So I think having even more clout and the perception of even more independence by that independent campaign finance board is good. Which leads to the other issue. I was interested in the clause in the proposed bill that says that there would be at least two televised debates by the candidates running for various offices and that you would try to attract media attention to that. One of the big issues you'll face is how to get sufficient media attention for any of the candidates. And then if there are people running outside of the framework you've proposed, who are not going to abide by these rules, how do you have enough media attention to the candidates who want to play by these rules. So that, again, you can't have someone going around and being able to buy so much media that drowns out or obscures the real issues. 14 /00 LAW & GOV'T - BILL 2 So, again, I think that independent board and other civic and community groups would have to be very, very vigilant, do all they can to get the major television and radio stations and the print media to give extensive coverage to the various candidates at the various levels, even if they aren't paying some of these incredible rates that you have to pay to get on television. Because, as you know, that is the biggest part of a budget, particularly for anyone who's running for mayor, is the TV costs, which are the single largest item in most people's budgets. The next item that I wanted to bring up is what I would perceive as further discrimination against or punishment of people who are already elected officials within the City of Philadelphia. And, again, having been one and as a person who needed to resign my Council office in order to run for mayor, while there are people coming from other sectors who could be doing all they wanted for as long as they wanted, or if they had independent incomes, could resign and say, you know, I don't need to work at all, I'll just campaign steadily for two years.

15 /00 LAW & GOV'T - BILL 2 So I think the clause you have here that says that someone who is currently an elected official, not only according to the City Charter has to resign in order to run for anything else, but also could not use any of the funds that might be in their campaign funds which, under your bill, would be much more limited anyway, that those could not be used. I think that's further punishment and I think you ought to take a second look at that. So those were my major issues. I think there's a lot of other little details. I would frankly like to hear the debate about your attempts to limit contributions of people who are doing business with the City. I think that's the area where you would find people still doing it through wives or children or dogs or something in order to make sure the politicians perceived that their money had helped get them elected and were, therefore, still buying access. I understand what you're trying to do, but I think that needs some pretty serious debate and examination.

Well, the good thing about it is that we have people that are already 16 /00 LAW & GOV'T - BILL 2 experienced in this public financing of political elections -- L.A. and New York and other individuals who are looked into those aspects that you're looking at and that you have mentioned, and that we will be looking very strongly as to how those other boards have managed to monitor and police those instances.

Right.

And I think we'll hear from L.A. and probably New York, and we'll have some very interesting thought and comments as to how four elections now, four election cycles have gone through in L.A., and candidates for city council and mayor have run under these guidelines and have adhered to them. So it's -- we will get the history and the knowledge to be able to hopefully close all of those loopholes.

So my bottom line is, I think this is a well constructed bill, and after the hearings and the various kinds of amendments, I'd be glad to talk with you again, but I want to compliment you on taking on this very important issue. 17 /00 LAW & GOV'T - BILL 2

You know, because you were one of the candidates that ran for mayor and that if you go back -- and I would love to see a political historian do this, but if you go back to the reporting in the print media or the TV and other aspects in terms of that election, every time that they reported on individuals that were credible or viable, they mentioned only a few because they had money. And then those individuals that were behind in the money chase, in the money aspect of getting it together and so on -- you and Dwight and others -- were really relegated to second-tier candidates, not because of not having experience, not because of having lack of political vision, not because you could not handle the job and be able to do the job, but the only reason that it was second-tier was because of the level of money that each one of those individuals had.

But that also -- you know, I hope some of the reporters would take a look at what that does. But you're right, I raised over a million and a half dollars which you think would be adequate for a mayor's race, but in 18 /00 LAW & GOV'T - BILL 2 this particular race, that was a modest amount. But, again, as you know and a number of people have said, the kind of time it takes to raise that amount of money from a broad base of people is a very time-consuming issue, and that was actually one of the things I found most distressing about running for mayor was all the time it took to be raising money, when I would much prefer to be out talking with people at all the meetings and -- which we did anyway, but that's also what adds to the stress of a mayor's race.

Thank you.

Thank you very, very much.

Thank you.

We very much appreciate your working through your schedule to be with us here today. Thank you. Great. The next speakers are going to be what was considered panel number one before: Katherine Rutherford of the National Civic League, and Barbara Dietrich, President of the League of Women Voters of Philadelphia. 19 /00 LAW & GOV'T - BILL 2 We welcome you both. Please identify yourself for the record first and then proceed with your testimony.

Okay. My name is Katherine Rutherford, and I'm the Assistant Director for the New Politics Program at the National Civic League. The National Civic League is a 106-year-old good-government organization that held its first meeting here in Philadelphia. That meeting was convened by such turn-of-the-century progressives as Teddy Roosevelt, Louis Brandeis, and Marshall Fields. At that time, they convened a meeting of municipal administrators and politicians and citizens to take a hard look at what was happening with the political machine in America, and specifically what they were looking to do was to put government back into the hands of the people at that time. That's when political machines were at their height. Through the New Politics Program at the Civic League, we look to promote innovative political reforms at the State and local level. This, in fact, brings us full circle to our 20 /00 LAW & GOV'T - BILL 2 founding mission in 1894, which was to help local reform groups learn from each other's successes and failures and to develop specific proposals for making government more honest, efficient, and effective. The New Politics Program connects with the National Civic League's philosophy that all major political reform begins at the local level, gains momentum, and is eventually codified in federal law. This also extends to our interest in political reform and democratic renewal. In 1998, the National Civic League published this book, Local Campaign Finance Reform: Case Studies, Innovations and Model Legislation, and this book has been distributed, actually, to the City Councilmembers here in Philadelphia and to many other elected officials throughout the country as well as reform-minded activists throughout the country. The book itself was an enormous undertaking for our organization, and along with that, it was an enormous leap of faith. The suspicion at that time was that there was a lot of activity happening on the local municipal level around campaign finance reform, but it was just a suspicion or a belief that local 21 /00 LAW & GOV'T - BILL 2 democracy was healthy and vital was confirmed through the study. The study confirmed that over 75 municipalities within the country had passed, enacted some type of campaign finance reform. So we discovered through the survey that a quiet movement was taking hold, and that movement continues to move forward today. Two-thirds of the reforms that we studied, that are documented in this book, have been enacted since 1990. Prior to 1990, other reforms has been enacted. For example, in 1979, the City of Seattle passed campaign finance reform that included contribution limits. There are to date 133 municipal entities that have passed contribution limits, so those extend beyond the time period that this book was --

And they are constitutional within the federal --

Yes.

Within the Supreme Court decision?

Those are standing pieces of legislation, yes. I think it's important to say that 22 /00 LAW & GOV'T - BILL 2 local campaign finance reform is an ongoing evolution. Indicators point to increasingly comprehensive campaign finance reform being passed over time. A lot of the municipalities that we've looked at start out with a baseline model and move forward into more comprehensive legislation.

Could you tell us some of the major cities that have passed it and very roughly the kind of limitations they have, just very briefly, maybe not exactly, but in general.

Okay. And I will make mine very rough because I believe someone from Los Angeles as well as New York is going to follow me in their testimony, and they're actually running those programs. But Philadelphia is one of the top ten cities in the United States -- actually one of two of the most populous City cities in the United States that has no type of campaign finance reform.

But tell me, say, in New York, where Giuliani and Hillary Clinton are breaking all kinds of fund-raising records, in New 23 /00 LAW & GOV'T - BILL 2 Jersey, where Jon Corzine has raised maybe 35 to $40 million against an opponent that raised $2 million. Give us major states like that.

Okay. I can speak more expertly to more local municipalities than I can to state or federal-wide races, other than what everyone reads in the newspaper, not necessarily from my level of expertise.

But New York -- New York City has --

New York City.

New York City has a campaign finance bill in place.

That's right. And New York City and Los Angeles both have incredibly comprehensive campaign finance reform legislation that they work on. Both programs that -- two of the administrators from those programs will speak to you about the success of those. There's also the City of Tuscon that has comprehensive campaign finance reform. There are a number of cities -- there are actually, in total, in our database 16 cities and counties in the United States that have what we tend to define as "comprehensive campaign 24 /00 LAW & GOV'T - BILL 2 finance reform legislation," which typically including contribution limits, spending limits that are tied to public financing, so some type of public financing, either partial or full.

And New York City's one of them?

New York City is one of the very successful models, as is Los Angeles. And I would actually defer my questions to those cities to those administrators.

How about -- the City of New York, yes.

Not the state.

Yeah.

Right, it's New York City Campaign Finance Board.

And how about in Los Angeles?

That's the Los Angeles City Ethics Commission.

And we're going to have -- I think the young woman's going to be a witness on that.

That's right. 25 /00 LAW & GOV'T - BILL 2

Some questions have been raised about Los Angeles not having partisan primaries, as we have in Philadelphia and a second place in the State of New Jersey and often in the state of New York. We'll be interested in knowing how it applies there. Well, we thank you very much.

Let her finish.

Have finished your statement or --

A few more words. In late 1999 through June of this year, the New Politics Program has been working directly with coalitions in five locations across the country to catalyze the dialogue around campaign finance reform and move it forward into concrete policy proposals. These locations include Philadelphia, Pennsylvania; West Chester County, New York; Cincinnati, Ohio; Denver, Colorado; and the State of New Jersey. Our role on each side has been to put our principles of collaborative problem-solving and consensus-based decision-making into practice. The application of these principles in /00 LAW & GOV'T - BILL 2 each setting typically with a diversely representative coalition has been inspiring at the least. Elected officials and citizens care about the health of their democracy at the local level. In an exercise that we facilitated here in Philadelphia, we asked a group a question that gave the following answers. And the question was really about what critical values in campaign finance reform would you want to see reflected? Their answers came out roughly as follows. These are sort of the areas: To address the perception of corruption in the political process; To free elected officials to govern, rather than fund-raise; To remove money from the access and/or influence equation; To bring new candidates into the system; To develop fair competition. I think it's been referred to as "leveling the playing field" in a lot of ways; Increase voter participation; And improve the political discourse. 27 /00 LAW & GOV'T - BILL 2 These values inform the shaping of a policy that the Coalition developed, and many of those elements are reflected in the proposal before you today. And the other thing I just wanted to do quickly was to go through some of the larger pieces of the legislation and let you know about other municipalities where similar components have been enacted. So in terms of --- I've already mentioned the mandatory contribution limits. In our database, we have 133 municipalities that have mandatory contribution limits, starting with Seattle in 1979 and continuing forward to today. And I should also preface this with, some of this data was most recently modified in 1998, so there could be a greater number than what I'm reporting to you now. In terms of the mandatory limit in off-year elections for fund-raising, there are 16 municipalities in total that have some form of time limits on fund-raising. Again, this is covered in our book, and we have more information at our office in Denver than is covered in this 28 /00 LAW & GOV'T - BILL 2 book, if anyone has any specific questions about that. In terms of the pay-to-play, which Councilman Ortiz had mentioned, we also look at this in this book, and a more broad sense, those are categorized as conflict-of-interest laws. There are about municipalities in the country 9 currently that have those that type of policy 10 enacted. 11 And, finally, in terms of voluntary 12 spending limits tied to public financing, there 13 are 13 city-county entities that have enacted that 14 type of policy. 15 As I mentioned earlier, Philadelphia is 16 the largest city in America with no regulation on campaign finance at the municipal level. It is home to most expensive municipal election in history, with a final tally of $27.5 million. Philadelphia now stands at a critical juncture of opportunity -- the opportunity to lead the state in local campaign finance reform policy, and by extension, to pave the way for political reform and democratic renewal at the local level. Thank you. 29 /00 LAW & GOV'T - BILL 2

Thank you.

Thank you very much.

And also, just to let you know, I didn't type up my testimony, but I will be happy to hereafter; I will get you a copy of this afternoon.

Thank you very much.

All right. We will be grateful. Thank you. Barbara Dietrich.

Good afternoon, Councilman Cohen, Chair, and the members of the law and government committee. I am Barbara Dietrich, President of the League of Women Voters of Philadelphia. And we have my testimony typed out for you here.

Very good.

The League of Women Voters of Philadelphia has a continuing concern for maximum citizen participation in the political process. The campaign finance reform bill before City Council provides an opportunity for candidates to enhance the participation of their constituents by soliciting monetary contributions 30 /00 LAW & GOV'T - BILL 2 that would not be overshadowed by large gifts of money from donors who hope to curry favor with elected officials. When candidates raise larger numbers of small individual contributions, they engage citizens in the local governmental process and are more likely to get those persons to vote for them. The League, as conveners of the Philadelphia Clean Money Clean Elections Campaign Coalition, and its partners, would like to cultivate a climate where elected officials are accountable to their local voters, rather than to outside contributors. As you know, the 1999 Philadelphia mayor's race had a national record of $27.5 million in total contributions, including several $100,000 donations, as reported in a recent Inquirer editorial. The provisions of the bill would also eliminate the pay-to-play aspects of the current system, which could help to put an end to the perceived undue influence in the election process caused by campaign fund-raising. Through a system of public financing, citizens who may not have the financial resources currently needed to be a 31 /00 LAW & GOV'T - BILL 2 strong candidate could have the chance to run for public office. The high cost of winning an election favors candidates who are either well off or well-connected. In addition, incumbent candidates must constantly funds for reelection, which takes time away from the community which they were elected to serve. Presently, the general public has a low level of trust in politics and government, which could be one reason for apathy on Election Day. An increase in the number of people who are able to run for public office could lead to more citizens exercising their right to vote. Another provision in the ordinance 16 which the League favors is the inclusion of two one-hour debates per covered election for candidates. This commitment to discuss the issues helps to dispel the cynicism of the electorate and offers the assurance that all candidates are being treated fairly and that there is no political favoritism. The League of Women Voters of Philadelphia strongly supports the amendment to the Home Rule Charter which would establish an 32 /00 LAW & GOV'T - BILL 2 independent campaign finance board. The membership of that board is designed to be nonpartisan, which is important to the League, which, itself, is nonpartisan. The amendment of the Philadelphia Home Rule Charter is a serious matter. The League does not automatically support or oppose a proposed amendment. We support a change only when it would better serve all citizens. The League does support the question to be submitted to the voters at the general election on November 7, 2000 regarding the amendment of the Charter. In a city which is known as "the Cradle of Liberty," we can offer the opportunity to all of our citizens to make a difference in the life of the community by empowering them politically. Government of the people, by the people, and for the people is still a goal worthy of pursuit by all who hold elective office. Campaign finance reform can be the hallmark of this City Council's continued concern for its constituents in the new millennium. Thank you.

Thank you very much. 33 /00 LAW & GOV'T - BILL 2 Any questions for Miss Dietrich? There's just one that I may want to repeat. You know, we're so careful in our discourse when we say "the perceived concern of money-buying influence." Does anyone have any question on that?

I don't think so.

You know, why would so many businesses spend so much money if they didn't they were getting solid results from it?

Yes.

The only genuine answer I've ever heard anybody give that made any sense was, Well, if we can all businessmen to do it, you know, it jacks up the price of the contributions, and then we can say, as candidates have in local elections, everybody contributes to us, so it means none of them have any influence, you know, and I think that strains our imagination, it strains our ability to believe our public issues.

Yes.

Thank you, Miss Dietrich. 34 /00 LAW & GOV'T - BILL 2

You're welcome.

The next panel will be Mike Petro, Vice President for Business and Government Policy of the Committee for Economic Development. (Witness comes forward.)

We appreciate you're being here. We know you've got to dash off to Washington. Is that the headquarters of your organization?

Yes, sir. We're located both in New York and in Washington, DC.

All right.

But I work out of the Washington office, so. . .

All right. Please, for the record, would you state your name and organization, and proceed.

Sure. Let me introduce myself. My name is Michael J. Petro, and I am the Vice President for Business and Government Policy for the Committee for Economic Development, CED. CED was formed nearly six decades ago by a group of business executives to promote the 35 /00 LAW & GOV'T - BILL 2 Marshall Plan. Today we remain an independent research and policy organization of some 220 business leaders and prominent university presidents. We are a nonprofit, nonpartisan organization dedicated to studying and proposing policies that promote steady economic growth, increased productivity, and living standards and greater and more equal opportunity for every citizen and an improved quality of life for all. " The recommendations contained in that report were developed by a special committee cochaired by Ed Kangas, Chairman of Deloitte Touche, and George Rupp, the President of Columbia University. Since the release of the report, more than 200 prominent business leaders and civic leaders throughout the country have endorsed our recommendations. Over the past year, CED has put to rest the idea that the business community supports the status quo, loves giving ever-increasing amounts of money to campaigns, is unconcerned about the damage the system is doing to our democratic 36 /00 LAW & GOV'T - BILL 2 institutions, and opposes far-reaching reform. The business executives involved in our efforts are, first and foremost, concerned about the negative impact our current system of funding elections on democracy shareholders, the voters, but they are also convinced that the status quo threatens our economic and business climate. Our report says a vibrant economy and well-functioning business system will not remain viable in an environment of real or perceived corruption, which will corrode confidence in government and business. If public policy decisions are made, or appear to be made, on the basis of political contributions, not only will policy be suspect, but its uncertain arbitrary character would make business-planning less effective and the economy less productive. CED is focusing on reforming the federal system. In brief, we call for banning so-called soft money, increasing candidates' access to resources by increasing slightly the current federal contributions limit, and establishing a partial public financing system adopting voluntary spending limits, similar to 37 /00 LAW & GOV'T - BILL 2 your proposal today. This afternoon, let me focus on the public-financing and spending-limit components of our plan, as you consider a similar proposal. Under our proposal, Congressional candidates would receive $2 for every dollar received from an individual donor up to a maximum of $400 for each contribution of $200. Candidates would qualify by raising a threshold amount of money in small dollar-donations. Those who accept the public financing would be required to abide by spending limits. As you might imagine, the public financing part of our plan surprises many people. The common and wrong assumption is that the business executives would not support this type of public expenditure, but as the CED report says, we make no apology for proposing direct public financing of this program. The improvement of our campaign finance system is a public benefit and it should, therefore, be publicly funded. It's an investment in the people's business. Our business leaders had very specific reasons for supporting public finance. First, 38 /00 LAW & GOV'T - BILL 2 they were concerned about the decline in contributions from smaller donors. By providing matching funds, we hope to leverage more contributions from small donors. Under our plan, for example, a $200 contribution would be worth $600 to the candidate. Second, the public subsidy provides an incentive for candidates to seek smaller contributions from a larger number of donors.

Today, candidates, for understandable reasons, focus almost exclusively on contributors with deep pockets, to the exclusion of average citizens. Third, public financing helps reduce the escalating burden of fund-raising. Our business executives are appalled at how much time elected officials spend fund-raising. They clearly understand that the chase dollars distracts officeholders from doing the people's business. Fourth, our members view public financing as a way to diminish the risk of corruption and, just as important, the appearance of corruption, which erodes public confidence in our democratic institutions. Matching smaller 39 /00 LAW & GOV'T - BILL 2 contributions broadens the base of financial support and reduces candidate' reliance on special-interest money. And, finally, and probably more important, we believe that public financing will enhance competition in elections by providing challengers with sufficient funds to run viable campaigns. This is another overlooked perspective of corporate executives. They are pro-competition. S. House of Representatives, they saw that there are very few competitive races. This diminishes the choices voters can make. Today, fund-raising burdens and obstacles discourage many good candidates from running in the first place. Those are our main reasons for advocating a system of public funding of federal elections. It's important to stress here that we believe that public funding needs to be linked to voluntary spending limits. Let me close by reiterating why business leaders are joining the reform cause. Like most Americans, they understand that the 40 /00 LAW & GOV'T - BILL 2 current system of financing elections is out of control. Increasingly, business leaders are pitted against each other in the competition for ever-larger contributions. Corporate executives understand that the public sees them as part of the problem; they want to be a part of the solution. Importantly, business leaders are concerned about how the system of funding elections skews public policy in a dangerous way. As our cochairman, Ed Kangas, recently reported, today, many business leaders are alarmed that decisions in Washington may be made on the basis of who put the largest pile of cash on the table, instead of what makes sense or what is best for the country. Creating public policy on the basis of political contributions makes business planning less effective and the economy less productive. While these words referred to flaws of our federal system, I think they offer some sound advice for those looking at any reform proposal. The voters, whether nationally or in this great City of Philadelphia, will benefit from reform that ensures their voice is protected and that 41 /00 LAW & GOV'T - BILL 2 they can have a greater faith in their democratic institutions. I applaud your efforts to consider meaningful reform, and I appreciate your interest in our work and perspective. And thank you for asking me here today.

Thank you. Are you familiar with the Philadelphia bill?

Yes, I am.

Could you tell us what you feel about it. Are there any suggestions you have? Does it go in the right direction from your point of view? And when I say "you," I'm referring to your organization.

To the organization, yeah. I think the -- especially the public financing part of it, which mirrors the CED proposal, is clearly in the right direction. Our trustees looked at some of the similar issues that you guys did here, and in certain cases, just were less concerned about -- in one particular instance it was raised that people shouldn't be able to make contributions if they had businesses before 42 /00 LAW & GOV'T - BILL 2 certain committees, and our trustees rejected that, but it wasn't any strong rejection; it was just that they were mainly concerned about it getting soft money out of the system and concerned about having some sort of a system that promoted competition inside. And I think that they would applaud you here today because that's what they would view that that does.

Councilman Ortiz?

Rosemary, I asked her to come in if she wanted to, but she said that she would contact you, and I'm glad that you actually did come. Are there other Philadelphia business people that are members of the Committee for Economic Development?

Yeah, we have about ten people in the Philadelphia area that have endorsed CED's proposal. And last March, we put together a lunch here in Philadelphia, where we brought together some business leaders, just to talk about the issue, engage them in a dialogue about this issue, because what we find is, as you talk to 43 /00 LAW & GOV'T - BILL 2 them more and more, they don't like the system, they don't like the shakedown. They use that term a lot.

Shakedown.

Shakedown, and they don't like it. But, quite frankly, I think there are an awful lot of people don't want to stick neck out, and they're sort of waiting to see what happens with some of these business movements. And Mr. Rizzo, I think, attended our lunch in March, the CED lunch that we had and talking about this issue, and we were going around the country, using our trustee base as an anchor and having them as -- Rosemary invited some of her friends and we talked about the issue, and we had about 30 or so people who, you know, I think were very favorably inclined.

So as well as pay-to-play, this mean be the beginning of the end of the shakedown politics across the country.

Absolutely, yeah.

Well, business folk are victims as well as maybe unlawful beneficiaries of the current system. 44 /00 LAW & GOV'T - BILL 2

Yes. I mean, one of the things -- what happened with our organization was after the '96 elections, a number of our trustees came forward and they said, Enough is enough, this was way out of control. And what they were particularly offended by was the phone call that pitted them against their competitor in the same industry. You know what I mean? And that was particularly offensive to them. What we state in our report is that we would rather compete in the marketplace. As business leaders, we'd rather compete in the marketplace than the political arena. And I think that you will find, as go around the country and you talk to business leader, there's more and more sentiment in that direction.

Thank you.

Thank you very much. Any questions, Councilman Rizzo?

Thank you. I like that terminology "shakedown."

Yeah. You've added a new word to our lexicon. Thank you. I'm going to ask the next one Rebecca 45 /00 LAW & GOV'T - BILL 2 Avila, the Executive Director of the Los Angeles City Ethics Committee. (Witness comes forward.)

We're delighted to have you here.

Good afternoon.

Will you please state your name and tell us the situation in Los Angeles.

My name is Rebecca Avila, and I am the Executive Director of the City of Los Angeles Ethics Commission. In the City of Los Angeles, my organization, our city agency, the City Ethics Commission, has jurisdiction over the city's ethics, lobbying, and campaign finance laws. It is a city agency funded by the general fund. We have five commissioners, each appointed by a different elected official. The Commission has the authority to hire and fire me, the Executive Director, and I have the authority over the staff.

Who are the elected officials that appoint the commissioners.

The mayor, city attorney, 46 /00 LAW & GOV'T - BILL 2 city controller, the council president, and the council president pro tem. The theory behind having a different elected official appoint a member of the Commission is that no single elected official would, thereby, be able to control the action or decisions of the Ethics Commission. We have staff people and a budget of approximately 9 $1.2 million. 10 This afternoon, I understand you want 11 me to focus on our campaign finance program. The 12 City of Los Angeles's campaign finance program is 13 very comprehensive, and as part of that, it's also 14 very complex. It's a program that was really 15 adopted in two states. In 1985, the voters of Los 16 Angeles approved the ballot measure that enacted 17 contribution limits. The limits on contributions 18 in the City of Los Angeles for citywide office -- 19 and that would be the offices of mayor, city 20 attorney, and controller -- $1,000 per person per 21 election, with the primary and the runoff being 22 considered separate elections. For the offices of city council -- and we have 15 city councilmembers and they're elected by district. Unlike Philadelphia, we do not have 47 /00 LAW & GOV'T - BILL 2 any at-large members of our city council. The contribution limits for them are $500 per person per election. In 1990, the voters of Los Angeles were faced with a ballot measure that included a partial public financing system for campaigns, as well as the creation of our agency, the City Ethics Commission, to administer and enforce that program. In addition to the contribution limits then, in 1990, what we enacted was a funding for the partial public financing program, a fund-raising window. There is no longer continuous fund-raising for our city elections in the City of Los Angeles. If you are a candidate for citywide office, you can begin fund-raising months 18 before the election in which you will appear on 19 the ballot. If you are running for city council, 20 you may begin fund-raising 18 months before the 21 election on which you appear on the ballot. There 22 will be a proposal before our city council to 23 continue to consider shortening the fund-raising 24 window to 18 months for citywide office and 12 months for city council. 48 /00 LAW & GOV'T - BILL 2 In addition to the fund-raising window, we also have-- and in addition to the individual contribution limits, we have a limit known as "the aggregate contribution limit," and that's the limit on the total amount an individual can make to all candidates in the race. There is also a limit on the total amount of contributions a candidate can accept from non-individuals -- corporations, labor unions, or what have you PACs.

And what is that limit?

It varies, depending on the office. It's 900,000 for the office of mayor. Finally, we also have a mandatory training requirement. Every candidate and treasurer is required to attend a training session conducted by our agency, and they are also subject to mandatory audits. Any campaign that spends $100,000 or more or any campaign that receives any public funding will be audited by our office. The partial public financing program is voluntary. A candidate can choose not to participate. If they want to participate in the program, they agree to limit their spending and 49 /00 LAW & GOV'T - BILL 2 they agree to limit the amount of personal funds they are going to use in their race. They also agree to debate their opponents. The formula to get public matching funds is $1 to every dollar of contribution you receive from an individual. Let me give you an example. As I mentioned to you before, the limit in a council race is $500, so I, as the candidate, could accept a $500 contribution from an individual, and $250 of that contribution will be matched by public financing. There is a maximum on the total amount of public financing a candidate can receive in a given election. Does the program work? We've conducted an extensive analysis of the four elections in which the program has been operating. You should have been provided with a copy of two studies. One is Investing in Competition: Campaign Finance Reform in the City of Los Angeles. It looks at three elections. And then there's an addendum that we produced last year, after the most recent election. Based on these four elections, here's what our analysis demonstrated: 50 /00 LAW & GOV'T - BILL 2 The program has succeeded in controlling spending, particularly by incumbents and by candidates in open-seat races. Historically, open-seat races were the most expensive races conducted in our city. In addition, challengers have been provided with more resources, which has enabled them to get their message out and compete more effectively with incumbents. In addition to the statistics, however, I think it's important to take a moment to listen to what the candidates had to say about their experiences. After every election, we surveyed the candidates and their treasurers, and here's what they said: First of all, on the subject of spending limits, there's been concern -- there was concern in our city of over whether our spending limits were high enough to enable people to compete effectively. Candidates have said that the amount of our spending limits are high enough so that it doesn't matter. It gives confidence to their donors that there will be a level playing field. And most importantly, what they like best 51 /00 LAW & GOV'T - BILL 2 about the program, naturally enough, is the public matching program. It enables them to spend more time communicating with the voters, walking precincts, participating in candidate forums, and less time on the phone raising money. Incumbent candidates who participated in the program also noted that it enabled them to spend more time on council business during the election instead of campaigning. They estimate that between 30 and 75 percent of their time is spent fund-raising, and the program frees them from spending even more time on that activity. Finally, participation in our program has been very high. Eighty-eight percent of the candidates in the last election participated in the program -- all of the incumbents except one.

Did he win or lose, or she win or lose?

He won. One note about estimating the cost --

I didn't get which one won.

The one that did not 52 /00 LAW & GOV'T - BILL 2 participate.

That's correct, the incumbent who did not participate still was successful in getting elected.

Okay.

A note about how much --

Isn't it important that the electorate kind of vote on the campaign issue --

Yes.

-- considering it is a very important factor, the person's participation?

I think it's certainly important for us. The proposition that was on the ballot that created the partial public financing program was approved by 57 percent of the voting electorate in that election. So the program is perceived to have widespread public support. We've also had consistent editorial support by the local media. As a result, there has not been any backlash on participants for taking public financing in their elections, and I think that's 53 /00 LAW & GOV'T - BILL 2 been an important factor.

Well, I think more important would be the factor of making it clear to people who are perceived as trying to buy an election that it can't be done. For example, Jon Corzine may have many very fine aspects to his campaign in New Jersey, but isn't it kind of a disgrace to have one candidate have enough money available so that he can spend $40 million in a race in which in normal fund-raising, maybe he could only raise, even at the highest level, to million? And I think the public votes on campaign financing when they vote in an election like, where somebody's clearly using his money to try to buy the election, I think you've got to say it's that the plain. And I'm concerned in this coming election. One candidate has chosen not to participate and indicates that -- I think that gives a very clear indication of the character and of the integrity of the candidate. And so I think you vote on campaign finance reform in more than one way. You vote on 54 /00 LAW & GOV'T - BILL 2 bills like this, which I think are important to pass, and you vote when the candidate flouts the public campaign laws when they get enacted.

Well, our experience in the City of Los Angeles has been rather an interesting one in terms of the wealth candidate issue. Both the state level and at the local level, we have had candidates spend a great deal of their personal funs on their campaigns. Some win, some how. Our current mayor spent a great deal of his personal wealth to get elected the first time. But I do think it's important to note that that was the first election under our partial public financing system, and his opponent, while he was defeated, I don't think there's anybody in the city who would say he was not able to get his message out. Because of the partial public financing system, he was able to compete more effectively against the wealthy candidate, who ultimately won.

Didn't you have a candidate, I think, by the name of Huffington, running for the U.S. Senate --

Who lost. 55 /00 LAW & GOV'T - BILL 2

-- who tried to buy his -- it seemed as if he was trying to buy his way. He spent an enormous sum of money and he was defeated, wasn't he? I don't know whether he was a Democrat or a Republican. I don't remember the particulars.

He was a Republican, David.

He was a Republican?

And he was defeated. One final point, perhaps, and that is that, in terms of estimating the cost of the program, I would caution interested parties from simply doing a simple mathematical calculation and thinking that the program will cost as much as the maximum amount available times the number of candidates. You could do that calculation, but it will overestimate the cost of the program. What we have seen is, while candidate will opt in to participate in the program, they still have to qualify to receive the matching funds, and even if they qualify to receive the matching funds, it is a matching program, so they have to raise contributions in order to get 56 /00 LAW & GOV'T - BILL 2 matched. So we've had very few candidates actually reach the maximum.

How are the funds appropriated for the matching funds?

There is a requirement in our city charter that the council and the mayor appropriate $2 million from our general fund every fiscal year until the fund equals $8 million, plus interest. The fund cannot exceed that amount. So, for example, in our current fiscal year, the appropriation from the city council and the mayor was a few hundred thousand dollars and because the program -- the fund will be fully funded this year. Now, we have an election coming up in 2001. It's a very big election for us, we will have nine open seats on the ballot. So I expect there to be a large demand on the fund. However, we still think we can withstand that demand. In fact, the Commission is recommending to the city council that we consider tweaking our formula to go to a two-to-one match instead of a dollar-for-dollar match.

And in terms of the 57 /00 LAW & GOV'T - BILL 2 limits in spending, what are the limits on the mayoral and the city council races?

Let me just refer to my chart so I give you the right numbers. For the mayor's race, in the primary, the spending limit is $2.2 million. The maximum matching funds available to you if you qualify is $667,000. If you go to a runoff, the spending limit would be $1.7 million, and the maximum matching funds would be $800,000. For comparison purposes, for city council candidates, the spending limit in the primary would be $330,000, the maximum matching funds available, $100,000. And then the runoff for council candidates, it would be $275,000 spending limit, and the maximum matching funds would be $125,000.

So the spending limit for mayoral in a city of, what, 3 million-plus, and probably more, is $2 million?

$2.2 million.

$2.2 million in order to be able to qualify for public funds?

No, that's not the 58 /00 LAW & GOV'T - BILL 2 qualification; that's the spending limit.

Oh, that's the spending limit.

That's the spending limit.

Okay, very good.

In order to qualify for the program -- for mayor, you have to raise $150,000 or more and contributions of 500,000 or less within months of the election. 11

Oh, okay. And your 12 city council is proportionately the same? 13

$25,000 is the threshold 14 for our city council candidates. 15

Thank you. 16

Thank you. 17 Councilman Rizzo? 18

Thank you. 19 Welcome to Philadelphia. 20

Thank you. 21

Could you describe 22 in your process if a candidate loans his campaign 23 or her campaign money, is that candidate allowed 24 to recover that loan?

Yes. A participant in the 59 /00 LAW & GOV'T - BILL 2 campaign finance -- if you opt into the partial public financing system, remember, part of that is that you agreed to limit the personal funds you're going to use. And that would include a loan. So if you're a council candidate, you have agreed to limit your personal funds to $25,000. And it can be a combination of loans or contributions. If you loan the money, you can certainly get paid back.

Thank you. Thank you, Councilman.

Thank you very much. Well, thank you very much.

Thank you. It's been a pleasure.

Councilman Ortiz, do you have any other questions?

No. We will have -- you -- hopefully, the model that we have -- and your campaigns are nonpartisan?

That's correct. And I know that's a significant difference from your situation here. We have change nonpartisan elections in the City of Los Angeles. 60 /00 LAW & GOV'T - BILL 2 Before I leave, the one final thing I would say to you is that it is a continuing process. We a great program, it's a comprehensive program, but we are continually trying to improve it.

You know, it's funny. One comment that was made to me the other day by a very good friend and a political friend, he said, Hey, look, this is Philadelphia, this is a big city. I mean, you're coming from a bigger city than we are. But this is Philadelphia. I mean, you're going to go out and ask the people of Philadelphia to give money to politicians so that they can run their campaigns? Ha! You know, there's that sort of cynical type of attitude that people will not invest in their government. And I think that permeates a part of our political environment here in the city, that we don't believe that people will buy into a public financing formula. I think the same situation was in L.A., right? I believe politicians didn't believe that people would buy into, you know, a public financing formula. Was there this same sort of 61 /00 LAW & GOV'T - BILL 2 cynicism about the electorate there?

Yes, there was. In fact, in our case, it was compounded by the fact that the ballot measure that created our push of public financing system also included a 30 per pay raise for our elected officials.

For your city council?

For our city council, in exchange for them no longer having outside employment. The conventional wisdom at the time was that that was a poison pill and that the voters would not support the ballot measure. As a result, the city council wrote the most ethics ordinance in the country for a local municipality because they believed that they wouldn't ultimately have to live under those rules. They were quite surprised when the voters approved it by 57 percent.

I think if we give the people of Philadelphia a chance to vote on whether they prefer the current system or a new one, I think they'll opt for a new one. I have 62 /00 LAW & GOV'T - BILL 2 that faith in the people. And just like in L.A., it happened; and in New York, the same thing, I think. I think we can buy into it.

Well, we stand ready to assist you.

Thank you.

Thank you very much. Nicole Gordon, Executive Director of the New York City Campaign Finance Board. (Witness comes forward.)

Miss Gordon, welcome to Philadelphia.

Thank you so much for inviting me to be here today. I have a number of handouts, and I wonder if I could distribute them.

Identify yourself for the record.

Right. My name is Nicole Gordon. I'm the Executive Director of the New York City Campaign Finance Board. It's a nonpartisan independent city agency that administers New York City's program of public financing.

If you would give 63 /00 LAW & GOV'T - BILL 2 the handouts to the gentleman that's approaching you from the Sergeant-At-Arms office, he will make the distribution.

Was that established also by the people voting?

It was established first by legislation by our city council and, in a sense, confirmed by a charter revision that was voted upon and approved by almost 80 percent of the population.

80 percent.

Yes. It was a comprehensive charter revision, included which was the campaign finance program. Let me give these handouts. One is my prepared testimony which, I must say, I have more -- I have some amendments to -- having studied them additionally on the way down here. And in addition to that, I'd like to hand up copies of a voter guide that we -- a nonpartisan voter guide that we publish that goes to every registered voter in the City of New York, some pamphlets that describe the mandate of our Board, and various publications, rules, 64 /00 LAW & GOV'T - BILL 2 comprehensive report that we publish after each election, which I see you have provided for in your proposed bill, as well.

And these are partisan elections?

These are partisan elections, yes.

In which there is existing borough machineries of the Democratic and Republican party and other parties in New York.

Oh, yes, that's correct. If it's acceptable to you, then I will just begin with my prepared testimony, which I will just try to summarize rather than read every word that's printed here.

Yes, please do that.

First of all, I want to congratulate this body for giving serious consideration to finance reform. It is surely the most difficult subject that a legislature grapples with. And one of the reasons, I think, is that every member of the legislature is an expert on the subject matter. But I do believe that strengthening the democratic process by reducing 65 /00 LAW & GOV'T - BILL 2 the role that money plays in elections is the urgent concern of every legislative body. In New York City, our program of reform, which was first enacted by the New York City Council in 1988, is evidence that campaign finance reform can succeed, but to echo what Becky Avila just mentioned, it is a continual process of reform, it must be constantly revisited, changes have to be made constantly. But having had 11 years experience with that process in New York 12 City, I am pleased to have the opportunity to give you some reflections on our experience. One aspect of the New York City Campaign Finance Board that I urge you to include in your bill is that it is charged to operate in a, quote, nonpartisan manner, and I think that's a crucial concern.

For the Board.

The Board is charged. Now, unlike our City Board of Elections, for example, which is bipartisan, which I think is a very different, our board is nonpartisan, and I am pleased to say that the culture of our Board has, from its inception, been 66 /00 LAW & GOV'T - BILL 2 truly nonpartisan. People leave their party affiliation at the door, and when they come into the room and have to vote on penalties or anything else, they have to judge every matter on its merits. Our program gives matching funds to candidates who agree to contribution expenditure limits, a ban on corporate contributions, detailed disclosure of their campaign finances, and they must submit themselves to the audit powers of the Board, and that's another item that I want to amend in my testimony. As I read your bill -- and I don't know what other provisions of law might apply to the board that you're proposing. I did not see there the power of audit or of subpoena or the other kinds of powers that I think an investigatory body needs to have, and I think that's particularly important when a body is giving out public matching funds. The public, while I think it will support these programs, it must do so with the feeling that the money will be given out fairly and that it will be given out for the purposes that it was intended for, and that requires a 67 /00 LAW & GOV'T - BILL 2 board has the power to do full investigations and to call people to account if they are not properly spending the money or are not entitled to it. In addition, in New York City, we do have a provision that requires candidates for citywide office who join the program to participate in a series of mandatory debates. And let me digress again for just a moment there. Our board, years ago, published a report advising against linking mandatory debates to a program of public financing. Our city council, nonetheless, decided to go forward with that. We have had one experience with it in the 1997 elections in New York City. I think it went very, very well. I think the Board is pleased with it. I think possibly, if the Board were presented with the same question today, they would have a different opinion from the one that they expressed some few years ago, but I think it is a very treacherous territory for a government agency to get involved with, and I would urge you to be very cautious about how you proceed in this area. I notice, for example, that you have this for all the various offices. In New York 68 /00 LAW & GOV'T - BILL 2 City, we only have it for the citywide campaigns, and it is very difficult for a board to do. Also in New York, we have a provision that allows us to choose sponsors to conduct the debates. We don't do that ourselves. And it wasn't clear to me from your legislation whether you intend that the board itself will administer the debates, which I think might not be the appropriate thing for the board --

That's a good point.

-- itself to be doing. Our program is open to candidates for three citywide offices. That's mayor, controller, and public advocate. It is also open to the 5 borough president offices and to the 51 city council seats.

Your city council seats are all districts, right?

Districts, right. We don't have any at large. No, that's a distinction from Philadelphia. The candidates who are entitled to receive public funds are people who are on the ballot, who have an opponent on the ballot, and 69 /00 LAW & GOV'T - BILL 2 who have met the threshold fund-raising requirements. And if they qualify, they then can receive matching funds of up to $4 for every $1, up to $250 per contributor, and the contributions must come from residents of New York City.

They must come from residents?

That is correct. To be matched. Since 1988, when our program was established, there have been many changes in our program. The public funds matching rate was one change, the contribution limits have been reduced, the ban upon corporate contributions was introduced. The mandatory, as I mentioned, was added, and there were other limitations on PAC contributions. And each change was made in order to improve the program after the Board had made recommendations. The city council has not always accepted our recommendations, but I can say that they have really improved the program a great deal over time. I'd also like to mention that among the results that the program has had in New York City 70 /00 LAW & GOV'T - BILL 2 are: Number one, we have successfully reduced the size, the average size of private contributions to candidates;. We have increased the number of individuals who felt it was useful to make contributions; It has created a more even playing field among serious candidate, particularly as a result of spending limits; It has created greater opportunities for credible candidates to run competitive campaigns; And it has provided the public with nearly instantaneous access through the Board's Web site and its searchable database to candidates' campaign finance information.

What are the spending limits in terms of mayor and council?

For mayor, for the primary -- the primary and the general election have separate spending limits, and it's something over -- it's over 5.2 million for each election. For city council, it is about -- depending on the 71 /00 LAW & GOV'T - BILL 2 pre-election year spending, it ranges in the 150 to 200,000 range, and 200,000 is the top.

Are the candidates for mayor accepted? What's been your experience since the law has been enacted with your mayoralty races?

You mean whether they have opted in?

Whether they have opted to follow this.

Almost everyone has opted in. We had two exceptions that are worth mentioning. One was Rod Lauder, who ran a race in which he spent $12 million in the primary alone. He did not opt in.

Who was that?

He was defeated.

Who was that?

Ron Lauder. And Andy Stein, years ago, thought about running. He began a campaign and he had to withdraw because the public was offended by the nature of his spending in the context of what other candidates were doing. 72 /00 LAW & GOV'T - BILL 2

Who was that?

Andy Stein.

Andy Stein, ah, yes. He ran and he did not opt to --

He ran and he withdrew. He started to run and then he withdrew, and I think it's fair to say that that was largely because of the adverse publicity that he received that related to his fund-raising and spending outside the program's requirements. And one of the most important aspects of our program is that the support we've gotten from the civic groups and from the editorial boards has been very, very strong. And I think it's fair to say that the New York Times, for example, would probably not endorse a candidate, for mayor at least, who was not a participant in the program. They are very, very strong proponents of our law.

Let me say that Councilman Nutter, a member of the committee, has also joined us. Councilman Rizzo, did you have a question? 73 /00 LAW & GOV'T - BILL 2

Hi. Welcome to Philadelphia.

Councilman Kenney also has joined the hearing. Yeah, go ahead.

The question I have, in your district races, is the district candidate required to live in the district?

Yes. I think, as a technical matter, they -- I'm not sure what the date is by which the candidate has to be a resident, I'm not sure of that, but the answer is yes.

So if a person decides to run for a district office, not a citywide office or precinct -- I don't know how you refer to them there.

District, yeah.

District?

Let me interrupt again. Councilwoman Blondell Reynolds Brown is also attending the hearing. Councilman Kenney, who I mentioned a moment ago, is the other chief cosponsor of this bill, together with Councilman 74 /00 LAW & GOV'T - BILL 2 Ortiz.

So the unanswered part of the question is that if you decide to run, you may be able to move into the district that day and qualify?

Oh, I don't know about that. That's a matter of election law, what district you live in and what timing is of the residency. I don't know what the period of time is that you have to have lived there, I just don't know the answer to that question.

But the answer --

You must live in your district in order to be a representative from that direct, yes.

You might want to take back as a message to New York that maybe they ought to reconsider the question of having only district council members. I want you to notice that of the five Councilmembers currently in the room, each one is a Councilperson-at-large.

Except for Mr. Nutter.

Except for 75 /00 LAW & GOV'T - BILL 2 Councilman Nutter, who came in to save the District Councilmembers, and he is one of the ten District Councilmembers. We're five of the seven Council-at-large. That's just an aside.

That's certainly a very interesting observation. I will bring it back to New York. I wanted to return to the disclosure for just a minute, another item in which I was a little bit confused about the local law that you are proposing. I don't know what the candidates are already required to disclose to the Board of Elections, but there are some elements that are important to include.

All of them have to --

Well, for example, when a contribution is reported to the Board of Elections, must it include things like employer information or occupation? We consider those to be very important pieces of information.

Yes, except that we have basically no auditing aspect at all. People file their complaints and the only way a return 76 /00 LAW & GOV'T - BILL 2 gets examined at all is if a competitor files a demand for it, and there are very, very few demands ever filed.

Right. Well, I would couple my earlier suggestion that you look into the audit powers of this board with a concern about what kind of disclosure will be made. In New York, we have a board of elections that, I think, similarly does not do a lot of audit and does not have as stringent requirements. But for the voluntary part of our program, we require additional information from the candidates that the Board of Elections does not require, such as occupation and employer information, and we also audit every single candidate who joins our program.

Of your own initiative.

Yes, we do, every single candidate.

So you do that on your own initiative.

Yes.

That would be an 77 /00 LAW & GOV'T - BILL 2 addition and one I think we ought to consider.

We're not required to audit every single candidate by law but as a matter of practice that's what we do, but we do have explicit audit powers in our law for the Board. And we also have Internet disclosure. We provide candidates -- software to the candidate, and we have virtually instantaneous disclosure to the public of the candidates' filings.

How does that work? The candidate files to the Board, and then you instantaneously put it on the Internet?

We give them campaign finance software. They enter the data directly onto the software, and when it's a filing date, they hand us a disk and we stick it in a computer, it gets up loaded instantaneously, and it goes into the --

That's something we got to put in our bill.

Well, you have provided, I noticed, for software, the Internet was not 78 /00 LAW & GOV'T - BILL 2 mentioned, but it's time for that too, yes. And we would be pleased to give you a copy of our software package, if that would be helpful to you.

I would really appreciate that.

Right, we'll be happy to do that. Our board is also mandated to publish the nonpartisan voter guide that I just handed up. It provides information about candidates, ballot proposals, and voting in elections, and it is sent to all registered voters in New York City. It also includes candidates regardless whether they choose to opt into our voluntary program. And I think what's important about it, especially for the small council races, is that it is a free -- for the candidate, it is free, it is targeted to the audience that pertains to the candidate, and it also allows the voters the opportunity to get information about candidates in a nonpartisan format.

If I may, because one of the preoccupations that have been expressed to me is that Philadelphia is still one of the 79 /00 LAW & GOV'T - BILL 2 last big cities with, I would say, a party machine.

Can I suggest that this be the last question. And if you could stay, it might be helpful because there may be questions that come up, but there are a great many witnesses that have to be heard yet.

So many concerns that they have expressed to me has been that Philadelphia is one of the last big cities with a party machine. I know that New York has, like, five different party machines -- the Bronx machine, the Manhattan Democratic machine, the Brooklyn Democratic machine, the Staten Island, and so on. And that this type of bill would inhibit or prevent or would hamper, hamper independent candidacies challenging the candidates that would be endorsed by the machine and this would be preventing individual candidacies from coming forward and being successful. Has that -- how's that experience happened in New York?

I don't -- I think that a good system of public financing adds more 80 /00 LAW & GOV'T - BILL 2 candidates. I don't see that it takes them away. I don't see what that argument would really be. I think other problems --

Well, I'll tell you what the argument is. In Philadelphia, for example, the Democratic party is one of the strongest organized Democratic parties. Most of us sitting at the table welcome that fact, but the other side of it is that that organization can put out on Election Day an army of committee people who work, say, on behalf of the endorsed candidates, and an independent candidate who is not endorsed has to find some means, if they want to run seriously, to combat that, and it means they have to raise far more money to produce their own army.

In New York City, we attribute to the candidate the party spending on that candidate's behalf. In other words, if the party puts out a card that has your name and says "Vote for John Doe," we would expect, unless the candidate can show us differently, and no one ever has, that that will be charged to John Doe's campaign as a contribution by the party to that 81 /00 LAW & GOV'T - BILL 2 campaign and as an expenditure by that campaign. So that controls the behavior -- so far has controlled that behavior.

Hmm. Interesting.

That's an interesting concept, yes.

I'd like to summarize. I know you have a lot of witnesses, but I do want to make a few points that I think are very important.

Go ahead.

One is that in New York City, we have a provision that protects the Board against lengthy vacancies, and that provision is that after a certain period of time, if the appointing authority does not make an appointment, the Board can make a new appointment. I would urge that only because sometimes the elected officials, for whatever reason, may not want to fill a vacancy or they're not paying attention to it, and it's very important that this board always have a full complement of members. Another thing is that the budget should have some special protections. In New York City, 82 /00 LAW & GOV'T - BILL 2 we have -- and I think we've built in certain things and I don't know enough about how your system here works. But in New York, for example, our operating budget, as well as the public fund, we estimate that number, our mayor must include our estimate in the executive budget that he could -- it could be she, but it's always been he -- submits to the Council, and even though the Council and Mayor may negotiate something out later, our number is where they start, and that's a very important budget protection.

It certainly is.

Another --

We may want to adopt it as a general procedure, not limit it only to campaign reform.

Another concern is that meaningful penalties have to be available for violations of the law. In New York City, penalties are up to $10,000 per violation. There are possibly criminal penalties, but for the most part, that $10,000 figure has been -- per violation has been sufficient to be a very strong check. And I questioned whether the current draft 83 /00 LAW & GOV'T - BILL 2 really addresses the notion of penalties to a degree that will safeguard the public fund. I'd also just on a few last points, I'll mention that I do believe expenditure limits must be high enough to allow people to opt into the system. People can use a low expenditure limit as an excuse not to opt into the system. And in addition, a low spending limit can have, whether intentionally or otherwise, the effect of prevent lesser known candidates from spending enough money in order to get their name out. A well-known person or an incumbent has many other avenues to communicate with the public, but a lesser known person or an insurgent needs to have sufficient money to make the case. On public the funds, I think you have to be very cautious about how much money is going out to candidates and at what stage. As an administrator, I am very concerned that we have the time to look at candidates' filings to assure ourselves that these people are in compliance with the law because once that money goes out, just try and collect it. It's not easy, and especially when you have formulas that are very generous, 84 /00 LAW & GOV'T - BILL 2 that's something you have to be prepared to deal with. On independent expenditures, I had a question about your draft. It read to me as though any independent expenditure, no matter how small, would suddenly trigger a 10-to-1 match, and I don't know if that was the intent, but I thought that might be.

No, it wasn't the intent.

Oh, all right. Well, the way I read it, it seemed that way to me. Another thing. On filings. In New York City, we have a filing schedule. It's intended to go at the same pace as the Board of Elections filing schedule. The Philadelphia proposal could mandate that the candidates file on as much as a monthly basis, and I would just mention that even the frequency of our filings, which is not as frequent as what you're calling for, has been said by some candidates to be burdensome. It can also be burdensome for an administrative agency. And then the last couple of points I 85 /00 LAW & GOV'T - BILL 2 would make. On the add-on provision, the sort of self-taxing arrangement, I'm not aware of any tax checkoff system, whether it is an add-on or even an allocation of what's already being. I've taxed never seen one in the country that has worked. And I would urge you to delete that. That's my personal opinion, I'm not necessarily representing my board, but I think that's an invitation to have a referendum every year and to lose it, that people are checking it off and, therefore, this is not worthy. There is no other government expenditure, generally speaking, that asks people to check it off. And I think one of the important psychological facts about having a campaign finance program is, it has to be treated as an important integral aspect of democracy. It's not something separate, it's not a luxury. We spend millions of dollars in New York City, 30 million a year on our board of elections, just to get the machinery out, the physical machinery out so that we have votes. Our program, to date, after a decade, has never cumulatively cost that much money to 86 /00 LAW & GOV'T - BILL 2 operate, or even in terms of the money that's been given to candidates. And I believe it should be thought of as money that makes democracy meaningful, not some luxury. So I, just as an ideological matter as well as practical one, I don't think that the tax deductions -- the tax checkoffs are very meaningful. And then my last point that I want to leave you with, we have in New York a new provision that applies the same rules as the campaign finance program has to transition in inaugural expenses. There has been some experience in New York State and in New York City where candidates were able to raise money after they were elected in order to pay for transition in inaugural expenses that were never scrutinized, nobody knew who the contributor were, etc., and in many ways, that money is even more influential than campaign contributions. So I want to say again, I applaud you for looking into this subject. I know it's a very difficult one but I think it's a very worthy one. And I do caution, however that the devil is very often in the details, and it's important to get 87 /00 LAW & GOV'T - BILL 2 the details right when you ultimately pass this law.

Well, we thank you very, very much. Obviously, you've had an enormous amount.

David, before she leaves --

Just one last question.

I saw in the New York Times not too ago some punitive measures that the Board took, and a friend of mine was involved in that, Guillermo Leonares (ph.) and some other -- the borough president, or whatever it is. And what were the fines levied at that time?

I believe the fine that you are describing was $60,000, and it was a very large amount of money. I should mention two things, however. I want to say first about Councilmember Leonares, he has been a very staunch supporter of campaign finance reform.

I know he has.

And he also is, I believe, the very first Dominican representative in our 88 /00 LAW & GOV'T - BILL 2 city council and maybe across a lot of other offices, and he gave very moving testimony before our board how he really could not have run except for this program. He's now in his second, in his term last term, and in the last election, our board found that his campaign had failed to report many, many expenditures and had gone way over the expenditure limit. Under our law, if you go over the expenditure limit, the maximum fine is three times the amount of money by which you went over the limit. And I think he had the second highest, in terms of percentage, the second highest overage that the Board had ever seen. But that was the subject. It was over-the-limit expenditures, and I believe it was a 2- or 3-to-1 calculation of the amount by which he went over the limit, that his campaign went over the limit, I should say.

No, he's a good friend, and I served on like three boards with him, and he was talking to me about it, but it is part of the process that we need, perhaps, to institute here.

And he still 89 /00 LAW & GOV'T - BILL 2 supports campaign finance reform.

Yes, he does, fervently.

Very good. Well, thank you. We're very appreciative.

Thank you.

We're going to go over all of those items very much in the preparation of a report that will be following this meeting.

All right, good.

We thank you for it.

Thank you.

Now a local panel consisting of Kathy Miller, President of the National Organization for Women, Philadelphia Chapter; Liberty City Gay and Lesbian Democratic Club, and I understand Denise Kulp, the Co-Chair, will be testifying. Also as part of the panel will be Mary Goldman, for the Americans for Democratic Action; and Ed Schwartz, President of the Institute for the Study of Civic Values, and a former Councilman. And I understand Mary Goldman 90 /00 LAW & GOV'T - BILL 2 is going to speak first for the panel. (Witness comes forward.)

Well, Angus Love, of the National Lawyers Guild, why don't you come forward also and join the panel. Mary Goldman, why don't you exercise the rights of seniority and start.

It is worth something these days, isn't it?

Well, I'm particularly sensitive to that.

I understand that, David. I'm with you, baby. Thank you all, Councilmembers, for having these hearings, and especially for taking up this important issue. Over time, as campaign spending has escalated out of control, there seems to have been a deterioration in people voting and being involved, and I know this particularly because I live near students, and it is terribly depressing to see how they're not voting these days at the University of Pennsylvania. As many of you know, ADA has been 91 /00 LAW & GOV'T - BILL 2 involved in virtually every municipal election since our founding, in 1949. So we agree that campaign reform, finance reform is vital, necessary, and overdue in Philadelphia, and we support the adoption of limits on individual and PAC contributions. However, we think that this bill does not adequately address the many nuances and intricacies of campaign finance reform and shouldn't be passed at this time. And I think we've heard recently from New York a lot of the reasons why not, and our overlap some of that. Instead, we'd like to spend several months working with Council to develop legislation that comprehensively addresses the needs of the City of Philadelphia with all peculiarities. So we're going to urge all of you to hold this bill and work with us in order to pass a really comprehensive bill after the summer recess. Some of the concerns we have: The voluntary expenditure limits are so low that they would discourage people from challenging incumbents, which is the opposite of what the bill is designed to do, and I think you 92 /00 LAW & GOV'T - BILL 2 may have raised them between the bill I saw today, and I haven't seen that. If the purpose of this effort is to create more level playing field, then the overall limits must be increased; otherwise, citizens will view this bill as an effort to protect incumbents. The bill does not give voluntary expenditure limits for the Row Offices, just for Mayor and City Council, and that should be spelled out as well. The bill does not address what happens to any campaign funds that candidates have in the bank prior to the day of the enactment of this law. The topic of independent campaign expenditures is extremely complex, and we're not sure that this bill addresses all of these issues. The bill calls for a 10-to-1 public financing for a candidate whose opponent has an independent campaign contribution, and do we really want to discourage all independent organizations such as ours from getting involved in campaigns? Is this provision legal? Is it desirable? And how do other cities address it? And what are the 93 /00 LAW & GOV'T - BILL 2 ramifications that this brings up? The makeup of the campaign finance board seems peculiar and subject to political influence. How can we ensure that it does not give advisory opinions that are pro-incumbent or otherwise subject to political influence. I don't know in Philadelphia if we can do this. We should have a try at it. How do we make sure that this system does not simply encourage campaigns to go underground as the federal finance reform system has done with soft money. For example, can we figure out a way to make sure that ward leaders are covered? No other city in America has a stronger ward system as Philadelphia. And as a former ward leader, I know that the ward system is susceptible to abuse and a serious lack of oversight. In addition, how do we ensure that candidates do not shift their campaign expenditures to state campaign accounts, which are not regulated? The additional limits on people who do business with the City are probably unnecessary if 94 /00 LAW & GOV'T - BILL 2 we have a $1,000 limit on individual contributions. Also, this provision would be a nightmare to administer, and the cost would outweigh whatever small benefit it would add to the bill. The limits on off-year fund-raising may not be practical and should probably be either increased or done away with.

How can we improve upon the enforcement mechanisms of the bill? As many of you know, the current reporting requirements are not currently regulated by the District Attorney or any other City officials. What's make us think that this system will work any better? And it sounds like it does in New York, so we, it seems to me, need to study that much more carefully. Finally, what will all of this cost us as taxpayers? As you know, the City has many serious needs right now, and we must have a good estimate of the cost. And what it cost in other cities? Although I personally think that we have to do it -- we need to have campaign finance reform, whatever it costs, again, based on some of the past testimony. I think they're absolutely 95 /00 LAW & GOV'T - BILL 2 right. We understand that these are complicated issues that can't be resolved in a few hours or even a few days, but it would be a serious mistake to try to rush this bill to passage. This bill may be our only attempt to achieve true finance reform in this generation of Philadelphia politics. With that in mind, we urge members of Council to hold this bill at this time, and we stand ready to work with you to develop the legislation that we all can support. We should not rush to reform, as Congress did in the post-Watergate era. We in Philadelphia need to engage in a thoughtful process so that we can make a more perfect campaign finance reform bill. Thank you.

Thank you. I'm going to suggest to all members of Council, those at the table, those in other seats, that we hold questions until the panel all has an opportunity -- each member of the panel has an opportunity to make their statement, then questions can be 96 /00 LAW & GOV'T - BILL 2 directed at any member of the panel. The next one is going to be Councilman Schwartz.

Thanks, Councilman Cohen, and I appreciate the opportunity to share some thoughts on this today. I guess it's a question of half-empty, half-full in this instance. I certainly came at this with the notion, this bill, that this is in effect the next step in a conversation about what a final bill will look like. These are complicated matters, and I agree completely with the ADA and Mary Goldman that we need to try to do it right, or it will be done wrong; but on the other hand, there's a tendency, when you do move toward a new system, to see all the potential faults of it. And I guess the first thing I want to do mostly here is to weigh in on behalf of at least the bill and what it's attempting to do, and as the framework for this conversation, to urge that we really make a strong effort to move forward in producing a system that will work. And I do they think that we benefit from the fact that 97 /00 LAW & GOV'T - BILL 2 two major cities, and perhaps some others, but New York and Los Angeles, which are hardly small towns, have adopted systems of this kind that seem to be working fairly well. And they have offered us valuable advice. And, therefore, we can benefit from their experience. I would like to address at least some reactions in general and issues that I think we have to raise and bring to the attention of the committee some of the work that we have been doing on the role that the media and spending on the media plays this in this process, which, I think, really has to be taken into account as what we're trying to do deal with as we deal with the question of money.

Well, let me just say I don't think you ought to take -- any people here ought to take the point of view that because this matter's before Council that it's a sure shot for passage; it isn't. Councilmembers are basically becoming familiar with the issue for the first time. There are lots of questions by the whole Council body. One of the considerations is 98 /00 LAW & GOV'T - BILL 2 that the thought behind pushing it onto a vote to get on the ballot in November was that in the presidential election, more voters seem to be attuned, more are interested, that Senator McCain campaign, whether you regard him as an independent, a right-wing conservative or a right-wing radical, whichever way, but he has heightened the interest of everybody. And there was concern expressed that this may be the best time. So I just suggest that you think about that. That's one of the factors that maybe we won't get a perfectly bill, but at least if we can get some bill that makes sense, this may be the best time for passage. You all raise good points about, you know, how the bill can obviously be worked on and approved, but will it be worthwhile doing it and maybe using four years of possible momentum. So I'm just suggesting that don't assume that this bill is ready for passage. There would have to be a lot of work done in City Council. We think this hearing will be very helpful in the process, but I'm just suggesting 99 /00 LAW & GOV'T - BILL 2 you might want to think of those concerns. That's what we're going to be thinking of in evaluating whether we move forward or take more time to prepare a better bill. And we'll be interested in your reactions, you know, in the next few weeks, when that decision has to be made. To get it on the November ballot, Council has to complete its action by no later than June 22nd, which is when we are scheduled to recess. If don't complete it by then, it means there's no chance of making the November ballot. So just keep that in mind and, you know, you have your own evaluations, and we'll appreciate them. Councilman Kenney?

Thank you, Councilman. I may have been wrong on counting the dates, but I had a discussion with Councilman Ortiz, and he had mentioned something about the final passage of the bill by the 13th of September would get us still on the ballot for November.

By when?

September 13th. 100 /00 LAW & GOV'T - BILL 2 I'm not sure whether or not that's accurate. Yeah, September 13th would be our drop-dead date for the November election.

And when do we come back?

We come back September 13th -- 14th, I'm sorry.

So this bill would have to be --

Finally voted on.

-- in a position to be voted by the first day we come back.

Right. But we'd have to vote it finally by that date in order to make the November election, I think. Well, I'll tell you what, why don't we have the tech staff figure that out but I think that's the situation.

Yeah.

Okay, thank you.

Let me just add from my perspective.

Go ahead. I just wanted to get that on your radar screen. 101 /00 LAW & GOV'T - BILL 2

No, no, I understand. I just want to make it clear that my coming here -- I'm coming here with the attitude that I think you have a Herculean task, really in getting this bill 6 together for passage -- no offense to the bill. We have had all the public support in the world at the federal level for finance reform, and it doesn't pass because the devil does lie in the details, and when people start getting down to individual provisions, they can't agree on them. And from my understanding, even the major citizen groups in the field out here who are fighting for this don't agree. So, yes, everybody's for it until you start getting down to the specifics, and it doesn't pass along. And you throw that into the equation along with the obvious question that taxpayers will ask about an additional expenditure of public money for something at a time when the City's finances are now being propelled again at risk. I think we have our work cut out for us, but I do -- that's why, in a way, I come here saying I support this. With all the things that we have to do, the first thing we have to say is, We support this, 102 /00 LAW & GOV'T - BILL 2 this an public objective that we need to achieve. And now is the time to achieve it. We did finish the last year of a mayor's race which recast entirely the framework of local politics in this city. When I ran for City Council years ago, I was proud, and still am, to say that I spent no more than about $60,000 to win a Council-at-large seat, and at that time, I guess it was close to the fourth largest city in the United States. 2 million just to win a state legislative seat because they don't have a grassroots system of organizing, and they do have to rely entirely on the media, which is what raises the cost to the astronomical levels. Well, last year, we virtually threw out the remnants of the grassroots system until Election Day and fought the whole thing out on television, and that's what jacked the price up. And I have some evidence here that might be useful to you in your deliberations. But we do have work cut out for us. I think that, in fact, just to take 103 /00 LAW & GOV'T - BILL 2 turns of two of the basic framework here, leaving aside the question of how much public money ought to go into this and how. I think the limits on contributions from individuals and businesses with contracts with the City are especially justified. That really galls people to see that in the paper. And the limits, I would say, on off-year elections, if it's impractical to do it -- maybe we can't, but it seems to me this endless round of fund-raising that goes on is something that is really offensive to the candidate themselves, as well as the public. And, frankly, these things could go into effect even if there were no limits on spending because what they would require, then, of people is that they broaden base of people from whom they have to raise money. And that in itself democratizes the process. Now, of course, the problem we have is that given court decisions, that doesn't rule out the millionaire spending, as you point out with Corzine trying to be senator, his own money or her own money to win a seat. I believe the courts have ruled that it's unconstitutional to prevent 104 /00 LAW & GOV'T - BILL 2 that. So this is where the expenditure limits become almost essential. And the caveat I would emphasize here is a comment that was made earlier, and that is that you really do have to look carefully at what it costs an insurgent to win a race against an incumbent as a as basis for your spending limitations. I recall that there was one year -- and I don't one which one it was -- in the federal where the limits that Congress proposed, or some people proposed, to set were in fact lower than it cost any insurgent to beat any incumbent in the previous election anywhere in any district in the United States. That's not campaign finance reform; that's an incumbent racket, and it didn't go through.

So you have to look at that. I say that, as we, Councilmen, all three of us have been insurgents at one point or another, we know what we needed to do. And if the die was cast in a way that you couldn't spend the amount to meet your basic needs, but an incumbent could get himself or herself in the press every day, that's not going 105 /00 LAW & GOV'T - BILL 2 to work. So that's got to be examined, what did it cost for insurgents to win. Finally, I would say that if the spending is to be reduced significantly, we do have to, in fact, address an aggressive effort to broaden the coverage of these races by the conventional media, and here I'm not waiting for a bill. In part, as a result of what was happening last year, the Institute connected with Paul Taylor, who, you may recall, was the political reporter here in Philadelphia for a number of years for the Inquirer, went on to become the political reporter for the Washington Post and then quit his job, out of his own outrage at what was developing in American democracy. And Paul created an organization called "The Alliance for Better Campaigns," and they have been leading the fight to expand not free air time, but news coverage -- issue-oriented, like debates, news coverage of campaigns a month before the primary and the general election, and they have piggybacked in this year on a proposal that came out on a presidential commission on this subject, 106 /00 LAW & GOV'T - BILL 2 which has called for every station to devote at least five minutes over the course of the period of time from to 11:30 at night the month before 5 primary and general election campaigns for issue-oriented coverage of the candidates. And we're not talking about a particular candidate; we're talking about all the candidates. So it's a very reasonable kind of request. But I can tell you, having pursued this spring, and we will now go more aggressively in the fall, with our local stations. There's been a lot of resistance to this. But here are the stakes. I have given to you two spreadsheets, which we, in fact, developed for the Alliance for Better Campaigns because the biggest campaign last year in the country was our mayor's race. And so they were using our mayor's race as an object lesson, in a sense, for what goes on. They had us go to all the stations and get the public file on campaign contributions. ), who does this work at Penn, did a careful analysis of the news coverage. 5. That's $5 million of the amount that they raised that was put into the four stations in this area during that two-month period of time. That's where the money goes. And, meanwhile, there was nothing like that kind of coverage on the news stations night after night of their efforts or others, as much coverage as there appeared to be. We are witnessing now this barrage of ads back and forth between Corzine and now Florio. Do we have comparable news coverage for the South Jersey of that senate campaign, issue-oriented coverage? I don't think so. So if we're going to be able to significantly reduce the amount that candidates have to spend, particularly at the mayor's level, we're going to have to simultaneously address that, and I would suggest to you that that we are doing that this year now, and I will be calling upon your assistance in dealing with some of our local media this fall. This spring, the primary turned out to be, let's say, less interesting that it might have been, although the senate race was 108 /00 LAW & GOV'T - BILL 2 there for people to cover if they wanted to. There will no excuses like this in the fall and there will be no excuses like this in the future for a mayor's race. Obviously, for some of the other races like Council-at-large or District Council, some of our races -- I've come back now as a candidate -- you can't get media, there are too many candidates and they can't choose, so we have to go out and dig. And I'll end with this: it is a good point of comparison in a way.

Because we could not, in fact, get media, then we had to rely on the system of grassroots politics to carry us forward. This forced all of us to go night after night to ward meetings, to community meetings, to use our contacts with various kinds of organizations to get other contacts, to pyramid our support from the bottom up to the point where, on Election Day, we might end up on a ballot that actually did benefit from some spending. And the result is that even now, even last year, I heard numbers of 100,000, $120,000 that people had to spend to run at large. In other cities, those kinds of candidates, our kinds 109 /00 LAW & GOV'T - BILL 2 of candidates, could not do that, because they, too, would have had to figure out a way to buy enough media time to get attention. So we have a very good point of contrast in this system, between a system that depends upon the media and a system that depends upon people. And the closer we can get through both media reform and finance reform to moving politicians back to the people, the better democracy we will have. Thank you. )

Thank you very much. Angus Love, of the National Lawyers Guild.

Thank you, Councilman Cohen. And I thank Chairman Ortiz and the Law and Government Committee for the opportunity to testify today. Angus Love, on behalf of the Philadelphia Chapter of the National Lawyers Guild. The Guild was founded in 1937 as the first racially-integrated national bar association. Through the years, Guild members have been active 110 /00 LAW & GOV'T - BILL 2 in the development and implementation of the New Deal, fought against the McCarthy-era scare tactics, provided organizational and legal skills to the civil rights movement, assisted draft resistance during the Vietnam War, and most recently, fighting for economic rights and corporate responsibility. We have over 5,000 members and 200 chapters. The preamble to the National Lawyers Guild Convention states we hold human rights more sacred than property rights. Thus, we are here today to speak on behalf of campaign finance reform. In the political arena, it is obvious that property interests in the form of campaign contributions are overwhelming human rights. Campaign spending is clearly out of control. Each new election cycle breaks records from the previous cycle. The recent mayoralty election that's been well documented here is just another example. Spending in Councilmatic races has reached the half a million dollars. On the national level, as Councilman Cohen pointed out, George Bush has rejected public financing. As he 111 /00 LAW & GOV'T - BILL 2 also pointed out, Jon Corzine is breaking all spending levels in his senatorial campaign against Jim Florio. As the need for money increases, the amount of time spent tending to the people's business decreases. Governor Ridge started fund-raising for his reelection campaign a few short weeks after winning his first term. As many of the large contributors expect access, the voice of the people, or the vox populi, is greatly diminished. Community organizations and lobbyists with which the Guild often works with are armed only with ideas quickly forgotten when political action committees and lobbyists show up with envelopes stuffed with campaign contributions. If we are to strengthen the democratic traditions, campaign reform must take place. Many of the causes that I and fellow Guild members are committed to hinge upon campaign finance reform. Only when a candidate has the sufficient time to tend to the people's people's business and has not mortgaged their positions on important issues of the day can a real debate take 112 /00 LAW & GOV'T - BILL 2 place on the important social issues of our time. True campaign financing reform can keep the democratic principles that we hold so dear from eroding into a kleptocracy. While we stand steadfastly behind the idea of campaign finance reform, we do not naively assume that every and any scheme put forth will bring about the desired result. We know the long march begins with one step. We are here today to urge the City Council to take the first step by scrutinizing Bills 356, 357, and 380 in the included Charter change and come up with a comprehensive campaign finance reform proposal. Philadelphia has been in the forefront of many great social movements. This Council adoption of the death penalty moratorium was another historic step in our city in the tradition of our forefathers. Emerging issues such as campaign finance reform often begin at the local, or grassroots levels. We ask you once again to take the lead in our Commonwealth in the area of campaign finance reform. We ask you to follow the lead of other municipalities, as we've heard today, such as New York and Los Angeles. We are 113 /00 LAW & GOV'T - BILL 2 well aware that many of the proposals are flawed and often lead to countermeasures by those comfortable with the status quo. Thus, we do not want to rush into this area. Indeed, certain aspects of the current proposals may inhibit participation of certain grassroots candidates.

We also welcome the amendments that have been offered and think they take a step in the right direction in curing the problems. In 1976, the Supreme Court decided the Buckley case. , matching funds. And I know we have someone from the Brennan Center here today to speak to their recent study regarding the Buckley decision and how it's really failed to address the issue and allow the proliferation of soft money to thwart any kind of meaningful reform. S. District Court 114 /00 LAW & GOV'T - BILL 2 for the Eastern District to advance to a vote in the Senate, I believe, was cut by allowing an individual who opposes campaign financing reform to be elected to the Federal Elections Commission. This will only make matters worse. We are aware that for every move, there is a countermove. Despite this knowledge, we must move forward if we are truly interested in a participatory democracy. Those who term these bills "anti-incumbency" should come up with reasonable alternatives. This issue is too important to be left twisting in the political winds. We urge everyone to take a long hard, look at the proposed legislation and come up with a workable solution to this festering wound in our democratic process. We commend you for taking this important first step.

Thank you. Denise Kulp, please, and then Kathy Miller.

Good afternoon. My testimony deals, I think, more specifically with, I believe, the effects that complain finance 115 /00 LAW & GOV'T - BILL 2 reform will have on grassroots organizations. I've been the co-chair of Liberty City Lesbian and Gay Democratic Club since 1996. We have over 400 members locally, a mailing list of over 5,000. And in 1999, we were part of an effort to register and identify lesbian and gay voters in the City. We were successful in identifying over 18,000 lesbians and gay voters in Philadelphia, over 15,000 of whom are Democrats. Since 1998, I've been the co-chair of the National Stonewall Democrat Federation, a national organization of gay, lesbian, bisexual, and transgender Democrats and Democratic clubs across the country. National Stonewall has over 50 affiliate organizations throughout the U.S. and over 20,000 members. Just over a year ago, the City of Philadelphia came through a Democratic primary in which we had five viable candidates for mayor, and it's no secret that the candidate that was supported by all of the major lesbian and gay political organizations in the City did not win. It was the most expensive Democratic primary in the City's history and one of the most expensive 116 /00 LAW & GOV'T - BILL 2 in the country. And it was the amount of money contributed during the primary that determined who the winner would be. Seeing that two candidates had far and away the most money raised, the media decided that the race was between these two financial front-runners. A lot of people, deciding that the person wanted to vote for had no chance to win, ended up voting for one of the two with the most money. A lot of people, having been told that the person they wanted to vote for had no chance the winning, decided that they wouldn't vote. And this is how campaign finance reform positive effect in Philadelphia. As was made clear by last spring's Democratic primary, the people who have the effect on the outcome of the race here in the City are the people with money. The lack of a cap on campaign fund-raising takes away the decision of who will win from the people and awards it to those who have the money to make substantial contributions to a politician's campaign. It takes power away from the people and grassroots organizations like the ones I represent and puts it in the hands of people who often don't 117 /00 LAW & GOV'T - BILL 2 even live in the City but have financial interests here. And I really encourage members of Council to look at the article about the economic development in Philadelphia that was in the New Yorker this week, by Nicholas Lemon, that talks about that. Grassroots organizations may not have much money, but we are rich in votes, and we have worked hard to get our constituencies out to vote on Election Day, but it's hard to counteract the belief that an individual's vote will have little effect in the face of millions of dollars and the coffers of the predetermined winners. Everyone bemoans the fact of low voter turnout, but we must have the courage to take the steps needed that would erase some of the causes of low turnout. And one of the causes is the idea that the outcome of an election has already been determined by money. Campaign finance reform will help to democratize the democratic process and allow the people who are registered to vote once again to determine the results of Philadelphia elections. Liberty City Lesbians and Gay Democrat 118 /00 LAW & GOV'T - BILL 2 Chub wholeheartedly endorses campaign finance reform in Philadelphia, and we're very willing to work with Council and the committee on whatever bills -- on how the bills are final written in the City thank you. Thank you.

Miss Miller.

Thank you. I'm Kathy Miller, the President of Philadelphia NOW, and I appreciate very much that City Council is holding these hearings, and I appreciate Law and Government Committee and Councilman Cohen for doing this. I'm delighted that the issue of campaign finance reform is being given some serious consideration. I'm probably the least technical witness on this. And my major concern here is the effect that campaign finance reform has on the potential of women taking a more active voice in governing ourselves. It took women 72 years to get the right to vote, we've had it for 80 years, and we still have a very small percentage of women in the governing bodies.

But not in this 119 /00 LAW & GOV'T - BILL 2 Council. We have a lot of good women in this Council.

We have a lot of good women, well but out of is not even half. 6

Okay, we're not half 7 there, but -- 8

We're not half there. 9 We're not doing bad but we're not half there. 10

But a few years ago, 11 there were none -- well, a couple. 12

And things are moving and 13 I think things have been moving, and I would be 14 interested in term of, like, Los Angeles and New 15 York whether they can tell whether the impact has 16 been on having more women, in fact, run for office 17 or not, but that we're still one of the major difficulties for women --

I know one in New York who ran an insurgent campaign against a very well-financed individual. Margarita Lopez, Margarita ran an insurgent -- am I right? -- an insurgent campaign, a really grassroots campaign. And the only way that Margarita Lopez was successful was because New York City had public 120 /00 LAW & GOV'T - BILL 2 financing, and she ran against an individual or two individuals. She ran against -- I know one individual that really out-raced her tremendously, and she was able to -- this is to me the proof of independent candidacies being able to overcome the party machinery, because Margarita was not only Puerto Rican, she was a lesbian Puerto Rican, and she was running on a ticket that really was a progressive agenda that she was pushing, and she has become one of the more vocal City Councilmembers, one of the thorns on Giuliani's side.

Yeah. This is exactly what we're hoping will happen with the finance reform, that if we change the way local elections are financed, then more women will be able to actively take part. One of the biggest barriers for women has been how elections are financed, and women historically have had the lack of access of control of money. I know some people have raised concerns that finance reform will hamper women, or that just as women are starting to learn to play by the rules, they're changing the rules. Most groups of 121 /00 LAW & GOV'T - BILL 2 women who I know who are politically active feel like campaign finance reform is essential to women getting in there, that we're quite aware of the fact that campaign finance reform will change -- can actually help level the playing field. I don't think it will make it even; I think women will still have an uphill battle, but it lessens the difference and makes it a more even playing field. And I was here when we honored Granny D for her long and valiant walk across the United States to call attention to the campaign finance reform issue. I sincerely hope that we will not just honor her.

I hope that we will honor her by passing a meaningful campaign finance reform bill.

Yes, that's my hope too. Thank you very much.

Darlene Cradle, because she's a part a community panel, and I know that she has a short statement. Stay, please. (Witness comes forward.) 122 /00 LAW & GOV'T - BILL 2

Just bring in a chair in there. Identify yourself for the record and proceed with your testimony.

Okay. Good afternoon. My name is Darlene Cradle. I am a board member with Philadelphia ACORN. ACORN has 5,000 members strong. It's a very strong organization for low- and moderate- income people. Too often, low- and moderate-income neighborhoods are denied access to democracy because one of the simple facts: money. We can't make large contributions, and often people running for elected office listen to their contributors. We need to take big money out of politics and pass strong campaign finance reform legislation here in Philadelphia. It should be about one person/one vote instead of one dollar/ one vote. On behalf ACORN, we support Councilperson Kenney and Ortiz and request for campaign finance reform. Take money out of politics and put democracy back in. Thank you. 123 /00 LAW & GOV'T - BILL 2

Thank you. Mary said something when she testified, and we're not rushing. I mean, today Nicole Gordon's and Rebecca Avila's testimony were -- and the facts and the issues that they brought in are some things that we want to bring integrating into the bill, putting it into the bill, but we have to begin at one point, and I want to be able, from all of testimony that we have and we are getting, to be able to come out with the most comprehensive bill possible. And if individuals such as Marguerita Lopez can succeed in the machine-hard, nitty-gritty politics of New York City -- I know some of the Bronx boys. Freddie Ferrell (ph.) is a friend of mine, Jose Rivera is a friend. Roberto Ramirez, I spoke -- I spoke to him because we're involved with the Vieques issue and are doing a lot of stuff. And they play hard politics. They play, I would say, even harder politics than we do here, if that can be possible. And -- but you still see people. I mean, you have an iconoclast like Jose Rivera, who is a Puerto Rican in the South Bronx, who takes 124 /00 LAW & GOV'T - BILL 2 the most outlandish progressive, really progressive positions. You have people like Margarita Lopez succeeding against big-money interests and big-machine interests. So -- and the only way -- and Guillermo Leonares, Guillermo Leonares succeeded again against machine interests, against the Manhattan Democratic machine in there, and he was able to succeed and run for a Democratic district that because of his politics -- not only that he was Dominican and the first Dominican running for a council seat in New York City, but he was under-financed, and his politics -- his politics are very similar to mine, in terms of progressive outlook, in terms of the issues that he takes on and advocates for. And he was easy able to overcome those odds and win, and win. So I think that one of the issues that that proves to me is that if you have it done well, if it is established well and the limits are set in such a way that they're realistic and people are able to organize and get out their message, independent politics, I think, will not only survive, but I think will thrive under this 125 /00 LAW & GOV'T - BILL 2 system. Yes, Ed?

I think it's a procedure in terms of looking at this. The starting point -- what seems to fly most is the spending limits on individual contributions. I mean, we all kind of accept that in other races. And so there's a lot of precedent there, you can't give more. That doesn't solve the problem if the individuals have a lot of money themselves, but it certainly does a lot to broaden the base of, as I said, people who contribute. I think the second issue you need to look at rather quickly really revolves around the fiscal implications of this. I don't think you should treat this lightly. I've just finished reading the PICA report on the City's financing. They're raising all these risks, you have a projected budget that doesn't include pay increases for employees and the rest of it. What does this realistically look like it's going to cost in order to achieve any meaningful result?

I agree, Ed. You 126 /00 LAW & GOV'T - BILL 2 know, when this thing was approved in New York, New York was going through some sort of fiscal situations itself at that point. And, again, I go back to one thing that impressed me at the end there when Miss Gordon says that the fund has to be considered important, and I wrote it here on this paper, as an integral aspect of democracy.

I heard that and I think that --

And the thing is that we spend a lot of money very foolishly in this city, millions of dollars. I think we are not the size of New York, we're not "8 million stories in the Naked City." You know, we are 1.2 million; by the time the census comes out, maybe 1.1 million, who knows? And so we want to make it very rational. And I do not believe -- Rebecca Avila said that in the last election, the expenditures from the fund were in the hundreds of thousands of dollars. Is that right, Rebecca? You know, in a city of 3 million people. And so what we have to go by is the experience of other cities and what they have gone 127 /00 LAW & GOV'T - BILL 2 through. It's like when they were talking to us about domestic partnership here. One of the issues that they kept saying to me in arguing against the domestic partnership bills was the same phrase you used -- you got to consider the fiscal implications of this on the budget. It is going to put a huge hole in the City budget. Well, we have approved it, people. It's functioning, and it has not. Either at one point in time, we're going to have to have the courage to invest -- as Nicole Gordon said, invest in democracy. And as Mr. Pedro said when he came in and said to invest in it and, you know, let the citizens of Philadelphia be the judge of whether they want to do this or not. And I believe that, just like in New York, the people of New York voted it in and the people of L.A. voted it in, and I think the people of Philadelphia will fool us. I think they will approve it.

I'm merely saying -- I'm not disagreeing with you and, in fact, again, we do have the experience of these other cities, which may be very assuring, and I certainly think 128 /00 LAW & GOV'T - BILL 2 that, you know, I'm inclined to support it. I mean, we seem on a stadium or whatever you think of the project, $200 million, oh, yeah, that's nice. So when you really want to do something --

A billion.

Yeah. Well, I'm just saying that we're spending $200 million more, etc.. Whatever the number is, it's a lot, right? And people accept it. Again, I'm merely saying, as a procedure for dealing with this, coming up with -- you may end up with a number that's so reasonable based on what we're trying to accomplish here that it will reassure people, and then that becomes the basis in part on working backwards toward the spending limits that are appropriate, keeping in mind these concerns about insurgency that I raised.

But I do believe -- Mary, go ahead, say it.

First of all, let me say, I think you drove away from me when we were talking, and I didn't hang up on you.

No, I just ran out 129 /00 LAW & GOV'T - BILL 2 -- the cell phone.

You went someplace, but I figured, oh, okay, I just want to make sure I didn't --

It's the cell phone.

Okay. You know, I think Ed is right, and that's why we brought up the amount, because of all of this. And so we have to make sure that there is proper oversight, that the audits are in place because we all need to be pulling on the same (unintelligible). We absolutely want campaign finance reform, we are totally 100 percent with you on that. We just want to have it so that it's the easiest sell because of, I think, some of the reasons we said. You know, it's going to be a hard thing, and if people are saying, but you're not going to keep track of where it's going and who's doing what to whom, in this town, it's, you know, it won't work.

No, the audit idea, those ideas we want to integrate that into the bill. The people have to have confidence, as 130 /00 LAW & GOV'T - BILL 2 Nicole Gordon said. The people have to have confidence that the money that is being taken out of the fund is going to be spent responsibly, that it is going to be spent in what we're talking about, that it's going to be spent in good government, in helping government become more responsible and much more responsive.

And they have been able, evidently, to amend it in New York, and I'm not saying that we're rushing -- well, we feel a little rushed, for whatever reason, it's two weeks and here's the hearing, and we only have a couple weeks, and all of these things have been left out, and we want to have a full discussion so we can get everything in as fast as possible.

Well, Mary, remember, we tried to do this last term and it never came up to a hearing. Now --

Well, it wonderful.

And now we're at the hearing level and we're moving along.

And we thank you for all of that.

Okay, thank you. 131 /00 LAW & GOV'T - BILL 2

Thank you.

Robert Wingert, Larry Frankel and Glenn Moramarco of the Brennan Center. (Witnesses come forward.)

I really appreciate you guys listen to all of this because I know that some of you -- I know that Mr. Moramarco and I have discussed this issue for a long time now, and I know that you must have heard this testimony many times before, so I appreciate it. Whoever is going to go first, please grab the microphone and identify yourself for the record.

My name is Larry Frankel, the Executive Director of the American Civil Liberties Union of Pennsylvania. And I'll wait till the two Councilmen are actually pretending to pay attention.

Yes.

I want to thank you for inviting me to testify today on the campaign finance reform bills. I compliment you for initiating this discussion and especially commend 132 /00 LAW & GOV'T - BILL 2 you for considering the idea of public financing for candidates in Philadelphia elections. I want to first state that I cannot present you an official position of the ACLU of Philadelphia. The Board of Directors is meeting next week and we'll have the bills on the agenda. I think they will also have my testimony to consider. I have tried to highlight in my testimony what I think are the issues that I expect to at least -- if I don't bring them to the Board, the Board will probably want to consider them if they, you know, continue to formulate their position on these bills, and I hope that my review of those issues will add to your perspective and consideration on the legislation. Of course, we'll address the issue the constitutionality. S. Supreme Court has upheld federal and state laws limiting the amount that individuals and Political Action Committees can contribute. That's the Buckley case and Nixon v. Shrink Missouri Government PAC upheld state limitations. On the other hand, the Supreme Court, starting in Buckley, has been much more skeptical 133 /00 LAW & GOV'T - BILL 2 about legislation of limits on expenditures, and particularly in the area of independent expenditures, whether they're by political parties, incorporated political associations, or Political Action Committees. If they're independent, not coordinated with the campaigns, it's going to difficult to regulate them. In Buckley, the Supreme Court also held that Congress could engage in public financing of elections and may conditions acceptance of public funds on agreements by candidates to abide by specific expenditure limitations such as you guys have set forth in your bill. However, to withstand constitutional scrutiny, the public funding system must be truly voluntary and not coercive. With those principles in mind, let me discuss several specific aspects of the legislation. Certainly, the contribution limits for all candidates, the mandatory limits on all candidates, would probably survive a constitutional challenge. I do not think that the same can be said with regard to limits on how much any candidate can raise in an off-year. I don't 134 /00 LAW & GOV'T - BILL 2 know of any particular precedent that would support this kind of temporal restriction, both on the raising and giving of money, 'cause it also affects those who give money. You're saying I can't give to candidate in X-year if he's already hit the limit, so it's not just affecting the candidate's ability to raise money, it affects the person who might want to give money. In light of the Supreme Court's holding in Buckley about expenditures and, of course, skeptical views on a variety of restrictions on defended expenditures, I am doubtful this kind of regulation would be looked upon with favor, although there be some cases that indicate it could. I also think -- and I will get later into my testimony -- that there may be practical reasons that it may not be a good idea. I'm going to shift my focus now to the public financing aspects of the bill. Nationally, the ACLU has been very supportive of public financing as the most sensible campaign finance reform and one that runs into the least constitutional problems. We believe that the public would be well-served if government provides 135 /00 LAW & GOV'T - BILL 2 the means for candidates to deliver their message, give them the floor, give them the ability to get out into what is the media market for their candidacies and get their message out. As long as the system is truly voluntary and not coercive, the ACLU supports this means of reform. I would anticipate that my board and others would focus on a couple aspects that appear problematic. First, the amounts provided to candidates seem insufficient.

I can't imagine any credible candidate for mayor of the City of Philadelphia thinking he or she can wage a competitive campaign and deliver his her message for $750,000. While many may think that the amounts spent in the last election were extremely large and offensive, it still takes money to be on TV, on the radio, put out print material, and maintain a campaign. So 750,000 probably won't do it. The amounts aren't necessarily coercive, but they may be virtually unattractive. Now, I see your amendments, and I'm going to get to amendments before I finish my testimony, Councilman. I've had a chance to look at the amendments. 136 /00 LAW & GOV'T - BILL 2 The other issue I want to address is a more complicated issue, and that's the impact of independent expenditures. First of all -- and this isn't in my testimony -- I don't know if your definition may need some tweaking. I was looking at one of the cases which I'll discuss and in Minnesota. Although the law was invalidated, they at least made it clear that independent expenditures did not involve newsletters sent out by organizations that may indicate, you know, ratings of candidates. You know, there's all sorts of organizations in the City that yearly, you know, like to let their members know how they feel about that, and I don't know that we want to make independent expenditures, and the definition isn't clear in the bill. But more problematic is the section 19 that says that if it's determined that a candidate who participates in the public funding system is the subject of an independent expenditure campaign, then that participating candidate shall receive public funds at a rate of $10 for each $1 of eligible contributions made. I'm not completely certain of what this really means. 137 /00 LAW & GOV'T - BILL 2 Does it mean a campaign against you? which is what it logically sounds like. But what about an independent expenditure campaigns on behalf of a candidate? That is not really described in the legislation. I mean, if the candidate has a campaign on behalf of them, should the opponents of that candidate get money? While I'm not completely certain of what the provision really means, it does sound like you could have a massive infusion of public funds to a candidate as a result of that kind of independent expenditure campaign. And we believe that this impacts on first-amendment rights. And I'll give you an example. Suppose the labor unions get together and decide to target, let's say, a District Council race, and they want to spend considerable sums on an independent campaign against a candidate who they think is hostile to their interests. Well, according to the bill, that would trigger off public funds being distributed to the candidate they're opposing because they've chosen to get involved in a race that they care about, and then they affect their members and the 138 /00 LAW & GOV'T - BILL 2 livelihood of their members. Now, there's conflicting court decisions about whether this indeed does impinge on first-amendment rights. The most recent case is from the First Circuit, and I know that my -- I think I can call him "a colleague" here, because we've been on a debate at least together, and he's come and spoken to my board. They were involved in successfully defending law in Maine, which had a provision, although not a 10-to-1 provision. But there's another case from the Eighth Circuit which invalidated a Maine law which had a matching-fund provision when they were running independent expenditure campaigns.

You know, just to get a flavor, the court there went the other way, and they described a system in these words: "Thus, by advocating a candidate's defeat or her opponent's victory by an independent expenditure, the individual committee or fund working for the candidate's defeat instead has increased the maximum amount she may spend and given her the wherewithal to increase that spending merely by exercising a first-amendment 139 /00 LAW & GOV'T - BILL 2 right to make expenditures opposing her or supporting her opponent. " Now, I understand that independent expenditure campaigns are an issue that's going to have to be dealt with if you're going to have public financing, but I think it does become problematic, and I used labor unions as an example. I could use a race involving a pro-choice candidate or a pro-life or a pro-gun safety candidate or a whole range of issues. I mean, we're not even talking about people who've got a financial interest per se in government but who care about an issue deeply. And I think we have to really grapple with what the consequences of giving a candidate matching funds because that group has decided to exercise its right to be involved in the election. I don't have an easy answer to it. I know it's a problem that has to be addressed, and it is a first-amendment issue. And I think that although the courts are split, I think that we 140 /00 LAW & GOV'T - BILL 2 have to look at that.

I don't we want to infringe on the first amendment in any way.

I don't think you are either, and I think we want to be careful. And I know there's going to be further work on the bill, but I think we need to look at what some of other cities and states that have public financing and see how we solve that problem. I would also like to address another constitutional point, and that is the ineligibility of individuals or businesses to enter into a contract for goods or services, city financial services if they donate to political campaigns. And I know eliminating pay-to-play sounds like good political rhetoric, but in reality, it means many individuals could lose their rights to give money to candidates of their choosing. I mean, I think if you read this broadly enough, you've got a law firm, and that means every lawyer in that law firm cannot donate any money or that law firm cannot apply to do any work for the City, and that, I think, is 141 /00 LAW & GOV'T - BILL 2 inhibiting a tremendous amount of first-amendment activity. And if you've got maximum contribution levels already, I'm not sure that you need to also have that kind of provision in here. One final constitutional question -- maybe it's not constitutional, but it fits in here, which I'm not about to address, but I think some lawyers who understand Home Rule Charter and the interaction with State law really need to take a look at is whether the City even has the authority to do this. As you know, Councilman, I do lobbying up in Harrisburg, and I'm sure you know the State House has passed a bill with an amendment that is sitting over in the State Senate, which would make it clear that the City has the authority to do it. One would ask, why do they think they have to pass such a bill if the City already has the authority? I think it's a question I'm not prepared to even try to answer, but given the history of some attempts by this body to enact legislation to only see either the State legislature or overrule it or the courts throw it out, I think it ought to be looked at carefully. 142 /00 LAW & GOV'T - BILL 2 And one thing I would certainly suggest -- at least with regard to the legislature -- if this bill comes out as a Democratic-only bill, without bringing some Republicans on board, you probably are guaranteeing a bill in Harrisburg passing rather quickly with the Governor's signature trying to overturn it. I mean, I think you really need to make this bipartisan and yet they not see it in any way as a Democratic attempt to make it harder for Republicans to participate. That's not an ACLU position; that's just, I think, you know, a gratuitous advice. But having seen enough things this Council's done interfered up in Harrisburg, I don't think it, you know, can be lightly dismissed, and that may change if the majority in the House changes, but I don't know that we can anticipate that. Moving beyond some of the constitutional issues, I just want to point out when I view campaign finance reform proposals, and I've had an opportunity to do so, I think one of the questions that we really have to ask is whether the proposal -- how much the proposals really favor incumbents, because oftentimes, I 143 /00 LAW & GOV'T - BILL 2 think if you look at it closely, and maybe, you know, this makes people vote in favor of them some more and probably sometimes some proposals don't pass, you have provisions that do help incumbents. I think the public has a right to expect that if you change the system, it's going to be more competitive, not less competitive. And I think you have to be careful at looking at some provisions to make sure that you don't inadvertently make it less competitive. I think limiting challengers to how much they can raise -- not just incumbents but challengers, to how much they can raise in off-years, particularly when you have a primary that's in May, can create a lot of problems for the non-incumbent. I mean, can you imagine -- what if Sam Katz could only have raised $100,000 a year each year before the general election?

He would have started off much further behind than he already was. Can you imagine somebody running against an incumbent Councilperson and not being able to try and build up a war chest prior to the election year and then even be taken seriously? 144 /00 LAW & GOV'T - BILL 2 You know, incumbents maybe can't raise more than that either, but they already have a whole lot of built-in advantages. They, you know, have newsletters they can send out, they can do all sorts of community events, they get all sorts of press. I mean, the challengers really need to be able to raise money sometimes to run an effective campaign, and this would limit them. I think the limits on expenditures on candidates for -- the public financing also inhibits the challengers, and I see that the amendment that you've got proposed would increase those amounts. And I think that is important because you want to make it so it's attractive enough for a challenger to say, Yeah, I'll go with public financing because that that will really give me enough money to be credible and out there. One risk that I see, and if you'll let me play off this scenario, I think a savvy incumbent would realize, you know, I've got enough name recognition, I've got the ability to deliver my message through my office, I'll go with public financing. If my opponent doesn't go with public financing but raises enough money, I'll get even 145 /00 LAW & GOV'T - BILL 2 more public financing money, so if they're successful in raising money, I'll benefit also. So I think you just want to take some time to make sure you are not -- I mean, you are incumbent, but I think your motives are well and good, and we don't want to --

How did Feingold win like that in Minnesota?

Feingold was in Wisconsin.

In Wisconsin, and he squeaked through but he made it against the challenger, who spent huge amounts of money.

Mm-hmm, mm-hmm. But I would want to note some practical issues that I noticed in reading the bill. It's silent on the status of campaign funds already accumulated before the law goes into effect. What is going to happen if, you know, somebody's got half a million in the bank already? You know, they're going to have an advantage, I don't think you can take it away from them and say they can't use it, and I would be interested -- and I haven't had the time -- to like learn from the experience of New York 146 /00 LAW & GOV'T - BILL 2 and Los Angeles, what they did. I mean, how did they, time-wise, implement this to this deal with that issue? Are the enforcement tools sufficient to really discourage political operatives from trying to skirt the various prohibitions contained in the bill, or is this a regulatory system that is so full of potential loopholes as to be nearly unenforceable like the federal law? You need strong tools and strong teeth. I mean, we've seen what's gone on at the federal level. There was even a story in the Wall Street Journal today about even some of the Republicans were questioning some of Congressman's DeLay's tactics. I mean, you've got people who spend a lot of time scheming and thinking about where's the loophole and how do I get around it? They know they can because the enforcement mechanism isn't --

I think that's been the advice we got both from L.A. and New York in terms of being very strong along those lines. And I think that's something that we would hope to integrate into the -- I mean, the hearing has been very instructive, because it has shown where it is 147 /00 LAW & GOV'T - BILL 2 that we need to go to make it a stronger bill and a much more relevant and meaningful bill.

Yeah. I think the hearing's been very good in that regard. I also have a series of questions about Council-at-large elections. First let's go to what's the debate going to look like? If you have to participating candidates, only the most 10 diehard are going to listen to 20 to 25 11 candidates, believe me. I know that someone 12 mentioned the Senate race. In the primary here, 13 we had six candidates up on a debate. I mean, how 14 many people watched one full one, much less four 15 or five, you know, especially when everybody 16 recognizes -- except those candidates who aren't 17 extremely competitive -- that maybe you're down to 18 7 or 8 but you still have to listen to the other 19 15 because of the way the debate structure is. 20 It's just something pragmatically that has to be 21 thought out. 22

Councilman Kenney, 23 you want to say something? 24

No -- eventually, 25 yes, I have a couple questions. 148 /00 LAW & GOV'T - BILL 2

Another question I have is, how do you deal with an independent expenditure campaign in the Council-at-large elections? What if, say, there's ten candidates who are participating candidates and there's an expenditure campaign in favor of one? Do you give matching funds to the other nine? Do you figure out which one is actually the target of the campaign and give that one -- I mean, I don't know what the answer to any of that is. I don't know that anybody does yet, and while we can learn some things, I think, from New York City and possibly Los Angeles since they don't have at-large elections, those issues are a little different. And the last point I'd like to make is, we also need to consider the impact of the lack of State regulation and the lack of State law in this area. I don't know -- again, I think it's useful to look at what's going on in other cities and what kind of laws those states may have. But Pennsylvania is pretty notorious for having virtually no State regulation of campaign finance, certainly the amounts that given. And can we successfully regulate -- can 149 /00 LAW & GOV'T - BILL 2 one successfully regulate their activities so that they are not becoming the vehicles for what, you know, generically we might call "soft money," that then is used to influence elections in the City? I think that has to be seriously looked at. I don't know what the experience has been in other places, but there's a whole range of other entities interested in what occurs in Philadelphia that are not necessarily, you know, any candidate's campaign committee in this city. And I think you have to consider the interaction between the two in making sure you have a strong bill. My final comment is the one point -- and I don't know how you build it into the legislation, but the woman from New York said you got to constantly be vigilant and probably modify the system as you see the problems that arise and address, you know, things that nobody's even thought of here today that you'll see once you implement a system. But in closing, I want to commend you for initiating this discussion. It's the beginning of what I think is an important process 150 /00 LAW & GOV'T - BILL 2 here. I hope that the focus will be on a public financing system. And to the extent we have time and some expertise to provide, we'll be happy to assist.

Jimmy?

Yeah, thank you. There's two general issues that get raised from most of the testimony that comes from people with legal expertise and legal background, and that is one on constitutionality. And I'm wondering how you view the continuing success and existence of both New York and Los Angeles and some other major cities that they have not been either struck down or challenged for their constitutionality and can be more restrictive, or as restrictive, as what's being proposed here.

I'm not completely familiar with all of the provisions in those bills. Let me tell you what I think is unquestionably sound here: restrictions on the amount that people can give. The Supreme Court decision this year made it clear that as long as you've got some rational basis for setting those amounts and the amounts I see are chosen are 151 /00 LAW & GOV'T - BILL 2 pretty much the federal amounts, those are going to be upheld. A voluntary system of public financing with an agreement that you will not spend beyond those amounts, that's going to be constitutional. Some of others, you know, I don't even know if those other cities have some of the kind of provisions here with regard to the time --

Los Angeles, I believe, does.

Los Angeles does. And I don't know whether anybody's ever challenged it on that basis as well and whether it poses any kind of problems. I don't know what the term limits there may be, and that may affect some of that to a certain degree. I just caution that it struck me in terms of reading it and, you know, no criticism of it. You know, we had less than two weeks. And, frankly, there's been some other business on the table, and I'm glad to hear there will be further time to take a look and do some further research. In the independent expenditures, there's a split in the courts, and I think there's 152 /00 LAW & GOV'T - BILL 2 still a lot of work that needs to be done. So I think the general framework is there and in place. There may be some particular issues. I don't see, you know, a court striking down the whole thing. There may be certain details that may be --

Do you believe that the State -- that the Commonwealth's lack of oversights provision law on -- statute on this particular issue is maybe, in the long run, good for us? Because they're not prohibiting us from doing anything. If they're silent on the issue, would it indicate some leeway for us to monitor ourselves because they are silent on a specific issues? Is that's how courts have ruled or have they ruled alternatively on those kinds of issues?

I'm going to say I need to look at that a little more closely. You know, maybe it's a gut reaction, but obviously, some people in the state legislature think you don't have that authority.

Well, we do have an opinion from the City Solicitor that says we can 153 /00 LAW & GOV'T - BILL 2 do it and it is defendable. I understand a lot of folks in the legislature will always say that we don't have the authority to do anything.

They also thought you had the authority some gun-control legislation.

I was actually surprised that it got out of the House, frankly, and-- well, it got out of the House and it is in the Senate, and I think some of the conversations, informal conversations, that I've had and others have had with senators in trying to explain what it is we're trying to accomplish, I think there's been somewhat a softening of what you would expect them to be against it. I mean, some prominent who have people raised a lot of money themselves say, Well, yeah, if you explain it that way, I understand it, and if you guys want to police yourselves, that's fine. As long as you're not imposing upon our ability to raise money, we don't really care. So I think there's a possibility it may even get out of the Senate.

If I may. I think there's a possibility. I think to aid that -- I 154 /00 LAW & GOV'T - BILL 2 mean, I think you would be on much better grounds if the bill was passed in the Senate and signed by the Governor, and no one could then come in and say they didn't give you the authority. You know, you take that away. But I will go back to the -- I think it's much more likely to pass the Senate if it appears there is significant bipartisan support for the legislation because, frankly, the House -- it was easy. They know, we pass it, we can say we voted for campaign finance reform, and let the Senate be the bad guys. I mean, you know, that happens all the time, as you know well. Let the other guy be the bad guy. It's different when you have a unicameral legislature like City Council, you can't play that game.

And I guess as a matter of comment, I find it difficult, although I understand the concept of the first-amendment issue as it relates to television advertising, but I guess you would at least acknowledge the fact that from, I guess, maybe a truth in advertising situation, it's difficult to defend the amounts of money that are spent to spin a person's image in 155 /00 LAW & GOV'T - BILL 2 ways that maybe really don't relate to issues but more relate to trying to portray a person in a particular way. I mean, Neil Oxman's favorite comment that I've read in a story in the Washington Post was that he viewed his job as keeping people from going to the polls, which I thought -- I called him up about it and had a discussion with him about it, which I think is kind of crazy in the long run if you're looking at it that way. So money, in some ways, large amounts of money, are being raised to put stuff on television that really make people not want to go out and vote. And I'm wondering if in the end analysis, maybe from a legal standpoint it may be accurate, but from a moral or practical standpoint, it really isn't even promoting the first amendment; it's stifling in some ways people's desire to participate in their democracy. And I don't know a legal way around it, but just from a comment, an observation standpoint, I mean, you look at some of the commercials that you see in the last election, 156 /00 LAW & GOV'T - BILL 2 that you see in the presidential election and you see in the mayoral elections, I mean, we all know these people, and we're saying, Who is this person on television spending 10, $15 million, creating an image that we know may not even be true? But all that aside, the fact that campaigns have become so electronic and so televised so product-slick, I think, in many ways, has detracted from people's desire to participate anymore. And if we could rachet down the amounts and change the ballfields from major-league ballparks and go into a minor-league ballpark price-wise, it may get more people wanting to at listen to what we have to say as opposed to flipping the dial as we show up in their homes unsolicited.

Glenn Moramarco and then we'll follow with Common Cause. And, you know, you cannot read this thing, but just give me the stuff and this will be included in the record because it's a good analysis of the New York bill 23 here.

Sure let me just make sure that everyone in Council is clear about the 157 /00 LAW & GOV'T - BILL 2 Brennan Center or at least what we've been doing recently.

Identify yourself for the record.

Sure. Glenn Moramarco from the Brennan Center for Justice at NYU School of Law. The Brennan Center was founded about five years ago by former law clerks and friends of Justice Brennan to work on issues that were of concern to the justice. A premier one is democracy. In that line, we've been involved in campaign finance reform for some time now and have really been very active in litigating these issues on a day-to-day basis. We represented parties in the Shrink Missouri case that has been discussed today. We got Senator McCain on the ballot in New York. I'm representing Ralph Nader now to get him on the ballot in North Carolina. I successfully the Maine Clean Elections Act case, which was the first full public funding statewide initiative in the country. And I think people have read in the Philadelphia Inquirer on Monday about our landmark 158 /00 LAW & GOV'T - BILL 2 study of issue advocacy that just came out, analyzing all of the ads from the 1998 election. But in terms of litigation, we bring some expertise to the field here, and I would like to discuss then a case that Larry brought up, because, actually, I would go farther. I'm not in fundamental disagreement with Larry on some of these issues. I think the worse thing that could happen would be if you pass a law that then gets struck down, because a lot of effort is obviously going into this, and I see from all the testimony that there really is a ground swell of support in this city for good and effective public financing campaign reform system. So it would be silly to lose it then in some details that may not be necessary. And while I don't think a court would strike down the whole bill, I think you ought to know going in which are the potentially problematic areas here. A. and New York, you're fine. Mandatory contribution limits, public funding, voluntary spending limits those are all sound and reasonable, and you're not 159 /00 LAW & GOV'T - BILL 2 going to have any problem, but there are some aspects to this bill that are a little unique that you need to need to give a little bit more thought to, perhaps. The lower contribution limits, for example, for those seeking government contracts or benefits, I actually think that that would survive. I think the case law on that is pretty good. C. Circuit, basically based on the Securities and Exchange Commission rules on pay-to-play. What the federal rule now is that you can only give $250, which is very close to your $200 limit. And I think the court there was satisfied that by allowing some de minimis contribution, you weren't cutting off a person's first-amendment right, but you were attacking an area in which there really is more pervasive opportunity for corruption. There are a number of states with similar provisions to this; it is not 160 /00 LAW & GOV'T - BILL 2 unique to the Philadelphia bill. And so I think that that is something that you could pretty strongly defend if you decide politically you want to keep it. On the other hand, the 10-to-1 match for independent expenditures, I think, really is questionable both in terms of policy and constitutional validity. There are two cases on that, and I defended the successful one in Maine, which is the only positive precedent in this area. But that was a 1-to-1 match, and the Court there was persuaded that with a 1-to-1 match, you can say that it's furthering first-amendment values because when somebody speaks, there's a right to reply. And there really is, you know, a furtherance of a debate here is like giving equal time. Here, this 10-to-1 match seems to be to just be punitive. It's saying to people, If you have an independent expenditure, the person you're against is really going to be helped tremendously. There are other ways to do this. You could do this the way Maine does.

You can say if 161 /00 LAW & GOV'T - BILL 2 somebody's the target of an independent expenditure, the City will match the amount of that expenditure, or you can raise their otherwise their voluntary spending limit by the amount of the independent expenditure. There are lots of ways to do that, but I think a court would see 10-to-1 as punitive. A closer call is the total contribution limits for off-year fund-raising. There's not a lot of case law on it, it's mostly at the State level. There aren't federal decisions on it, I don't think the State Court decisions are that well-reasoned, they go both ways. I mean, I think you just should know that that's a gamble. You may not want to invite the problem unless, for political reasons, you think it's very important. A. very well at all. But it's a problem area. The other thing I would suggest is, it seems to me the penalty section here really needs beefing up. Under the federal system, what you have is, you tie the potential penalties to the 162 /00 LAW & GOV'T - BILL 2 magnitude of the violation, so that if it involves contributions or expenditures of $50,000 -- there are basically two tiers in the federal system. For regular civil violations, it can be $5,000 or the amount involved in the nondisclosure or non-reporting. And if it's willful, it can be $10,000 or twice the amount. It seems to me, you want to tie whatever the penalty is to the magnitude of the offense. I know that Common Cause also raises an issue about independent expenditures, which I did not address in my testimony, but just want to say for the record that I think their recommendation is really quite good, and you should look at the definition of "independent expenditures" more closely and go with the bill that they recommended. This is the most -- this is one of the most contested areas in public finance today. It's very, very difficult to predict what the courts will approve in this area, but I think the bill that is put forth in Common Cause's recommendation is really quite a good one.

My name is Robert 163 /00 LAW & GOV'T - BILL 2 Wingert. I'm a Philadelphia resident and business person and a former member of the Pennsylvania Common Cause Government Board. With me today is Barry Kauffman, who is the Executive Director of the State Governing Board of Common Cause. I'm going to be very brief because much of what I had to say would be redundant, and in light of the honor, it would waste everyone's time. We applaud what you're trying to do here. We appreciate what it would do to open the doors for people who otherwise wouldn't have a shot at public office, and we appreciate also the concept of limiting campaign contributions to a level that would force potential candidates to get out and play the field a little more in terms of fund-raising. Obviously, they wouldn't spend a lot of time lobbying big-ticket contributors and avoiding the small gain. We know that these reforms can work because where they've been implemented in other locales, they've worked. And we know that -- we have some information that we can elaborate on that issue if you would like. 164 /00 LAW & GOV'T - BILL 2 We have several recommendations for changes to the proposed legislation, and we are submitting those along with my written testimony for your review. I'll turn this over now to Barry.

Thank you for conducting this hearing today. I think it's very important. I think it will add some momentum to your efforts. I just have a few brief comments. Common Cause, you will notice in our written comments -- and we're not going into that at this time does -- does share almost all of the concerns that the Brennan Center has raised as well as the ACLU, and we have some suggested ways of remedying those problems. Four points which we did not put in written testimony, which I would -- I think it's important to reinforce form prior speakers. And that's: I think New York suggested that you have audit and subpoena power. I think it's really important if we're going to protect the public purse. Public finance is important, it's worthwhile, but I do think we need to protect it. I think we need to apply party 165 /00 LAW & GOV'T - BILL 2 expenditures on behalf of a candidate to the overall expenditure limits of that candidate. I think that was suggested by one other person. One of the bills -- again, this is a technical amendment now. I think we have to make it absolutely clear that the expenditure limits are in the aggregate, that you cannot give $1,000 once, $1,000 twice, $1,000 three times, but 333, and 333 and 333 make the 1,000. So that all those limits are in the other aggregate. And every other municipality I've talked to -- and I did get a chance to talk to several yesterday -- made it absolutely clear that you must have a nonpartisan tough-minded enforcement agency to keep the public's confidence in this. And the one issue which has come up quite a few times -- and I think it's an issue we're all going to have to deal with as we promote this, and that is the cost. It's a legitimate issue, but I think we can win on that issue, because in the several municipalities I talked to, they noted the pay-to-play does seem to diminish, that there is less incentive to have to reward 166 /00 LAW & GOV'T - BILL 2 political contributors. And to some degree, this system may pay for itself because there isn't this reward system built in that we have in the current system. But even putting that aside, I think we can defend this on its own because there's no more important task or duty of a government, especially a representative democracy, than in protecting its own integrity and the people's confidence in that integrity. And I cannot think of any more justifiable expense than protecting the integrity of elections because, let's face it, elections are the only way that the average citizens have in holding power accountable. So protecting the honesty, the openness, and the competitive elections, I think, is absolutely essential and is justifiable on its own merits. Thank you.

You know, what bothers me more than any single issue in this area is the feeling I have that decisions at the government level may not be made on the issue of merit. It's very distressing to learn, for example, that a campaign contributor pays for the 167 /00 LAW & GOV'T - BILL 2 cost of a trip to a foreign country by a candidate and then shortly thereafter, the candidate, who has the power of decision-making, shortly thereafter, a very big contract involving millions of dollars is issued to that candidate. It may very well be that the decision was made totally on merit, but everybody -- you know, everybody says they hope so, but there is a note of question in most people's mind, and in many people's minds, there is a conviction that the choice had nothing to do with merit. That happens constantly in this city. The excuse given is that, Well, we have to pick among contributors because everyone's contributing large sums of money to our campaign. Therefore, we're not being influenced by the contribution. In other words, I guess if you get enough corruption, then the honest person is guilty of something for not participating in the system of corruption. It's just a very uncomfortable feeling. We citizens ought to be able to feel that public monies and public decisions as to money are based on merit. And I find that a more important issue 168 /00 LAW & GOV'T - BILL 2 in my mind than the question of the election. In Philadelphia, we have had independents win elections. After they win elections, independents don't always remain independent. Generally, they move in the other direction. Ed Rendell, the Mayor, was -- you know, was a strong independent when he first ran for office. And that's been true of many people. So I think whatever we can do to bring in elements of integrity in the decision-making progress is important -- maybe more important than the question of candidates who are independent winning. In Philadelphia, we've had a pretty good history of independent candidates being able to win elections. Of course, maybe things have changed now. We never had an election before in which I think $9 million was spent by one candidate in the Democratic primary for mayor, and I think maybe the second candidate raised $5 million. Now, it would be tough for an independent, particularly a newcomer in the race, to raise that kind of money. So we thank you all for your interest. Somehow we've got to make this subject a little 169 /00 LAW & GOV'T - BILL 2 more interesting, though. I would like to say that we were discussing the no-smoking issue in restaurants and bars last week, and we had -- the room was packed here. Some people were standing up. It created so much interest because we were dealing with something basic to the owners of restaurants and bars. And, by, God they packed it, and there was a lot of people interested in the issue of dealing with smoke and preventing it for health reasons, preventing it from occurring in restaurants and bars that they wanted to go to. But looking in the room today, we have people, you know, who are leaders in community groups and the public-interest groups, but we haven't reached the community yet. And I think maybe the reason we haven't reached the community yet is that people have begun to accept it as a necessity -- that's the lack of integrity. They think that, you know, kind of everything is for sale, and there's no use fighting it. But with your help, I think we're going to be leading the community. Yes, go right ahead.

I've testified at a 170 /00 LAW & GOV'T - BILL 2 number of hearings on campaign finance reform, and I was going to refrain from making my soapbox speech but, Councilman Cohen, you're motivating me. I think one of the damaging things that can happen at these hearings sometimes is to reinforce unnecessarily to some degree people's cynicism. I lobby in Harrisburg. We make absolutely no political campaign contributions, none. It doesn't stop people from sending me invitations, unfortunately, but we don't make any. There is nobody's office that is off-limits to me because of that. I understand that money has influence, but when you bring some information. Some expertise, or when you can organize people to contact their legislators -- an elected official will not do something for a contributor if they think it's going to cost them their job. And there's not press here so I'm not so worried today. But I think sometimes these hearings add to the problem, if that's the message that continually sent out. There are numerous occasions that I can point to in Harrisburg, of all places, where the 171 /00 LAW & GOV'T - BILL 2 money interests wanted something and they didn't get it because the legislature were more scared of the voters. And some of us. Including myself, need to spend more time re-educating people about how to contact their legislator and making them responsive to things besides money. And, you know, I understand that -- there's no doubt about it, the agenda is set by who gives money, and sometimes bills merely move one stage in the process to shake the money tree. But there is a rule for those without the money. It's, they organize -- that's what labor was all about, that's what labor unions get in business for, because they could bring together numbers of people. Max Weiner had an incredible impact in this city and he didn't have money to do it. So it just-- you know, I'm speaking to people who knew, but it just is a soapbox get on. I also have to communicate to the public that they can have an impact, if they actually care and if they actually organize. And those of us who are in the business of having to kind of communicate that message need to keep doing it. Otherwise it, is just going to get worse. 172 /00 LAW & GOV'T - BILL 2

I think that's an important message.

Councilman Cohen, I'll just be very brief. Larry's right that we shouldn't help to fuel cynicism, but I think we're starting to see the pendulum swing a little bit, and I think that's good news for us, because we saw some groups here, I guess, some of the gay-rights groups and some of the other City groups, and across the nation, environmental groups, they're finally starting to get it, that this is not just some boring insider's game; this is the power game that underlies every issue that rank-and-file people care about, and they're finally starting to get it and they're understanding why and that's why they're backing organizations like ours and campaign finance reform, because it impacts their success in the long run. And we're even starting to see hints of this in the U.S. Supreme Court, which up to this year, was always very careful to exclude expenditure limits from their view of what -- mandatory expenditure limits from their view of 173 /00 LAW & GOV'T - BILL 2 what was constitutional. And I think -- I'm not sure, but I think it was Justice Stevens' concurring opinion which began hint that the Court now understands -- they didn't make any decision on this, but their opinions began to hint that the court now understands the impact that big money not only has on candidates corrupting candidates, which was there was low contribution limits, but they began to hint that they now understand the impact that it has on corrupting the electoral system and the legislative process as a whole. They haven't quite gotten to the point where they're doing anything about it yet, but their opinions are beginning to hint at their understanding of this.

Well, they are very hopeful signs. We thank you for that note of optimism, too. Thank you for being patient with us today and for your testimony. Lauren Townsend, the Executive Director of Citizens for Consumer Justice. And I'm going to suggest Inja Coates come up, of the Philadelphia Cable Access Coalition. And David 174 /00 LAW & GOV'T - BILL 2 Masur, Director of Pennsylvania PIRG, and Phyllis Gilbert of the Sierra Club. (Witnesses come forward.).

Inja, would you like to begin.

Good afternoon.

And you have to hold the microphone very close to you, right.

Good evening. My name is Inja Coates, and I'm here to speak on behalf of the Philadelphia Community Access Coalition to express our support for this bill, though it sounds like there are some details that still need to be ironed out. In 1997, our group has picked up where previous groups left off and has been working for the last several years on the 16-year-old struggle to get the City to implement its own legislation for citizen access television. Among our members and supporters are many of Philadelphia's notable arts and cultural institutions, science and technology agencies, community groups, educators, and ordinary citizens. Perhaps it not be immediately obvious 175 /00 LAW & GOV'T - BILL 2 what our issue has to do with campaign finance reform, but allow me to explain what our experience has been. We have been a group of concerned citizens without a lot of political savvy, weren't really sure why the City was ignoring its own ordinance for public access. We thought that if we brought the situation to the attention of City Councilmembers, they would understand and correct this situation. We naively believed in a political system where elected officials represent their constituents' needs and interests in establishing public policy. Well, the past few years have been a real education for us in the way politics really works. Despite the fact that we have shown significant community support, our issues have been continually marginalized or ignored. I've been amazed to attend Council hearings, somewhat like this, where there are virtually no 21 Councilpeople in the room to hear the citizens speak, and many Councilpeople will not make themselves available to meet with citizens during a significant part of their term because they're busy fund-raising and campaigning for their next 176 /00 LAW & GOV'T - BILL 2 election. We have had difficulty gaining access to many of our elected officials because we are not perceived as important, and then several of the ones who did meet with us said they weren't opposed to public access but wouldn't support us against the powers that be. One Councilman put it -- as one Councilman put it, we didn't stand a chance going up the power of the cable industry, which he referred to as an 800-pound gorilla. We have been given lame excuses to justify the City's giveaway of the public resources to a powerful industry that is growing at an astonishing rate. With recent technology advances, the cable industry stands to make billions through its consolidated cable TV and cable Internet services. At the same time, they have worked very hard to see that a minor thing like the public interest does not impede their profit-making progress. A public access system in Philadelphia could do wonders for our city by providing free technology access and training to our citizens and organizations. Not only would this help in 177 /00 LAW & GOV'T - BILL 2 bridging the digital divide, but programs could be established that would assist after-school programs after-school programs, teach teens about the Web, televise Town Meetings, link block captains and community groups, assist social service agencies, and even provide free air time to local officials and candidates running for office. However, we have been taught not to rely on the merits of our issue, that being well-intentioned citizens is not enough. This is that cynicism that was being talked about earlier. Sadly, I am sure that we are not unique in this situation, and many groups have had similar experiences. The majority of politicians won't move unless you can help or hurt them financially or politically, and group that don't have a lot of money must build a political power base, negotiate influence, and demonstrate intimidating numbers of potential votes.

Perhaps those same rules of politics will apply even if we do have campaign finance reform, but hopefully, you can help to empower our 178 /00 LAW & GOV'T - BILL 2 elected officials to act on behalf of citizens by ending their enslavement to big money, and perhaps the influence of the local cable industry can be reduced to where they can be described as only a 200-pound gorilla if not a monkey. Access, whether to information, the media, or to the government, access means power. If ordinary citizens don't have a voice in politics or cannot access their representatives, then we do not have a true democracy. It is our hope that the campaign finance reform measures proposed in this bill, or one similar to it, will go a long way towards returning the government to the people.

Thank you. I would suggest to Councilman Ortiz and myself that we refrain from asking questions until each of the panelists have been heard. And then we may have questions for each of you. Who is next? Phyllis Gilbert.

Good evening. My name is Phyllis Gilbert, and as Chair of the Global Warming Committee of the local Sierra Club. I'm offering this testimony in support of campaign 179 /00 LAW & GOV'T - BILL 2 finance reform and public financing for the City of Philadelphia elections. The Sierra Club has 9,400 members in the Delaware Valley and 2,500 in Philadelphia, and we vote and we talk to our elected officials. We greatly appreciate this opportunity to publicly support these issues which are crucial to reviving our democracy, to protect its integrity and openness and, hopefully, its honesty. I was going to give -- you know, mention a whole bunch of issues that have plagued cities where we've paid polluters to pollute and plagued our government historically and to the present, but in view of the time constraints, I thought I'd just mention some of the kinds of issues that I've been involved in and others of us locally in the pay-to-play scenarios. And like Inja, we have come to City Councilpeople to try to educate and try to help to gain understanding of the importance of these issues for the sake of the public's environment and their health, but we've been kind of cast aside, even in public hearings. We came and testified at the public 180 /00 LAW & GOV'T - BILL 2 access cable TV hearings, we worked to force toxic waste contractors to obey environmental laws in southwest Philadelphia, we've protested against allowing many hospitals to continue burning hazardous waste, and we've testified against allowing privileged developers to let once- productive buildings to rot, and this little technique is now called "demolition by neglect." So, you know, we've known from our personal experience how important this law can be. As an activist, when we participated in these issues, we've really been discouraged by the lack of attention to our concerns. This bill has a good chance to improve our air and water quality and, therefore, our public health, for environmental issues are basically health issues. Where the polluters of the public have given the privilege to the public to pay for their health care, there are diseases that have been caused by a bad environment. So let me reiterate that the pattern of pay-to-play at all levels of government is destroying our environment and turning many away from their voting responsibilities. So we're 181 /00 LAW & GOV'T - BILL 2 looking forward to helping implement this bill to educating the public to encouraging people to take heart. We will work diligently with this coalition to take the next steps necessary for implementation. Thank you.

Thank you very much. Lauren Townsend.

Thank you for letting me speak here today. My name is Lauren Townsend, and I'm the Director of Citizens for Consumer justice. Thank you again for allowing me to speak. It's a very grim problem that we're confronted with, our campaign finance system. A little bit CCJ is that we've become the state's largest consumer organization and coalition working on preserving and strengthening Social Security and Medicare, lowering prescription drug prices for consumers, passing a strong patient's bill of rights, preserving access to our civil justice system, and winning clean- money elections, as well as other issues. And working on these issues forces us to regularly battle the influence of 182 /00 LAW & GOV'T - BILL 2 special-interests dollars on the political process. Case in point was last week's Philadelphia Inquirer when the pharmaceutical lobbyists had a full-page ad urging consumers to keep the status quo and keep the government out of their medicine cabinet. So the problem is grim. In 1998 -- well, you know the problem. We've got very expensive elections. Congress spent more than a billion running for office in 1998, the Mayor's race astronomically priced, over twice that of New York City. And citizens and politicians agree that the system is broken. But a small, but growing, number of states across the country and cities, as you've heard earlier, are taking initiatives and moving forward with alternative campaign finance systems, like clean-money elections. Now, CCJ does prefer clean-money elections, with full public financing of elections, where candidate run their campaigns entirely with money from the public fund to qualified candidates that first meet ballot-access requirements and demonstrate community support by collecting a threshold number of small donations 183 /00 LAW & GOV'T - BILL 2 and signatures and then agree to abide by spending limits and reject private contributions. And because such a system is voluntary, it would be constitutional and stand up in court. But we applaud Councilman, Ortiz, Kenney and Cohen for introducing a proposal which, for Philadelphia, is a real step toward leveling the playing field and giving more Philadelphians equal opportunity, regardless of their economic status, gender, or the color of their skin. I mention economics, gender and race because when the vast majority of Americans stand outside the process altogether, with roughly 95 percent of the adult population making no 16 political contributions, it's kind of no-brainer to look at what's going on and see the situation what it is. Money, rather than democracy, is the name of the game. There was a study done by the Center for Responsive Politics called "Sex, Money and Politics: The Gender Gap in Campaign Contributions," where the Center states that although the gender gap in apportioning money between parties has generally widened in the 184 /00 LAW & GOV'T - BILL 2 1990s, the male/female breakdown in overall political contributions has not significantly changed. Women may vote in larger numbers than men, but women are responsible for only about one quarter of the large individual hard-money contributions; that's itemized donations of at least $200 to candidates, parties, and Political Action Committees. And that figure has remained fairly constant for over the past four election cycles. And we wonder whether this disparity could have something to do with why public schools and day care centers have to have plant sales, bake sales, and walkathons to raise money for public schools and day care center. But the plot thickens, adding insult to injury. The national group Public Campaign did a study called "The Color of Money," which examines campaign contributions and race. In it, they say that people of color are largely absent from what has become one of the most crucial elements in the election process, namely campaign financing.

The study quotes civil rights leader Nelson Rivers, III, Director of the Southeast Region of the NAACP, explaining the effect of money and politics 185 /00 LAW & GOV'T - BILL 2 on his community: "We're impacted in a negatively disproportionate way. Since African-Americans have decidedly less income, less disposable money than other people in this country, we're at a disadvantage when money is the deciding factor and whether you can participate. While other folk have the luxury of picking between two people who still might represent them in some way. " I've included sheets from the Color of Money Study, which show the greater Philadelphia metropolitan area contributions in the 1995-1996 election cycle by zip code. When you look at the numbers, you'll realize just how racist and imbalanced our campaign system is. Could it be that this imbalance has something to do where a new sports stadium is placed in our city, or why we don't have public access cable, which City Council voted to into law years ago? Today's system of financing political campaigns rewards large contributors by amplifying 186 /00 LAW & GOV'T - BILL 2 their voice at the expense of ordinary citizens. It is special-interests campaign contributions that effectively determine which candidates will have the resources to run serious election campaigns. This leaves out good candidates without money or connections to contributors. What's more, under our present campaign finance system, politicians are forced to spend too much time raising money, as Inja mentioned earlier, instead of devoting their full energies to the duties public office. With this in mind, while we do support full public financing, I urge you to move forward in your efforts to level the playing field because a truly vibrant democracy is one in which average Americans and grassroots organizations are shaping public policy, not large contributors and corporations. Thanks.

Thank you. David Masur.

Thank you. I'm David Masur. I'm the Director for the Pennsylvania Public Interest Research Group. Penn PIRG is a 187 /00 LAW & GOV'T - BILL 2 statewide nonprofit and nonpartisan public-interest advocacy organization. With nearly 12,000 citizen members throughout Pennsylvania, Penn PIRG promotes greater access to the democratic process and campaign finance reform, environmental and public health protection, and safeguarding consumers from dangerous products, as well as consumer scams and rip-offs. Penn PIRG is part of a network of state PIRGs that have a long, rich history of working campaign finance reform issues. In recent years, the state PIRGs have had numerous campaign finance reform victories. In Montana, Mont. PIRG helped pass I-121, a ballot initiative to ban corporate contributions from ballot campaigns. Vermont PIRG helped support efforts to pass public financing for gubernatorial races and set mandatory spending limits and low contribution limits for legislative races. And state PIRGs in Massachusetts, California, Colorado, Missouri, and Oregon have helped put campaign finance reform initiatives on their respective state ballots. Penn PIRG supports political reform to 188 /00 LAW & GOV'T - BILL 2 make government accountable to ordinary citizens. Government of the people and by the people, while not flawless, is inherently better than rule by enlightened elite and is not only more likely to yield a political process that serves the public interest, but is essential to the ideals of freedom and democratic self government. I'd like to start off by congratulating the members of City Council for taking up such an important public-interest battle. It has become apparent to many Americans that our political process has become corrupted by the effects of big money and special-interest fat cats. As special interests spend hundreds of millions of dollars building their access to politicians, the scales have fallen out of balance, removing the ability of common citizens to have their voices heard in our political process. In turn, Americans become disillusioned about the political process, believing that it is no longer one person/one vote but $1/one vote. Because citizens feel they can no longer have their voices heard, they no longer participate in the political process, causing the democratic process to stagnate. 189 /00 LAW & GOV'T - BILL 2 Since money overwhelming influences who can run for office, who can wins elections and what issues dominate public discourse, elections can only truly represent the will of the people if campaign financing comes from ordinary citizens. There are many aspect of City Council's campaign finance reform legislation that Penn PIRG strongly supports. First, this legislation takes a strong stance to eliminate the pay-to-play scenario by prohibiting all elected officials and candidates for City offices from receiving contributions in excess of $200 from any individual or business which has a City contract for goods or services or City financial assistance, we were to level the playing field and promote a system of financial equality that promotes citizen involvement in the process. Secondly, the public financing system proposed in this legislation is quite beneficial in promoting greater constituent involvement. By guaranteeing that candidates get a broader base of financial support from a broader base of local supporters will undoubtedly mandate that candidates will not put special-interests dollars 190 /00 LAW & GOV'T - BILL 2 ahead of public-interest needs. For a candidate to choose to rely primarily on small contributions from ordinary citizens, this is a critical chance to run for office. While this is a step in the right, direction it still leaves grassroots candidates vulnerable to attack from candidates backed by wealthy interests or independent expenditures. Still, this legislation could take much stronger steps to protect the public interests in the democratic process.

First, the mandatory contribution limits are set too high to reduce wholesale corrupting influence of large contributors. By setting contribution levels at $1,000 this legislation will continue to allow wealthy interests to disproportionately influence elections. For most residents of Philadelphia, these contribution levels are well beyond their reach and will only continue to promote status quo. Penn PIRG recommends setting contribution at $100 for all candidates and all races in Philadelphia. This sets a limit that is within striking distance of what ordinary citizens can 191 /00 LAW & GOV'T - BILL 2 afford. Furthermore, we believe that by setting this mandatory contribution limit to a level of $100, it is on track with the spirit of this legislation and it will accomplish the worthy goals set out by the sponsors of this legislation. By eliminating the pay-to-play system, the language of this legislation sets strong limits of $200 for contributors who hold contracts with the City of Philadelphia. The goal is obvious: controlling undue influence by these specific special interests. Why would we not take equally strong steps to control special-interest influence from other sources as well and set similar strong contribution limits? Also this legislation clearly states that it hopes to achieve spending levels of $750,000 for mayoral candidates and $100 for at-large City Council candidates through the voluntary spending limits set forth in the bill. Again, lower contribution limits only will help promote these spending levels. A contribution limit of $100 would mandate that mayoral candidates need only $7,500 contributions at the 192 /00 LAW & GOV'T - BILL 2 maximum limit, and candidates for City Council would need only 1,000 contributions. 1 million residents, these levels of contributions are easily attainable for candidates who genuinely have a broad base of support. If public financing is added in, they become even easier to reach. The greatest step that can be taken to truly promote greater public involvement in protection of the democratic process comes from the methods that drive this legislation. This legislation is driven by spending limits instead of contributions. Penn PIRG, along with many organizations that work on campaign finance reform issues, believes that this has proven to be the less effective of the two options for controlling special-interest power over the political process while promoting public involvement and investment in our current political system. In order to meet the honorable goals set forth by the sponsors of this legislation, Penn PIRG recommends changes that can only promote access to the democratic process for Philadelphia's residents. 193 /00 LAW & GOV'T - BILL 2 First, set limits that are attainable for all of our City's residents. Contribution limits must be lower and Penn PIRG recommends contribution limits of $100 for all races. Secondly, just as the contribution limits in this legislation are mandatory, City Council should make spending limits mandatory as well. There are many reasons why spending limits must be made mandatory. In the political arena, we see far too many candidates who can out-spend their opponent with personal wealth and then turn their back on spending limits. This has been the case with many visible federal campaigns, including presidential candidate Steve Forbes, Ross Perot, as well as numerous Congressional candidates such as Mr. Corzine in neighboring New Jersey. Furthermore, spending limits should be made mandatory, as we've seen an era where candidates are able to raise so many large contributions that they no longer feel the need to opt into the spending limit plan. George W. Bush recently proved the power of the $1,000 donors in his decision to ignore voluntary spending limits 194 /00 LAW & GOV'T - BILL 2 for the presidential primaries. We must guarantee that we avoid this type of scenario in Philadelphia's elections.

These voluntary spending limits are unlikely to work in the obscene levels that some candidates will spend to outbid those candidates who comply. The spending cap will wind up being lifted in almost all instances and, therefore, will not achieve their purpose as currently drafted. S. Supreme Court struck down mandatory spending limits in 1976 in the infamous Buckley v. Valeo decision. However, over 200 constitutional scholars have denounced that decision as misguided several, and members of the current Supreme Court indicate willingness to reconsider that decision as ever early as this past January Pennsylvania's own senator Arlen Specter has cosponsored many times a constitutional amendment that would overturn the Buckley decision and specifically authorize mandatory spending limits. Philadelphia, the birthplace of democracy, should lead the country forward in establishing the common-sense need for mandatory spending limits in 195 /00 LAW & GOV'T - BILL 2 political campaigns. By taking these two critical steps, I believe that City Council will be able to meet the goals of this legislation and take a critical step in promoting greater citizen involvement in the democratic process. This will make Philadelphia a city with a rich history of being in the forefront of the fight for democracy to continue the tradition of being the leader in the fight for the cornerstone of our democratic process -- liberty equality, and justice. Thank you for giving me the opportunity to speak today.

Thank you.

I'd like to make a statement. When this passes, the fight for the Charter change, the fight for -- because I believe that this is going to draw a lot of monied folks to throw an opposition campaign against approving a Charter change of this sort. So we are going to need a real grassroots organization that we'll mobilize citywide and get the voters to really create a consciousness about what we're trying to do and get the voters to come out and defeat the 196 /00 LAW & GOV'T - BILL 2 money interest, because I believe the money interest, if they come out and do a campaign -- they did it in New York, they do it everywhere where this type of situation has been put forward, so we're in for a struggle.

One of the speakers mentioned the stadium, that maybe the site of the stadium is being picked --

I said that.

You're the one that did? Well, just for those that are concerned about that issue, let me mention that on June 20th, beginning at 2 o'clock -- that's a Tuesday afternoon and running into the evening to enable those who can't come until after their work ends at 5 o'clock or thereabouts, Council will be holding a hearing on campaign financing for the purpose of hearing how people feel about whether there should be, and if so, how much should there be of public financing.

Not campaign financing -- public financing of stadiums.

That's the public 197 /00 LAW & GOV'T - BILL 2 financing of stadiums, so remember that. But Lauren Townsend mentioned that issue. Now, before that, we hope to be able to have this issue on the ballot. And as Councilman Ortiz pointed out, it's extremely important, if we're successful in City Council getting it on the ballot, it's very, very important that there be a tremendous amount of support, or the thing may very well be defeated in an election. It's not defeated because people don't support it; it gets defeated because of the power of money in influencing the media to campaign against it, but that will be the second step for us to deal with after this is over. We thank you all for coming being so patient. Next is Charles Juntikka, who's going to speak to us, representing the New York City Bar Association's Committee on Government Reforms. (Witness comes forward.)

Thank you very much.

You know, I only have about five minutes of information to give you. I'd like to talk about the -- I'd like 198 /00 LAW & GOV'T - BILL 2 to talk about the history of the New York City finance program, public financing program, and I'd like to tell you about our new law that is working really well in special elections. And then I'd like to make a constructive criticism, if I could.

Go right ahead.

I'm happy to do it. The history of the New York City system -- I'm not sure everyone knows about it, but in the mid-'80s, we had a Parking Violation Bureau scandal, where the Democratic county leader of Queens actually committed suicide as the police were coming to arrest him. And the Bronx County Democratic leader was arrested and convicted of a felony. And this caused enough of an uproar that we adopted our first public financing system, which was a one-to-one match for only percent 20 of the spending limit. But even that amount of money had a tremendous impact because it elected Mayor Dinkins over Mayor Koch. That election was so close -- it was 40,000 votes out of 2 million votes cast. And, of course, Koch got a lot of money because he was the incumbent, but Mayor 199 /00 LAW & GOV'T - BILL 2 Dinkins got $400,000 in public financing. And without that $400,000 in public financing, there is no Mayor Dinkins. And the real-estate industry continues to control New York for those four years. And areas of New York that never got public resources the way they should have got public financing. Because public financing got Mayor Dinkins elected. It's a very powerful tool, even a small amount of public financing. Now, we ran into a problem about ten years after our first law became antiquated. We started to spend -- one candidate would spend 9, $10 million on a mayoral race in a city of 8 million, and that created a kind of a scandal in New York. When I found out what was happening here, I was flabbergasted. You've got a scandal here too, for sure. Now, that caused our law to be improved. We had increased public financing to 55 percent, and we've had special elections where that money has really helped. We had a City Councilperson retire in lower Manhattan, and there were two candidate. We had a real estate 200 /00 LAW & GOV'T - BILL 2 candidate that got a lot of real estate money, landlord money; and a grassroots candidate. And, of course, the landlord candidate out-raised the grassroots candidate by, like $30,000, and that's a lot money in a special election. But the grassroots candidate went out there, got small contributions, with a 4-to-1 match, and got $75,000 in public financing. Now, the landlord candidate is no 11 dummy. He got 70,000 in public financing, and he still out-spent the grassroots candidate by 30 grand. But the grassroots candidate had enough money to get her message out, and she crushed the landlord candidate. Now, I think she would have won anyway, 'cause I'm that kind of guy, but it made a difference. And, again, that's not 80 percent public financing, that's not 100 percent public financing. You know, all people need is enough money to get their message out. And with our coming election in two years, we have people running for office who always wanted to run for office but never thought about it because they knew they couldn't have the money. We've tripled 201 /00 LAW & GOV'T - BILL 2 the candidates that we used to have. Now my constructive criticism. I think you guys are almost too generous with the public financing and too small on the spending limit. You know what's going to happen if you make the spending limit so low and the public financing system so generous? What you're essential trying to do is trying to almost completely get rid of the big-money contributions. It's smarter to keep a place for them to go. You know, like our spending limit now is going to be about 5 million, okay. And we allow -- we allow big-money contributions to be 45 percent of the spending limit. See, that money's going to go somewhere. And under your system, you know what will happen? It will go to independent expenditures, these crazy outfit that they set up. You know, in 16 years in New York City, we have never had a problem with independent expenditures. They are minuscule. And, you know, New York City is bigger than 40 states, because we allow a place for the big money to go.

If you don't allow a place for it to go within your system, it's going to go outside the system, which 202 /00 LAW & GOV'T - BILL 2 will defeat the purpose, especially at the mayoral level. City Council's different, it might work under your system. But I wish you would increase the spending limit because people will just -- you know, you'll have problems with that, people will go outside of it. And, you know, I don't think it really needs to be 80 percent public financing. I think our system is fine at 55 percent but, you know, anything you do will be better than the current system because you clearly have problems. One last thing I'd like to say -- not as a member of the Bar Association, but as a member of a consortium of other good government groups. We are using some very innovative tactics in getting campaign finance reform in Albany. And we've handed out a New York Times article about that with the Web site. The Web site has gotten 40,000 hits in the last 18 days or so. com. It was featured in a New York Times article with 1100 words, a big picture. And I got to stop talking 'cause I'm 203 /00 LAW & GOV'T - BILL 2 supposed to meet Nicole Gordon to catch a Metroliner. So do you have a question. Can it be a "yes" or "no"?

Don't worry about it, we'll be calling you on the phone.

You know, I've been here four or five times.

Thank you.

Okay, thank you.

Very good, thank you. Is there anyone who wishes to be heard who has not yet had opportunity, anyone? (No response.)

Seeing no one who wishes to be heard --

Thank you all for coming.

The committee will stand in recess until Thursday, June 8th, at 9 a.m. We hope at that time to have a bill.

And integrate the suggestions that have been made today into a 204 /00 LAW & GOV'T - BILL 2 stronger bill, a much more thorough bill, and a bill that will be closing the loopholes that we talked about, and hopefully, the majority of the members of the Council of this committee will vote it out of committee so that we can go into the full floor of City Council.

It would be very important -- is that true, Councilman Ortiz? -- to have many people here present at that time?

Yes, indeed.

That's Thursday morning, June 8th, a.m. It will be very important for those who could possibly make it to be here to show the committee itself, and later that day to City Council. What we would hope to do is to report the bill out of committee and have what's called the first reading of City Council so that the bill will be prepared to be voted on by the City Council by June 15th. And then if the Mayor wishes to veto it, City Council would have an opportunity to override the veto on June 22nd. Just so that everybody would understand the calendar schedule. We want to be sure that -- I'm being 205 /00 LAW & GOV'T - BILL 2 corrected. I'm told that if we get the bill 3 passed by either June 15th or June 22nd, either of the last two meetings of City Council, were the Mayor -- we would hope he would sign it, but were the Mayor to not sign it, we would have an opportunity in the fall, at the first meeting of City Council, to override any veto. And that would still be time to get the matter on the ballot. Is that accurate now? So we hope to see as many people as possible on the morning of June the 8th, at 9 a.m. It's not a time that we're picking by choice, but it's governed by the calendar schedule. Thank you very much, and we hope to see you on the morning of Thursday, June 8th, 9 a.m. same place as here. Thank you. This meeting stands in recess until June 8th, 9 a.m., the Committee on Law and Government. I thank everybody for their patience. (Adjourned at 6:35 p.m.) - - - 206 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Thursday, June 1, 2000, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE ON LAW AND GOVERNMENT BILL NO.'S 000356, 357, RESOLUTION No. 000380 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter