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The Governmental Interests that Support Public Financing

This memo summarizes the governmental interests that justify public financing programs in the aftermath of Arizona Free Enterprise Club v. Bennett, which overturned the “trigger fund” provisions of Arizona’s public financing program.

  • Mimi Murray Digby Marziani
  • Adam Skaggs
Published: September 14, 2011

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In June 2011, for the first time in three decades—and only the second time in history—the U.S. Supreme Court issued a decision concern­ing the consti­tu­tion­al­ity of publicly financed elec­tions. Although the Court struck down a narrow provi­sion of Arizon­a’s public finan­cing system in Arizona Free Enter­prise Club v. Bennett,[1] it reaf­firmed that, as a general matter, public finan­cing is consti­tu­tional.  The Court made clear that “govern­ments may engage in public finan­cing of elec­tion campaigns and  . . . doing so can further signi­fic­ant govern­mental interests, such as the state interest in prevent­ing corrup­tion.”[2]

The Court’s affirm­a­tion that public finan­cing is a valu­able tool to fight corrup­tion came at a time when concerns about the corrupt­ing poten­tial of big money in polit­ics have reached a fever pitch.  These concerns stem, in large part, from the Court’s Janu­ary 2010 decision in Citizens United v. FEC,[3] which lifted long­stand­ing bans on corpor­ate polit­ical spend­ing—and made the 2010 elec­tions among the most expens­ive in our nation’s history. Spend­ing in the 2012 elec­tions is predicted to dwarf even the histor­ic­ally high spend­ing of 2010.  As a result, public finan­cing has never been more import­ant to ensure that our govern­ment serves the broader public good, not the narrow agen­das of deep-pock­eted special interests. 

This memor­andum is meant to assist advoc­ates who are reex­amin­ing exist­ing finan­cing systems in light of Arizona Free Enter­prise Club—and consid­er­ing new ones in light of Citizens United.  It describes devel­op­ments in the consti­tu­tional law pertain­ing to public finan­cing, and outlines what govern­mental interests provide suffi­cient justi­fic­a­tion for public finan­cing—and what interests do not.

Public Finan­cing and the Consti­tu­tion:  Arizona Free Enter­prise Club

In Arizona Free Enter­prise Club, the Supreme Court struck down the so-called “trig­ger funds” provi­sion of Arizon­a’s public finan­cing system.  Trig­ger funds, also known as “rescue funds” or “fair fight funds,” are public grants made avail­able to a publicly funded candid­ate who faces high oppos­i­tion spend­ing. Under Arizon­a’s law, parti­cip­at­ing candid­ates initially received a base grant equal to one-third of the maximum per-candid­ate fund­ing.  If a publicly funded candid­ate’s privately funded oppon­ent spent more than that base grant amount, or if the publicly funded candid­ate was targeted by hostile inde­pend­ent expendit­ures, the parti­cip­at­ing candid­ate received addi­tional funds.  (In other words, extra public money was “triggered” to publicly funded candid­ates when they were caught in partic­u­larly compet­it­ive, high-spend­ing races.) Arizon­a’s program was care­fully designed both to provide parti­cip­at­ing candid­ates with suffi­cient resources to run compet­it­ive campaigns and to avoid wast­ing limited state funds on noncom­pet­it­ive races.

Chal­lengers of Arizon­a’s program claimed that the prospect of trig­ger­ing addi­tional funds to their polit­ical foe consti­tuted a penalty upon their free speech—and there­fore, that they were forced to refrain from spend­ing.  Support­ers of Arizon­a’s program—in­clud­ing the Bren­nan Center, which repres­en­ted one of the defend­ants in the case­—­countered that there was no evid­ence that the trig­ger funds actu­ally deterred nonpar­ti­cipants from spend­ing.  More import­antly, because Arizon­a’s program has always been completely volun­tary, nonpar­ti­cip­at­ing candid­ates remained free to raise and spend unlim­ited private funds. Never­the­less, by a razor-thin five-to-four vote, a major­ity of the Supreme Court agreed with the chal­lengers. 

The decision in Arizona Free Enter­prise Club has several implic­a­tions for public finan­cing:

On the one hand, because the Court held that Arizon­a’s trig­ger funds imper­miss­ibly burdened the speech of non-parti­cipants without suffi­cient justi­fic­a­tion, there are two imme­di­ate effects.  First, the trig­ger funds of Arizon­a’s system are no longer oper­a­tional, and the state will need to amend the program. Second, the Court’s reas­on­ing means that trig­ger provi­sions like Arizon­a’s found in other juris­dic­tions are also no longer valid.  Already, similar provi­sions from Maine to Albuquerque, New Mexico have been judi­cially enjoined.  Poli­cy­makers in other juris­dic­tions should consult with legal coun­sel to determ­ine whether any elements of their laws are affected.        

On the other hand, the case did noth­ing to disrupt thirty years of preced­ent hold­ing that public finan­cing systems are gener­ally a First Amend­ment boon, not a First Amend­ment burden. In the Supreme Court’s first take on the issue, in the 1976 case Buckley v. Valeo, the Court upheld the pres­id­en­tial public finan­cing system, explain­ing that a public fund­ing system aims, “not to abridge, restrict, or censor speech, but rather to use public money to facil­it­ate and enlarge public discus­sion and parti­cip­a­tion in the elect­oral process, goals vital to a self-govern­ing people.”[4]  Since Buckley, lower federal courts have upheld public finan­cing time and again, and Arizona Free Enter­prise Club reaf­firmed Buckley’s cent­ral hold­ing. 

The Consti­tu­tional Interests Implic­ated by Public Finan­cing

As advoc­ates and poli­cy­makers amend exist­ing public finan­cing programs and adopt new ones, they should be aware that a court chal­lenge is likely. Though public finan­cing promotes numer­ous govern­mental interests, some of these will not be suffi­cient to uphold public finan­cing against consti­tu­tional chal­lenge—and other interests, if too closely tied to a campaign finance law, may prompt courts to view it with suspi­cion.

  1. The Only Govern­mental Interests Sure to Justify Public Finan­cing are the Govern­ment’s Interests in Prevent­ing Corrup­tion and its Appear­ance.

If a court determ­ines that a campaign finance law like public finan­cing burdens polit­ical speech, it will be upheld only if there is evid­ence that the law combats corrup­tion or the appear­ance of corrup­tion. 

In Buckley v. Valeo, the Supreme Court held that public finan­cing does not burden speech and combats corrup­tion and its appear­ance.[5]  In Arizona Free Enter­prise Club, by contrast, the Court found that the trig­ger funds provi­sion did burden speech, and that it was not inten­ded to further the state’s anti-corrup­tion interest. Accord­ingly, the Court struck down the trig­ger funds.

In Arizona Free Enter­prise Club (and in other recent related cases, like Citizens United), the current Supreme Court has found anti-corrup­tion interests to be the only interests strong enough to justify a burden­some campaign finance law.

Accord­ingly, advoc­ates must ensure that the legis­lat­ive record built in support of any public finan­cing program contains proof of a clear link between that provi­sion and the state’s anti-corrup­tion interest

  1. Public Finan­cing Yields Several Addi­tional Bene­fits that are Consti­tu­tion­ally Permiss­ible.

Public finan­cing serves many interests in addi­tion to fight­ing corrup­tion. More than three decades ago, the Supreme Court recog­nized that public finan­cing enlarges parti­cip­a­tion in the elect­oral process by encour­aging ordin­ary citizens to run for office; enhances the flow of inform­a­tion from candid­ates to voters, thereby promot­ing broader public discus­sion; and frees candid­ates and elec­ted offi­cials from spend­ing a dispro­por­tion­ate amount of their time and energy rais­ing large amounts of money.[6]  In the inter­ven­ing decades, substan­tial evid­ence has confirmed that well-funded finan­cing systems:

  • Promote contested and compet­it­ive elec­tions, decreas­ing the number of incum­bent offi­cials who face no oppos­i­tion, and increas­ing the options voters have to choose from at the polls;
  • Foster diversity in the elect­oral process, draw­ing in candid­ates who have been excluded from running in tradi­tion­ally funded campaigns; and
  • Encour­age voter-centered campaigns, by giving candid­ates incent­ives to engage with regu­lar voters, instead of wealthy donors.

These are all permiss­ible state interests, and may be help­ful in build­ing support for public finan­cing.  But, absent a strong anti-corrup­tion justi­fic­a­tion, these interests are likely insuf­fi­cient to save a law found to burden free speech rights from a court chal­lenge. 

Thus, while it will not hurt to include these interests in the legis­lat­ive record support­ing public finan­cing, advoc­ates should remem­ber that, without a strong anti-corrup­tion rationale, these interests may not be suffi­cient to defend a law from consti­tu­tional chal­lenge before the current Supreme Court major­ity.

  1. Some Possible Govern­mental Interests are Now Consti­tu­tion­ally Suspect.

It is clear after Arizona Free Enter­prise Club that some goals which reformers and voters invoked in the past are not only insuf­fi­cient to support such laws, but may lead courts to strike down public finan­cing laws.

In partic­u­lar, though there is broad public support for laws that promote “equal­ity,” “fair­ness,” or “level­ing the play­ing field,” the Supreme Court’s current major­ity has expressed substan­tial hostil­ity to these goals.  Though Arizona Free Enter­prise Club did not expressly hold that laws further­ing these goals will be struck down in every case, several members of the Court—in­clud­ing Chief Justice Roberts—have indic­ated that govern­ment may never seek to equal­ize campaign resources.  Consist­ent with this posi­tion, the Court struck down Arizon­a’s trig­gers after conclud­ing that the law’s actual purpose was “‘level[ing] elect­oral oppor­tun­it­ies for candid­ates of differ­ent personal wealth’” and that, as a result, it did “not serve ‘a legit­im­ate govern­ment object­ive,’ let alone a compel­ling one.”[7]

Given the current Supreme Court major­ity’s posi­tion, advoc­ates must ensure that any interest in “equal­ity,” “fair­ness,” or “level­ing the play­ing field” is excluded from the legis­lat­ive record and from public state­ments meant to support a public finan­cing law.

To include them risks a court decision inval­id­at­ing reform.

[1] Arizona Free Enter­prise Club’s Free­dom Club PAC v. Bennett, 131 S. Ct. 2806 (2011).

[2] Id. at 2828 (quota­tions and cita­tion omit­ted).

[3] 130 S. Ct. 876 (2010).

[4] Buckley v. Valeo, 424 U.S. 1, 92–93 (1976).

[5] See Buckley, 424 U.S. at 96 (“It cannot be gain­said that public finan­cing as a means of elim­in­at­ing the improper influ­ence of large private contri­bu­tions furthers a signi­fic­ant govern­mental interest.”).

[6] See Buckley, 424 U.S. at 91, 93 (citing S. Rep. No.93–689, at 1–10 (1974)) & 96.

[7] Arizona Free Enter­prise Club, 131 S. Ct. at 2825.