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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, 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.”
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, 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.” 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.
- 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. 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.
- 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. 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.
- 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.”
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.
 Arizona Free Enterprise Club’s Freedom Club PAC v. Bennett, 131 S. Ct. 2806 (2011).
 Id. at 2828 (quotations and citation omitted).
 130 S. Ct. 876 (2010).
 Buckley v. Valeo, 424 U.S. 1, 92-93 (1976).
 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.”).
 See Buckley, 424 U.S. at 91, 93 (citing S. Rep. No.93-689, at 1-10 (1974)) & 96.
 Arizona Free Enterprise Club, 131 S. Ct. at 2825.