Only five months into his term as a newly elected Los Angeles City Councilmember, David Ryu is already starting to shake things up at City Hall when it comes to campaign finance reform. This September, the freshman Councilmember announced a proposal to ban campaign contributions from non-individuals – corporations, limited liability companies, labor unions, political parties and other groups. Only donations from individuals would be allowed.
Ryu notably refused to take money from developers during his own political campaign, and promised not to take money from them while in office. So far, the reception to his proposal from other Councilmembers has been lukewarm at best. The Office of the Council’s powerful President, Herb Wesson, said it’s too soon to enact such regulations since the city’s Ethics Commission is already weighing similar proposals concerning limits on campaign contributions.
Last year, the Commission issued recommendations to strengthen L.A.’s 25-year-old campaign public finance system, namely to increase the public matching fund rate for qualified candidates to 6:1 for both primary and general elections. The Commission also proposed raising the total amount qualified City Council and citywide candidates can receive. Ethics staff presented the recommendations at a hearing last month before the Council’s rules committee, of which Wesson is one of three members. At this point, no concrete action has been taken.
In the meantime, Ryu has gotten Ethics to consider his proposal to ban on non-individual contributions at a hearing scheduled for Oct. 21. There’s a question whether Ethics will go in that direction as the commission’s President, Jessica Levinson, has cited possible legal hurdles under federal law in the wake of the 2010 U.S. Supreme Court decision in Citizens United, which threw out rules prohibiting independent groups from spending unlimited amounts of money on political campaigns. At the very least, it may be possible for the city to require more transparency about the donations coming from non-individuals - that is, organizations, corporations and unions. The conversation over whether to require more transparency from non-individuals - that is, organizations, corporations and unions, started around concern that businesses can already get around current rules on contribution limits directly to candidates by funneling donations through multiple subsidiaries without having to disclose who owns or controls them.
Still, Ryu’s proposal isn’t unusual, since San Diego and New York City already ban contributions from certain non-individual entities. New York City’s campaign finance system goes even further with a public matching funds program with a 6:1 match rate – the same ratio that the Ethics Commission had proposed for the Los Angeles City Council to consider. Both New York City and Los Angeles have seen some success with their matching funds programs over time. According to the voting rights advocacy group, the Brennan Center, after the public matching funds program was implemented in New York City, the participation of small-dollar contributions and donors from low-income areas was significantly larger, compared with fundraising from city residents for candidates for the New York state legislature, which does not have a matching funds program. Neighborhoods like Harlem, Chinatown and Bedford Stuyvesant showed healthy small donor participation when residents could tap into the 6:1 public funds match to amplify their voices.
Similarly, key findings from an L.A.’s Ethics Commission report noted that in Los Angeles, the number of qualifying donations of $100 or less also increased over time from 34.2% in 2011 to 58.3% in 2015. Said another way, for candidates who participated in the new matching funds program that was rolled out starting in 2013, where a higher match is given for small, local donor dollars, fundraising from constituents giving in small amounts has increased significantly.
By comparison, qualifying donations of $250 or more represented a decreasing amount for participating candidates - 38% of submitted contributions in 2011 compared with 28.7% in 2015. This is despite the fact that the city’s individual contribution limit was raised from $500 in 2011 to $700 in 2015. Furthermore, five of seven winning candidates in Los Angeles’ 2015 local elections participated in the matching funds program.
To see a copy of the LA City Ethics Report that recommends bumping up the matching funds for small donors even further (to a 6:1 match as New York City does), click here.