Understanding the New York City Public Financing Program
The New York City public financing program is a system that provides a multiple match of public funds for small donations made by city residents to candidates who choose to participate. Designed to reduce the influence of private wealth in politics, voters approved this initiative by referendum in 1988 following a series of corruption scandals. Participants, including figures like New York State Attorney General Letitia James, have commended the program for enabling them to depend on the backing of everyday New Yorkers rather than on “big donors demanding meetings and policy changes.”
This program’s success in fostering fair elections prompted a special New York State anticorruption commission in 2013 to suggest a similar statewide public financing system to combat the state’s “epidemic of public corruption.” The commission’s report stated that “by virtually all accounts, the program has succeeded in making New York City’s elected officials more accountable to city voters.”
Over its 35-year history, the program has contributed significantly to New York City’s democratic landscape. In 2021, it was instrumental in the election of the city’s most diverse City Council to date. Small contributions from residents have become the primary source of financing for candidates. Data indicates that candidates funded through this program rely more on their local constituents compared to those without public financing. The program’s popularity is evident, with 80% of voters in 2018 supporting an increase of the match to an $8-to-$1 ratio.
Allegations Against NYC Mayor Eric Adams and Public Financing
The recent indictment of NYC Mayor Eric Adams involves allegations of corrupt interactions with Turkish officials and businesspeople from 2014 to 2024. Adams is accused of soliciting illegal campaign funds through straw donors, allegedly to fraudulently secure public matching funds from the city’s public financing program.
While any fraud is serious, there is confusion about the funds involved. The transactions reportedly involve $26,000 in straw donor contributions, with $6,000 refunded by the campaign. These resulted in approximately $24,000 in public matching funds, a small portion of the $10 million pool portrayed as improperly obtained in some reports. The case is ongoing, and these figures may change.
Addressing Straw Donor Schemes and Public Financing
Straw donor schemes, where contributions are made through intermediaries to avoid legal limits, occur nationwide and are often independent of public financing programs. Public programs generally have strict measures to prevent and detect fraud. Though there have been few violations in NYC’s program, violators have faced significant consequences.
Historically, straw donor violations are common federal charges. For instance:
- In 2019, Navatek executives illegally funneled $52,000 to Sen. Susan Collins and $150,000 to a supportive super PAC.
- In 2018, Lev Parnas contributed over $350,000 on behalf of a Russian national with US business interests.
- In 2012, Dinesh D’Souza disguised $20,000 in donations to a Senate hopeful.
- From 2006 to 2012, Jeffrey E. Thompson channeled over $3 million in unlawful contributions.
Such schemes are frequently detected and prosecuted. None of these cases involved public campaign financing.
Enhancing the Public Financing System
Effective oversight is crucial for enforcement. The New York City Campaign Finance Board, known for its robust monitoring, might need to update its procedures in response to the Adams case. A May 2024 audit of Adams’s 2021 campaign identified unaccounted $2.3 million in expenses and unresponsiveness to board inquiries before obtaining public matching funds.
The board should consider implementing stricter rules regarding payment eligibility. Recently proposed rules would mandate withholding payments under certain conditions, enhancing existing rules that impose severe penalties for falsifying information.
Clearer communication with potential straw donors is also necessary. The current donor card should be revised to emphasize the illegality of using another’s funds, highlighting potential penalties.
Finally, the board should aim for more timely audits. Criticized for lengthy delays, the board should explore ways to expedite its processes while maintaining thoroughness, ensuring candidates aren’t running for reelection under unresolved audits.
