Two courts hand down contradictory rulings on public financing

In a dizzying one-two punch of state and federal court decisions today, the public financing of campaigns in Connecticut was upheld, but key provisions that could affect the race for governor were invalidated.

A federal appeals court ruled that the state cannot give supplemental grants triggered by an opponent’s spending, while a state judge separately denied a motion to bar Republican gubernatorial candidate Michael C. Fedele from receiving $2.18 million in public financing.

Fedele’s grant includes money that the federal court says was inappropriately given, but there is no legal prohibition on him from spending the $2.18 million awarded to him last week by the State Elections Enforcement Commission under the Citizens’ Election Program, part of sweeping campaign finance reforms passed in 2005.

Superior Court Judge Julia L. Aurigemma today denied a request by Fedele’s GOP rivals, Tom Foley and Oz Griebel, for a temporary injunction stopping him from spending his public grant. Late this afternoon, the Connecticut Supreme Court approved Foley’s request for an expedited appeal of the judge’s ruling.

“We are disappointed in the judge’s decision today, but we look forward to a trial on the merits of these issues and plan to appeal this preliminary ruling,” said Justin Clark, Foley’s campaign manager.

Republican gubernatorial candidate Michael Fedele at the state Capitol after Tuesday’s court rulings on public campaign financing. A Superior Court judge said Fedele can get public funds, but a federal appeals panel limited the amount. (Keith M. Phaneuf)

Foley’s campaign also went to federal court this afternoon, seeking an injunction stopping Fedele from spending a supplemental grant of nearly $1 million, Clark said.

The U.S. Court of Appeals for the 2nd Circuit issued two decisions today in response to a ruling nearly a year ago by U.S. District Court Judge Stefan Underhill, who declared the public financing law unconstitutional, saying it discriminated against minor parties. It overturned Underhill on several issues and returned the case to him for further action.

The appellate court found no discrimination against minor parties, but it concluded that a bar on contributions and solicitations by lobbyists and their spouses violated free-speech rights under the First Amendment.

Most significantly for candidates seeking public financing, the appellate court negated an order by Underhill that would have imposed an injunction on the program until all its constitutional defects were cured by legislative action.

“Underhill’s decision would have padlocked the program completely,” said Beth Rotman, director of the Citizens’ Election Program.

She praised the state court and said the state will immediately seek a stay from the U.S. Supreme Court of the federal decision, citing the impact on statewide primaries for governor that are less than a month away.

Gov. M. Jodi Rell said the legislature should quickly alter the law to comport with the federal decision, which Attorney General Richard Blumenthal says leaves most of the public financing program intact

“Today’s decisions uphold significant provisions of the Citizens Election Program and the state’s ban on political contributions by state contractors, but strike down bans against lobbyist donations and solicitations of contributions. The decisions also strike the provision providing additional funding to candidates when an opponent spends beyond a publicly financed candidate’s threshold,” Blumenthal said.

The court decision does not affect the ability of candidates’ to seek and obtain public financing, but it bars them from obtaining supplemental grants triggered by an opponent’s excessive spending, a long-term complication to the campaigns of the two publicly financed candidates for governor, Fedele and Democrat Dan Malloy.

“Today’s decision is just one step in a long process, a process that I am confident will result in Connecticut’s public financing law remaining in place. In the short-term, the decision has no impact on the primary election I’m engaged in – I’m as confident as ever that we’re going win on August 10th because this campaign represents values and experience that money can’t buy,” Malloy said.

The campaign of Democrat Ned Lamont, who has opted out of the voluntary public financing program to use his own wealth and privately raised funds, had no comment on either court decision.

“This was a frivolous lawsuit,” Fedele said of the action initiated by Foley and joined by Griebel. “It was Tom Foley trying to silence me.”

Fedele said he that tomorrow he will launch a media campaign, including television advertisements, and that he plans to spend all $2 million in public funds available to him in less than one month. The gubernatorial primaries arer Aug. 10.

“We have a plan and we are ready to go,” Fedele said, predicting Foley’s lawsuit and planned appeal would weaken his standing with voters. “While Tom Foley spends his time with his lawyers, I’ll be spending it with the people of Connecticut.”

Foley’s campaign issued a statement expressing its disappointment with the federal decision. It had no immediate comment on the rejection of its request for an injunction.

The supplemental grants were not a factor in legislative races two years ago, when only one legislative candidate was given an extra grant of a few hundred dollars.

“Campaign finance is alive and well,” Rell said.

But the court struck down a ban on contributions by lobbyists, a provision demanded by Rell over the warnings of lawyers that it might be unconstitutional. The court found that the state made no compelling case to restrict the free-speech rights of lobbyists.

“I’m disappointed to say the least,” that bans on lobbyist contributions, and on the ability of lobbyists and contractors to solicit contributions for candidates from their clients, were struck down, Rell said. “I still think that whatever we could do to keep special interests out of campaigns I would support.”

House Speaker Christopher G. Donovan, D-Meriden, and Senate President Pro Tem Donald E. Williams Jr., D-Brooklyn, were reviewing their options for a special session consider legislative fixes. Still, Donovan found the overall decision good news for advocates of public financing.

“We came out on top,” he said. “We kept the public financing.”

The governor said she believes the legislature should act quickly in special session to resolve the lobbyist contribution issue, suggesting a $100 limit. That was the legal advice Rell rejected in 2005, when the campaign finance reforms were passed.

“I think it would be very simple for the legislature to put the same threshold in place that they put for everyone else,” she said. “I think that would be an easy fix.”

“I believe campaign finance reform works,” she said. “I support it. I believe that the Republicans would benefit from campaign finance reform because I think it helps to level the playing field.”

By late afternoon, advocates of public financing were pressing legislative leaders to act quickly.

“The enactment of Connecticut’s reform was one of Connecticut’s proudest moments,” said Tom Swan, executive director of the Connecticut Citizen Action Group. “It is time for the legislature to act. This late in the election cycle it is important for the legislature to clarify the rules under which people are running in the fall. We call on the legislature to come into special session to enact a fix.”

“Connecticut voters overwhelmingly support the landmark Citizens’ Election Program,” said Cheri Quickmire, executive director of Common Cause. “The legislature and the Governor should act quickly to amend the program to comply with the court ruling. Candidates are mid-stream and the primary is weeks away.”

In the race for governor, the ability of Fedele to collect a further supplemental grant triggered by the spending of Tom Foley seems in question. The appellate court struck down that provision.

Malloy already has collected and, presumably spent, a supplemental grant of $1.25 million triggered by the spending of his opponent in the race for the Democratic gubernatorial nomination, Ned Lamont. Fedele received a basic grant of $1.25 million and a supplemental grant of $937,500.

Based on Foley’s continued spending, Fedele was expected to seek and receive another $312,500.

Opponents and supporters of public financing praised the mixed federal decision.

“Connecticut’s so-called Citizens Election Program is fatally flawed and should be repealed. The law’s perverse incentives, convoluted logic, and unconstitutional provisions have already had a shameful impact on this year’s elections, regardless of which candidates ultimately are nominated and elected,” said Fergus Cullen of the Yankee Institute.

But Secretary of the State Susan Bysieiwcz credited public financing for a 12-year high in the number of candidates running for General Assembly. She said public financing has encouraged that trend.

“Candidates for state office in Connecticut still need clarity on the rules for raising and spending campaign funds, and I hope we soon get the clarity we all seek,” she said. “We must not forget the big picture, which is that we need to stay committed to concept of clean elections in Connecticut.”