July 14, 2024
A $20K limit on candidates reimbursing their campaign loans was nixed in response to a SCOTUS ruling from last year.

San Jose’s contentious mayoral race last year between Matt Mahan and Cindy Chavez was a pricey battle between business and labor interests, shattering the city’s all-time campaign spending record to the tune of more than $8 million.

Now that figure could climb even higher in the years to come after the San Jose City Council voted 10-1 Tuesday to loosen the city’s campaign finance laws in the wake of a 2022 Supreme Court case involving Texas Republican Sen. Ted Cruz.

Candidates running for public office in San Jose will now be able to get back all the money they loaned to their campaign through the use of pre and post-election contributions. Previously, candidates could only claw back up to $20,000.

The recommendation to eliminate the cap was made by the city’s five-person Board of Fair Campaign and Political Practices. In addition to investigating violations of campaign rules, the board also reviews the city’s current campaign laws during off-election years. Councilmember Bien Doan was the only councilmember who voted against the change.

Though it may be a small tweak in the rules, San Jose State University political science professor emeritus Larry Gerston asserted it adds to a laundry list of ways for more money to flow into politics.

“The essence of all of these (changes) are to remove constraints on campaigns,” said Gerston, who referred to the landmark 2010 Supreme Court ruling in Citizens United v. Federal Election Commission — blamed by critics for sparking a tsunami of political spending. “There are endless amounts of money out there if the powers that be favor the candidate. This is just another part of that.”

In a statement, Councilmember Dev Davis said that there were positive aspects of the change.

“Removing those limits helps candidates who are new to the scene to get started,” she said. “Given the new state law (SB 1439) restricting contributions to $250 in a lot of cases, which applies to sitting councilmembers but won’t affect their opponents who aren’t in office, removing this loan limit can also help candidates running for reelection. So, I think this change is unlikely to significantly impact any local elections.”

The city’s rule change stems from a Supreme Court decision in May 2022. In a case involving the Federal Election Commission, Sen. Cruz purposefully challenged the two-decade-old Bipartisan Campaign Reform Act when he loaned his 2018 reelection campaign $260,000, which is $10,000 over the federal limit.

In a 6-3 decision along ideological lines that sided with Sen. Cruz, Chief Justice John Roberts argued that limiting the amount of money a candidate can repay themselves is a violation of the First Amendment and contended there were no proven instances of quid pro quo corruption where a donor paid off a candidate’s loans through post-election contributions.

But Justice Elena Kagan pointed out an example in Ohio, among others, where law firms donated $200,000 to help a newly-elected state attorney general pay off his loans. Those firms later ended up receiving state contracts worth close to $10 million.

That sort of dynamic laid out by Justice Kagan is what worries Dan Schnur, former chair of the state’s Fair Political Practices Commission.

“I’m not all that positive about this,” said Schnur, who teaches political communications at UC Berkeley and the University of Southern California. “Post-election donations have a much greater opportunity to cause problems than those pre-election. This (change) doesn’t necessarily require newly elected candidates to do the bidding of their donors. But it certainly makes that type of quid pro quo activity much more tempting.”

Schnur said it may also encourage wealthy political candidates to push a lot more of their own money into the campaign since they’ll be assured they can repay their loans.

Sean McMorris, a member of government transparency nonprofit California Common Cause, said he’s unsure whether the city needs to eliminate the cap at all.

“I know that San Jose is being proactive, but it is not clear to me that the SCOTUS ruling, which pertained to federal campaign finance law and post-election fundraising, would necessarily apply to all local campaign finance laws pertaining to candidate loans or that a city cannot narrowly tailor such a law to avoid running afoul of the SCOTUS ruling,” he wrote in an emailed statement.

Ann Ravel, a former member of the Federal Elections Commission who previously served as Santa Clara County counsel, said that removing the cap is especially concerning for local politics. She said that while quid pro quo-style corruption happens at the federal level, it is even easier for it to occur in a city like San Jose because of donors’ vicinity and ease of access to local politicians.

“I think the ability to influence locally is greater,” said Ravel. “A lot of people contribute to campaigns, and hopefully a lot of people do it for the right reasons. If it is a lot (of money), it is probably being done not because you think people are going to be a great public servant, but because those people are going to be a servant to your interests.”

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