The recent momentum towards campaign finance reform is often stymied by a lack of consensus on a clear, simple solution that can unify the efforts of diverse reform interests into one. Many schemes have been proposed, some enacted, and some struck down, but little has been done to resolve the questions. To a public eager for reform this is mystifying.

The meager empirical data about the impacts of various reform options -- contribution limits, PAC bans, public funding, in-district limitations -- leaves reformers with little on which to base their strategies other than instinct. This study is written with the hope of shedding some light on the subject.

Executive Summary

First, Measure 9 resulted in as much as two-thirds less money being contributed to candidates, and one-third more contributors participated in the financing of campaigns.

Second, analysis of the sources of contributions before and after Measure 9 indicates that the reduction was not evenly felt across the array of contributors. For example, organized labor’s contributions declined more than 93%, while lawyers’ contributions declined 55%.

Third, the radical reduction in the size of the average campaign fund did not change the nature of the races as might be expected: the funding advantages of incumbents remained the same, as did the likelihood of successfully challenging one. It did not divert funds into open seat races, often the hardest fought campaigns, nor did it encourage more independent candidates or increase their funding. The number of uncontested races rose slightly and the amount collected as small contributions (under $50) actually declined. The number of third party candidates remained the same but their funding dropped, on average, 15%. The candidates with the most money won most of the time and the ratio of winners’ funds to losers’ funds did not change appreciably. Its impact on the number of candidates is not clear, as 15 more Republican candidates ran while there were 7 fewer Democrat candidates. Republicans raised one-third more money than Democrats, the same ratio as their 1994 funding advantage. And, the total number of seats won by each party stayed about the same; only one seat changed hands.

Fourth, the contribution limits did encourage several avoidance techniques which added another $2.6 million to the total expenditures. It also encouraged bundling by members of different industries, which did not increase the total spent but was used to enable groups of businesses to maximize their visibility and their importance to the candidates.

1. The Oregon Statute

In 1994, the citizens of Oregon approved an initiative called Measure 9 with 72% of the vote. It imposed the first limits of any kind on contributions in Oregon state elections. Measure 9 was a hybrid reform that combined strict contribution limits with voluntary spending limits, and modified use of an existing tax credit for contributors. The new law:

The initiative was immediately challenged in court and held unconstitutional by the Oregon Supreme Court in February 1997, shortly after the completion of the 1996 election cycle with the new limits in effect. The 1997 legislature is considering a bill to repeal the few provisions that were not struck down by the Court. Thus, the 1996 election cycle will stand alone as evidence of what campaign finance reform of that kind could achieve. Statutes limiting contributions to $100 have been struck down in other states (Missouri, Minnesota and Washington, DC) and are under challenge in still others (Montana and California). Nonetheless, similar statutes with low limits are still being adopted in other states, such as California and Colorado, and are still the law in Montana. Examining the impact of low contribution limits is still relevant to other states.

Oregon offers a good laboratory for the study for several reasons. First, campaign costs were climbing at an alarming rate, having increased nearly 16-fold in just 12 election cycles, justifying public concern over money in politics.

Second, the state has comprehensive records of contributions from past elections, records which the Money in Western Politics Project has analyzed over several recent cycles. Finally, the state's lack of any previous restrictions that might have already changed the behavior of political supporters presents a clean before-and-after comparison. Prior to Measure 9, for example, there were no significant independent expenditure campaigns or other ancillary patterns for political contributions: supporters simply contributed funds directly to their candidate. The proliferation of alternative contribution patterns in the 1996 election offers a glimpse of the disturbing consequences of contribution limitation statutes.

In the two previous elections, 51% - 53% of the funding came from business interests, 12% - 15% came from organized labor groups and 13%-20% came from the parties. The contributor profile was top heavy, as well, with a few dozen $50,000+ contributors donating 42%-43% of all the funds given to all candidates, while the remaining 9,000+ contributors supplied the rest. The imbalance in the funding of campaigns was drawing increasing press attention as the top contributors increased their giving and became more visible in seeking legislative favors. One member of the “Millionaire’s Club,” as the press dubbed them, even hired the Republican majority leader, Ray Baum, as a personal political consultant between sessions to help him achieve his political agenda and set up meetings for him with legislators when the legislature met again.

The Western States Center’s Money in Western Politics Project has complete databases of campaign contributions from several prior years. The data is comprehensive, comprising all contributions to all candidates, losers and winners, primary and general elections. Each contributor is identified by their economic interest by Center researchers. This study compares the sources of money flowing into the 1994 and 1992 elections cycles with the 1996 election and analyzes the disparate impact on different parts of the contributor population. Only legislative candidate contributions have been used in this study to make the three files comparable.

2. Impact on Campaign Funds

Measure 9 substantially reduced the money given to candidates during the election cycle. The total of funds contributed to legislative candidates was reduced from $10.7 million to $3.4 million, a remarkable decline of 68% in one election cycle. The average House candidate raised $14,515, less than a third of the 1994 average of $48,143 and the 1992 average of $39,741. The average Senate candidate raised $19,258, less than a third of the 1994 average of $55,974 and the 1992 average of $53,797.

The top contributor was candidate Cedric Hayden, who loaned his own campaign $89,064. Hayden was one of 32 contributors who gave more than $10,000. Of these top contributors, 10 were candidates giving funds to their own campaigns and 22 were PACs, including political party PACs. Together they supplied 17% of the funds, a very different profile from prior years.

However, the low contribution limits also spawned a number of circumvention practices, such as independent expenditures by labor and the business community on behalf of candidates. In another tactic, the state Republican party created initiative PACs, which were not subject to the contribution limits, to collect money to advertise Republican candidates and their positions on the initiative. In both cases the funds were clearly spent to influence the outcome of legislative elections.

When those sums are added to the amount contributed to candidates, the actual change in the funding of the legislative candidates shows a 44% decline in the total of funds contributed to the 1996 legislative elections, still a substantial impact. For a more complete discussion of those additional contributions, see section 6.

In addition, the 1996 contributor file shows ample evidence of the bundling or grouping of contributions by certain industries, a practice intended to maximize the visibility of their contributions by aggregating many smaller contributions into one package or sending them on the same day. While this does not increase the money contributed, it is intended to defeat the reform goal of stopping the checkbook influence of special interest groups.

3. Impact on the Races

An oft-stated goal of reform is to open the political system to challengers and lessen the advantage of money in the election process. It is predictable that the higher-spending candidate has a better chance of winning, but the advantage declined slightly in 1996. In contested races, the higher-spending candidate won 85% of the time in 1992, 88% in 1994 and 82% in 1996. The advantage of money is still substantial even when the level of funding is reduced by two-thirds.

a. The dollar advantage

Losers in general elections had only 43% as much money as the winners in general elections in 1992, 53% as much in 1994 and 49% as much in 1996, a slight decline from the 1994 high. Put another way, the ratio of winners’ funds to nominees’ funds was 2.28, 1.88, and 2.03 in the three cycles studied. It is clear that lowering the overall funding for politics in Oregon did not affect the great disparity between winners and nominees. The goal of "leveling the playing field" so often cited in reform efforts did not occur; indeed, the playing field became slightly less level as the disparity increased slightly for 1996. Fund-raising skills and contacts still constitute a substantial advantage in the election.

A third category of candidate, those who lost in the primary, are typically the least funded of the candidates. The average war chest raised by a losing candidate rose nearly 20% from 1992 to 1994 but declined only 33% in 1996 compared to the overall 70% decline. Thus, the relative financial position of the losers increased substantially compared to winners: in 1992 and 1994, losers raised just 11% as much money as winners did, but in 1996, they raised 24% of the money winners raised. Encouraging more participants into the political debate and enabling them to mount a meaningful challenge is a positive step toward a vigorous democratic process.

b. Incumbency

Incumbency is often the single greatest advantage a candidate can have in getting re-elected. In fact, there have been recent election years in which the chances of dying while a member of the U.S. Senate were greater than the chances of being unseated by a challenger. Oregon state politics are no exception to the general rule and the value of incumbency was not changed by Measure 9. In 1992, 90% of incumbent candidates won, 96% won in 1994 and 94% won in 1996.

Measure 9 also did not change the funding ratio of challengers and incumbents: on average challengers had just 46% of the funds that incumbents had in 1992, 43% in 1994 and 47% in 1996. One of the advantages of incumbency is the greater ease in fund-raising because lobbyists already know the incumbent, so it is surprising that Measure 9 did not change that pattern, as PACs were the most heavily impacted givers and they usually give to incumbents. However, while incumbents as a class raised more than twice as much as challengers, incumbent candidates were the top fund-raisers in only 60% - 65% of the races that they won.

Another advantage of incumbency, better name recognition, can win races even without the funding advantage. However, in 1992, four of the six incumbents who lost the election also raised more money than their opponents and so lost despite having two substantial advantages. In 1996 just one incumbent lost while outspending his opponent.

The number of uncontested races did not decline as might be expected when the cost of running is reduced dramatically. There were 18 uncontested races in 1992, 15 in 1994, and the number increased in 1996 to 19 uncontested races. Generally, uncontested races occur when a popular incumbent runs for re-election. Remarkably, in 1996, two open seats were uncontested, whereas in prior years all uncontested races were won by incumbents. One was a Senate seat won by candidate Kate Brown who had previously been elected to a House seat. The other uncontested seat was won by a newcomer.

The number of open seats did not change appreciably either. In 1992 there were 17 open races, 24 in 1994 and 25 in 1996. Open seats often produce the most spirited competition and, therefore, more costly races. Limits on contributions ought to help newcomers compete for funds that otherwise might have gone to incumbents, but they did not. Candidates for open seats raised only slightly more than incumbents, on average, with 8% more money in 1992, 27% more in 1994 and 5% more in 1996. Again, diminishing the average campaign war chest by two-thirds did not enhance the funding and the competitiveness of open seat campaigns.

c. Third Parties

The number and funding of third party candidates did not increase after Measure 9, although a goal of reform is to open the system up to non-traditional candidates and broaden the terms of the political debate. A summary of the candidates who were neither Democrat or Republican, and who did raise some funds, shows their average funding actually declined in 1996:

It should be noted that in 1996, candidate Cedric Hayden ran as an independent but is not included here because he was a Republican incumbent and had served several terms in the House as a Republican. He lost the primary in 1996 and so ran as an independent for his old seat. He raised $93,918 in 1996.

4. Impact on Contributors to Candidates

The average contribution declined from $280 in 1992 and $349 in 1994 to $87 in 1996. The total number of contributors increased dramatically in the 1996 cycle, from approximately 9,000 in the two prior cycles to 12,000. These numbers include all contributors, individuals as well as PACs, but do not count party contributions nor the many “small” donors of $50 or less whose contributions are recorded as aggregate sums without names. Curiously, despite the new emphasis on the small contribution fund-raising, the actual dollars received in small contributions declined 10% after Measure 9.

While broadening of the base of contributors may reduce the concentration of political giving, the contributors still represent a very small part of the population of the state, just 0.43%, or less than one-half of one percent.

While Measure 9 successfully cut candidates’ campaign coffers by two-thirds, the impact on contributors was not even handed. As expected, the contributors most affected by the limits were PACs, which serve to aggregate the contributions of many contributors but are still limited to the same $200 per election that a single individual would be. When contributors are grouped by their economic interest, and the contribution levels before Measure 9 are compared to contributions after, some interest groups declined 93% while others fell 55%. Each category, with its largest contributors and rate of decline are discussed below. The chart below summarizes the changes from 1992 to 1994, giving two prior election cycles for comparison, and the decline from 1994 to 1996 under Measure 9.

a. Labor: -93.6%

The interest most heavily impacted was organized labor, with a 93.6% drop in their contributions, from $1.6 million in 1994 to $104,080 in 1996. The overall business-labor ratio changed from 4:1 to 15:1, showing that the impact of Measure 9 was not evenly felt by all contributor groups. While business groups also give through PACs, and their overall decline in contributions was substantial, the new law left them in better relative position than labor groups. In fact, overall business contributions directly to candidates declined about 73% from 1994 to 1996.

Public sector unions representing teachers and other public employees, were the largest source of labor contributions, contributing $744,067 in 1992, $1,322,071 in 1994 but falling to $49,635 in 1996. The largest of these, the Oregon Education Association, gave $696,184 to 70 candidates in 1994, with 11 of those candidates receiving more than $20,000 each from the union. Twenty two Republican candidates got 5% of the OEA's funds.

Traditionally, labor groups in Oregon gave 94% of their money to Democrats. That pattern carried forward to 1996 despite the 94% decline in contributions. However, unions did use their political funds to finance independent expenditures on behalf of their slate of candidates, discussed in section 6.

b. Ideology: -90.2%

Ideological groups do not typically make substantial contributions to candidates in state politics in the West, although they do play a significant role in ballot measure campaigns. Oregon has been the exception to the rule, with Pro-Life groups leading the field with $67,736 in 1992, climbing to $106,846 in 1994, but dropping 94% to $6,900 in 1996. Similarly, groups supporting gay and lesbian rights contributed $45,525 in 1992, $60,651 in 1994 but dropped 93% to $4,500 in 1996. Other groups opposing gun control, supporting reproductive choice or environmental regulation were similarly impacted.

Ideological groups supplied just 3% of the total election funds, but that dropped to 0.9% in 1996. Their contributions tend to be split between Democrats and Republicans, with slightly more going to Democrats in prior years. In 1996, the funds were split nearly evenly.

Funds raised by such groups are often grass-roots contributions raised in the process of encouraging public debate on issues of political importance. Unlike other categories in the Center’s coding system, these PACs are usually acting on belief rather than economic self-interest and often use door-to-door canvassing, newsletters, and local meetings to discuss their ideas. It is unfortunate that the implementation of reform, aimed at cutting special interest influence, has such a strong negative impact on these PACs.

c. Miscellaneous Business: -86.9%

The third most heavily impacted group is the general business category, i.e., those businesses not specifically itemized in the list. It includes most manufacturing, wholesale and retail companies, as well as general business associations such as the Chamber of Commerce.

Business associations are the largest category in this group, accounting for 42.5% of the contributions in 1992. Those contributions increased dramatically in 1994 from $405,780 to $623,778 and declined in 1996 to $22,900. Again, the use of PACs as a mechanism for gathering and disbursing contributions probably accounts for the higher-than-average decline.

The single largest source of funds in this category was the Oregon Victory PAC, a PAC created by former House speaker Larry Campbell, R-Eugene, "to funnel business contributions to Republican candidates,". who receive 100% of its contributions. In 1994 the PAC gave $561,700 to 22 candidates, with 17 of them getting more than $20,000. As a result, the category of business associations gave 98%-99.6% of its funds to Republicans in 1992 and 1994, 95% in 1996.

Food and beverage companies are the second largest category in the miscellaneous business group in all three election cycles. Beginning with 1992, this group, led by the Oregon Restaurant Association and a few other industry PACs representing beverages and soft drinks, gave $253,758. Their contributions increased dramatically 98% in 1994 and then declined 91% to $46,325 in 1996. The percentage going to Republicans increased from 75% to 85% under the new limits.

The contributions from the leading PACs in the industry fell most sharply, with the individual contributions from restaurants and beverage dealers making up 60% of the 1996 contributions, compared to less than 15% in 1994. As the relative power of the PACs in the industry fell, the importance of the individual businesses rose as contributors in this segment.

d. Resource Development: -79.3%

The resource development group showed the fourth largest rate of decline and slipped from the top contributor category in 1992 to the fourth highest in 1996.

The timber industry has been the leader in the resource development group in all three elections, starting with $325,859 in 1992, growing to $487,718 in 1994 and falling 81% in 1996 to $91,976. The top eight or nine contributors, headed by the Oregon Forest Industry Council PAC, Weyerhaeuser, Georgia Pacific, the Association of Oregon Loggers and Boise Cascade, each gave more than $10,000 and supplied 75% of the money from this industry in prior years.

Measure 9 took most of those prominent names in Oregon timber out of the running. In 1996, no contributors gave more than $10,000 (the largest contributor gave less than $9,000) and only the Association of Oregon Loggers appears among the top 10 timber contributors. The rest are individual business owners and the Georgia Pacific Employees fund. The top 10 timber contributors supplied less than 40% of the funds from the industry.

The timber industry gave 85%-91% of its money to Republicans in prior elections and 93% to them in 1996.

Oil and gas interests were the second highest contributing industry in the resource development group, with about $230,000 in both 1992 and 1994, which dropped 76% to $56,405 in 1996. ARCO (Atlantic Richfield) topped the list in both 1992 and 1994, followed by the Northwest Natural Gas Company, the Petroleum Marketing PAC, and several major oil companies. The top six or seven contributors, those giving $10,000 or more, accounted for 82%-88% of the industry total. In 1996, in contrast, only one company gave more than $10,000, Northwest Natural Gas, and the eight contributors who gave more than $1,000 supplied 60% of the funds from the industry. Only ARCO and the Petroleum Marketers PAC remained in the top 10 list for this industry, with the majority of contributions coming from individuals or small companies in the industry. The petroleum industry gave 60%-65% of its funds to Republicans in prior years, increasing to 70% in 1996.

e. Communications and Electronics: -72.4%

The communications and electronics sector has not been a dominant player in Oregon's campaign finances, supplying about 3% of campaign funds in the last three elections. Contributions are split between the parties, with 57% going to Republicans in two prior elections and 53% in 1996.

The largest segment of the communications and electronics contributions is from the telecommunications industry, supplying more than 40% of the funds contributed by that group. The field is dominated by PACs representing the employees of various telephone companies, as well as funds from the companies

themselves. The US West Employees PAC leads the field in all three elections, with $82,480 in 1992, rising slightly to $90,307 in 1994, and falling 84% to $14,500 in 1996. Similarly, the United Telephone Employees PAC contributed $25,000 in each of the two prior years, but dropped to $8,400 in 1996.

The second largest source of funds is the computer equipment and services sector, predominantly small computer retailers and service companies rather than PACs, which suffered a 39% decline in their contributions after Measure 9, from $50,071 to $30,662. The below-average decline is probably attributable to the nature of the contributors.

f. Finance/Insurance/Real Estate: -73.2%

The financial industries have supplied substantial amounts of funds to candidates, 8%-9% of total election funds in prior years, and 7.5% in 1996. About 70% of their funds went to Republicans in all three years. The two largest segments of the group are real estate interests and insurance, each of which supplied about $300,000 to candidates in the 1994 elections. Approximately three-quarters of their contributions go to Republicans.

The insurance industry contributions were dominated by PACs representing general insurance companies, life insurance and health insurance, as well as PACs of the larger companies in the field, such as Liberty Northwest, Safeco, Standard, North Pacific, and Farmers Insurance. In both 1992 and 1994, 11 of these PACs gave more than $10,000 each and supplied 80%-85% of the funds from the industry. In 1996, only two PACs gave more than $10,000, Life Underwriters and Standard Insurance, and only seven contributions were over $1,000. Together these comprised 68% of the industry contributions, the remainder coming from individuals and small companies. In all, insurance contributions fell 80% in 1996.

Contributions from the real estate industry were dominated in all three cycles by the Oregon Realtors PAC and the ParkPAC, which represents owners of trailer parks. Together they supplied 78% of the industry funds in 1992 and 57% in 1994, but only 15% in 1996. The remaining funds came from a number of smaller PACs, such as the mortgage industry PAC and the rental owners PAC, as well as real estate companies, developers and individual agents. Overall, real estate contributions fell 70% in 1996.

g. Agriculture: -75.1%

The agriculture sector supplies 3.3% to 4.3% of the total campaign funds in Oregon campaigns and over the course of three election cycles, the percentage going to Republicans has increased from 75% to 86%.

The largest industry in agriculture is food processing and sales, which contributed $217,885 in 1992, $281,808 in 1994 and fell 89% in 1996 to $30,340. The top contributors are PACs representing the Oregon food industry, Oregon grocers and several food chains (Southland, Norpac and Safeway), which together supplied 93% of the contributions in this category in 1992 and 1994 and fell to 36% in 1996, again showing the decline in PAC funding power. The remaining funds came from individual grocers and small food-processing concerns.

The agricultural services and products category has three PACs that dominate giving: Oregonians for Agriculture, Oregon Nurserymen’s PAC, and the Veterinarians PAC, all of which supplied about 90% of the funds in 1992 and 1994. In 1996 that fell to 36% and the giving by the largest PAC, Oregonians for Agriculture, fell 98% in one cycle.

One category, crop production and basic processing, actually increased its contribution level slightly from 1994 to 1996: from $45,069 to $47,668. This category consists of farmers and orchardists and does not include any large PACs, so that most of the contributions were small before Measure 9.

h. Transportation: -53.3%

The transportation industry has never supplied a large portion of campaign funds to legislative candidates, 1.9% in 1992 and 1994, which rose to 2.1% in 1996. The support for Republican candidates has steadily increased from 65% to 70% to 80% over the three cycles.

The automotive industry has always been the largest segment of the transportation group, dominated by two PACs, the Oregon Automobile Retailers and the Oregon Independent Auto Dealers. Together they accounted for 83% of the industry's contributions but that fell to 24% in 1996.

Trucking interests' contributions were dominated by PACs, such as the Oregon Truck PAC, and several others representing large trucking firms, such as Reddaway and Freightliner. The Truck PAC contributed $40,815 in 1992 and $28,150 in 1994, but gave only a single $100 contribution in 1996. In fact, the largest contribution in the trucking industry was $600 that year.

i. Health: -64.6%

The health industry supplies 5%-6% of the funds contributed to Oregon candidates, with a nearly even split between the parties. The largest category is health professionals who supply two-thirds to three-quarters of the funds.

Numerous PACs representing the various health professions, such as doctors, nurses, dentists, chiropractors, osteopaths, podiatrists, and psychologists, dominate the giving in all three cycles. In fact, in 1992, only one of the top 20 contributors in the health profession category was an individual. Their contributions were cut drastically in 1996 by 67%. In 1992, they contributed $393,778, and $370,162 in 1994, dropping to $148,727 in 1996. Individual members of the health professions are also well represented on the contributor list, which likely explains why the overall decline of the health sector is slightly lower than average.

j. Construction: -57.5%

The construction sector has contributed 4%, 3.5% and 4.7% in the last three election cycles. The increased share in 1996 is a function of the below-average decline in contributions after Measure 9. Construction contributors give 75% - 81% of their money to Republicans.

The general contractors and home builders are the largest contributors, represented by three large PACs in the years prior to Measure 9. The Committee to Build a Better Oregon, the Associated General Contractors PAC and the Oregon Manufactured Housing Association each gave more than $35,000 and combined, the three PACs accounted for 82% of the money from this segment in 1992. In 1996, the largest contribution, $13,000, came from Oregonians for Affordable Housing and together the large PACs accounted for less than 35% of the money.

The second largest segment of the construction category is the building materials and equipment industry, which has been dominated by the concrete and aggregate producers. Their PAC spent $62,775 in 1992 and $66,090 in 1994, two-thirds of the total from the industry, while the second largest contributor was a businessman who made $2,380 in contributions. In 1996, industry funds fell 55% and the Concrete and Aggregate Producers PAC gave just 8% of the total: $3,800. The remainder of the contributions came from individual businesses, and the pattern of those contributions indicates a planned strategy to make contributions as a group of individuals without the medium of a PAC (see “Bundling” below).

k. Lawyers and Lobbyists: -54.6%

Lawyers and lobbyists supplied 3.5% of the funds in Oregon elections in prior years, but that increased to 5.2.% in 1996. In both prior years, 84% of lawyers’ contributions went to Democrats, declining to 68% in 1996.

Two PACs, the Oregon Trial Lawyers and the Criminal Defense Lawyers, and two large law firms, Stoel Rives and Pozzi Wilson, were the top four contributors in this category in both 1992 and 1994, supplying 72% and 55% of the funds respectively. The trial lawyers' PAC was the largest source of funds, with over $150,000 in both election years. After Measure 9, the trial lawyers’ PAC contributed just $3,450 and the Criminal Defense Lawyers just $7,400. The remaining funds came from individual lawyers and lobbyists, or small contributions from firms.

l. Other : -10.4%

The group showing the lowest rate of decline is really a composite of categories that do not fit into the business groups listed above: government employees, clergy, artists, retirees and those who work for non-profit organizations. As a result, this group is now the largest source of funds in the 1996 Oregon election, accounting for 11% of the funds compared to 4% in 1994. While there are a few PACs in this category, most contributors are individuals and their money goes to Democrats about 55% of the time.

The largest category is retirees. It is comprised of individual contributors, with the top contributor, Cornelius Duffie, giving $11,500 in 1994 and $7,000 in 1996. There were 21 individuals who contributed $1,000 or more in 1994, and only four in 1996, so the limits did have an impact on the contributors, albeit a smaller one than those in other categories.

Education is the second largest segment in this group, with the Citizens Alliance for Responsible Education and the Oregon Faculties PAC the two largest contributors. They gave $44,850 and $38,000 in 1992, dropped to $36,958 and $18,050 in 1994, but just $1,700 and $10,700 in 1996. Again, the remaining contributions came from individual educators and school officials.

5. Party Differences

Republican candidates raised one-third more money in 1996 than did Democrats, reflecting an advantage similar to previous years, when Republicans also had a 33.3% advantage in 1994 and a 24.5% advantage in 1992. Interestingly, while Measure 9 changed the entire fund-raising system in fundamental ways, the parties’ candidates weathered the process without changing their relative positions in funding.

Limits on contributions are thought to have a disproportionately heavier impact on Democrats than Republicans. The funding source most affected is usually organized labor, which gives to Democrats through PACs. For example, in Washington, after $500 limits were adopted in 1992, the Democrats lost their funding edge in the next election to Republicans, whose decline in contributions was much smaller than the Democrats’ decline. Labor contributions dropped nearly 40% against an overall decrease of just 7% in campaign contributions.

In Oregon, however, both parties suffered the decline equally and kept their relative positions with just 31% as much money as they each had in 1994. It is likely that the stricter limits account for the different response. Those who would previously have given through PACs representing their industry’s interest might now be giving directly to candidates, but with a $200 limit on all contributions, individuals still could not overcome the loss in the PAC contribution category.

The number of winners in each party did not change much either. In 1992, the Republicans won 42 seats and the Democrats won 34, in 1994 the Republicans won 41 and the Democrats won 34, and in 1996, the Republicans won 42 and the Democrats won 33.

However, a change did occur in the number of candidates each party fielded. In prior elections the figures were remarkably even: 118 Democrats to 117 Republicans in 1992, and 96 Democrats to 94 Republicans in 1994. However, the Democrats’ numbers continued to decline in 1996 to 89 while the Republicans’ numbers increased sharply to 109. Despite having 20 more candidates (22.5% more) the Republican candidates, on average, still maintained a 9.3% funding advantage over Democrats. Critics had feared that the new fund-raising rules would discourage candidates from running because of the increased fund-raising efforts required, but the divergent response of the two parties makes it difficult to judge whether these changes are related to Measure 9 or not.

Of course, it is possible that the increase in the number of candidates does not represent serious candidates who would contribute to the quality of the political debate. However, if token candidates (those who raised less than $1,000) are removed from the file, the Republican funding advantage becomes even more pronounced. The average Republican candidate had 28% more money than the average Democrat in the 1992 election, 45% more in 1994 and 21% in 1996. Clearly, there are fewer token Republican candidates in the Oregon elections. Furthermore, the overall pattern remains the same without the token candidates with the parties having similar numbers in 1992 (Democrats 109, Republicans 106), dropping for both parties in 1994 (Democrats 90, Republicans 83), and following a divergent pattern in 1996 (Democrats 85 - a loss of 5, Republicans 94 - a gain of 11.)

Measure 9 also changed the level of support that candidates gave their own campaigns out of their personal funds. When a campaign reform measure makes it difficult to raise contributions, self-funded candidates have an advantage because the contributions a candidate makes to his or her own campaign cannot be limited. The candidate with the largest campaign fund in 1996, Cedric Hayden, supplied $89,164 of his own money and raised only $3,754 from supporters.

Prior to Measure 9 Republicans enjoyed a large advantage in self-funding, with the average Republican candidate contributing 4.4 times as much as the average Democrat in 1992, and 5.4 times as much in 1994. While Measure 9 could not limit the candidate contributions without running afoul of the Constitution, it did allow the opponent of a self-funded candidate who exceeded $10,000 in contributionsfrom themselves to be exempted from the contribution limits, as a disincentive to wealthier candidates to pour excessive amounts of their own money into their races. In 1996, the average Republican candidate contributed just 28% more than the average Democrat to his or her own campaign.

Candidate contributions declined 49% for Republican candidates from $451,832 to $230,519 but increased 71% for Democratic candidates from $109,093 to $186,424. The change brought the per-candidate averages closer together: $2,115 from Republicans and $2,095 from Democrats. The disincentive effect of Measure 9, therefore, impacted the Republican candidates by reducing their level of self-funding. On the other hand, the difficulty of raising funds from outside sources seems to have encouraged Democrat candidates to contribute more to their campaigns.

The money raised by party leadership PACs and passed on to candidates also declined under Measure 9. In 1994, both parties had more than doubled their previous efforts and had supplied $229,425 to Democratic candidates and $492,538 to Republican candidates. In 1996, the Democratic leadership PACs gave just $77,881 to candidates, a drop of 66% and Republican leadership PACs gave $53,807 to their candidates, a drop of 89%.

6. Other Sources of Funds in the 1996 Elections

During the election, several techniques were used to avoid the limits of Measure 9. Two of them, independent expenditures and the use of initiative PACs to advertise candidates, added $2,596,081 to the 1996 campaign funds, a 76% increase over direct contributions. The total reported therefore is $6,007,616, or a 44% decline from the previous election. Half of the $2.6 million came from labor unions, but every other economic interest category contributed in some way.

Democrats gained $1,389,877 and Republicans gained at least $1,206,204 from these two sources, which brought the two parties’ totals closer together: Democrats had $2,800,215 and Republicans had $3,093,380

In the following chart, these additional funds are added to the direct candidate contributions, and show a dramatic change in the profile of election funders.

a. Independent expenditures were not limited by Measure 9; indeed expenditures in support of political expression have been held by the Supreme Court to be protected by the free speech protections of the First Amendment. Measure 9 did anticipate that this route would be used and instituted requirements for the reporting of such expenditures, although there were complaints that the reporting requirements were not comprehensive enough.

The most striking example is an anonymous advertisement late in the race encouraging voters to “Stop the unions from buying control of the legislature” (see Attachment 1) with pictures of a dozen candidates supported by labor unions’ independent expenditures. Even though the ads were obviously political and related to specific candidates and races, they did not use the words “vote” or “support,” so the Secretary of State determined, in an advance private ruling, that they were not independent expenditures within the statute and did not need to be reported. The funds that created the ads and paid for the media are, therefore, not included in the totals reported below, nor have the people responsible for the ad been identified, even though the effectiveness of the ads as a political message is not disputed by any of the participants.

Of the independent expenditures reported ($1,851,852), about $1.4 million, 75% of the total, was spent supporting Democrats (or opposing Republicans) while $461,975 was spent supporting Republicans (or opposing Democrats). However, since the anti-union ad mentioned above is not included, we should treat these figures as minimums.

b. Initiative PACs were set up during the elections by Republicans to raise funds outside of the Measure 9 limits and use them to “employ the party’s candidates as ‘spokespersons.’” According to an interview with The Oregonian, Senate Majority Leader Brady Adams, R-Grants Pass, 10 to 20 spokespersons would appear in brochures to be mailed statewide. There would be different versions of the mailings, with spokespersons appearing in the mailings that hit their hometown. “Coincidentally,” Adams said, “many of those individuals will be candidates and/or sitting legislators.”

The two PACs that were used for this purpose were the Critical Issues Committee and the Ballot 96 Committee. Together they spent $744,229 on advertisements that should be added to the total spent on candidates in this election.

7. Bundling

Bundling of contributions is a technique used to group contributions from one set of contributors in order to make the candidate aware of the economic interest group that is contributing the funds. It is an attempt to overcome the leveling effect of Measure 9 and retain what influence the group can.

The Oregon Cement and Aggregate Producers PAC, for example, contributed $66,090 in 1994 but only $3,800 in 1996. However, many individuals in the business made contributions and one candidate, Ken Messerle, got 17 contributions from them in one day. At least 22 candidates received four or more contributions on the same day from the same group of business people. By arranging contributions by date, the following pattern appears:

Several additional candidates had multiple contributions from the same sources that were grouped in the space of three or four days.

Of the 50 individuals who made the contributions between 10/17 and 10/29, 36 had not made contributions in 1994.

A similar pattern appears with members of the beer/wine and alcohol business. Fourteen individuals made the following contributions to seven candidates:

Nine of the 14 contributors had not contributed in 1994 and 5 were members of one family whose business had contributed in 1994.

Other industries in which similar giving patterns appeared are automotive sales, manufacturing, lawyers and lobbyists, forest products, real estate and building materials.

8. Analysis of the Impact of Measure 9

The amount of money flowing to candidates was cut substantially, even when the additional independent expenditures and initiative expenditures are added in. This is clearly a positive step toward reducing the impact of private interest money in our politics. However, it did not relieve candidates of the burden of raising funds and courting contributors; rather it increased it.

Too low? Cutting two-thirds of the funds out of the average candidate’s campaign fund is a huge adjustment in one election cycle and raises serious concerns about their ability to conduct a meaningful campaign. During the campaign, newspaper reports quoted a variety of politicians claiming that the limits were too low. Such claims are hard to evaluate in the heat of the campaign as no candidate ever believes they have enough money, with or without limits on contributions. However, there were claims that war chests were so depleted as to impair the ability of candidates to get their message out. Others complained that it meant politicians had to spend more time fund-raising which had the ironic effect of forcing them to concentrate even more on contributors than they had before.

There were candidates who raised large sums of money, proving that it could be done. The largest campaign fund, without substantial contributions from the candidate, was more than $66,000, and 18 candidates raised more than $40,000. However, in a system that provides no funds or media assistance from the state, and limits the funds the parties can give to their candidates, it is important to guard against strangling the political debate. Challengers, for example, typically need to outspend incumbents to run a credible campaign, so that a law that makes it difficult to raise money could easily guarantee re-election for incumbents. Limits of $100 on contributions have been struck down in other states as being too low to safeguard free speech.

Oregon does provide a government subsidy in the form of a tax credit to contributors if the candidate to whom they contribute has voluntarily agreed to the spending limits. While this costs the state funds, it does not put money into the hands of candidates to replace the funds lost to reform as a system of public funding would do.

Further study is needed to determine what level of funds are needed to assure that candidates have enough money to participate in a meaningful debate, that challengers are not silenced, and that newcomers have a chance to enter politics.

Independent expenditures and initiative expenditures were also the result of Measure 9. Generally, encouraging money into alternative forms is a negative trend, for several reasons.

First, the money is harder to track, which violates the first rule of free elections: full disclosure. Independent expenditures can be made anonymously, with the sponsor only disclosed at the filing date, or not at all as was the case with the anti-union ads run at the end of the election. Furthermore, the expenses are undercounted in that only the outlays directly associated with the ad are reported, so that the overhead expenses of political consultants, planning and polling, etc., are not counted. Stricter reporting and accounting rules are required to prevent a recurrence of anonymous political ads.

Second, by definition, these expenditures must not be made with the knowledge or assistance of the candidate. As a result, more than one candidate was forced to deny things said on their behalf by independent campaigns and some complained that they lost control of their campaigns. Even many of the groups running these independent campaigns clearly stated that they preferred simply giving the money to the candidates as they disliked the sense of subterfuge about their efforts. It is also true that policing the expenditures, to guarantee they are not made in concert with the candidate, or party officials acting on the candidate’s behalf, is nearly impossible. This leaves an open door, a wide open door, for special interest groups to use their money to influence elections and gain access and power with the candidates. It also means that the groups mounting independent campaigns are controlling the issues and terms of the debate rather than the candidates.

Third, experience tells us that often independent campaigns are used for attack ads with which the candidate would rather not be directly associated. As with the famous “Willy Horton” ads during the 1988 Presidential campaign, which made a subtle racist appeal to voters, the candidate has the protection of “deniability.” This does not enhance the quality of the political debate.

Fourth, only those with substantial funds can mount an independent campaign. An individual whose contributions were limited really cannot turn to independent campaigns as an alternative unless they are wealthy, so it tends to enhance the power of well-heeled political interests.

One of the most curious -- and unfortunate -- impacts of Measure 9 deserves mention here. The general goal of campaign finance reform is to lessen the role of money in politics and increase the role of the individual, the voter. In an unregulated system, the candidate who attracts the most money is not necessarily the most popular. Since money wins elections, it distorts the democratic process. Proponents of low contribution limits argue that reducing contributions to $100 remedies that by allowing only those with a popular following to raise large sums of money.

As Measure 9 limited the contributions to PACs to $100 (as well as contributions to candidates), those PACs with large numbers of contributors raised more money than those PACs that had relied in the past on a few contributors for large sums of money. As a result, labor PACs were able to raise more money than many business PACs. That provision of Measure 9 increased the political power of groups representing large numbers of people compared to those PACs representing a few -- clearly a pro-democracy impact.

However, as unions began spending that money on independent campaigns, the cry went up from the business community that the new law “unfairly” favored unions. Surprisingly, newspaper reporters, columnists and editorial writers failed to see this as a pro-democracy trend and branded the unions’ fund-raising advantage as a “loophole” that was not anticipated or intended by Measure 9. Editorial writers called on the unions to stop ruining the new campaign system by exploiting the loophole and columnists complained that big money was once again controlling elections. Even the authors of Measure 9 were quoted as saying that it was not within the spirit of the measure. Those who had long argued for changing the system were now criticizing the new law because of its very success.

By the end of the campaign season, lawmakers were vowing to remedy this fault in the system as soon as the legislature met. Business leaders were referring to Measure 9 as a carefully crafted effort to allow the unions to buy the elections. (It should be noted that unions did not craft, or even support Measure 9 in 1994.) As a result of the anti-labor press, the anonymous anti-labor ads that ran just before the election are thought to have had a major impact on the election. Only 4 of the 14 candidates named in the ad won. A variety of anti-labor measures were introduced in the 1997 legislature to inhibit their fund-raising ability.

Individuals vs PACs? More individual contributors could indicate greater support and participation by individuals, which is a positive result.

However, it is hard to determine how many of those were encouraged to contribute by the increased fund-raising activities of the candidates or whether they are business people making contributions that their business would have made last year. In the examples of bundling discussed above, one family had seven family members each contribute to a slate of candidates whereas their business made the contribution in 1994. In the concrete and aggregate business, 36 of the 50 contributors who bundled their contributions were new to the contributor list, but were likely replacing funds given by their businesses last election. Simply increasing the number of individual contributors does not guarantee that the special interests are being pushed out of the election.

A similar result occurred in Washington, after that state adopted $500 limits on candidate contributions. PACs warned their contributors that they should give directly to candidates because of the new limits. The individual giving within interest groups more than offset the decline in giving by PACs in most business categories.

A larger number of individual contributors also means that candidates spent more time and effort on fund-raising, which has both positive and negative connotations. It could mean that they spent more time meeting and talking with constituents but it also means that candidates had to focus even more on money than ever, possibly to the detriment of political debate. In numerous comments by former elected officials, the constant worry about money is one of the most damaging effects of the present system of funding campaigns.

© 2004, Western States Center
Modified on December 1, 2004