In recent weeks, the North Carolina General Assembly has been in the spotlight, both locally and nationally. Facing a still recovering economy, state leaders have had to make tough financial decisions. Some have been praised; some have been criticized. Like any family facing financial hardship, state leaders have had to cut or eliminate funding for a number of programs in the new budget. Eliminating public campaign financing for statewide judicial candidates is one of those programs.
In 2004, many viewed North Carolina as a pioneer due to the state’s efforts in creating a public campaign finance fund for statewide judicial candidates. Various national observers applauded North Carolina for eliminating the perception of bias or conflicted interests in its courtrooms. Prior to implementation of the program, a significant majority of campaign contributions came from attorneys or special interest groups. The program aimed to curb that funding, instead giving candidates a share of public funding if they agreed to certain fundraising limitations.
The new budget, coupled with the election reform bill waiting for Governor McCrory’s signature, eliminates the public financing system entirely; however, to a certain extent this has been the case for some time. In the last several years, two Supreme Court of the United States decisions have strained the continued effectiveness and utility of public finance systems like the one in North Carolina. These cases signaled the potential end of the program—further highlighted by an explosion of outside spending in the Newby-Ervin Supreme Court of North Carolina race in 2012—even before the General Assembly’s recent cuts.
At its inception, North Carolina’s public finance system was championed by various coalitions as a progressive reform.
North Carolina is one of twenty-two states that elect judges. Other states employ a range of judicial selection models, including merit selection systems, appointment systems, or hybrid models. The Judicial Campaign Reform Act of 2002 created a public finance system for statewide judicial candidates who agree to fundraising and spending limits. At its inception, the Act was championed by various coalitions as a progressive reform. The stated purpose of the fund is to
ensure the fairness of democratic elections in North Carolina and to protect the constitutional rights of voters and candidates from the detrimental effects of increasingly large amounts of money being raised and spent to influence the outcome of elections of the judiciary, since impartiality is uniquely important to the integrity and credibility of the courts.
The public finance system is funded by a fifty-dollar surcharge on attorneys’ state bar dues as well as a three-dollar optional checkbox where taxpayers can earmark a portion of their annual income taxes to be directed to the public finance fund. Contemporaneous with the creation of the public finance fund, the Act also provided for matching funds—“rescue money”—in certain situations.
As a consequence of Citizens United, an outside group may spend limitless amounts of money in favor of the group’s preferred judicial candidate.
In 2010, the Supreme Court of the United States handed down its often-criticized Citizens United decision (pdf). Justice Kennedy, writing for the majority, concluded that “the Government may not suppress political speech on the basis of the speaker’s corporate identity. No sufficient governmental interest justifies limits on the political speech of nonprofit or for-profit corporations.” Citizens United unequivocally led to the formation of Super Political Action Committees (PACs), which may raise and spend virtually unlimited amounts of money in support of candidates.
The effects of Citizens United have not gone unnoticed in North Carolina judicial politics. As a consequence of Citizens United, an outside group may spend limitless amounts of money in favor of the group’s preferred judicial candidate (Candidate A). Candidate A not only receives the benefit of public funding (assuming Candidate A has opted for public finance) but also receives the benefit of outside money spent by the group on Candidate A’s behalf. On the other hand, the opposing candidate (Candidate B) likewise enjoys the benefit of public funding but is constrained by the spending limit imposed by the program’s eligibility requirements. There may be other Super PACs that support Candidate B, but rarely do both candidates receive equal outside support. Special interest groups being what they are, it is almost certain that spending will favor one side over the other.
The 2012 North Carolina Supreme Court contest between Judge Sam Ervin, IV, and Justice Paul Newby is a prime example of the explosion of outside spending in judicial races, attracting more than $2,800,000 in outside funding. Of that amount, various Super PACs spent $2,536,141 (eighty-nine percent) in support of the incumbent Justice Paul Newby; by comparison, other Super PACs spent just $310,970 in support of Judge Sam Ervin, IV.
The Newby-Ervin race, however, was not the first judicial race in North Carolina to receive any substantial influence from documented outside spending. In 2006 (pre-Citizens United), FairJudges.net (a “527 group” heavily funded by the Democratic party) spent $259,101 on a television ad promoting “fair judges,” including four candidates for appellate judicial seats. Even this relatively low amount of spending was criticized at the time.
In the aftermath of Arizona Free Enterprise, states like North Carolina are no longer permitted to extend “rescue money” to candidates.
The “rescue money” component of the public finance system was designed to grant a publicly financed candidate additional funding to compete with a non-publicly financed candidate. In this scenario, consider two candidates: Candidate A has opted for public finance and is subject to the strict fundraising limits, and Candidate B has not. Candidate B likely chose to forego public financing in order to spend significantly more than the amount that Candidate A is allowed to spend pursuant to the public funding allotments. When spending becomes grossly disproportional, Candidate A would supposedly be entitled to “matching funds,” essentially leveling the playing field.
However, in Arizona Free Enterprise v. Bennett, et al. (pdf), the Supreme Court of the United States deemed such funds an unconstitutional infringement of the opposition’s (i.e., the non-publicly funded candidate’s) free speech rights. In the aftermath of Arizona Free Enterprise, states like North Carolina are no longer permitted to extend rescue money to candidates. Even prior to the Arizona Free Enterprise case, use of the rescue funds component was hampered by two natural limitations: (1) most candidates since 2004 have opted for public finance, so there has seldom been a contest between a publicly-financed candidate and a non-publicly financed candidate; and (2) when the provision is applicable, the amount of funding available is simply insufficient to compete with a privately-financed candidate. In the 2012 Newby-Ervin race, both candidates opted for public finance. Therefore, even if the Supreme Court had not stricken rescue money as it did in Arizona Free Enterprise, the system would have been of no use to Ervin.
The perception of bias or partiality, even if none actually exists, damages the public’s confidence in the judicial system.
The future of public financing for judicial candidates in North Carolina may have implications far beyond concerns about who will win the election next year or which candidate will attract the most spending. Rather, further eradication of a system that was designed to promote neutrality and impartiality could result in public skepticism of the judicial system. In 1962, Justice Frankfurter dissented in Baker v. Carr, observing that “[t]he Court’s authority—possessed of neither the purse nor the sword—ultimately rests on sustained public confidence in its moral sanction. Such feeling must be nourished by the Court’s complete detachment, in fact and in appearance, from political entanglements….”
Though Justice Frankfurter was responding to the Supreme Court of the United States’ involvement in what he believed was a political question, his warning also rings true for campaign financing. Citizens of the United States generally expect their elected officials to engage in significant fundraising in order to run an effective campaign. However, those citizens may be skeptical when a judge receives campaign funding from a special interest group. Whether a judge truly feels pressured, conflicted, or that he or she owes allegiance to that group is not necessarily material; rather, the troublesome aspect is the general public’s perception that the judge might be conflicted. Possibly in no other branch of government is fairness and impartiality so crucial. The perception of bias or partiality, even if none actually exists, damages the public’s confidence in the judicial system.
Indeed, a recent poll indicates that sixty-eight percent of respondents were against a judicial elections system where money plays a more significant role. Additionally, sixty-one percent of respondents answered that they would be “more likely to be supportive of public financing when they hear that ‘the current system should remain in place because even the hint of bribery is too much in our judicial system.’” Last month, prior to the General Assembly’s decision to eliminate the public campaign financing system, fourteen of the fifteen North Carolina Court of Appeals judges signed a letter voicing their support for the continued existence of the program in its current form. Those judges, comprised of different races, genders, and political affiliations, expressed their concerns about protecting “the impartiality and independence of the judiciary.”
Several years ago, current West Virginia Supreme Court Justice Brent Benjamin received a $3,000,000 campaign donation from the CEO of Massey Coal. Following his successful campaign, Justice Benjamin sided with a 3-2 majority that shielded Massey Coal from a $50,000,000 liability. Justice Benjamin’s failure to recuse himself prompted an appeal (pdf) to the Supreme Court of the United States. The Court held that there is no requirement of actual bias; rather, a party on appeal must only show a risk of actual bias, which occurs where a judge has a “direct, personal, substantial, pecuniary interest.” In applying this standard, the Court found that Justice Benjamin’s failure to recuse himself was improper. Situations such as the one in West Virginia serve only to diminish the public’s confidence in judicial integrity and impartiality. Interestingly enough, West Virginia legislators recently decided to permanently adopt a public financing model similar to the one North Carolina is currently in the process ending.
North Carolina’s public financing system, once praised as progressive and innovative, is no longer.
It may not soon be apparent whether complete elimination of the public finance system is the best course of action. The ill effects of the Legislature’s decision, if any, might well go unnoticed until multiple election cycles come and go. North Carolina’s campaign finance system, as it existed in recent years, was overmatched and unworkable. Citizens United helped create an environment where candidates could essentially abuse the system and defeat the intent of the program’s existence.
In a post-Citizens United public financing system, each candidate has incentive to opt for public financing, notwithstanding the strict fundraising limits, because the candidate may still rely on unbridled, limitless outside spending. Because fundraising limits imposed by the system clearly cannot apply to independent, outside groups, the public finance system becomes compromised. Some may question the General Assembly’s decision to abolish the system in its entirety, rather than working to fix it or improve its effectiveness. For now, it appears that the system, once praised as progressive and innovative, is no longer.