Finance

Is Palo Alto ready for campaign finance reform? | News

Everyone agrees that there’s too much money in Palo Alto politics, even those who benefit the most from this trend.

Vice Mayor Lydia Kou, who raised more than $70,000 in her successful reelection bid in 2020, said she had some concerns as she watched donations pile up over the course of the campaign, which received dozens of small individual contributions as well a handful of large four-figure donations. This includes a pair of $5,000 contributions from venture capitalist G. Leonard Baker and Mary Anne Baker, local residents who have given prolifically in the last three elections to residents affiliated with the council’s slow-growth wing.

“I was having a hard time with how high it was going,” Kou said in a recent interview.

Even with the high totals, Kou finished the race for cash well behind Greg Tanaka, who raised nearly $90,000 in his successful bid for a second term. A council member who favors pro-growth policies, he saw local developers pump tens of thousands of dollars into his campaign, with Roxy Rapp donating $10,000 and Charles Keenan, John McNellis and John Shenk contributing $5,000 each.

Like Kou, Tanaka told this news organization that the influence of money on politics is problematic.

“At every level of government, I think it’s a problem,” said Tanaka, who is currently looking to unseat the U.S. Rep Anna Eshoo in District 16. “That’s how someone could be in office for 30 years — because it’s almost impossible to beat an incumbent like that.”

Now, a movement is afoot to curb campaign cash. A new proposal from the local chapter of the League of Women Voters and Clean Money Campaign would limit individual contributions to Palo Alto campaigns to $500.

The League of Women Voters last year formed a task force that developed the proposal and reached out to council members to share their ideas. This week, they presented to the council a petition with more than 500 signatures supporting the reform.

Lisa Ratner, who served on the League of Women Voters task force dedicated to the subject, told the council on Monday that large donations “undermine the integrity of our local government by creating perception, real or imagined, that City Council votes are influenced more by the size of the contributions than by the interests of those living in the city.”

In a recent interview, members of the League’s task force said that they had initially floated three proposals: setting donation limits, capping total campaign expenditures and increasing disclosure of independent expenditures. After the latter two proposed reforms failed to gain traction, the League narrowed its focus to just the first.

Both the rising cost of running elections in Palo Alto and the growing percentage of donations coming from major donors are concerning, the task force members said. A study from the technology nonprofit MapLight found that between 2014 and 2018, the average amount raised by a winning council member rose 57%, going from $40,000 to $63,000. About one-third of the cash raised by all the candidates came from just 25 contributors, while small donors (those who gave less than $100) accounted for only 3% of the funding.

An analysis by League of Women Voters members of the 2020 election showed similar trends, with the four winning candidates raising $439,532 and the average individual winner raising $66,620. In addition, just 20 donors accounted for 29% of all itemized contributions, according to a report that the organization released.

The funds raised represent a significant escalation from past elections, Ratner told this news organization. In 2012 and before, a winning candidate typically raised around $25,000, she said.

“That just seemed to be completely out of line, in terms of the number of people who need to be contacted when you’re running,” Ratner said. “And it’s also discouraging to the people who don’t have the ability to raise that kind of money.”

The idea of capping individual contributions or campaign expenditures is far from new. Council members in Mountain View have long abided by a voluntary pledge to limit their expenses to about $25,000 (it was $27,400 in the 2020 election). The city also has a $1,000 cap on individual contributions ($500 for candidates who opt not to adopt voluntary expenditure limits).

Hayward has a voluntary expenditure limit of $79,303 and individual donation limits of $1,000 for those who abide by this limit or $250 for those who do not. In Redwood City, the donation limit is $1,000 and the voluntary expenditure limit is $2.25 per district resident.

In Palo Alto, however, the proposal to limit contributions is proving to be a tough sell. Local politics in recent elections has, with some exceptions, been dominated by slates. One side has typically drawn contributions from builders and developers. The other has benefitted from giant contributions from five local families as well as from independent expenditures by Palo Altans for Sensible Zoning, a political action committee that favors “residentialist” candidates.

And while candidates from both sides have said they are concerned about the high sums of campaign cash, they also argued that capping contributions and setting an expenditure limit would leave open giant loopholes that the opposite side would exploit.

One problem that candidates from both sides pointed to is “dark money” that is spent by political action committees to support certain candidates. Thanks to the controversial 2010 decision by the Supreme Court in Citizens United vs. FEC, corporations and outside groups can spend as much as they want to on elections as long as they don’t coordinate with the campaigns they are supporting.

Judy Kleinberg, a former mayor who is supporting the effort to cap contributions, said the rise of independent expenditures and political action committees has transformed local politics. When she ran for council in 1999 and in 2004, she limited her campaign spending to $20,000. Even accounting for the growing costs of waging a campaign, the numbers today are on a different scale.

“That’s a huge, seismic, tectonic change in Palo Alto politics,” Kleinberg told this news organization. “They have influenced a lot of candidates who were not supported by the PAC to get more money — to fight against the PACs who had seemingly unlimited amounts of money and could do what they wanted.”

Kleinberg is part of a group of former mayors that is supporting the proposal for a contribution cap. The list also includes Betsy Bechtel, Peter Drekmeier, Liz Kniss, Le Levy, Dena Mossar, Nancy Shepherd, Lanie Wheeler and Gail Woolley.

Current Mayor Pat Burt is a bit more skeptical. While he supports exploring campaign finance reforms, he said he is concerned that limiting individual contributions would encourage more contributions of the sort that the city cannot legally limit, namely independent expenditures.

In discussing campaign finance reform, Burt alluded to the H.L. Mencken adage about every complex problem having a solution that is “clear, simple and wrong.”

“There’s clearly a problem, both generally and in Palo Alto, increasingly, in our campaigning,” Burt said. “But as you think through what happens if you do just one thing, it gets a lot more complicated.”

As an example of what can go wrong, he pointed to the city of Santa Clara, where San Francisco 49ers owner Jed York contributed $3 million in 2020 to help four city council members get elected. While that case is a bit of an anomaly in the Bay Area, Burt suggested that something similar could happen in Palo Alto if giant corporations wanted to elect a slate of candidates who oppose initiatives like the business tax, which the council is planning to bring to the voters this fall.

Residents bound by contribution limits would have a hard time counteracting the independent expenditures made by these corporations through political action committees.

Despite his reservations about the particular approach championed by the task force, Burt said he’s open to exploring a cap on expenditures as part of a broader set of measures. The Mountain View approach, he noted, has been very successful in limiting expenditures.

Kou and Tanaka also expressed concerns about political action committees and independent expenditures, which each characterized as giant loopholes in the League’s proposal. In the last council race, PASZ supported Burt, Kou and Greer Stone, all of whom prevailed, and Ed Lauing, who fell short.

Tanaka and Kou also raised concerns about the prospect of a very wealthy candidate self-financing their campaign. Other candidates in the race, if bound by strict limits, would have a harder time competing.

Kou said that there were times during her campaign when she considered stopping accepting donations. Then she saw ads or blogs attacking her and she would feel compelled to refute and correct the misinformation, she said. Having a large number of contributions gave her both the resources to respond and reassurance that she had support in the community.

“I was concerned, and it made me feel a little worried about how (the contribution total was) going up, but at the same time it let me know that there are people out there who believe in me,” Kou said.

Despite his skepticism about the League’s proposal, Tanaka said he would be willing to discuss other approaches.

“I’m a bit of an optimist. I think anything is possible and I’m open to exploring ideas. But these are big holes and that kind of money is never reported. That’s an issue.”

Council member Alison Cormack, who was elected in 2018, has been more receptive to campaign finance reform. In announcing last week her decision not to seek a second term, she cited her inability to convince her colleagues to pursue reform as one of the main disappointments of her term. Giant donations create an impression of undue influence, she said in an interview. This is why she limited contributions to her campaign to $1,000, she said.

Cormack also said that she believes talking to a wide swath of local residents is a crucial part of a campaign. Candidates who receive giant donations from few sources can avoid going through that.

“All my colleagues who have taken much larger donations have spoken to fewer people and haven’t had as much connection with the community,” Cormack said. “They’ve really gotten a narrow view.”

Council member Greer Stone also talked about the importance of reaching out to the wider community. During his 2020 campaign, he said he attended every debate and accepted every invitation for a meeting over coffee or at a farmers market. Though he was endorsed by PASZ in 2020 and received several $950 contributions from donors affiliated with residentialists, his campaign raised about $41,000, which is relatively modest by Palo Alto’s standards.

Stone agreed with the League of Women Voters that Palo Alto has a problem when it comes to campaign cash.

“I think the amount of money raised in Palo Alto campaigns over the last several years has been incredibly high, and I’d imagine there’s a lot of potential candidates looking at that. And that might be a reason why they choose not to run,” Stone said. “I also hope they can see successful candidates like myself and say, ‘You can have a competitive campaign by not raising $100,000.'”

Yet unlike Cormack, he is not convinced that capping individual contributions is the way to go unless other measures are also considered. Though he said he is keeping an open mind about the League’s proposal, he also raised concerns about the idea of this move encouraging more independent expenditures and self-financed campaigns.

“I don’t think anyone likes to see the influence of money on politics, and having an even playing field is a worthy cause,” Stone said. “But one of the areas I’m always focused on is: What are the unintended consequences of decisions that might not be as obvious when you first look at the issue?”

But even if the limit on individual contributions faces long odds under the current council, some members suggested that they would be open to consider other measures to address campaign finance reform. Council member Tom DuBois, who has been affiliated with PASZ in both of his council campaigns, suggested that an $85,000 limit on total expenditures — in the neighborhood of what Hayward has — might be a good place to start.

“If you start with something really restrictive, it makes it harder to adopt it,” DuBois said. “Unfortunately, it always comes up too late.”

While some residents have raised concerns about large donations coming from a few local families, DuBois suggested that this is not necessarily a bad thing given the resources that corporations and developers can muster to support their favored candidates.

“I think we’ve been lucky we’d had residents stepping up to offset some of that money coming into campaigns. Otherwise, I’d feel we’d have an uneven playing field.”

One area that he thinks the council should consider is requiring candidates to list how much money is coming from out-of-town sources. There is a big difference, he said, between entities that have projects going in front of the council making major contributions and residents doing so. In some ways, however, it is inevitable that Palo Alto elections would entail major expenditures.

“We want the small-town feel of a $20,000 campaign, but we are kind of a big city with big money in terms of big decisions,” DuBois said. “The city budget, when you consider utilities, is approaching $1 billion.”

Both DuBois and Stone said they would support more disclosure of independent expenditures. DuBois said he would favor having each candidate show on their website the percentage of money that they receive from local residents as opposed to out-of-town sources, a measure that they said would add transparency to the process.

Council member Eric Filseth, who has also been supported by PASZ, similarly said that transparency should be the primary focus. The influx of money from out of town and from real estate developments is particularly concerning, he said in an email, “especially since those contributions have been very, very unevenly distributed among candidates.

“I can think of no good reason for large amounts of out-of-town and financial-interest money to try to influence a local city election, but plenty of bad reasons why they might try,” Filseth stated. “I wish the League would tackle those things instead, or at least in addition. We need to be sure that any reform we undertake doesn’t accidentally skew the playing field in favor of such special interests. That’s not in the interests of residents.”

Not everyone on the council sees it that way. Tanaka, whose contributors included the California Real Estate Political Action Committee, suggested that local residents aren’t the only stakeholders in the city’s election process and that it’s perfectly reasonable to consider other voices. Some local employees, for example, may be spending “most of their waking moments in Palo Alto” even if they don’t reside in the city. They should also factor into council decisions, he said.

“There are people who vote for us, but there are also people who work in our city. They may not be able to vote, but we need to consider them,” Tanaka said. “They’re huge contributors to our city. Do we not consider impacts on them? I think we need to have a more holistic view of the health of the city.”



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