North Carolina’s system of awarding taxpayer money called “matching funds” to political candidates participating in a state campaign finance program could be headed toward the scrap heap. A June U.S. Supreme Court ruling points in that direction. Daren Bakst, Director of Legal and Regulatory Studies for the John Locke Foundation, discussed the issue with Donna Martinez for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)

Martinez: Tell us about the Supreme Court ruling in this Arizona case. What did the court rule?

Bakst: Yes. In the case — Arizona Free Enterprise Club’s Freedom Club PAC v. Bennett — the Supreme Court struck down an Arizona law that was a public financing scheme — kind of like North Carolina’s — and in particular, a matching-fund provision within that law. And the matching-fund provision, basically what it does is, it punishes candidates that don’t want to accept public dollars …

Martinez: Meaning you just go out, and you’re going to raise money from supporters.

Bakst: Right. I’m going to raise money on my own. If I spend beyond a certain amount of money — let’s say I spent $10,000 above some threshold — then $10,000 goes to my opponent in what’s called matching funds. So as a result, I don’t want to spend any more money, and as a result, I don’t want to exercise my free speech rights. So the Supreme Court said this type of matching-fund provision is punishing these candidates and chilling their free speech.

Martinez: So that was the rationale? That this is infringement on the free speech rights of people running for office?

Bakst: Right. And also independent groups. So if I’m an independent group, and I want to support Donna Martinez for office, and I spend a certain amount of money, it’s possible I can trigger money to the opposing candidate, and that certainly chills the independent group’s speech. I’m not going to spend money to support you.

Martinez: Yes. Why would someone want to support you if they knew that, dollar for dollar, the opponent would receive money, public money?

Bakst: Right. Exactly.

Martinez: North Carolina has a program of matching funds. Is it just like Arizona’s?

Bakst: Exactly like Arizona’s. So it’s very clear. North Carolina’s matching-fund provisions are unconstitutional. They’ll have to be struck down.

Martinez: So what would that take? Is that a legislative move in order to comply with this new Supreme Court ruling?

Bakst: The legislature is going to need to strike out the relevant language, and, practically, these matching-fund provisions are so important — so central — to the public financing schemes in North Carolina that, for all practical purposes, it basically crumbles. These programs crumble. And we have public financing for three different situations. You have judicial public financing — and let’s call it taxpayer financing, because it’s not public financing; it’s more appropriate to call it taxpayer financing — and that includes appellate court races, so Court of Appeals judges and Supreme Court justices’ races. You also have it for three Council of State races — that’s agriculture, public instruction, and insurance. And then Chapel Hill has its own public financing — taxpayer financing — program. …

[Editor’s note: Prompted by a letter from Bakst, N.C. Board of Elections executive director Gary Bartlett has indicated that he plans to recommend in September that the board vote against releasing matching funds for this fall’s Chapel Hill municipal elections.]

Martinez: Basically, it sounds like you’re saying that the legislature should now just change or rescind North Carolina’s matching funds because it’s clearly unconstitutional based on this ruling.

Bakst: Right.

Martinez: And that when they do that, then the whole system just collapses.

Bakst: Yes. Well, just the way the statute is written, it’s very difficult to see how the rest of the language in the statute continues to exist. There may be a way, somehow. I don’t know how, but there might be a way to keep whatever’s left. But, you know, when all is said and done, they would never have pushed the public financing stuff without the matching funds. The reason why they’re so reluctant to get rid of matching funds in the first place, the proponents of what are called “clean elections”— that’s what these are called, these types of public financing schemes — they know that candidates will not participate in these programs unless you have a way to get matching funds to these candidates.

Martinez: And in fact, the argument, Daren, from folks who advocate for matching funds and what they call “clean elections” is that it levels the playing field.

Bakst: Right.

Martinez: Because they say, “Well, hey, then only rich, well-funded people can run for office, and the little guy, the average guy, basically has no chance.” Do you expect them to try to come up with a new argument for some sort of taxpayer involvement in elections?

Bakst: I think they might be creative. Let me get to the “levelizing” of the funds. First of all, when you say “levelizing funds,” what you’re saying is you’re levelizing speech. Another way of saying it is you’re trying to restrict speech. And that’s exactly what this did. So if they want to continue to restrict speech, it’s going to continue to be shot down by the courts. And the U.S. Supreme Court has always said that trying to equalize funds is not a valid reason to place restrictions on free speech. In fact, when you equalize funds, it hurts challengers, because incumbents have built-in advantages because people know their name. So a challenger needs more money to try to make up the difference and to get their message out. Yes, I think they’ll try to be creative, but when all is said and done, you know, it’ll be tough for them.

Martinez: This Supreme Court ruling came out in late June, but you have been on this story for a long, long time.

Bakst: Yes.

Martinez: And in fact, roughly a year ago, when the Supreme Court actually had issued, I believe, an order that said that Arizona could not give out the matching funds while this was all being reviewed, you actually wrote to the North Carolina Board of Elections about this. Tell us about what happened.

Bakst: I wrote a letter indicating it was very clear that if the Board of Elections kept issuing the matching funds and enforcing the law and whatever, that it was unconstitutional — and it was absolutely clear from the Supreme Court’s actions in previous and other court actions that it was unconstitutional — and asked for a moratorium, in the meantime, until the Supreme Court ruled on this and made it clear one way or another, whether or not it was constitutional. The State Board of Elections decided that that wasn’t appropriate, that they should just move forward, and didn’t really care if it was constitutional or not, apparently. And now, finally, the Supreme Court has made it very clear that matching funds are unconstitutional, and I don’t think there will be any question the State Board of Elections will now cease to enforce the matching-funds provisions or have anything to do with the matching funds. And if they do, they’ll get themselves in trouble.

Martinez: Well, last year, did they even respond to your letter?

Bakst: They did actually respond, I believe, in a kind of vague, unpersuasive way.

Martinez: But they went ahead with the program.

Bakst: Yes. They continued with it.

Martinez: So North Carolina and Arizona participate in this type of program with matching funds. Do other states do this as well?

Bakst: A few other states do, and those programs will be affected as well.

Martinez: So what’s the history of taxpayer financing in this country? I mean, is this a relatively new type of program in election law?

Bakst: Well, you know, public financing is constitutional. Let’s be clear. Taxpayer financing is constitutional. And it hasn’t worked. The presidential system … we have taxpayer financing for president and it hasn’t worked. Candidates don’t want to participate because it limits their ability to spend money and get their message out. So it hasn’t worked. So they created this idea of matching funds, and that has been relatively new — early 2000, 2002, you started seeing matching-fund provisions being pushed. And now that that’s been shot down, we’ll see another variation, different ways to try to chill speech. For some reason, proponents of these programs don’t care about political speech. They just don’t.

Martinez: So we’ve seen it at the presidential level. We’ve seen it in North Carolina.

Bakst: On the governor’s level, too. The governor … we had a program for governor, a taxpayer financing program, and it failed. And what they did was, they took the money for the governor’s program, which failed, and then put it into the judicial public financing program.

Martinez: So the next step then is we wait to see if the legislature takes this up, correct?

Bakst: Exactly.