Mayor Michael R. Bloomberg and City Council leaders have agreed on a major overhaul of the city’s campaign finance laws intended to enhance the power of small donors and reduce the influence of those who do business with the city, including real estate developers.
The wide-ranging legislation, which appears all but certain to pass the Council, would sharply cap contributions from lobbyists, developers and municipal bond underwriters, as well as most of those with city contracts of $100,000 or more.
It would also expand the prohibition of corporate donations passed in 1998 to include limited liability corporations and partnerships, which have accounted for a growing source of campaign donations.
The proposed changes are among the most sweeping since the city’s publicly financed campaign program was created in 1988 after a series of corruption scandals.
“This bill will give all New Yorkers confidence that campaign contributions are not winning special favors from government,” Mr. Bloomberg said in a City Hall news conference, flanked by Council Speaker Christine C. Quinn and several Council members and representatives from government watchdog groups.
The bill comes after six months of sometimes tense negotiations between the mayor’s office and the Council over such issues as who should be included in the “doing business” categories and what the caps on their contributions should be. One concern among council members is that the limitations would make it difficult to run for office in an era of increasingly expensive campaigns
Some government watchdog groups had also lobbied to have unions and political action committees bound by the new caps on those doing business with the city. But the proposal did not gain traction with either the mayor or the Council.
Ms. Quinn said the bill would give New York “the best and the strongest public financing system of any city and probably any other jurisdiction in the country.”
Mr. Bloomberg has pushed for stricter campaign finance limitations since his first term, when he met resistance from the former speaker, Gifford Miller. But the relationship between Ms. Quinn and Mr. Bloomberg has been far more cordial. Last year, after becoming speaker, she helped push through a ban on public matching funds for contributions from lobbyists and their families. This latest bill could help her win Mr. Bloomberg’s support if she runs for mayor in 2009.
In some ways, Mr. Bloomberg seems an unlikely advocate for the restrictions. His record-breaking spending during his election campaigns led to concerns among government watchdogs about the viability of the public financing system, which aims to even the playing field for candidates and decrease their reliance on special-interest money.
“As long as individuals have the ability to self-finance to infinity, the system doesn’t work,” said Douglas A. Muzzio, a professor at the Baruch School of Public Affairs.
In response to questions yesterday, Mr. Bloomberg said the Supreme Court had upheld the right of an individual to self-finance a campaign, and added that “being wealthy doesn’t guarantee you get elected.”
While some portions of the legislation have been discussed previously, the bill includes a new provision that aims to give more influence to small donors by revising the formula for public matching funds.
Under the current system, for every $1 a donor gives, $4 in public funds are provided, up to the first $250 of a contribution. The new bill would increase the public contribution to $6 for every $1, but only up to the first $175. The result is that a $250 contribution that would have generated $1,000 in matching funds would now generate $50 more.
“This will increase the value and importance of smaller gifts and encourage candidates to raise more grass-roots money from a greater number of supporters,” said Dick Dadey, executive director of the Citizens Union, one of at least three government watchdog groups that helped shape the bill.
Also, the maximum contribution for people who do business with the city would be reduced to $250 from $2,750 in City Council races; to $320 from $3,850 in borough president races; and to $400 from $4,950 in mayoral and other citywide races.
The overhaul would not apply to contracts obtained through competitive sealed bids, which made up about $3.7 billion of the nearly $11 billion in city contracts in 2006.
The bill also closes a loophole in a 1998 voter referendum that banned corporate donations but allowed limited liability corporations and partnerships to continue giving. Gifts from those sources grew from about 2.5 percent in the 2001 election to 6 percent in the last election. They make up about 11 percent of all money given in the 2009 cycle so far.
While most of the Council’s 51 members publicly applaud the intent of the bill, it met with resistance from many during negotiations. Their objections are likely to carry over into hearings on the bill, the first of which is scheduled for June 14. But with all 26 council members in leadership positions signing on as co-sponsors, it is unlikely to face significant opposition.
The bill could also face legal challenge from lobbyists, among others, who say it may be discriminatory in treating classes of contributors differently. Sid Davidoff, a senior partner of Davidoff & Malito, one of the state’s biggest lobbying firms, said in an interview last week that lawyers would be looking closely at the legislation.
The bill is also likely to face strong opposition from the real estate industry, traditionally a major source of campaign cash for city candidates. Those facing a cap would include people seeking land-use and zoning decisions.
“Clearly, any suggestions that people are giving contributions in expectations of a contract or a special benefit, they ought to be thrown in jail,” said Steven Spinola, president of the Real Estate Board of New York. “But I don’t think we should be prohibiting legitimate businesses from deciding they want to give a check to a candidate who has principles and beliefs that support the economics of that business doing well in the city.”
Ms. Quinn hopes to have the bill passed by summer. While the legislation calls for the measure to take effect two months after passage, some provisions may take longer to put in place. For instance, the city would be required to build a database to track all those doing business with the city.
With some 30 candidates already raising funds for 2009 races, some say the new restrictions will put those who begin raising money after the bill is made law at a big disadvantage. Opponents are likely to latch on to that possible inequity.
“There are a lot of people who are candidates who have been raising quite a bit of money under the old system,” said Martin J. McLaughlin, a partner of the lobbying firm of Connelly & McLaughlin. “That right there could be grounds for a lawsuit.”
