Public Matching Funds in New York City: From the Electorate to the Everyday

New York City’s most recent election cycle felt like a blast from the past. Ranked-choice voting, which was used almost a century ago for City Council elections, is now back in the hands of voters and this time it has been applied to other races for public office. In addition to the council elections, voters were able to partake in this electoral system for the mayoral, public advocate, comptroller, and four open borough president races. However, as I noted in my last blog post, there’s room for improvement. In my piece I explained how the latest iteration of RCV is notably less ambitious than the version used during the 1930’s and 1940’s, and I proposed that bringing back the older version of ranked-choice (known as multi-winner RCV with proportional representation) could perhaps act as a springboard for quadratic voting. Still, this past election cycle was a meaningful democratic achievement because it enabled citizens to say more with their individual votes.

Ranked-choice makes races more competitive and, especially in elections for open seats, gives dark horse candidates a better shot at winning than they would have otherwise had under the circumstances of regular plurality voting. However, unto itself, ranked-choice doesn’t necessarily guarantee that more candidates than usual will enter a given race. With that being the case, how come the Big Apple’s latest election cycle was more crowded than ever before? Over 300 New Yorkers were running for council seats, while over 50 were running in the other combined races. To put it crudely, the reason behind the 2021 surge was that it was more profitable to run for elected office—though not because of any new laws in favor of corporate donors or super PACs. Quite the opposite actually.

High-frequency funding

During the 2018 general election, New Yorkers overwhelmingly voted in favor of a ballot measure to increase how much influence the city’s public matching funds program has on political campaigns. Even prior to the measure’s passage, the program had always been a celebrated fixture of local elections, rewarding candidates regardless of their party affiliation for putting their small donor constituents ahead of corporations and the ultra-wealthy. It was established by the City Council in 1988, in response to a spate of bribery scandals that pulled back the curtain on a history of collusion between local politicians and big business. A similar initiative might be enacted at the federal level. HR 1, or the For the People Act, includes a provision to reward matching funds to candidates running for any office position within the United States Congress, so long as they voluntarily opt into the program. (Whether HR 1 has a shot at becoming law is a whole other matter.)

Before 2018 in New York City, the Campaign Finance Board matched $6 for every dollar coming from campaign donations between $10 and $175. Now its rewards are more bountiful, with a higher matching ratio of $8 for every dollar. In addition, candidates for citywide office positions can get matching funds up to $250 per donation, which used to be the case in 2001, though the cap remains at $175 for borough president and council candidates. This wasn’t the first set of reforms made to the program. Since the Campaign Finance Board was first established, the council has periodically increased the matching ratio alongside cuts to the donation thresholds. It started by matching up to $1000 at a 1:1 ratio, then it matched up to $250 at 4:1, and then it matched up to $175 at 6:1—before voters approved the 2018 measure with the 8:1 ratio.

The ballot measure also drastically lowered the different thresholds for defining “small” donations eligible for matching funds. How would that have played out during the mayoral race? If I lived in New York City and was so passionate about Maya Wiley that I sent her $2000—which is the new maximum small donation limit for mayoral campaigns—it would have been matched as if it were $250. Meaning another $2000 ($250 times 8) would’ve accompanied my initial $2000 to Wiley. If, however, I was even more of a Wiley zealot and donated $4000—considered a small donation prior to 2018—then the Campaign Finance Board wouldn’t have matched any of it because it goes over the new maximum limit. The lower thresholds help to curb the influence of ultra-wealthy donors and reiterate the primacy of everyday New Yorkers in the scheme of electoral politics.

All of this suggests a unique opportunity to incorporate quadratic funding as a means to facilitate public funding for campaigns. With their periodic reforms to the Campaign Finance Board’s matching ratio, the City Council has essentially been trying to say that the frequency of donations should take precedence over their quantity. QF provides the instructions on how to put this widely held belief into practice: that is, funding candidates based on how many different small donors they attract as opposed to the price tag on each donation. Given the city’s openness to improving the program over the years, switching to a QF mechanism to determine matching funds seems less far-fetched than overhauling ranked-choice to replace it with quadratic voting, as I discussed in my last blog post.

In fact, New York City probably wouldn’t have implemented ranked-choice in the first place if not for the effects of matching funds. The program has incentivized so many New Yorkers to run for public office because it rewards those who pursue a robust grassroots strategy, and as a result, local elections have become more and more crowded over time. Following the new 8:1 matching ratio, this past cycle saw an average of at least six candidates running in each City Council race. Within these packed races, ranked-choice helped to elucidate decisive majorities and voter preferences much better than plurality voting, under which a candidate could’ve won with less than 50% of the vote.

It would be auspicious to revive the multi-winner version of ranked-choice used roughly a century ago for New York City Council elections, perhaps swapping out the ranked-choice component with QV as well. At the same time, the logic behind the return of ranked-choice is instructive. Considering how matching funds played a part in legitimizing a new electoral system, it’s possible that QF could similarly help to bring about QV.

Beyond Electoral Politics

There’s a simple but very admirable thesis at the heart of New York City’s approach to matching funds: Electoral politics should be dictated by everyday citizens; not corporations, super PACs, lobbyists, or any other manifestation of the 1%. And yet the program’s mere existence is surprising when you consider the fate of multi-winner RCV—repealed in 1947 due to fearmongering that it was a conduit for communism. By the time the Campaign Finance Board was established, the Red Scare mentality was still lingering within the public consciousness. How, then, did this initiative for socialized financing not only pass the council, but achieve bipartisan support within and outside the legislature?

In general, socialized programs run by the government tend to generate broader support when a competition-based argument can be made in their favor, even if not all proponents (particularly those on the Left) feel inclined to make that sort of argument. Evidence of this logic dates as far back as the 18th Century, when Adam Smith argued that public roads and sidewalks should replace private toll roads because the latter stifles commerce and the flow of capital (Jo Guldi makes the same point on an episode of “RadicalxChange(s)”). The competition-based argument still resonates today, as numerous centrist Democrats have co-sponsored Medicare for All on the basis that it would assist small business owners and lead to a boom in entrepreneurship, since building a business from scratch is less risky when you don’t need to worry about the vagaries of healthcare coverage. So while the Campaign Finance Board was established as an immediate reaction to corruption scandals, it can also be interpreted as a form of necessary government intervention to counter the outsized spending power of big business donors and thus restore fair competition between candidates.

That same reasoning can be leveraged to expand and strengthen the city’s participatory budgeting process, another significant opportunity where New Yorkers get to vote (albeit indirectly) with their own dollars. Four progressive-minded councilmembers began experimenting in 2011 with involving constituents in the process of allocating taxpayer dollars to pay for public goods like schools, parks, and public housing. Since then, the number of councilmembers participating in the process, officially known as Participatory Budgeting in New York City (or PBNYC), has increased more than eightfold to include 33 total members as of 2019. The annual budget across all involved districts is $35 million, making the Big Apple the largest jurisdiction in the country for participatory budgeting—not just ranked-choice voting and public matching funds. PBNYC marks a step towards fully democratizing public goods and infrastructure. And that’s how the program should be understood: as a step rather than an end in itself.

One downside to PBNYC is that it doesn’t encompass so-called “public goods” spearheaded by ultra-rich donors, which have backfired on those they were purported to benefit. The High Line saw the revitalization of an abandoned train track with a sleek walking path and lush greenery, drawing tourism, high-end retailers, and luxury housing developers to Manhattan’s West Side since 2009, and culminating in the shopping center known as Hudson Yards. Despite being a free attraction, the High Line abetted over-development that jacked up rent prices and property taxes within the vicinity. The nearby Little Island, opened this past May, does nothing to reverse this trend let alone slow it down. Funded by media businessman Barry Diller, the artificial island, which is also free but requires reservations to enter, was built with no input from locals. And yet it received millions in state and local funding.

It would be less maddening if privately funded projects such as these had to compete for taxpayer dollars much like politicians competing for votes. That way, the executives who oversee nominally public destinations like the High Line and Little Island would have to run formal campaigns to try and convince voters how they will improve public wellbeing. Otherwise, if they fail to win over a decent section of the public, they lose the chance to build. PBNYC provides a framework in which to test out this idea with the mechanisms of quadratic finance.

A speculative citizens’ budget

The only (and hence most well known) real-world application of quadratic funding came in April 2020 when Gitcoin launched the Downtown Stimulus Program to support five small businesses struggling amid the pandemic in downtown Boulder, Colorado. Donations from locals were quadratically matched from a pool subsidized by Gitcoin and local philanthropists, eventually raising over $40,000 altogether for the small businesses. Although this pilot experiment was a success, it wouldn’t be an appropriate model for how to reform PBNYC. That’s because the funds for participatory budgeting derive from taxpayer dollars, and New Yorkers reasonably wouldn’t want to throw in more cash on top of the taxes they already pay towards public infrastructure.

Below I offer a very rough outline for how to strengthen PBNYC. Here’s my idea for how it can facilitate fair competition while also accounting for rising privatization and gentrification, all without relying upon philanthropists to subsidize the funding pool:

• Ultra-wealthy developers would each pay a sizable “pay-to-play” tax that helps to subsidize the participatory budget of the district where they want to build.

• New Yorkers in a particular district can vote with their own tax dollars to fund public goods as well as major private projects, and their dollars would be quadratically matched from a pool that has been subsidized by pay-to-play taxes.

• Similar to multi-winner ranked-choice voting with proportional representation—wherein candidates had to surpass a certain amount of votes to win a seat on the council—goods and projects eligible for matching funds would need to receive a minimum amount of funding (both taxpayer and matched dollars) in order to “win”: that is, get greenlit by the community to be built.

• At the end, winners would also receive their respective funding rewards.

• The total rewards for each public good and private project that “loses”—or falls below the minimum threshold—would be siphoned into future quadratic budgeting pools.

Of course there are many open-endeds to sift through regarding the execution of this idea, such as:

• What qualifies as a major private project versus a small or midsize business?

• Should this be facilitated district-by-district or rather borough-by-borough?

• Crucially, how will the city guarantee easy internet access to all taxpayers so they can access their tax returns and participate in quadratic budgeting?

Less ambiguous is what all of this would bode for free enterprise. By design, it would still be permitted. The key difference is that corporations would have to compete with each other to win over the communities they’re impacting by spelling out how exactly they would benefit them. Big business would need a game plan for putting the consumer/voter first by providing high-quality jobs, counteracting gentrification, and/or resolving other needs and anxieties of everyday folks.

Already, New York City is one of the leading destinations in the country for putting voters first. On top of having ranked-choice and public matching funds, the city is on the cusp of absorbing almost a million noncitizens into the electorate; the legislation in question has a supermajority of co-sponsors on the council and has been endorsed by Eric Adams, the city’s presumptive incoming mayor. That attribute of voter primacy can and should be integrated into other areas of public life beyond the sphere of electoral politics. In particular, as previously outlined, drawing upon the process of public matching funds along with quadratic finance could imbue PBNYC with groundbreaking democratic potential.

Members of the RadicalxChange community who want to think expansively about public goods in the Big Apple must start by considering the intersections between ranked-choice voting, public matching funds, and participatory budgeting—the last two especially. Taken together, these three opportunities for democratic participation can energize an egalitarian, potentially quadratic vision for the five boroughs.