THE STATES ARE often neglected in the study of campaign finance, despite the fact that they oversee the vast majority of American elections. The candidate who raises the most money wins the election most of the time, and when incumbents run, they almost always enjoy a funding advantage. Second, the average cost of a state election varies. For example, California's $300,000 average candidate expenditures for the general assembly election of 2006 dwarf those of even other large states. In New York, for instance, average expenditures were about $75,000, and they were slightly lower than $150,000 in Texas. The norm for most states is well below $50,000, and in smaller ones such as Maine, Wyoming, or North Dakota, the costs are often less than $10,000. The spending gap between states can be explained in part by population differences and the competitiveness of the district. Candidates in more densely populated areas must turn to more expensive campaign methods to get their messages out, and when a race is close, there is a greater impetus to spend. These factors can explain variation within the same state as well, as candidates in different districts can differ considerably in spending depending on the character of the race and the composition of the district. In Texas, for example, four candidates for the state house raised more than $1 million in 2006, while more than 70 spent less than $50,000.

The most important factor in explaining spending variations between states is the wide-ranging spectrum of legislative professionalization. Seats in more professionalized legislatures typically come with higher salaries, more staff, and other perks that make them more prized. Contenders are willing to raise and spend more money to win election to those bodies. In Michigan, for instance, where the legislative base salary is roughly $80,000 a year, a typical 2006 house race cost less than $40,000, while in Montana, the average candidate for the state house spent about $7,000 for a job that pays only $83.67 per session day with no staff assistance.

The cost of gubernatorial contests also varies by state. Candidates for governor often spend several million dollars, or about the same cost as a campaign for U.S. Senate catering to the same statewide constituency. Again, there are large differences in total outlays from one state to another. In the 2006 California gubernatorial election, nearly 30 candidates to spent more than $137 million combined, more than any non-federal race in American history. During the same cycle in Hawaii, 18 candidates spent less than $5 million, and in Maine, 10 contenders spent a combined total of just over $2.5 million. The costs of other statewide races, such as secretaries of state, judicial candidates, or attorneys general, are typically somewhere between the legislative and gubernatorial figures, but rarely come close to the spending levels of the latter.

Despite such wide disparity in average spending, the vast majority of state elections are much less expensive than federal ones. State legislative races are less costly because districts are smaller in population and geographical area than all but the tiniest congressional districts. With fewer voters to reach, candidates for many state legislatures are able to put a personal stamp on their campaign. In federal elections, the price of media advertising is usually a substantial factor in the overall Page 80  |  Top of Articlecost of a race, but in state races, the media market may be a daily newspaper or local radio station. With comparatively few advertising media on which to spend money, it is not uncommon for legislative candidates to still rely on grassroots tactics, campaigning door-to-door, telephoning constituents, sending mailings, and purchasing relatively inexpensive signs.

While funding levels do not approach the cost of a federal race, money still plays an important part in state elections. Most states therefore employ some combination of financial disclosure, contribution limits, or expenditure restrictions to regulate campaign finance. In developing these regulatory policies, each state has called upon its unique historical experience and political culture. As a result, while major campaign finance reform at the federal level has been largely contained within fewer than a dozen major bills, there is a broad array of campaign finance laws at the state level, and state policies are constantly in flux. Despite this diversity, the development of modern campaign finance regulation has followed a similar arc, governed both by national trends and local scandal.

Early in American history, the parties controlled elections. For most of the 19th century, millions of Americans voted with pre-made party tickets, casting their votes on party platforms instead of candidate preference. To pay for these activities in the era of political patronage, parties often exploited their position within government to raise funds from political appointees, who kicked back a portion of their wages. Some states began passing laws to address the overt purchasing of votes in the early and middle of the 18th century, and civil service reform soon followed. At the federal level, the financial exploitation of party members in government was dealt a serious blow with the 1883 passage of the Pendleton Act, which ended the spoils system and eliminated the kickbacks to parties from patronage appointees. State governments, mainly in the northeast, adopted similar regulations fairly quickly, while those in other regions were slower to formally outlaw patronage. Today, the bureaucratic patronage system is officially banned in over 90 percent of the states.

As the flow of money from patronage evaporated, parties turned elsewhere for funding streams. By the end of the 19th century, Mark Hanna had created a Republican funding juggernaut funded almost exclusively by the large business interests and wealthy individuals of the Gilded Age. As corporations were pouring money into the political system, the Progressive Movement and the era of journalistic muckraking brought increased attention to the role of elite interests in government. By the turn of the century many Americans began to scrutinize the role of big business in influencing campaigns. In 1907, Congress passed the Tillman Act, the first in a string of bills over the next 60 years aimed at diminishing the influence of moneyed individuals and groups. The Tillman Act outlawed direct corporate contributions, and in the 1940s, Congress also banned contributions from labor unions and set limits on individual contributions.

Regulation in the states has followed a similar historical pattern. In fact, some states actually acted sooner; a small number had banned corporate contributions in the first five years of the 20th century. Despite the head start, the regulation of contributions in many states has historically been less stringent than that of the federal government. For example, as of 2007, 13 states still allow unlimited individual contributions, and even with prominent news events such as the Enron scandal, basic corporate contribution proscriptions are far from ubiquitous. Corporate contributions have been banned in only 21 states, and in Illinois, New Mexico, Oregon, Utah, and Virginia, there remains no limit on direct corporate funding.

Labor union money has also been regulated, but to a lesser degree. Contributions from labor unions are proscribed in only 14 states, and are still unrestricted in five. Where corporate and labor contributions are restricted, political action committees (PACs) have often risen to fill the void. Since the creation of the first PAC in 1943, they have become a mainstay of American campaign finance, and have become large players in state elections as well. The role of PACs in state elections is dependent upon existing campaign finance regulation and political culture. PAC contributions are limited in 36 states, and many states apply different limitations depending on the affiliation or size of the PAC.

Even the strictest of regulations are difficult to enforce without proper disclosure. All states require candidates for state office to file at least semi-annual reports detailing the source of campaign funds and how the money was spent. Many disclosure laws date to the mid-1970s, when nearly every state government implemented sweeping reforms in the wake of the Watergate Scandal. With modern technology available, many states Page 81  |  Top of Articlehave made a focused effort to require the availability of report contents via the internet. Despite the potential for full, instant public disclosure, however, the electronic availability of campaign finance data remains an issue in some states.

Some states began employing spending restrictions during the Watergate period in an effort to control overall expenditure levels. Spending controls are not unique to the states; the federal government attempted to implement them in congressional races in the amended Federal Election Campaign Act of 1974. The Supreme Court found mandatory spending limits to be an unconstitutional restriction of free speech in Buckley v. Valeo (1976). Many states have since circumvented this restriction in a novel fashion by creating incentives to abide by voluntary spending restrictions. Under public financing systems, candidates are given subsidies in exchange for their agreement to restrict spending and/ or limit the sources from which they seek funds. Today, approximately half of the states employ some mechanism of public funding. Some, such as Minnesota, Hawaii, and Wisconsin have long provided partial public financing in legislative races, giving candidates relatively small subsidies that do not cover the entire cost of a race. In other words, the subsidy is less than the statutory spending limit, forcing candidates to raise the remainder on their own.

There is one reform initiative that has gained ground in numerous states. Clean Money, Clean Elections seeks to provide full public subsidies for all candidates. Under Clean Elections, as its supporters call it, candidates qualify by soliciting a predetermined number of five dollar contributions from individuals. The number is higher for statewide office and lower for candidates running in legislative or judicial districts. Once they prove their viability in this fashion, Clean Elections candidates receive public subsidies sufficient to wage an entire primary and/or general contest. In return, participating candidates agree to raise no additional money, and to abide by spending limits equal to their subsidy amounts. As a way to discourage participation, candidates running against those who choose to opt out of the program receive matching funds for their opponents' expenditures above the spending limit. Clean Elections has been fully funded in Maine and Arizona since the 2000 elections. In North Carolina, judicial candidates have had access to Clean Elections since 2004. In 2007, a pilot program was underway in a small number of New Jersey legislative districts, and Clean Elections legislation was passed in Connecticut. The experiences in New Jersey and Connecticut signal the possibility that full public financing may be gaining ground; as of 2007, several additional states have similar bills pending.