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Although it is a state of only modest size andinfluence, Maine finds itself on the cutting edge of the national movement to restructure campaignfinance through taxpayer financing of politicalcandidates. On November 5, 1996, voters passedthe Maine Clean Election Act by ballot initiative.That was the first piece of state or federal legisla-tion to offer taxpayer financing to state-level can-didates who voluntarily accept spending limitsand refuse private contributions. The legislationapplied to state senate and house candidatesbeginning with the 2000 primary and general elec-tion campaigns (and will apply to gubernatorialcandidates beginning in 2002). November 2000’svoting was the first test of this new campaignfinance system, and the Maine legislature swornin on December 6, 2000, comprised the first set of elected officials chosen under this system.The adoption of taxpayer financing for the2000 election did not result in a substantiallymore competitive election than occurred underprivate funding in 1998. Although enhancedelectoral competition has been predicted as aresult of clean election reforms, the evidencefrom Maine implies the opposite. Comparison of districts that had “clean” candidates in 2000with those that did not indicates that the cleandistricts displayed no improvement on two of three measures of electoral competitiveness andactually performed far worse on a third.Specifically, clean districts exhibited no differ-ence in victory margins or in contestedness—thefrequency with which candidates were unop-posed—relative to “nonclean” districts. However, inthe case of openness—the tendency of incumbentsto run—clean districts were far more likely to haveincumbents running in 2000 and far more likely tohave switched from an open race in 1998 to one inwhich an incumbent was running in 2000.An empirical analysis of the Maine electionsupports the following conclusions:
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The overall average margin of victory inboth state senate and house races declinedby a statistically insignificant margin.
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Races for open seats that featured govern-ment-financed candidates do not clearlyshow that taxpayer financing leads to morecompetitive elections.
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Despite limits on campaign spending byincumbents, the advantages of holdingoffice were almost impossible to overcome.
 Does Cleanliness Lead to Competitiveness?
The Failure of Maine’s Experiment withTaxpayer Financing of Campaigns
by Patrick Basham and Martin Zelder
_____________________________________________________________________________________________________
Patrick Basham is a senior fellow at the Cato Institute. Martin Zelder is an economist at Analysis Group Economicsin Boston.
Executive Summary
No. 456October 16, 2002
 
Introduction
Although it is a state of only modest sizeand influence, Maine finds itself on the cut-ting edge of the national movement to restruc-ture campaign finance through taxpayerfinancing of political candidates. OnNovember 5, 1996, voters passed the MaineClean Election Act by ballot initiative. Thatwas the first piece of state or federal legislationto offer taxpayer financing to state-level candi-dates who voluntarily accept spending limitsand refuse private contributions. The legisla-tion applied to state senate and house candi-dates beginning with the 2000 primary andgeneral election campaigns (and will apply togubernatorial candidates beginning in 2002).November 2000’s voting was the first test of this new campaign finance system, and theMaine legislature sworn in on December 6,2000, comprised the first set of elected officialschosen under this system. Unquestionably, asDan Harris reported, “Maine is now engaged inan electoral experiment.”
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The success or failureof Maine’s experiment may significantly influ-ence the fortunes of comparable campaignfinance restructuring efforts at both the stateand federal levels.The continuing political pressure inMassachusetts in favor of taxpayer financingdraws considerable energy from the erro-neous but widespread impression thatMaine’s taxpayer financing experiment hasbeen successful.
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After a single election cycle,Glenn Cummings, a member of the MaineHouse of Representatives, and EdYoungblood, a member of the Maine StateSenate, pronounced that “there was a lotmore competition for office.”
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Ellen S. Miller,a prominent supporter of taxpayer financing,forecast that “Maine’s success will make thatstate a beacon for others.”
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According to theRichard M. Neustadt Center for Communi-cations in the Public Interest, “The MaineClean Election Act is now a model for ballotand legislative initiatives in other states, andis being watched closely by observers aroundthe country.”
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The lobbying group PublicCampaign, the leading national advocate forMaine-style campaign finance regulation,says, “Maine is the good news political storyin a year of record-breaking fundraising.”
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Assessing the Maine elections, Nick Nyhart,Public Campaign’s executive director,declared:We are extremely pleased with theway the system worked. It . . . leveledthe playing field, freed candidatetime to talk to the voters, encour-aged qualified people to run andimproved the debate. These lawsshow the nation what comprehen-sive campaign finance reform can,and should, look like.
7
The taxpayer financing experiment inMaine is clearly a critical component of alarger strategy on the part of advocates of campaign finance regulation. According to journalist Robert Dreyfuss:Part of the rationale for advancingreform in the states is that ultimate-ly the movement will have an impactin Washington. If enough states canimplement Maine-style reforms, andif those reforms take effect withoutthe collapse of civilization, graduallythe idea will gain favor in Congress.
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Hence, the
 Boston Globe
argues that the so-called Maine plan should serve as a “blueprint”for national campaign finance regulation.
9
Over the past 28 years, 51 campaignfinance–related initiatives, referenda, andconstitutional amendments have appearedon state and local ballots. Forty-one of thoseballot measures have been successful. Byearly 1997 at least 10 states had a full taxpay-er financing proposal either being consideredby the legislature or en route to the electoratevia a ballot initiative. In June 1997 theVermont legislature passed a Maine-style reg-ulation. The good news for supporters of tax-payer financing continued apace: inNovember 1998 two taxpayer financing ini-
2
The continuingpolitical pressurein Massachusettsin favor of tax-payer financingdraws consider-able energy fromthe erroneousimpression thatMaine’s taxpayerfinancing experi-ment has beensuccessful.
 
tiatives won at the ballot box. In liberalMassachusetts, voters (by a two-to-one mar-gin) approved a “clean money” initiativemodeled on the Maine and Vermont legisla-tion; meanwhile, the more libertarianArizona electorate approved a comparablecampaign finance plan involving taxpayerfinancing, in the form of Proposition 200, bya narrow 51 to 49 percent margin. For theclean money movement those were auspi-cious developments.The 2000 elections brought the taxpayerfinancing winning streak to an end. OnNovember 7, 2000, two clean money ballotinitiatives lost badly at the polls. In Missouria proposition lost by 65 to 35 percent, whileOregon’s analogous referendum was defeat-ed by 59 to 41 percent.Consequently, a turning point has beenreached in the struggle over taxpayer financ-ing at the state level. Proponents of taxpayerfinancing see Maine and other states asexperiments that will lead to taxpayer financ-ing of congressional elections. Reflecting onthe voting in Maine, one pro-regulation com-mentator observed: “To be parlayed into suc-cess nationally, the state laws must work asdemonstrations. Here the evidence, althoughhardly definitive, is encouraging.”
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Voters, however, seem less convinced of thevirtues of funding campaigns from the publicpurse, although no clear trend has emerged instate initiatives. In this context, the actual con-sequences of Maine’s experiment become vital-ly important. Unfortunately, advocates providelittle, if any, empirical evidence to support theaccolades for Maine’s recent electoral experi-ence. The empirical evidence presented in thispaper indicates that taxpayer financing inMaine has not lived up to the expectations of itsproponents.This study provides a detailed and rigor-ous statistical assessment of Maine’s 2000and 1998 elections to answer the followingquestions:
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Was Maine’s first taxpayer-funded elec-tion in 2000 more competitive than thelast privately funded election of 1998?
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Did taxpayer financing increase thecompetitiveness of primary elections?
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What influence did incumbency haveon the competitiveness of the electionresults?
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What influence did term limits have onthe competitiveness of the electionresults?
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What was the impact of taxpayerfinancing on the participation of inde-pendent and minor party candidates?
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What are the lessons of Maine’s taxpay-er financing experiment for other statesand for Congress?
The Campaign forTaxpayer Financing
Impetus for the Maine Clean Election Actarose in part because the cost of campaigningin Maine has increased in the past twodecades. Advocates of taxpayer financing of state elections asserted that rising campaigncosts led to noncompetitive campaigns. Asevidence, they pointed out that as recently as1992, 31 percent of primaries were contested;by 1996, that figure had fallen to 22 percent.Regulators argued that the decrease wasdirectly attributable to the onerous necessityof fundraising among family, friends, con-stituents, and special interest groups.
11
Although campaign restructuring activistsagreed on the nature of the problem, Maine’spoliticians were not convinced. Over a period of several years, the legislature defeated more than40 campaign finance regulation bills. Advocatesof taxpayer financing decided to circumvent thelegislature and put the issue directly to the peo-ple in a ballot initiative in 1996.
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Maine voters supported the MCEA propos-al by a 56 to 44 percent margin. According toDemocratic pollster Mark Mellman, theappeal of the clean money campaign was itsvery simplicity.
13
However, that simplicityshould not be confused with a simplistic polit-ical marketing plan. Remarking on the sophis-ticated campaign that prompted passage of the MCEA, Robert Dreyfuss recounts:
3
The empirical evi-dence presentedin this paper indi-cates that taxpay-er financing inMaine has notlived up to theexpectations of its proponents.
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