HomeMy WebLinkAboutCC AG PKT 2010-02-08 #F AGENDA STAFF REPORT
DATE: February 8, 2010
TO: Honorable Mayor and City Council
THRU: David N. Carmany, City Manager
FROM: City Clerk and City Attorney
SUBJECT: CAMPAIGN FINANCE UPDATE
SUMMARY OF REQUEST
This report is provided in response to direction by then -Mayor Shanks to provide
a report with the most current laws regarding limiting campaign contributions and
expenditures. Staff recommends that the Council receive and file the report.
EXECUTIVE SUMMARY
Under current law, cities:
A. cannot limit expenditures.
B. may limit contributions of individuals or committees to local
candidates and committees supporting candidates.
C. may impose additional limits and reporting requirements.
A number of cities have imposed maximum contribution limits based upon federal
court decisions. However, on January 21, 2010, the United States Supreme
Court filed an opinion that overturned federal law restricting corporate
independent expenditures. While the opinion does not affect state law, it is .
another indication that the courts disfavor any limitations on free speech.
BACKGROUND
In 1993, the City Council adopted an ordinance that imposed contribution
limitations and campaign finance disclosure requirements more stringent than
those imposed by state law. The Ordinance was drafted by Orange County
community activist Shirley Grindle. Ms. Grindle is the author of the TINCUP
(Time Is Now, Clean Up Politics) model campaign finance ordinance. The
ordinance:
Agenda Item F
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• Required additional late campaign finance disclosure from candidates
and committees involved in City elections;
• Limited the time in which candidates and committees regarding City
Council races may accept and solicit contributions;
• Placed limits on the amounts any person or committee may contribute
or otherwise cause to be available to Council campaigns;
• Established a voluntary campaign expenditure limit of $5,000 in
Council campaigns.
After a number of amendments, the City Council unanimously repealed the
campaign ordinance in 2003. The report indicates, "campaign ordinances and
statewide initiatives on the same subject were routinely challenged in court.
Court decisions invalidated most, if not all of the regulations applicable to local
jurisdictions, necessitating periodic amendments to the City's ordinance."
Upon the repeal of the campaign ordinance, the City has relied exclusively on
state law regarding campaign disclosure. Therefore, there are no City limitations
on campaign contributions or campaign expenditures for local elections.
This report provides a brief overview of campaign finance law and the federal
and state limits on California cities' ability to regulate campaign fundraising and
expenditures in local elections.
DISCUSSION:
A. First Amendment Limits on Campaign Finance Laws
Laws limiting fundraising in elections affect free speech. Whether inspiring or
caustic, informative or misleading, political speech gets the First Amendment's
highest protection. As the U.S. Supreme Court stated in Buckley v. Valeo, 424
U.S. 1, 15 (1976), "it can hardly be doubted that the constitutional guarantee has
its fullest and most urgent application precisely to the conduct of campaigns for
political office." The Court has repeatedly struck down restrictions on campaign
expenditures because they unjustifiably restrict political speech; limits on
expenditures "reduce the quantity of expression by restricting the number of
issues discussed, the depth of their exploration, and the size of the audience
reached." Buckley, supra, at 19 (1976). Or, as the Court put it more colorfully,
"to engage in unlimited political expression subject to a ceiling on expenditures is
like being free to drive an automobile as far and as often as one desires on a
single tank of gasoline." Randall v. Sorrell, 548 U.S. 230, 241 -42 (2006). In the
recent opinion of Citizens United v. Federal Election Commission (January 21,
2010) the Court reiterated its position that there shall be no limitation on free
speech unless it is narrowly drawn. In that case, the Court invalidated
restrictions on corporate independent expenditures in connection with the 2008
presidential election.
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But money also corrupts. For over a century, the Supreme Court has recognized
that large contributions from donors can corrupt legislators, and has permitted
laws designed "to purge national politics of what was conceived to be the
pernicious influence of `big money' campaign contributions. ". United States v.
Automobile Workers, 352 U.S. 567, 572 (1957). As a result, the Court applies a
lower standard of scrutiny to laws limiting campaign contributions, since the goal
of such laws is to limit corruption, or the appearance of corruption. Federal
Election Comm'n v. Colorado Republican Federal Campaign Comm., 533 U.S.
431, 440 -41 (2001), McConnell v. Federal Election Comm'n, 540 U.S. 93 (2003).
Limits on contributions have Tess of an effect on free speech than limits on
campaign expenditures; they impose only "a marginal restriction upon the
contributor's ability to engage in free communication." McConnell, supra, at 142.
However, in Citizens United, the Court overruled Austin v. Michigan Chamber of
Commerce, 494 U.S. 652 (1990) and the portion of McConnell relying on Austin
in connection with independent corporate expenditures.
In sum, the Supreme Court has held that local governments can (1) require
campaigns to report expenditures, but not limit them, and (2) can impose some
limits on contributions. Beyond these simple rules, campaign finance laws, like
the elections they regulate, become complicated and contentious.
Even seemingly simple contribution limits can become complicated quickly. Why
is a $250 contribution permissible when a $1,000 contribution is not? A lower
contribution limit may be appropriate for a local race, but not a statewide one.
For instance, in Randall v. Sorrell, supra, the Court held that campaign
contribution limits cannot be set so low as to "prevent candidates from "amassing
the resources necessary for effective [campaign] advocacy" or to "magnify the
advantages of incumbency to the point where they put challengers to a
significant disadvantage." In that case, Vermont imposed contribution limits of
roughly $200 a year for candidates for statewide office, $150 a year for state
senator, and $100 a year for state representative. Given the number of voters in
Vermont, the Court held that these limits hindered competition and were not
justified by sufficient evidence. Randall, 548 U.S. at 260 -62 (2006)
Making regulation even more difficult is the unsettled nature of recent Supreme
Court campaign finance cases. In 2003, the Court broadly upheld a far - ranging
federal campaign finance law in McConnell, supra. But in 2007, the Court
reversed course and struck down part of the same campaign finance law in FEC
v. Wisconsin Right to Life, 551 U.S. 449 (2007). Now, in Citizens United, the
Court overruled the century-old ban on direct corporate contributions in election
campaigns. Given the flux in federal constitutional rules, it can be difficult for
cities to impose consistent and long- lasting rules.
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B. Local Campaign Finance Rules Permitted by State and Federal Law
State law grants cities some authority to regulate campaign contributions and
impose reporting requirements. The Legislature, however, has shown hostility
towards restrictive local campaign ordinances. The following lists permissible
restrictions that cities in California can impose:
1. Limitation of contribution amounts. State law does not limit
contributions to local candidates, so without local contribution limits, candidates
may receive contributions of any amount. But cities have the power to limit the
contributions of individuals or committees to local candidates and committees
supporting candidates. Elections Code §10202. These limits vary: cities have
limits ranging from $50 to $1,500. Cities may also limit "in- kind" donations of
goods and services. Government Code §82015; Buckley v. Valeo, supra.
Contributions to ballot measure campaigns, however, cannot be limited. Citizens
Against Rent Control /Coalition for Fair Housing v. City of Berkeley, 454 U.S. 290,
299 (1981). Recall elections are viewed like ballot measures, so contributions to
recall proponents also cannot be limited. Citizens for Clean Government v. City
of San Diego, 474 F.3d 647, 652 -53 (9th Cir. 2007).
2. Timing. Cities can limit (or prohibit) fundraising except in limited
windows prior to or following an election or, conversely, limit contributions within
a specified time prior to or following an election.
3. Cash Contributions. Cities can limit or prohibit cash contributions.
State law already prohibits cash contributions or expenditures of $100 or more.
Government Code § 84300. Cities can set lower limits.
4. Anonymous Contributions. Cities can limit anonymous
contributions. State law already limits anonymous contributions of $100 or more.
Government Code §84304. Cities can set lower limits.
5. Reporting and Disclosure. State law imposes disclosure
requirements upon candidates, committees, and those making independent
expenditures. All these groups must file semi - annual statements, pre - election
and post - election statements in election years, and late contribution statements
within 24 hours for contributions of $1,000 or more occurring just before the
election. See generally Government Code § §84200- 84225. Cities can create
additional reporting requirements for candidates and local committees, except
those committees solely making independent expenditures. Government Code §
81009.5(b). For example, cities can require more frequent pre - election campaign
statements or late contribution reports. Or they can also require disclosure at
lower thresholds: for example, a City could require disclosure of contributions of
less than $100 — the amount at which state law requires disclosure — or impose
late disclosure requirements on contributions of less than the state threshold of
$1,000. Government Code §81009.5(b).
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6. Number of Controlled Committees and Bank Accounts. Cities can
limit a candidate to one controlled committee and one campaign bank account.
Government Code §85201; 2 California Code of Regulations §18534.
7. Disclosure on the Record. Cities can require that a councilmember
disclose on the record when a particular applicant or bidder before the Council
has made a contribution to that councilmember.
C. Practical Considerations — Enforcing Local Campaign Finance Laws
Monitoring and enforcing local campaign laws can be challenging. The burden
falls on the City Clerk to: (1) oversee reporting requirements; (2) monitor
candidates and committees to ensure that they are complying with disclosure
requirements and following contribution limits; and (3) enforce contribution limits.
The more complex the law, the more difficult it can be to interpret and enforce.
Some large cities, particularly Los Angeles and San Diego, have elaborate
campaign finance schemes designed to identify and deter the many ways
lobbyists attempt to curry favor with the City Council or staff. These complex
regimes require significant resources to enforce: full -time staff members and
independent commissions oversee these ordinances. A simpler ordinance that
sets local contribution limits while requiring disclosure of contributions and
expenditures in the same manner as state law is easier for cities to enforce.
FINANCIAL IMPACT
There are no direct costs associated with the adoption of a campaign finance
ordinance. However, enforcement could be administratively cumbersome and
unknown attorney fees in connection with enforcement will have a financial impact
on the City.
RECOMMENDATION
Receive and file.
SUBMITTED BY: NOTED AND APPROVED:
n .
Linda Devine, City Clerk David N. CarmarS City Manager
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Prepared by: City Attorney