Campaign Finance 101 For City & Town Clerks PART 2 BALLOT MEASURE ELECTIONS & ENFORCEMENT Arizona Municipal Clerks Association Elections Training July

Campaign Finance 101Campaign Finance 101For City & Town ClerksFor City & Town Clerks

PART 2

BALLOT MEASURE ELECTIONS & ENFORCEMENT

Arizona Municipal Clerks AssociationElections TrainingJuly 2014

OverviewOverview

Ballot Measure Political CommitteesBallot Measure Political Committees Disclosure in Campaign Literature & Disclosure in Campaign Literature &

AdvertisementsAdvertisements Contribution Limits (not applicable)Contribution Limits (not applicable) Enforcement of Report FilingEnforcement of Report Filing Enforcement of Other CF ViolationsEnforcement of Other CF Violations Termination of CommitteesTermination of Committees Using Resources to Influence ElectionsUsing Resources to Influence Elections

Political Committees - DefinitionPolitical Committees - Definition

Committees related to ballot measures

• Who . . .– any association or combination of persons

organized or combined

• Why . . .– to influence the result of any election

• Does not have to be primary purpose


• For What . . . – engages in political activity to support or oppose an

initiative, referendum or recall or any other ballot measure or proposition

• Types of Committees / Examples (listed in statute) – A committee acting for qualification, passage or defeat

of a ballot measure or proposition – Circulate petition or support or oppose recall

• Note: AG Opinion - recall committee is candidate committee(Contribution limits apply, Corporate contributions prohibited)

Political CommitteesPolitical Committees

• Specific Situations - What about . . .– Individual (not a candidate) acting alone?

Is all Help paid? Unclear! May be political speech

– Business / organization involved in ballot measure?– Subcommittee of an organization?– Filing argument on ballot measure & pay deposit?– Public utility spending own money on franchise?– Religious assembly or institution that does not

spend a substantial amount influencing a ballot measure?


• When to raise question . . .– Inquiry about initiative, referendum or recall

(always on 1st contact!)– Upon filing an argument on a ballot measure

Note: not a committee solely for filing argument!

– Inquiry about making contributions to influence a ballot measure

Political Committee RegistrationPolitical Committee Registration

When to Register?

– Before engaging in "political activity." Accepting any contributions Making any expenditures Distributing any campaign literature Circulating any petitions


How to Register?

• Statement of Organization– If intends to receive or expend more than $500– Must file all applicable reports

• $500 Threshold Exemption Statement– If intends to receive or expend less than $500 (but

more than $250)– Not required to file reports – but must track activity– If exceed $500, must file Stmt of Org within 5 bus days


When is Registration not required?

• All Committees– If intend to receive / expend $250 or less– Must track activity and register if exceeds $500

• Conflict with Title 19 – Petition applicants?– Title 19 requires a SO or $500 ES with application

Filing officer cannot accept application without

– Signatures invalid if obtain before register– SOS opinion: only invalid if required to register, don’t!– If committee is not registering - inform of issue?

Non-Candidate Political CommitteesNon-Candidate Political Committees• Chairman and Treasurer must be different people

• Committee Name must identify any "sponsoring" org

• Committees acting to support or oppose a ballot measure, committee name must include:

– The petition serial number (or Prop number)

– Whether support or oppose the measure

• Issues– If it spends on an issue, have to change committee name?

– Spend on multiple measures? Include all in name?

– Recall committee a ballot measure committee?

AG Opinion – No! Committee to influence candidate election

Non-Candidate Political CommitteesNon-Candidate Political Committees

Penalty for Failure to Register

• Civil penalty – Up to 3x amount received/expended• Petition signatures invalid (Only if required to register?)

– Initiative & Referendum – Sigs invalid before a Stmt Org or $500 Exemption Stmt filed

– Recall - Sigs invalid before a Stmt Org filed Statute does not say “or $500 Exemption Stmt”

Statement of OrganizationStatement of Organization• Contents

– Name, contact info, officers– Name and relationship to any sponsor org – Designate financial institution– Statement Chairman and Treasurer have read all

campaign finance laws (New 2011) • Clerk issues ID number• Amendments

– For any change in required information– Must file within 5 days

Contribution LimitationsContribution Limitations Limits apply to CANDIDATES ONLYLimits apply to CANDIDATES ONLY

And possibly Recall committees (AG Opinion)And possibly Recall committees (AG Opinion) NOT initiative, referendum and recall NOT initiative, referendum and recall

committeescommittees NOT independent expenditure committeesNOT independent expenditure committees

Foreign contributions prohibited (Fed law)Foreign contributions prohibited (Fed law)

Corporations and Labor OrganizationsCorporations and Labor Organizations Permitted to expend corporate money to Permitted to expend corporate money to

support or oppose ballot measuressupport or oppose ballot measures Limitations on businesses making contributions Limitations on businesses making contributions

pertain to candidates (and Recall?)pertain to candidates (and Recall?)

Campaign Literature & Ads Campaign Literature & Ads DisclosureDisclosure

Requirement for All Political CommitteesRequirement for All Political Committees Must Disclose:Must Disclose:

““Paid for By” and name of committeePaid for By” and name of committee ExceptionsExceptions

Items too small to fit disclosureItems too small to fit disclosure Also now applies to printed items and broadcast ads!? Also now applies to printed items and broadcast ads!?

Broadcast mediumsBroadcast mediums

New specific requirements for print, broadcast, New specific requirements for print, broadcast, telecomtelecom

Penalty – up to 3x cost of the Lit / AdPenalty – up to 3x cost of the Lit / Ad

Campaign Literature & Ads Campaign Literature & Ads DisclosureDisclosure

Additional RequirementsAdditional Requirements for Ballot Measure Committeesfor Ballot Measure Committees

Must also disclose in Literature or Ad: Four largest “major funding sources”Four largest “major funding sources”

Cumulative contributions of $10K if pop 100K+Cumulative contributions of $10K if pop 100K+ Cumulative contributions of $5K if pop under 100KCumulative contributions of $5K if pop under 100K NotNot limited to contributions in the current year limited to contributions in the current year

If applicable, that contributor is out of stateIf applicable, that contributor is out of state Printed disclosure must be “conspicuous”Printed disclosure must be “conspicuous”

NNo specific size required for printo specific size required for print

Reporting Contributions and Reporting Contributions and Expenditures – “10K” NoticesExpenditures – “10K” Notices

““10 K” Notices 10 K” Notices (state trigger amount is $10,000)(state trigger amount is $10,000)

For Ballot Measure and Recall CommitteesFor Ballot Measure and Recall Committees File within 24 hrs of reaching trigger amount File within 24 hrs of reaching trigger amount

Two Types of Notices (Triggers)Two Types of Notices (Triggers)1.1. Contribution from a Single SourceContribution from a Single Source

Required for contributions received from a single Required for contributions received from a single source less than 20 days before election in excess of source less than 20 days before election in excess of --

$10,000 for statewide measures$10,000 for statewide measures For cities and towns, amount depends on population -For cities and towns, amount depends on population -

$2,500 if population over 100,000$2,500 if population over 100,000 $500 if population under 100,000$500 if population under 100,000

Reporting Contributions and Reporting Contributions and Expenditures – “10K” NoticesExpenditures – “10K” Notices

2. Cumulative Receipts File upon 1st occurrence of –

Receipt of contributions totaling $10,000 or more

Total Expenditures of $10,000 or more Upon receipt of contributions totaling

$10,000 or more from a single source Upon receipt of cumulative contributions

of $10,000 or more from different additional sources

EnforcementEnforcement

Enforcement MethodEnforcement Method

Public Disclosure of InformationPublic Disclosure of Information

Voters enforce at ballot box!Voters enforce at ballot box!

Filing Officers Enforce Report FilingFiling Officers Enforce Report FilingEnsures disclosure!Ensures disclosure!

Increasing Role in Other CF ViolationsIncreasing Role in Other CF Violations

Enforcement – Failure to FileEnforcement – Failure to File

Determination of failure made by ClerkDetermination of failure made by Clerk Treasurer, Chairman & Candidate Treasurer, Chairman & Candidate

responsibleresponsible

““Failure to File” exists if Failure to File” exists if ANYANY of the of the following occurs:following occurs: Report not filed by due dateReport not filed by due date Not signed as requiredNot signed as required ““Good Faith Effort” not made to completeGood Faith Effort” not made to complete


What is "Good Faith Effort" and What is "Good Faith Effort" and "substantially complete?“"substantially complete?“

Not defined - Range of interpretationsNot defined - Range of interpretations From - Full auditFrom - Full audit To - Review report on its face to verify if To - Review report on its face to verify if

appears completeappears complete Consult your attorneyConsult your attorney

Set policy for reviewing reports and apply Set policy for reviewing reports and apply consistently for all committeesconsistently for all committees


Enforcement Challenges for MunicipalitiesEnforcement Challenges for Municipalities State & CountyState & County

Filing officers and attorneys independently electedFiling officers and attorneys independently elected Authority to audit or prosecute other officialsAuthority to audit or prosecute other officials

MunicipalitiesMunicipalities Clerks & attorneys not independently electedClerks & attorneys not independently elected Auditing or prosecuting superiors & authority limitedAuditing or prosecuting superiors & authority limited

Important to set enforcement policiesImportant to set enforcement policies Determine policy with your Attorney and ManagerDetermine policy with your Attorney and Manager Be consistent with all committees, all electionsBe consistent with all committees, all elections

Enforcement - Failure to File NoticesEnforcement - Failure to File Notices

Filing officer must track committees Determine which committees required to file and whether

filed! Filing Officer must provide Notice –

In writing By certified mail (return receipt requested) Send to:

“Political Committee” (Chairman/Treasurer?) AND Candidate or Designating Individual

Within 15 days after “determine” failure to file When does officer “determine”? Due date? (SOS)

Enforcement - Failure to File NoticesEnforcement - Failure to File Notices

Reminder NoticesReminder Notices Optional - not requiredOptional - not required Reminder to committees before filing deadlineReminder to committees before filing deadline

Can send by e-mail (SOS, Phoenix and others)Can send by e-mail (SOS, Phoenix and others) Obtain email address from committees when Obtain email address from committees when

registerregister

BenefitsBenefits Avoids receiving 1Avoids receiving 1stst notice after penalties already due notice after penalties already due Reduces last minute requests for forms/copiesReduces last minute requests for forms/copies Reduces innocent failures from oversightReduces innocent failures from oversight Avoids criticism for not remindingAvoids criticism for not reminding

Enforcement - Failure to File PenaltiesEnforcement - Failure to File Penalties

Initial penalties are mandatoryInitial penalties are mandatory $10 per day up to $450 (business days $10 per day up to $450 (business days

only)only) Filing officer has no discretion and cannot Filing officer has no discretion and cannot

accept report unless penalties paidaccept report unless penalties paid

Cannot accept “Report”?Cannot accept “Report”? Cannot accept that report?Cannot accept that report? Or also any subsequent reports being filed Or also any subsequent reports being filed

on time?on time?


If committee does not file after notice - If committee does not file after notice - 15 days after 15 days after receiptreceipt of Notice penalties may of Notice penalties may

increase to $25 per day (up to $1,000 per filing)increase to $25 per day (up to $1,000 per filing) AssessmentAssessment

Filing officer cannot imposed before accepting reportFiling officer cannot imposed before accepting report Additional penalty must be assessed by attorneyAdditional penalty must be assessed by attorney Use procedure in 16-924Use procedure in 16-924

Duties to Enforce Failure to FileDuties to Enforce Failure to File City / Town Clerk City / Town Clerk shallshall notify the attorney of violation notify the attorney of violation Attorney Attorney maymay serve an order for compliance serve an order for compliance


Additional Penalty for CandidatesAdditional Penalty for Candidates

1.1. 5 Year Bar5 Year Bar Not eligible to be a candidate for any local or Not eligible to be a candidate for any local or

state office for five years after the last failure state office for five years after the last failure to fileto file

If failure to file with same filing officer – the If failure to file with same filing officer – the officer may refuse nomination papersofficer may refuse nomination papers

Filing officer in another jurisdiction may refuse Filing officer in another jurisdiction may refuse for any public office with copy of final orderfor any public office with copy of final order

Provide name / order to Secretary of StateProvide name / order to Secretary of State Add to candidate certification process to check Add to candidate certification process to check

with SOS to determine if a candidate is on listwith SOS to determine if a candidate is on list


Additional Penalty for CandidatesAdditional Penalty for Candidates (New 2012)(New 2012)

2.2. Prohibition on Accepting Nomination PetitionsProhibition on Accepting Nomination Petitions Filing officer cannot accept nomination petitions if Filing officer cannot accept nomination petitions if

candidate is liable for $1,000 or more in fines, candidate is liable for $1,000 or more in fines, penalties, late fees, judgments related to CF penalties, late fees, judgments related to CF

Exception - If liability is being appealedException - If liability is being appealed Nomination paper for all candidates must include Nomination paper for all candidates must include

statement candidate has satisfied any liability statement candidate has satisfied any liability (includes write-ins) (Added to form)(includes write-ins) (Added to form)

Scope of duty for filing officers? Not specifiedScope of duty for filing officers? Not specified Limited to face of candidate’s affidavit? Investigate?Limited to face of candidate’s affidavit? Investigate?

Can candidate file reports and pay up to run?Can candidate file reports and pay up to run? 5 years since last failure? Law unclear?5 years since last failure? Law unclear?


Additional Penalty for Standing CommitteesAdditional Penalty for Standing Committees If files late 3 or more times - If files late 3 or more times -

Loses eligibility as Standing CommitteeLoses eligibility as Standing Committee Must file reports in each jurisdiction activeMust file reports in each jurisdiction active

Jurisdictions are not notified if lose status!Jurisdictions are not notified if lose status! Filing officers do not know committee required to file!Filing officers do not know committee required to file! Check status of your standing committees on SOS Check status of your standing committees on SOS

Website or contact SOS Website or contact SOS Send reminder Notice if committee has to file with Send reminder Notice if committee has to file with

youyou


Additional Penalties – Committee SuspensionAdditional Penalties – Committee Suspension

City/Town Clerks may suspend committeesCity/Town Clerks may suspend committees If Committee Fails to File 3 Consecutive ReportsIf Committee Fails to File 3 Consecutive Reports

Send Notice of Intent to SuspendSend Notice of Intent to Suspend Committee has 30 days to come into complianceCommittee has 30 days to come into compliance

If Suspended - If Suspended - Filing officer can discontinue sending failure file notices!Filing officer can discontinue sending failure file notices! Committee can no longer operate in that jurisdictionCommittee can no longer operate in that jurisdiction Committee not relieved of responsibilities or penaltiesCommittee not relieved of responsibilities or penalties Cannot suspend candidate committee during that election Cannot suspend candidate committee during that election

cyclecycle

Enforcement - Failure to File DefenseEnforcement - Failure to File Defense

Good Cause DefenseGood Cause Defense Treasurer (or Candidate) may show good Treasurer (or Candidate) may show good

causecause Specifically includes (but not limited to):Specifically includes (but not limited to):

Illness or absence from the stateIllness or absence from the state At the time report was due or notice of At the time report was due or notice of

delinquency delivereddelinquency delivered That reasonably prevented person from filing the That reasonably prevented person from filing the

report or receiving noticereport or receiving notice Written request should be requiredWritten request should be required Penalties still must be paid to file reportPenalties still must be paid to file report

Enforcement - Failure to File DefenseEnforcement - Failure to File Defense

Good Cause DefenseGood Cause Defense

Who determines “Good Cause”?Who determines “Good Cause”? Filing Officer?Filing Officer? Attorney?Attorney? A committee appointed for this purpose?A committee appointed for this purpose?

If “Good Cause” determinedIf “Good Cause” determined Penalties may be waived or refundedPenalties may be waived or refunded

Enforcement – Other ViolationsEnforcement – Other Violations Use procedure in Section 16-924Use procedure in Section 16-924

Also applies to Financial Disclosure violationsAlso applies to Financial Disclosure violations

If Filing Officer has reasonable cause to believe If Filing Officer has reasonable cause to believe there is a violation of CF law . . .there is a violation of CF law . . . Must notify attorneyMust notify attorney Attorney has discretion whether to prosecuteAttorney has discretion whether to prosecute

Duty of filing officer to find violations?Duty of filing officer to find violations? Investigate?Investigate? Respond to complaints?Respond to complaints?

Enforcement – Other ViolationsEnforcement – Other Violations Increased complexity in CF RegulationIncreased complexity in CF Regulation

First Amendment cases removing restrictionsFirst Amendment cases removing restrictions Statutory provisions unclear or conflictingStatutory provisions unclear or conflicting Committees & candidates now OK in gray areasCommittees & candidates now OK in gray areas

Causing more complaints of “other violations”Causing more complaints of “other violations” Independent Expenditure organizations / Non-profitsIndependent Expenditure organizations / Non-profits ““Issue Advocacy” ads, mailers, Web sitesIssue Advocacy” ads, mailers, Web sites Trial Courts have referred issues back to filing officers!Trial Courts have referred issues back to filing officers!

CF complaints becoming part of campaign strategyCF complaints becoming part of campaign strategy Impacts ability to maintain perception of impartialityImpacts ability to maintain perception of impartiality Enforcement issues – clerk / attorney not electedEnforcement issues – clerk / attorney not elected Resources to review and make reasonable cause findingResources to review and make reasonable cause finding

Termination of CommitteesTermination of Committees

ALLALL Committees required to file Committees required to file Statement of Org and $500 ExemptionStatement of Org and $500 Exemption

Condition: must have ZERO BalanceCondition: must have ZERO Balance Committee must have no outstanding debts Committee must have no outstanding debts

or obligationsor obligations

Any surplus money has been distributedAny surplus money has been distributed

(May file report for distribution with termination)(May file report for distribution with termination)


$500 Exemption Committees$500 Exemption Committees Must also terminate Must also terminate (New 2010)(New 2010) Previously – existed foreverPreviously – existed forever Must file at end of each “election cycle”Must file at end of each “election cycle”

Election date? End of postelection reporting Election date? End of postelection reporting period?period?

If do not file – terminate by operation of law If do not file – terminate by operation of law 90 days after “end of election cycle”90 days after “end of election cycle”

Civil penalty of $100 for not filing Term StmtCivil penalty of $100 for not filing Term Stmt

Termination of CommitteesTermination of Committees Committees with Outstanding DebtCommittees with Outstanding Debt

Cannot terminate (must have zero balance)Cannot terminate (must have zero balance)

Candidate or Exploratory CommitteeCandidate or Exploratory Committee May transfer funds to subsequent May transfer funds to subsequent

committee and terminate, committee and terminate, OROR File File AnnualAnnual No Activity Statement in lieu of No Activity Statement in lieu of

other reports during calendar yearother reports during calendar year Must begin filing reports if receive contributionsMust begin filing reports if receive contributions


Committees with Surplus MoneyCommittees with Surplus Money Retain funds for use in subsequent Retain funds for use in subsequent

electionelection Return surplus monies to the contributorsReturn surplus monies to the contributors Donate surplus monies according to lawDonate surplus monies according to law Other lawful manner – broad?Other lawful manner – broad? NOT convert to personal use (or family)NOT convert to personal use (or family)

Then committee may terminate.Then committee may terminate.


Committees Active in Multiple Committees Active in Multiple JurisdictionsJurisdictions

May terminate activities in one jurisdiction May terminate activities in one jurisdiction and remain active in other jurisdictionsand remain active in other jurisdictions

Termination Statement must include Termination Statement must include additional statement that remaining additional statement that remaining monies will be used in other jurisdictions monies will be used in other jurisdictions (part of form)(part of form)

Use of City / Town Resources to Use of City / Town Resources to Influence ElectionsInfluence Elections

Statutory prohibitionStatutory prohibition Cannot use city / town resources to influence electionCannot use city / town resources to influence election

““Resources” includes personnel, equipment, Resources” includes personnel, equipment, buildings, postage, anything of valuebuildings, postage, anything of value

May issue neutral, informational bond May issue neutral, informational bond pamphlets pamphlets

Can use facilities for forums and debatesCan use facilities for forums and debates Government sponsorGovernment sponsor

Informational only, sponsor remains neutral, all viewsInformational only, sponsor remains neutral, all views

Individual can use facility if separate eventIndividual can use facility if separate event

Use of City / Town Resources for Use of City / Town Resources for Ballot MeasuresBallot Measures

Enforcement and PenaltiesEnforcement and Penalties Attorney general or county attorney may initiateAttorney general or county attorney may initiate Knowing violation - $5000 against person who violated!Knowing violation - $5000 against person who violated! Penalty cannot be paid by city or town or its insurance!Penalty cannot be paid by city or town or its insurance!

Information brochures and mailingsInformation brochures and mailings Disseminate information ONLYDisseminate information ONLY Cannot advocate for a position Cannot advocate for a position Standard for violation – Standard for violation – KromkoKromko case (Tucson) case (Tucson)

The communication “taken as a whole, unambiguously The communication “taken as a whole, unambiguously urges a person to vote in a particular manner”urges a person to vote in a particular manner”

Campaign Finance 101Campaign Finance 101For City & Town ClerksFor City & Town Clerks

Questions?Questions?

End of Part 2End of Part 2

BALLOT MEASURE ELECTIONSBALLOT MEASURE ELECTIONS

Documents

Campaign Finance 101 For City & Town Clerks PART 2 BALLOT MEASURE ELECTIONS & ENFORCEMENT Arizona Municipal Clerks Association Elections Training July