News

Guest Opinion: It's time to set campaign contribution and spending caps

Man calls for mandatory limit on total contributions from one source

Palo Alto City Council candidates broke records for total contributions and expenditures. Large cash and nonmonetary contributions played a role. Post-election developer infusions erased debts. The year was 2005, and I wrote about it in this space.

The aftertaste lingered, and in mid-2007, Council members Peter Drekmeier, who set the records, and LaDoris Cordell, who accepted no monetary contribution, called for limitations. Encouraged to pursue, they dutifully returned from committee with voluntary monetary contribution and expenditure caps: $300 and $30,000 respectively. But with the next campaigns in view, all other council members withheld support.

The effort, however, was not in vain, as candidates publicly adopted the limits or stayed relatively close, especially on the expenditure side. A positive norm of self-restraint ran through the 2007, 2009, and 2012 elections.

But in 2014, there were large fissures. Greg Scharff loaned his campaign $60,000, part of $97,000 in total expenditures, which was more than twice the previous record.

In 2016, candidate leanings across the contentious fault line of development could be generally classified as "Slow" or "Pro." At September's end, the Pros (Greg Tanaka, Liz Kniss, Adrian Fine and Don McDougal) led in contributions, topping out at $47,000. They were bolstered, in variation, by personal loan and cash infusions, carryover money from previous campaigns, family and friends, developers, and two $5,000 checks.

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But their supporters remained antsy, and when the Chamber of Commerce attacked an unnamed slate of Slows as "anti-business," while also certifying the Pros by name, it initiated a fear-driven chain reaction. Five families of early contributors to two leading Slows responded with an eye-popping total of $61,100 for each of those campaigns (Arthur Keller and Lydia Kou). Supporters of the Pros cried "foul."

But the cash infusion had its downside. Other contributions disappeared, and the two campaigns abdicated the virtuous high ground of small donations and a broadly-financed campaign. In addition, all that money and more was paid to a San Francisco firm for consulting, design and targeted advertising, which strayed into negative campaigning.

Meanwhile the Pros wanted additional funds, knew a willing collective, and reasoned "who's to mind?" if the money was received under the radar or after Election Day. Developer dollars covered new spending, erased candidate debts, and, in one case, created a sizable surplus. But the required year-end disclosures revealed failures: to be forthright during the campaign and to be transparent in financial reporting.

Playing catchup, Pros' expenditures totaled about $85,000 for Tanaka and Fine, $72,000 for Kniss, and $50,000 for McDougal. The Slows' Keller landed at $111,000, a record breaker, and Kou at $90,000.

But Pros, rest assured, this is a game where you have the upper hand, although it delivers with other costs. Slows, you have made your point. Now let's all move on to finally fixing the system.

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Most important, we need a limit on total campaign expenditures. By law, participation must be voluntary. Yet with incentives to opt in, such as notification to voters coupled with financial penalties and publication of violation, they can work. Mountain View has had one on the books since 2000. Indexed for inflation, the 2016 voluntary expenditure limit was $24,073.

Curiously, Palo Alto also has one on the books, passed in June 1997, but marked "suspended from enforcement" two years later after a court injunction halted campaign reforms in voter-approved state Proposition 208. The specific issue related to voluntary expenditure limits was resolved by Proposition 34 in 2000, but the city never re-enabled its own rule.

The second must-have is a mandatory limit on total contributions from a single source. Here mandatory limits are legal, and we need them. In 2016, contributions from a single source of over $500 accounted for a striking 75 percent or more of all contributions to two Slows and two Pros (Keller, Kou, Tanaka and McDougal). It was at 58 percent for Fine and 40 percent for Kniss.

In addition to cash, this mandatory limit on contributions must also apply to nonmonetary contributions. They reached well into five figures in 2016 via those who picked up the tab for kickoffs, lawn signs, surveys, literature distributions and design work.

What are the right numbers for Palo Alto expenditure and contribution caps? I leave that open pending more information and council and public discussion. But it is imperative we have an appropriate ordinance well before the next election season. If the council fails to act or its ordinance does not pass public muster, citizens will need to put one on the ballot that does.

There are other areas we also should look at, such as an additional pre-election filing to help reveal more late-stage contributions; restrictions on carrying over debts or a cash surplus to another campaign; and top contributor disclosures on mailings from unknown or out-of-the-area political action committees.

Juxtaposed to the deficiencies above, there are some special things we do in Palo Alto to increase transparency and participation in council elections. We lower the threshold for disclosure of contributor name, location, and occupation to $50 from the $100 in state law. In participation, we have absolutely no financial bar to entry as the city picks up close to $2,000 in county fees. Twenty-five signatures and $25, or 100 signatures and no fee, gets you on the ballot, a 200-word statement in the county's Voter Information Pamphlet, invitation to forum appearances, press coverage, and a big soap box.

Now we need to deliver on the long-overdue issue of contribution and expenditure limits to greatly lessen the potential for corrupting influence when a relative few bankroll election campaigns.

Fred Balin was treasurer of Stewart Carl for Palo Alto City Council 2016 and can be reached at [email protected]

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Guest Opinion: It's time to set campaign contribution and spending caps

Man calls for mandatory limit on total contributions from one source

by / Palo Alto Weekly

Uploaded: Sat, Apr 15, 2017, 2:25 pm
Updated: Sun, Apr 16, 2017, 10:27 pm

Palo Alto City Council candidates broke records for total contributions and expenditures. Large cash and nonmonetary contributions played a role. Post-election developer infusions erased debts. The year was 2005, and I wrote about it in this space.

The aftertaste lingered, and in mid-2007, Council members Peter Drekmeier, who set the records, and LaDoris Cordell, who accepted no monetary contribution, called for limitations. Encouraged to pursue, they dutifully returned from committee with voluntary monetary contribution and expenditure caps: $300 and $30,000 respectively. But with the next campaigns in view, all other council members withheld support.

The effort, however, was not in vain, as candidates publicly adopted the limits or stayed relatively close, especially on the expenditure side. A positive norm of self-restraint ran through the 2007, 2009, and 2012 elections.

But in 2014, there were large fissures. Greg Scharff loaned his campaign $60,000, part of $97,000 in total expenditures, which was more than twice the previous record.

In 2016, candidate leanings across the contentious fault line of development could be generally classified as "Slow" or "Pro." At September's end, the Pros (Greg Tanaka, Liz Kniss, Adrian Fine and Don McDougal) led in contributions, topping out at $47,000. They were bolstered, in variation, by personal loan and cash infusions, carryover money from previous campaigns, family and friends, developers, and two $5,000 checks.

But their supporters remained antsy, and when the Chamber of Commerce attacked an unnamed slate of Slows as "anti-business," while also certifying the Pros by name, it initiated a fear-driven chain reaction. Five families of early contributors to two leading Slows responded with an eye-popping total of $61,100 for each of those campaigns (Arthur Keller and Lydia Kou). Supporters of the Pros cried "foul."

But the cash infusion had its downside. Other contributions disappeared, and the two campaigns abdicated the virtuous high ground of small donations and a broadly-financed campaign. In addition, all that money and more was paid to a San Francisco firm for consulting, design and targeted advertising, which strayed into negative campaigning.

Meanwhile the Pros wanted additional funds, knew a willing collective, and reasoned "who's to mind?" if the money was received under the radar or after Election Day. Developer dollars covered new spending, erased candidate debts, and, in one case, created a sizable surplus. But the required year-end disclosures revealed failures: to be forthright during the campaign and to be transparent in financial reporting.

Playing catchup, Pros' expenditures totaled about $85,000 for Tanaka and Fine, $72,000 for Kniss, and $50,000 for McDougal. The Slows' Keller landed at $111,000, a record breaker, and Kou at $90,000.

But Pros, rest assured, this is a game where you have the upper hand, although it delivers with other costs. Slows, you have made your point. Now let's all move on to finally fixing the system.

Most important, we need a limit on total campaign expenditures. By law, participation must be voluntary. Yet with incentives to opt in, such as notification to voters coupled with financial penalties and publication of violation, they can work. Mountain View has had one on the books since 2000. Indexed for inflation, the 2016 voluntary expenditure limit was $24,073.

Curiously, Palo Alto also has one on the books, passed in June 1997, but marked "suspended from enforcement" two years later after a court injunction halted campaign reforms in voter-approved state Proposition 208. The specific issue related to voluntary expenditure limits was resolved by Proposition 34 in 2000, but the city never re-enabled its own rule.

The second must-have is a mandatory limit on total contributions from a single source. Here mandatory limits are legal, and we need them. In 2016, contributions from a single source of over $500 accounted for a striking 75 percent or more of all contributions to two Slows and two Pros (Keller, Kou, Tanaka and McDougal). It was at 58 percent for Fine and 40 percent for Kniss.

In addition to cash, this mandatory limit on contributions must also apply to nonmonetary contributions. They reached well into five figures in 2016 via those who picked up the tab for kickoffs, lawn signs, surveys, literature distributions and design work.

What are the right numbers for Palo Alto expenditure and contribution caps? I leave that open pending more information and council and public discussion. But it is imperative we have an appropriate ordinance well before the next election season. If the council fails to act or its ordinance does not pass public muster, citizens will need to put one on the ballot that does.

There are other areas we also should look at, such as an additional pre-election filing to help reveal more late-stage contributions; restrictions on carrying over debts or a cash surplus to another campaign; and top contributor disclosures on mailings from unknown or out-of-the-area political action committees.

Juxtaposed to the deficiencies above, there are some special things we do in Palo Alto to increase transparency and participation in council elections. We lower the threshold for disclosure of contributor name, location, and occupation to $50 from the $100 in state law. In participation, we have absolutely no financial bar to entry as the city picks up close to $2,000 in county fees. Twenty-five signatures and $25, or 100 signatures and no fee, gets you on the ballot, a 200-word statement in the county's Voter Information Pamphlet, invitation to forum appearances, press coverage, and a big soap box.

Now we need to deliver on the long-overdue issue of contribution and expenditure limits to greatly lessen the potential for corrupting influence when a relative few bankroll election campaigns.

Fred Balin was treasurer of Stewart Carl for Palo Alto City Council 2016 and can be reached at [email protected]

Comments

Douglas Moran
Registered user
Barron Park
on Apr 14, 2017 at 2:44 am
Douglas Moran, Barron Park
Registered user
on Apr 14, 2017 at 2:44 am
18 people like this

There are a variety of legal problems, starting with Political Action Committees, Independent Expenditure Committees ... and the US Supreme Court decision that "Money is speech".

Since a PAC/... is legally prohibited from coordinating with the candidate, how is the candidate to be held responsible for spending over which they have no control. For example, I have been told that a telephone poll of a city the size of Palo Alto costs at least $20,000. If a PAC conducts such a poll unbeknownst to any candidate and then reveals it to a candidate, under state law that candidate must report that PAC's expenditure as a "Contribution in kind" (if revealed to multiple candidates, they split the "contribution"). Unlike a contribution check that can be returned, a "contribution in kind" can't be "un-spent" (or "un-seen" in the case of a poll).

Even if there were some mechanism, if a PAC spends money attacking one candidate, how do you assign that spending to the other candidates in the race? Recognize that there may be 4-7 serious/credible candidates and 4-8 "vanity" candidates.

Spending has also been a way for citizen candidates to overcome the advantages of incumbents and "machine candidates". For example, until recently union endorsements came with an army of volunteers from the larger region to distribute that candidate's literature and handle other tasks. Now, it is the support of organizations that share their email lists and whose members will spend a lot of time on social media promoting their candidate and attacking others (including lots of falsehoods).

From talking to residents after the election, what I heard was that the Democratic Party endorsement of the pro-growth set of candidates was very influential in what is technically a non-partisan race.

I am not saying that it wouldn't be preferable to constrain spending, but the lessons of history, especially very recent history, has been that people and groups that want to put big money into elections routinely find ways around the rules, and candidates that try to abide by the rules find themselves at great disadvantage.

FYI: Conventional wisdom is that for a typical candidate, $20,000 is the threshold for having a serious campaign (lawn sign, literature, mailings ...).


Growth is good
Barron Park
on Apr 14, 2017 at 12:38 pm
Growth is good, Barron Park
on Apr 14, 2017 at 12:38 pm
1 person likes this

No, Fred, we do not need a limit. The candidates that you support set records for how much they spent. As Doug points out, there are legal issues which you seem to want to ignore, because Palo Alto is "specially"


Douglas Moran
Registered user
Barron Park
on Apr 14, 2017 at 2:20 pm
Douglas Moran, Barron Park
Registered user
on Apr 14, 2017 at 2:20 pm
20 people like this

Expanding on Balin's summary of spending in the 2016 campaign (Guest Opinions have a word limit):

In past campaigns, most of the fundraising occurs before the filings due in late September/early October. At that time, the fundraising was (Web Link):

Establishment/pro-development/pro-growth candidates:
Tanaka: $47K (including $20K loans)
Kniss: $46K (including $16K from previous campaign)
Fine: $36K
McDougall: $25K

Residentialist/Slow growth candidates:
Keller: $24K
Kou: $17K
Stone: $3K
Carl: $3K

Add to this differential that people associated with the Establishment candidates were saying that their candidates would substantially outspend the Residentialists and that they were planning a large (end of) "October surprise". Was this bragging or empty taunting? In the 2014 campaign, they did have a medium October surprise: A PAC run by people in the campaigns of the Establishment candidates did a negative ad blitz in the final week (Web Link).

Add to this that the list of donors to the Establishment candidates was missing many expected names -- ones who did donate after the last filing before the election.

It was this combination of concerns that triggered the large contributions to the Keller and Kou campaign in October.

Aside: I find it very hypocritical of the supporters of the Establishment candidates to complain about the high spending of the Residentialist candidates when it was their candidates who started the excessive spending by having a strategy of outspending the opposition.


Gale Johnson
Adobe-Meadow
on Apr 17, 2017 at 2:02 pm
Gale Johnson, Adobe-Meadow
on Apr 17, 2017 at 2:02 pm
3 people like this

Let me be honest. I'm not affected by any of the flaps about contributions, of any size, on time and well explained and documented, or late reported contributions. I hope I'm doing this right by my focusing on issues and what I get to see and hear the candidates offer, speak to, for or against, some in public forums/meetings, some in private settings, where I get to ask questions of the candidates. It doesn't always work out the way I want because what you hear during campaign season sometimes has little resemblance to how it transforms into how they perform on stage at CC meetings. That's always a risk we take. But then we look forward, sometimes anxiously, to the next election cycle, when adjustments can be made.

But yes, it is important to know where most of their campaign contributions are coming from. That should be a big clue as to how they will come down and vote on many issues. Citizens, arise, and be forewarned. Be vigilant, and do due diligence before our next election.


Curmudgeon
Downtown North
on Apr 17, 2017 at 4:44 pm
Curmudgeon, Downtown North
on Apr 17, 2017 at 4:44 pm
5 people like this

There's a point in every bidding process where the ROI for one side doesn't justify its buy-in, where anticipated profits from developments don't justify the cost to get them.

So why not set up a crowdfunding operation, outbid the developers, and buy our city council back?


Fred Balin
Registered user
College Terrace
on Apr 19, 2017 at 3:41 pm
Fred Balin, College Terrace
Registered user
on Apr 19, 2017 at 3:41 pm
2 people like this

Douglas Moran writes:
"Since a PAC... is legally prohibited from coordinating with the candidate …”

Doug, is this correct?
My reading of FPPC guidelines is that a person or a committee other than that of a candidate (e.g., a Political Action Committee) can indeed coordinate with a candidate. If that coordination results in a communication in support of the candidate then the spending is required to be reported by the candidate as an “in-kind” contribution. On the other hand, if there is no coordination, it is an independent expenditure by the non-candidate committee (e.g., a PAC) and reported by the PAC.

You also spoke of a hypothetical poll conducted by a PAC, with results revealed to a candidate as a potential reporting problem. I don’t see it that way. Unless the results were placed in the public domain, wouldn’t the candidate have to accept its receipt in order to know and utilize the data? If so, it seems to me that it is to be reported as an in-kind contribution to the candidate.

You also ask: “… if a PAC spends money attacking one candidate, how do you assign that spending to the other candidates in the race?” My thinking is that you do not and cannot, unless the communication was made in coordination with one or more candidates.

A related question is: What does one do about this? We had such an incident during the 2003 Palo Alto Alto elections in which a PAC, via fliers and mailers, attacked one city council candidate, while endorsing two others. Web Link

A voluntary code of ethics that candidates had agreed to, then came into play within the tempest. The code may be similar to the FPPC’s current voluntary Code of Fair Campaign Practices that you cited in a blog of yours last October. I do not know it that is something that candidates opt to sign onto currently when they file their intent to run with the city clerk, but will certainly check.


Douglas Moran
Registered user
Barron Park
on Apr 19, 2017 at 6:21 pm
Douglas Moran, Barron Park
Registered user
on Apr 19, 2017 at 6:21 pm
4 people like this

On coordination between a PAC and a candidate:
An ordinary PAC is allowed to contribute money to a candidate and is allowed to take actions favoring that candidate (which that candidate is required to report as a "contribution in kind" as Balin notes). However, I know of multiple instances of someone involved in administering a regular PAC, such as the Treasurer, resigning from the PAC when they join a candidate's campaign under the reasoning of avoiding the appearance of "coordination". However, I don't know the legal requirements.

An Independent Expenditure Committee, commonly referred to as a "SuperPAC", is prohibited from contributing to a candidate and from "coordination", but if you do a web search, you will find explanations of how SuperPACs and candidates coordinate while avoiding the legal definition.


Douglas Moran
Registered user
Barron Park
on Apr 19, 2017 at 6:29 pm
Douglas Moran, Barron Park
Registered user
on Apr 19, 2017 at 6:29 pm
4 people like this

On the hypothetical poll conducted by a PAC being revealed:

I could imagine people associated with a PAC sitting down with candidates that they support and giving advice on where to focus their campaigns (issues and types of voters), and then at the very end them telling the candidate that "We know this because we took a poll". The candidate cannot "un-hear" everything that came before, that is, they have no opportunity to reject receiving the poll results. I don't know of this happening locally -- nor would I expect to if it had occurred -- but as a computer professional, I am trained to work through such cases. I picked a poll as my example because it was the only common thing big enough that it alone could chew up most/all of a candidate's campaign budget under the suggested limits.


Gordon Gecko
Barron Park
on Apr 19, 2017 at 11:01 pm
Gordon Gecko, Barron Park
on Apr 19, 2017 at 11:01 pm
8 people like this

Interesting discussion. Re coordination between a PAC and a candidate / elected official, there's been some debate whether Cory Wolbach wrote the PAF mass email and whether it's ok if he wrote the mass email.

But what about the ethical / legal issues of PAF writing city laws and policies?


Fred Balin
Registered user
College Terrace
on Apr 20, 2017 at 2:26 pm
Fred Balin, College Terrace
Registered user
on Apr 20, 2017 at 2:26 pm
4 people like this

Gordon, a partial answer to your question:
Since the ADU ordinance hearings before the council are classified as “legislative” there are no disclosure requirements with regard to interactions between council members and other individuals or organizations. In a "quasi-judicial” hearing, however, in which council members in effect act as judges and are to impartially weigh evidence in the context of current law (such as for a project request for zoning exception), council members are to "disclose any contacts which have significantly influenced their preliminary views or opinions about the item” as written in the council's current procedures and protocols.”

But in this space and moving forward, I’ll stay focused on Palo Alto campaign contributions and expenditures. As per the California Fair Political Practices Commission (FPPC): "A local jurisdiction may enact a campaign ordinance that provides for additional or different campaign requirements for committees active exclusively in its jurisdiction as long as the provisions are stricter than those in the Act.”

Over 150 California cities have instituted their own custom campaign ordinance. For some reason, Palo Alto’s, suspended since June 15, 1999, remains on the FPPC web site. Web Link

It is well past time to enact a new ordinance with a close eye to the areas I have written about and possibly others. If any folks reading this would like to join me in this research, discussion, and action effort, kindly contact me at [email protected] . Thank you.


Guy_Fawkes
Old Palo Alto

Registered user
on Sep 17, 2017 at 2:42 pm
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Portola Valley

on Sep 26, 2017 at 5:44 am
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