City Council Meeting: October 23,
2007
Agenda Item: 3-A
To: Mayor and City Council
From:
Subject: Public Financing of Campaigns
Recommended
Action
Staff recommends that Council
review the information contained in this report and provide direction to staff.
Executive
Summary
At the June 19, 2007, City Council meeting, Council directed staff to continue to work on an election campaign public financing
system, including estimates of the cost and possible funding sources; to
research existing software that provides for creating a database to access and
query election campaign statement information; review the enforcement
challenges and to investigate ways to enable effective enforcement of our
existing contribution limits and perhaps recommend changes if appropriate.
This report provides information on programs for public financing of
electoral campaigns. Information on
campaign statement software has been provided to Council via an information
report. Information on enforcement
challenges and effective enforcement of existing laws will be addressed in a
separate report by the City Attorney.
Background
On March 13, 2007, in response
to Council direction, staff presented a staff report on existing laws on candidate
campaign contributions and expenditures, and on independent expenditures; on public
financing of election campaigns programs implemented in other cities and some states; and, on options for a local public
financing program structure.
After considering the
information received above, Council directed staff to hold a community workshop
to receive public input on ways to improve the electoral process. Staff presented a report to Council on June
19, 2007, on the results of the community workshop at which time Council gave
the direction that is discussed in this report.
Discussion
Existing Programs in Other
Cities and Some States
On March 13, 2007, staff reported that the cities
of
In addition, as reported in a July 2003 report by The Center for Governmental Studies, the
following cities had some type of public financing program (primarily matching
funds, as opposed to full public financing programs): Austin, Texas; Boulder, Colorado; Cary, North
Carolina; Miami-Dade County, Florida; New York City; Suffolk County, New York;
Tucson, Arizona; and, Oakland, San Francisco, Long Beach and Los Angeles in
California. The populations of these
cities range approximately from 400,000 in
- Matching
funds: $1 public funds for $1
contribution
- Maximum public
funds: no more than 50% spending limit
($6,437 in 2007 - spending
limit is $12,873.00)
- Qualifying
contributions: 10% of spending limit ($1,287)
- Funding for program
from general funds
- Spending limit is
$0.15 per registered voter ($10,532)
- $100 contribution
limit per election
Staff from the City of
- The amount of public
funding awarded to runoff candidates equals the spending limit, minus the funds raised by the candidates
(funds disbursed after the runoff election).
- Maximum of
$20,000 for citywide office.
- Qualifying
contributions required - $5,000
- Funding from
general fund
- Spending limit of
$25,000
- $4,000
contribution limit from individuals and non-party PAC's (does not apply to political party committees, nor to a
candidate's immediate family members)
In 2002, in State Board of Elections v. Jack Smith, Julie Robinson
and Town of
The March 13, 2007, staff report also listed information on
sources of funding, the structure of the existing programs, administration, and
measured success of the programs to date. In addition, in order to open
discussion, the report included an option of a structure for a local program.
On June 19, 2007, Council
reviewed the report on the community input received at the community workshop
held on May 14, 2007. The public input
also included a proposal for a public financing program submitted by VOTE4SM, a
group self-described as "a
Options for a Local Program
for Public Financing of Election Campaigns
Staff has reviewed related
information published by the Center for
Governmental Studies and has
contacted many of the entities that currently have public financing programs to
gather information. After reviewing the
data available, staff has prepared the following list of options for Council to
consider including full financing programs as well as a matching-funds-only
program with different variables. Please
note that the variables may be changed in any of the options and doing so will
result in differing amounts of qualifying contributions, grant funds, matching
funds, and funding sources.
OPTION 1
Qualifying contributions: $500 per participating candidate
to be raised in $5 increments from 100 registered voters.
Seed Money: Up to $250 of the qualifying contributions
may be used as seed money to pay for costs incurred in raising the $500
qualifying contributions.
Initial Grant: A
$25,000 initial grant will be disbursed to candidates that have qualified for
the program after a final list of participating and non-participating qualified
candidates is certified.
Matching Funds: An additional $25,000 in matching funds will
be disbursed to participating candidates and may be used only to respond to
non-participating opposing candidates that have spent over the amount of the
initial grant limit ($25,000), or to respond to independent expenditures
against the candidate, and only when the original grant amount has been
exhausted.
Discussion: A $5 contribution to a potential candidate
for City Council should not impose a financial hardship on the contributor or
undue pressure on the recipient.
Municipal Code Section 11.04.010 requires that a candidate be nominated
by not less than 100 registered voters, so receiving contributions from 100 registered
voters complies with this mandate.
Council may wish to discuss if $500 in qualifying contributions from 100
registered voters is an indication of a serious candidate demonstrating he/she has
a strong voter support base, and should be eligible for public financing.
OPTION 2
Qualifying contributions: $1,000 per participating
candidate to be raised in $5 or $10 increments from 100 to 200 registered
voters.
Seed Money: Up to $500 of the qualifying contributions
may be used as seed money to pay for costs associated in raising the $1,000
qualifying contributions.
Initial Grant: The
$25,000 initial grant will be disbursed to candidates that have qualified for
the program after a final list of participating and non-participating qualified
candidates is certified.
Matching Funds: An additional $25,000 in matching funds will
be disbursed to participating candidates and may be used only to respond to
non-participating opposing candidates that have spent over the amount of the
initial grant limit ($25,000), or to respond to independent expenditures in
opposition to the participating candidate, and only when the original grant
amount has been exhausted.
Discussion: This option is basically the same as Option
1 except that it raises the qualifying contributions to $1,000. This option may indicate a
"stronger" public support for the candidate because of the larger
contribution received, and/or because of the increased number of voters
contributing to the candidate.
OPTION 3
Qualifying contributions: $5 contributions from 1% of the
registered voter population in the City.
As of November 2006, there were 57,455 registered voters. At that time, the proposed number of
contributors would have totaled 575 and the total amount of qualifying
contributions would amount to $2,875.
Seed Money: Up to $1,000 of the qualifying contributions
may be used as seed money to pay for costs associated in raising the qualifying
contributions.
Initial Grant: A $40,000
initial grant will be disbursed immediately to candidates upon qualifying for
the program.
Matching Funds: Dollar-for-dollar matching funds of up to 1.5
x the initial grant will be disbursed to participating candidates. Once the initial grant has been exhausted,
matching funds are triggered by an independent expenditure in support of a
participating or non-participating opposing candidate over a cumulative amount
of $15,000 from all sources; or a dollar-for-dollar matching fund is triggered
by any independent expenditure made in opposition to a participating candidate. The total grant fund will be $100,000
($40,000 initial grant plus $60,000 matching grants).
Discussion: This is the proposal submitted by VOTE4SM,
and attached as Exhibit 1.
OPTION 4
Qualifying contributions: $2,000 per participating
candidate to be raised with a minimum of $5 contributions and a maximum of $20
contributions per individual voter.
Contributions may be obtained from between 100 and 400 contributors at
between $5 and $20 contributions each.
The minimum number of contributors required is the same number of
registered voter signatures required by the Municipal Code to qualify as a
candidate.
Seed Money: Up to $500 of the qualifying contributions
may be used as seed money to pay for costs associated in raising the $2,000
qualifying contributions.
Initial Grant: Participating candidates will receive $40,000 in initial
grant funds. A portion will be disbursed
after the three-month qualifying period ends and the candidates file required
documents confirming receipt of qualifying contributions. The second portion will be disbursed when
there is a certified final list of qualified participating and
non-participating candidates that will appear on the ballot.
Matching Funds: Participating candidates may also receive an
additional maximum amount of $40,000 that may be used only to respond to
non-participating opposing candidates that have spent over the amount of the
grant limit ($40,000), or to respond to independent expenditures against the
participating candidate, and only when the original grant amount has been
exhausted.
Discussion: This proposal is similar to the first three
except for the amount of the qualifying contributions and the amount of the
initial grant and matching funds grant.
OPTION 6 - Matching Funds Only.
Qualifying contributions: This option will not have a
provision for qualifying contributions.
Instead, it will have a provision limiting the amount of campaign funds
that a participating candidate may raise.
Total Contributions Limit: A participating candidate may be allowed to
raise a maximum amount in campaign funds.
For example a maximum contribution limit of $30,000 could be set.
Individual Contribution Limit: In recognition of a participating
candidate's commitment to the program Council may wish to consider the option of
raising the contribution limit for participating candidates. For example, the existing local individual contribution
limit for candidates participating in the program could be raised to one and
one-half times, or twice the contribution limit for non-participating
candidates. In other words, if the local
contribution limit is $250, the limit could be raised for participating candidates
to $325 (1.5x) or to $500 (2x) respectively, but would remain at $250 for
non-participating candidates.
Seed Money: Since there will be no qualifying contributions required, there will be
no associated costs. For this reason, there
is no provision for seed money in this option.
Initial Grant: There
will be no initial grant as the participating candidate would use his/her own
campaign contributions until the limit was exhausted.
Matching Funds: Participating candidates would receive a
maximum amount equal to the total contribution limit, dollar-for-dollar
matching funds, that may be used only to respond to non-participating opposing
candidates that have spent over the amount of the grant limit or to respond to
independent expenditures in opposition to the participating candidates, and
only when the original grant amount has been exhausted.
Discussion
This matching funds
only option is provided as a comparison to the above full financing options
and for discussion.
The amounts in these options are provided as examples of how
a local program can be structured, and any amount in any option or its
structure can be changed up or down should Council wish to do so for discussion
purposes.
In addition to the options listed above, in the March 13
2007, staff report staff included an option that called for qualifying
contributions in the amount of $3,000, seed money of $1,000, and candidates
receiving an initial grant or $50,000 plus matching grant funds in the same
amount for a total grant fund of $100,000.
Cost of Funding
As mentioned in the March 13, 2007, staff report, there were
13 council candidates in the November 2000 election, 9 in 2002, 16 in 2004, and
10 in 2006. Based on these numbers, the
initial funding amount could be based on the average number of 12 participating
candidates per election since 2000. The
total amount of the initial grant pool required for each option would be as
follows:
OPTION 1 OPTION 2 OPTION 3 OPTION 4 OPTION 5
$600,000 $600,000 $1,200,000 $960,000 $ 360,000
However, anticipating an increase of participants if a
program was implemented and publicized, it may be practical to anticipate half
as many more candidates. In that case,
for 18 potential candidates, the amounts would change as follows:
OPTION 1 OPTION 2 OPTION
3 OPTION
4 OPTION 5
$900,000 $900,000 $1,800,000 $1,440,000 $ 540,000
Selecting Amount(s) of Grant
Funds
In considering which, if any
option, to explore further Council should also consider the analysis of local
contributions and expenditures included in the March 13, 2007, staff report,
which stated:
"Below are average
amounts for committee contributions received and expenditures made per
candidate, and for independent expenditures per candidate, for the 2002, 2004
and the 2006 elections. These figures do
not include candidates that did not establish campaign committees:
"Contributions
and Expenditures
Election Number of
Year Candidates Contributions Expenses
2002 08 $
29,396.00 $ 28,708.00
2004 11 $
68,920.00 $ 70,108.00
2004* 10 $
40,531.00 $ 39,033.00
2006 07 $
39,911.00 $ 42,974.00
"Independent Expenditures
Election #
of candidates
Year included
in expenditure Total
2002 06 $
16,167.00
2004 09 $
68,938.00
*2004 08 $ 49,363.00
2006 05 $136,424.00
"*Please note that two different
numbers are reported for 2004. Under
"Contributions and Expenditures" the first contribution amount
reflects the average contributions for all the candidates that established
committees. However, because of the wide
gap between the highest and the second highest amount of contributions received
by candidates in the 2004 election cycle (see exhibit A), the asterisked
figures do not include the highest amount of contributions raised and spent by
one particular candidate. Under
Independent Expenditures, the first number reflects the total of all
independent expenditures made; however, the asterisked figures do not include
the highest amount spent in support of a particular candidate."
Funding Sources
All qualifying contributions
from participating candidates in a full financing program will be deposited
into the public financing program account.
In the options listed above, contributions will be made only by
registered voters in the jurisdiction.
However, Council may choose to provide for contributions from all
residents including those not registered to vote.
Staff considered a wide array of
possibilities for funding sources for the public financing of an
elections program including some
suggestions listed in the Public
Financing of Elections: Where to Get the
Money, by the Center for Governmental Studies. These possibilities included but are not
limited to a local tax on luxury items such as high-performance autos (hummers,
race cars, SUV's), endangered species leather and fur coats and accessories, and
other like items; increasing local civil or criminal fines and/or fees;
communication installations in the public right of way (cell phone antennas); add
an additional tax to sales of alcohol and tobacco; impose a surcharge on City
bids; a ballot measure for a $1 to $5 tax per resident; ballot measure for a
public campaign finance bond; a fee based on a percentage on independent
expenditures; a fee imposed on PACS based on percentage of contributions
received and expenditures made during the reporting cycle; a built-in fee in
contribution limit for non-participating candidates (for example: if
contribution limit is $250, $25 are given to the city for public financing and
the committee keeps $225) charging non-participating candidates a filing fee
and the cost of publishing and translating candidate statements; civil
penalties for violations of the local public campaign finance law; personal
voluntary contributions; a "storage" fee when returning political
signs posted illegally and removed by city staff; and of course, from the City's General Fund.
The City Attorney's office conducted some research on the above options and advised as
follows:
Imposing a new tax. There
are some things that the state won’t let a municipality tax and there are a
number of state requirements about how to impose or raise a tax; but, the
purpose of the tax is more important than what is being taxed. If a tax were imposed for the purpose of
publicly funding campaigns, it would be considered a special tax subject to the
requirement of approval by 2/3 of the electorate voting on the tax. In
contrast, if a general tax were imposed to increase the general fund for
various purposes, only a majority would be required.
A “voters tax” or poll tax (a
flat tax on all voters). This might be possible as it would be like a
parcel tax with the rate based upon the number of occupants of a parcel.
The risk is that it would be invalidated as an unconstitutional property tax.
It is not clear that any
Development tax. A viable possibility might be a development tax, which is an excise tax
on the activity of development. It could be based on the number of units,
number of bedrooms or square footage of development.
Campaign contribution
fee. The option of imposing a fee on independent expenditures or PACS is
legally risky, given the many First Amendment cases affording added protections
to such expenditures. The same applies
to the possibility of requiring that a percentage of any campaign contribution
go to the City. It’s dicey to limit or penalize participation in the
political process.
Enforcement and collection of fees. The
City can impose and increase these types of fees as well as civil
penalties. However, enforcement and
collection of these fees would be a practical problem.
Bond Financing. This
type of financing is usually used for funding of capital improvements and may
be an impractical solution because of the finite life of the funding (and the
improvement).
Storage fee for illegally
posted signs. The City can impose a "storage fee"
to individuals retrieving political signs that were illegally posted on public
property and were removed by city staff.
The revenue generated from this activity would be minimal.
Surcharge on City bids. In
Considering the above
information, it may be possible to implement one or two of suggestions but,
unless the voters were to approve a tax to support a public financing program,
it is unlikely that an on-going stream of revenue could be secured. As in most of the existing local programs,
the program would likely need to be financed by general funds.
Current Public Financing Efforts
Attached as Exhibit 2 is an information report to Council dated
June 11, 2002. In the report staff
reviews policy and practice of election activities undertaken that could be
considered a type of public financing.
Administration of the Program
As discussed in an earlier staff report, staff proposes that should
Council pursue the implementation of public financing of electoral campaigns, Council
initially consider creating a new division under the Elections Official's
department that would be staffed with one individual full-time for one year,
every other year, to handle the technical portion of the process, and direct
staff to assign a member of the Finance Department to handle the financial,
accounting, and auditing aspects of the program. Council can revisit this arrangement and
modify it as needed, after the program has been implemented and has gone
through the first election cycle.
Ongoing Maintenance and
Auditing of the Program
After the election, each participating candidate's committee
should be audited to assure that funds were spent in accordance with the
program's requirements, that any unspent funds are returned to the program
account, to balance the account, and to present a status report to Council with
any appropriate suggestions and recommendations for the next election cycle.
Council may consider
establishing an in-house committee made up of a representative from the City
Attorney's Office, the City Clerk's Office, the City Manager's Office and the
Finance department; or, Council may wish to appoint a committee made up of
residents to conduct the maintenance and auditing activities of the program.
Reporting Expenditures when Incurred
At the June 19, 2007, meeting Council also expressed an interest
in having a local requirement that campaign expenses be reported when they are
incurred. Council may consider directing
staff to return with an ordinance establishing such a requirement. Prior to doing so, however, a discussion
should be held on what the definition is of "incurring" an
expense. The definition could be
established at any of three different points or incurring an expense: At the time services/supplies/equipment are
ordered; at the time they are used; or, at the time they are paid. In addition, discussion should include the
definition of a violation of this requirement and enforcement of the violation.
In summary, Council directed staff to provide more information on
public financing of electoral campaigns and funding sources. Staff recommends that Council review the
information provided and the options listed for discussion, and provide
direction to staff.
Budget/Financial Impact
This
is an informational report and does not yet have a budget or financial
impact.
Attachments:
Attachment 1 VOTE4SM Program Proposal
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Approved: |
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Forwarded to Council: |
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Maria M. Stewart, City Clerk (Director,
Department of Records and Election
Services) |
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P. City Manager |