sr-032211-8a (2)c7®
c;tYor City Council Report
Santa ~ionica'~
City Council .Meeting: March 22, 2011
Agenda Item: ~~`
To: Mayor and City Council
From: Maria M. Stewart, City Clerk
Marsha Jones Moutrie, City Attorney
Subject: Reimbursement of Election-related Costs by Candidates; Regulation of
Campaign Contributions, and Disclosure of Filings and Campaign
Expenditures.
Recommended Action
Staff recommends that City Council consider the information provided in this report and
direct staff to return with a proposed ordinance setting a flat election fee in the amount
of $200 for candidates running for City Council, increasing the City's campaign
contribution limit to $400, and updating Municipal Code provisions regulating campaign
contributions and expenditure disclosures.
Executive Summary
At the budget presentations in May 2010, Council directed staff to return, after the
November 2010 election, with information and options to allow for a full discussion of
possible reimbursement alternatives for election-related costs which could be
established and implemented for the November 2012 General Municipal Election. This
report complies with that direction. Additionally, this report summarizes recent
developments in the law limiting the City's ability to regulate campaign contributions;
and, in response to Council direction, it provides information about enhancing disclosure
requirements.
Background
Currently, the City does not charge filing fees for voter-initiated petitions, including
initiatives and charter amendments, nor does it charge a filing fee for candidates
running for City office. In addition, the City pays for all candidate election costs related
to the printing,. translating, handling and mailing of the candidate statement which is
included in the City's voter information pamphlet that is mailed to each registered voter.
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Cost of Printing Candidate Statements
In addition to allowing for the charge of an initial candidate filing fee not to exceed
$25.00, the State Elections Code provides for candidate reimbursement of the cost of
printing and mailing their respective candidate statements in the voter information
pamphlet, and of the cost of translating and printing of the statements into a second
language. This pamphlet is distributed to every voter in the jurisdiction a few weeks
prior to the election. Different cities address the funding of these costs in various ways.
In the 2010 election, the cost of printing each candidate statement in English and
Spanish was $749 and the cost of translating into Spanish was $175. The total cost for
each individual was $924. The total cost to the City for printing these statements was
$10,164 for the 11 candidates who ran for City Council. The majority of the cities that
staff surveyed require each candidate to reimburse the entire cost; in some, the
municipality shares part of the cost, such as paying for the cost of translating the
statement into a foreign language but requiring the candidate to pay for the printing
costs. The City of Berkeley has set a candidate fee of $150 that is paid at the time of
filing nomination papers and charges no other costs.
Because the City of Santa Monica .pays for all candidate statement costs, and has paid
them since at least 1974, during every election all candidates have chosen to file a
candidate statement, and to have it translated into Spanish and printed in the voter
information pamphlet.
The City's Current Contribution Restrictions and Disclosure Requirements
The -Santa Monica Municipal Code strictly and broadly limits campaign contributions.
Section 11.04.05(a) prohibits any "person" (including a corporation) from contributing
more than $250 to any candidate, "controlled committee" or "any committee" that
supports or opposes a candidate. Likewise, the Code prohibits candidates and all
committees from accepting contributions exceeding the $250 limit. State Law defines a
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"committee" as any person or group that receives contributions or makes expenditures
or contributions for the purpose of influencing voters. Government Code Section 82013.
A "controlled committee" is one controlled directly or indirectly by a candidate. Thus,
the language of Section 11.04.05 makes the $250 limit applicable to both those
committees controlled by candidates and to independent committees, which are not.
In addition to limiting campaign contributions, the Municipal Code imposes local
disclosure requirements. Section 11.04.100 requires candidates, committees, elected
officials and slate mailer organizations filing statements required by the Political Reform
Act to file copies of their statements with the City Clerk. That section also requires the
City Clerk to post the statements promptly. Additionally, Section 11.04.105 requires
committees making expenditures of $1,000.00 or more to support or oppose a
candidate to report those expenditures to the City Clerk. The requirement is made
expressly applicable to "independent expenditures" (those not controlled by a
candidate) and to member contribution expenditures but not to direct contributions to
"political committees".
In 2008 legal staff provided information and recommendations on modifying the City's
campaign contribution limits. By way of background, staff explained the difficulty of
crafting regulations that limited contributions sufficiently to ensure that large contributors
did not dominate election results without running afoul of the broad First Amendment
right to express views by participating in the political process.. Staff noted that such
legislative efforts were very often invalidated by the courts. Specifically, staff
highlighted two lines of cases: one that invalidated very low contribution limits and
another that invalidated local attempts to regulate independent committee's
expenditures, which are not directly or indirectly controlled by a candidate. Based on
then-current case law, staff recommended that the Council consider raising the City's
limit on contributions and buttressing the language applying the limit to independent
committees. Council approved the latter recommendation, but not the former.
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Recent Developments in the Case Law
Since 2008, there have been many more court decisions ihvalidating campaign finance
restrictions, particularly restrictions applicable to independent expenditures. Most
notably, in Citizens United v. Federal Elections Commission, 130 S.Ct. 876 (2010), the
United States Supreme Court held that political speech may not be banned based on
corporate identity and that a municipal ban on corporate independent expenditures
failed to meet the only rationale constitutionally acceptable as a basis for upholding
limits: prevention of corruption or the appearance of corruption. This decision is widely
understood to mean that, among other things, prohibitions against corporate
contributions to independent expenditure groups may no longer be enforced. And, in
response, the Los Angeles Ethics Commission adopted a resolution stating that LA's
ban on corporate campaigning would no longer be enforced.
The Citizens United decision also establishes that contributions to groups that make
only independent expenditures cannot be restricted because the Court established, as a
matter of law, that the government has no valid anti.corruption interest in limiting such
contributions. Thus, based on Citizens United, the Court of Appeal for the D.C. Circuit
held that provisions of federal law limiting contributions by individuals to independent
political committees that make only independent expenditures violated the First
Amendment. Speechnow.Org v. Federal Election Commission, 599 F.3d 686 (2010).
Also in the wake of Citizens United, the Ninth Circuit considered and enjoined
enforcement of a number of provisions of San Diego's campaign control ordinance.
Thalheimer v. City of San Diego 706 F. Supp.2d 1065, S.D.CaI. (2010). Specifically,
the Ninth Circuit enjoined San Diego's $500 contribution limit as applied to independent
expenditures committees. In contract, the Ninth Circuit left in place San Diego's ban on
direct corporate contributions to candidates (because it does not prevent corporations
from making independent expenditures on behalf of candidates and therefore is not an
outright ban on corporate speech). In response to the Ninth Circuit's injunction, the San
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Diego Ethics Commission changed the City's campaign rules to eliminate any limits or
source prohibitions for contributions to committees making independent expenditures.
Long Beach's Campaign Reform Act law was also challenged based on Citizens United.
That law limited contributions- in excess of specified amounts made to independent
committees supporting or opposing candidates: Long Beach had attempted to support
its restriction with carefully articulated findings, including the need to ensure that the
city's residents and interest groups also had a fair and equal opportunity to participate in
the municipal elective and governmental processes, encouraging competition, and
reducing the fundraising advantages enjoyed by incumbents. Nonetheless, the Ninth
Circuit struck down the restriction, holding that the City's rationale was insufficient to
pass constitutional muster under both the demanding standard applicable to
expenditure limits (strict scrutiny) and the more moderate standard applicable to
expenditure limits (intermediate scrutiny). Lonq Beach Area Chamber of Commerce v.
City of Lonq Beach, 603 F.3d 684 (2010).
Discussion
As to cost reimbursement, the current free and accessible process for a member of the
public to run for office or to file an initiative petition allows for the optimum exercise by
members of the public of the local democratic process. However, occasionally, the
absence of any financial investment by the candidates and the same easy access to the
process can allow for its misuse.
For example, .during an election's nomination period, candidates are issued a minimum
of two sets of nomination papers which combined accommodate a total of 224
signatures -more than double the space for the 100 valid signatures required to qualify.
Cahdidates may require additional sets of nomination papers so that- friends and
relatives can assist in gathering signatures. During the November 2010 election filing
period, candidates requested anywhere from zero to 20 additional nomination papers
for one office. One candidate was issued approximately 30 sets of nomination papers
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for various elective offices throughout the filing period, but the candidate did not file
nomination papers for any of the offices. Staff acknowledges that the cost of providing
a large number of nomination papers to one candidate in itself does not necessarily
constitute misuse or lack of respect for the process. However, this is only one example
of the use of the process. This and other types of similar situations are reenacted
during each election at the various stages of the election season.
Staff suggests that a personal investment by the candidate, even if minimal, will
communicate the candidate's interest and personal commitment to the voters, may
discourage any misuse of the process, and will contribute to retaining the integrity and
due respect that the process deserves.
None of the cities surveyed required candidates to reimburse the cost of mailing the
candidate statement to the voters. Staff is not recommending any reimbursement of
these costs at this time. Should Council wish to have information on this subject, staff
can provide it upon request.
Other Cities
Staff requested information from municipalities in California regarding reimbursement of
election ,related costs. 84 responses were received. The breakdown of those
responses is as follows:
• 59 (70%) of the cities are reimbursed by the candidate for all costs related to
printing and translation of their candidate statements.
• 14 (17%) require reimbursement for printing only.
7 (8%) do not charge for the printing and translating of the candidate statement,
but do charge a filing fee when the candidate returns their nomination papers.
The filing fee for general law cities was $25 and for one Charter city it was $150.
• The remaining 4 (5%) of the cities subsidized a portion of the candidates'
expenses.
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None of the cities surveyed were reimbursed for handling and mailing of the
candidate statements.
A sampling of cities and the fees they imposed is attached as Exhibit A.
The cost for printing and translating each candidate statement for the previous three
elections is:
November 2006 - $868
November 2008 - $1046
November 2010 - $924
No. of Candidates Total Cost
10 $ 8,680
14 $14,644
11 $10,164
Staff acknowledges the importance of providing as even a playing field for candidates
as possible. And, even though the vast majority of City residents are able to pay fees,
there may be individuals interested in running for office who might be deterred from this
goal by the requirement of paying for the printing of a bilingual candidate statement.
Historically, most committed candidates participate in fund-raising for their campaigns.
The Fair Political Practices Commission guidelines allow for the payment of candidate-
related fees, including the printing of a candidate statement, from candidates' campaign
funds.
Indigence
California Elections Code Section 13309 provides relief to potentially indigent
candidates. This Section provides that: "... a candidate that alleges to be indigent and
unable to pay in advance the requisite fee for submitting a candidate statement shall
submit a statement of financial worth to be used in determining whether or not he or she
is eligible to submit a candidate statement without payment of the fee in advance." A
copy of the Elections Code Section describing the eligibility process is attached as
Exhibit B.
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Initiative Petitions
California State Elections Code Section 9202(b) states that any person filing a notice of
intent to circulate a petition shall pay a fee to be established by the legislative body not
to exceed two hundred dollars ($200) to be refunded to the filer if, within one year of the
date of filing the notice of intent, the elections official certifies the sufficiency of the
petition. Please note that this same Code Section also applies to City Charter
proposals.
A survey of cities in California found that of the 34 cities that responded, 16 charged
$200, 1 charged $210, and 17 did not charge a filing fee for an initiative petition.
Alternatives
• Council could choose to have candidates reimburse the City for the full cost of
running for office. A candidate would be required to deposit, at the time
nomination papers are filed, the estimated cost of printing and translating the
candidate's statement in the Voter's Information Pamphlet if the candidate chose
to have her/his statement printed.
• Council could choose to charge a flat filing fee, such as the City of Berkley does,
and absorb the remainder of the costs. Should Council choose this option, staff
recommends that a portion of the fee, such as $25.00, be payable when
nomination papers are issued and the balance when nomination papers are filed.
• Council could opt to have the City pay for a specific percentage of each
candidate's cost.
• Council could choose to take no action and continue paying for all costs.
As to imposing a filing fee for initiatives or charter amendments, there are three
alternatives. Council may choose to do nothing; Council may opt to charge a fee in a
lesser amount than the Elections Code provides for; or, Council may choose to impose
the fee provided by the Elections Code with the understanding that the fee would be
reimbursed to the proponents if the petition qualified within one year.
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Considering the information provided, staff recommends Council establish a flat fee of
$200 for running for the office of City. Council. Apart of the fee in the amount of $25,
that would be non-refundable, would be payable when the candidate requests
nomination papers with the balance to be due upon the filing of the same. The $175
balance would be refunded if the candidate did not qualify. If a candidate advised that
he or she could not afford the $200, the candidate could either choose not to have a
candidate statement printed and only pay the $25 initial filing fee, or could apply under
the indigence provision in the Elections Code cited above.
Depending upon what, if any, measurable impact this fee may have during the
November 2012 elections, thereafter Council may choose to increase, adjust, or
eliminate the fee for future elections.
Contribution Limits and Disclosure
The recent developments in the case law indicate that the City cannot enforce certain
provisions of the code. Most notably, the restrictions limiting contributions to
independent committees cannot be enforced. Therefore, staff recommends that the
Council give direction to amend those restrictions to conform to current law.
As to the City's current contribution limit, staff recommends revisiting the question of
whether it should be increased. As explained in staffs 2008 report to Council, the
courts invalidate limits that are so low as to interfere with a candidate's ability to
communicate her or his views. Given the high cost of elections in Santa Monica, staff
again recommends that the Council consider raising the contribution limit, which was set
many years ago and includes no escalator.- Specifically, staff suggests that Council
consider a contribution limit of $400 with an escalator. This modification would adjust
the present limit. established in 1992 by an amount sufficient to cover inflation and round
it up from $388 for convenience of administration. Making this change and adding an
escalator would insulate the City's contribution limit against a legal challenge.
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As to disclosure, staff believes that the current code provisions on disclosure usually
operate reasonably well. But, there have been particular instances in which the
requirements were not met and perhaps ignored or even flouted. In terms of
improvements that could be made to the code, Council may wish to specify a reporting
deadline in Section 11.04.105. That section mandates the reporting of expenditures
over $1,000 but does not specify a time limit.
As to the filing requirement, Section 11.04.104 already requires filing statements with
the City at the same time as they are filed with the state. And; that section also requires
the City Clerk to post within 24 hours, except on weekends, or as soon as practicable.
Thus, the requirement is already strict. The challenge is enforcement. Generally
speaking, compliance is achieved relatively promptly through the City Clerk contacting
late filers. However, recent experience shows that there are cases that require more.
And, the City Attorney's Office is conflicted in cases that involve or appear to involve
current Council members.
Generally speaking, the City Attorney's Office refers the small percentage of criminal
cases that involve actual or apparent conflicts, and this system usually works well.
However, recently the District Attorney's Public Corruption Unit advised that, because of
its limited resources, it could not handle a referral of an alleged violation of the
Municipal Code disclosure requirements. The Unit suggested that the matter should be
handled by the Fair Political Practices Commission (FPPC). The City refers cases to
that office, and it accepts them. However, FPPC sanctions are limited. Therefore, the
remedy of referral to the FPPC may not be adequate. The City Attorney's Office will
continue to work with the District Attorney's Office on this issue and will report any
progress to Council. And, the City Clerk and City Attorney will continue to require
compliance and to report violations.
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Financial Impacts & Budget Actions
Should Council choose to charge any fees, there would be a corresponding increase in
revenue of that amount. Reimbursement of translating and printing costs would result
in a corresponding decrease in the City's expenditure by that amount. There is no
budget impact for a filing fee of an initiative/charter amendment petition that is certified
as sufficient, as the entire filing fee may be refunded to the filer.
Prepared by: Maria M. Stewart, City Clerk
Marsha Jones Moutrie, City Attorney
Approved: Forwarded to Council:
a° ~
Jo~$ Moutri~; City Attorney
Maria M. Stewart, \
Director, Records & Election Services
Attachments`.
~. _~
e, ,.~- ~'
Rod Gould
City Manager
A. Sampling of cities and fees
B. California State Elections Code Section 13309
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Exhibit A
Sampling of Cities
Candidate /Initiative Petition Cost Recovery
City Candidate pays
filing fee,
printing &
translation
costs Candidate pays
filing fee and
printing only Candidates
don't pay Hybrids~i.e.
City subsidizes
a portion,
candidates pay
unless meet
criteria) Proponent
pays $200
filing fee for
Initiative
Petitions
Monterey Park X No
Inglewood X No
Thousand Oaks X Yes
Manhattan Beach X Yes
San Jose X Yes
Downey X No
-Glendale X Yes
Norwalk X No
Santa Barbara X Yes
Berkeley $15b filing fee
only No
Whittier X No
Torrance X No
Burbank X Yes
Beverly Hills N/C if candidate
accepts
spending limits No
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Exhibit B
California Elections Code Section-13309
13309. (a) Notwithstanding Section 13307, if a candidate alleges to be indigent and
unable to pay in advance the requisite fee for submitting a candidate statement, the
candidate shall submit to the local agency a statement of financial worth to be used in
determining whether or not he or she is eligible to submit a candidate statement without
payment of the fee in advance.
(b) The statement of financial worth required by this section shall be submitted by the
candidate together with his or her candidate statement in accordance with the deadline
specified in Section 13307. The statement of financial worth form shall be furnished by
the local agency, and may include questions relating to the candidate's.employer,
income, real estate holdings, tangible personal property, and financial obligations. The
candidate shall certify the content of the statement as to its truth and correctness under
penalty of perjury. The candidate shall also sign a release form of the candidate's most
recent federal income tax report.
(c) Upon receipt of a statement of financial worth, a determination shall be made by
the local agency of whether or not the candidate is indigent. The local agency shall
notify the candidate of its findings.
(d) If it is determined that the candidate is not indigent, the candidate shall, within
three days of the notification, excluding Saturdays, Sundays, and state holidays,
withdraw the statement or pay the requisite fee. If the candidate fails to respond within
the time prescribed, the local agency shall not be obligated to print and mail the
statement.
(e) If the local agency determines that the candidate is indigent, the local agency shall
print and mail the statement.
(f) Nothing in this section shall prohibit the elections official from billing the candidate
his or her actual pro rata share of the cost after the election.
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