1. Campaign Finance 101 For City & Town Clerks PART 2 BALLOT MEASURE ELECTIONS & ENFORCEMENT Arizona Municipal Clerks Association Elections Training July 2015

2. Overview Ballot Measure Political Committees Ballot Measure Political Committees Disclosure in Campaign Literature & Advertisements Disclosure in Campaign Literature & Advertisements Contribution Limits (not applicable) Contribution Limits (not applicable) Enforcement of Report Filing Enforcement of Report Filing Enforcement of Other CF Violations Enforcement of Other CF Violations Termination of Committees Termination of Committees Using Resources to Influence Elections Using Resources to Influence Elections

3. Political Committees General definition of a committee repealed The definition no longer requires a group to spend or receive more than $250 to be a committee Several types of committees are now defined separately –Political party –Political organization

4. Political Committees Petition Groups –An association of persons that circulates a petition in support of qualification of a ballot measure is a committee –An association of persons that circulates a recall petition is a committee –Other groups organized to support or oppose a ballot measure or a recall are NOT defined as committees

5. Political Committees Association of persons is a committee IF (both): –Organized conducted or combined for primary purpose of influencing result of any election; AND –Knowingly receives contributions or makes expenditures of more than $500 in connection with an election during a calendar year Primary purpose must be influencing election –Appears to exclude many organizations Must receive/expend more $500 in a calendar year –Appears to provide groups a $500 annual exception without requiring registration and reporting

6. Political Committees? Specific Situations - What about... –Business / organization involved in ballot measure? –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?

7. Political Committees - Definition When to raise question... –Inquiry about initiative, referendum or recall (always on 1 st 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

8. Political Committee Registration When to Register? Most committees - before engaging in "political activity“ –Accepting any contributions –Making any expenditures –Distributing any campaign literature –Circulating any petitions

9. Political Committee Registration When to Register? Subsection F committees (Association of persons) –Not required to register before engaging in "political activity“ –Not required to register using a $500 ES –Must register within 5 days after meeting definition of a committee –But... must disclose “Paid for By” and committee name as registered on any literature or ads?

10. Political Committee Registration How to Register? Statement of Organization –If intends to receive / expend more than $500 –Must file all applicable reports $500 Threshold Exemption Statement –If intends to receive / expend less than $500 –“Exempt” from filing reports – but must track money! –If exceed $500, must file Stmt of Org within 5 bus days

11. Non-Candidate Political Committees Chairman & Treasurer must be different people Committee name must identify "sponsoring" org For 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 –Note: a group is no longer defined as a committee solely because it supports or opposes a measure

12. Non-Candidate Political Committees Ballot Measure Committee Issues –If a committee spends on a measure, have to change the committee name? (or only committee circulating) –Spend on multiple measures? Include all in name? –Recall committee a ballot measure committee? AG Opinion: No –Recall is not a ballot measure –A recall committee is a committee to influence a candidate election –Contribution limits would apply to recall committees

13. Non-Candidate Political Committees Penalty for Failure to Register Civil penalty – Up to 3x amount received/expended Petition signatures invalid –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”!

14. Statement 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

15. Contribution Limitations Limits apply to CANDIDATES ONLY Limits apply to CANDIDATES ONLY And possibly Recall committees (AG Opinion) And possibly Recall committees (AG Opinion) NOT initiative and referendum committees NOT initiative and referendum committees NOT independent expenditure committees NOT independent expenditure committees Foreign contributions prohibited (Fed law) Foreign contributions prohibited (Fed law) Corporations and Labor Organizations Corporations and Labor Organizations Permitted to expend corporate money to support or oppose ballot measures Permitted to expend corporate money to support or oppose ballot measures Limitations on businesses making contributions pertain to candidates (and possibly Recall?) Limitations on businesses making contributions pertain to candidates (and possibly Recall?)

16. Campaign Literature & Ads Disclosure Requirement for All Political Committees Must Disclose: Must Disclose: “Paid for By” and name of committee as registered “Paid for By” and name of committee as registered Exceptions Exceptions Items too small to fit disclosure Items too small to fit disclosure Also now applies to printed items and broadcast ads Also now applies to printed items and broadcast ads Broadcast mediums Broadcast mediums New specific requirements for print, broadcast, telecom New specific requirements for print, broadcast, telecom Penalty – up to 3x cost of the Lit / Ad Penalty – up to 3x cost of the Lit / Ad

17. Campaign Literature & Ads Disclosure Additional Requirements for Ballot Measure Committees for 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 $5K if pop under 100K  Not limited to contributions in the current year That a contributor is out of state (if applies) That a contributor is out of state (if applies) Printed disclosure must be “conspicuous” Printed disclosure must be “conspicuous” N o specific size required for print N o specific size required for print

18. Reporting Contributions and Expenditures – “10K” Notices “10 K” Notices (state trigger amount is $10,000) “10 K” Notices (state trigger amount is $10,000) For Ballot Measure and Recall Committees For 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.Contribution from a Single Source Required for contributions received from a single source less than 20 days before election in excess of - Required for contributions received from a single 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  $500 if population under 100,000

19. Reporting Contributions and Expenditures – “10K” Notices 2. 2. Cumulative Receipts File upon 1 st 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 File upon receipt of cumulative contributions of $10,000 or more from different additional sources

20. Enforcement Enforcement Method Public Disclosure of Information Public Disclosure of Information Voters enforce at ballot box! Filing Officers Enforce Report Filing Ensures disclosure! Filing Officers Enforce Report Filing Ensures disclosure! Increasing Role in Other CF Violations Increasing Role in Other CF Violations

21. Enforcement – Failure to File Determination of failure made by Clerk Determination of failure made by Clerk Treasurer, Chairman & Candidate responsible Treasurer, Chairman & Candidate responsible “Failure to File” exists if ANY of the following occurs: “Failure to File” exists if ANY of the following occurs: Report not filed by due date Report not filed by due date Not signed as required Not signed as required “Good Faith Effort” not made to substantially complete the report “Good Faith Effort” not made to substantially complete the report

22. Enforcement – Failure to File What is "Good Faith Effort" and "substantially complete?“ What is "Good Faith Effort" and "substantially complete?“ Not defined - Range of interpretations Not defined - Range of interpretations From - Full audit From - Full audit To - Review report on its face to verify if appears complete To - Review report on its face to verify if appears complete Consult your attorney Consult your attorney Set policy for reviewing reports and apply consistently for all committees Set policy for reviewing reports and apply consistently for all committees

23. Enforcement – Failure to File Enforcement Challenges for Municipalities State & County State & County Filing officers and attorneys independently elected Filing officers and attorneys independently elected Authority to audit or prosecute other officials Authority to audit or prosecute other officials Municipalities Municipalities Clerks & attorneys not independently elected Clerks & attorneys not independently elected Auditing or prosecuting superiors & authority limited Auditing or prosecuting superiors & authority limited Important to set policies and apply to all committees Important to set policies and apply to all committees State Office of Administrative Hearings State Office of Administrative Hearings Now handles campaign finance issues - option Now handles campaign finance issues - option

24. Enforcement - Failure to File Notices Filing officer must track committees Must determine which committees have to file and whether filed! Filing Officer must provide Notice – In writing (explaining the failure and penalties) 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)   Recommend send ASAP after filing deadline

25. Enforcement - Failure to File Notices Reminder Notices Reminder Notices Optional - not required Optional - not required Reminder to committees before filing deadline Reminder to committees before filing deadline  Can send by e-mail (SOS, Phoenix and others)  Obtain email address from committees when register Benefits Benefits Avoids receiving 1 st notice after penalties already due Avoids receiving 1 st notice after penalties already due Reduces last minute requests for forms/copies Reduces last minute requests for forms/copies Reduces innocent failures from oversight Reduces innocent failures from oversight Avoids criticism for not reminding Avoids criticism for not reminding

26. Enforcement - Failure to File Penalties Initial penalties no longer mandatory Initial penalties no longer mandatory $10 per day up to $450 (business days only) $10 per day up to $450 (business days only) Previously, filing officer could not accept reports without payment Previously, filing officer could not accept reports without payment Now - must accept reports without payment, unless penalties result from 16-924 order Now - must accept reports without payment, unless penalties result from 16-924 order If committee does not file after notice - If committee does not file after notice - 15 days after receipt of Notice penalties may increase to $25 per day (up to $1,000 per filing) 15 days after receipt of Notice penalties may increase to $25 per day (up to $1,000 per filing)

27. Enforcement - Failure to File Penalties Assessment Assessment Penalties must be assessed by attorney Penalties must be assessed by attorney Both $10/day and $25/day penalty) Both $10/day and $25/day penalty) Use procedure in 16-924 Use procedure in 16-924 Filing officer cannot refer to attorney until 31 days after report was due Filing officer cannot refer to attorney until 31 days after report was due Duties to Enforce Failure to File Duties to Enforce Failure to File City / Town Clerk shall notify the attorney of violation City / Town Clerk shall notify the attorney of violation Attorney may serve an order for compliance Attorney may serve an order for compliance

28. Enforcement - Failure to File Penalties Additional Penalty for Candidates 1.5 Year Bar Not eligible to be a candidate for any local or state office for five years after the last failure to file Not eligible to be a candidate for any local or state office for five years after the last failure to file If failure to file with same filing officer – the officer may refuse nomination papers If failure to file with same filing officer – the officer may refuse nomination papers Filing officer in another jurisdiction may refuse for any public office with copy of final order Filing officer in another jurisdiction may refuse for any public office with copy of final order Provide name / order to Secretary of State Provide name / order to Secretary of State Add to candidate certification process to check with SOS to determine if a candidate is on list Add to candidate certification process to check with SOS to determine if a candidate is on list

29. Enforcement - Failure to File Penalties Additional Penalty for Candidates (New 2012) 2.Prohibition on Accepting Nomination Petitions Filing officer cannot accept nomination petitions if candidate is liable for $1,000 or more in fines, penalties, late fees, judgments related to CF Filing officer cannot accept nomination petitions if candidate is liable for $1,000 or more in fines, penalties, late fees, judgments related to CF Exception - If liability is being appealed Exception - If liability is being appealed Nomination paper for all candidates must include statement that candidate has satisfied any liability (includes write-ins) - (Has been added to form) Nomination paper for all candidates must include statement that candidate has satisfied any liability (includes write-ins) - (Has been added to form) Scope of duty for filing officers? Not specified Scope 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?

30. Enforcement - Failure to File Penalties Additional Penalty for Standing Committees If files late 3 or more times - If files late 3 or more times - Loses eligibility as Standing Committee Loses eligibility as Standing Committee Must file reports in each jurisdiction active Must 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 Website or contact SOS Check status of your standing committees on SOS Website or contact SOS Send reminder Notice if committee has to file with you Send reminder Notice if committee has to file with you

31. Enforcement - Failure to File Penalties Additional Penalties – Committee Suspension City/Town Clerks may suspend committees City/Town Clerks may suspend committees  If Committee Fails to File 3 Consecutive Reports  Send Notice of Intent to Suspend  Committee has 30 days to come into compliance  If Suspended -  Filing officer can discontinue sending failure file notices!  Committee can no longer operate in that jurisdiction  Committee not relieved of responsibilities or penalties  Cannot suspend candidate committee during that election cycle

32. Enforcement - Failure to File Defense Good Cause Defense Treasurer (or Candidate) may show good cause Treasurer (or Candidate) may show good cause Specifically includes (but not limited to): Specifically includes (but not limited to): Illness or absence from the state Illness or absence from the state At the time report was due or notice of delinquency delivered At the time report was due or notice of delinquency delivered That reasonably prevented person from filing the report or receiving notice That reasonably prevented person from filing the report or receiving notice Written request should be required Written request should be required Penalties still must be paid to file report Penalties still must be paid to file report

33. Enforcement - Failure to File Defense Good Cause Defense Who determines “Good Cause”? Who determines “Good Cause”?  Filing Officer?  Attorney?  A committee appointed for this purpose? If “Good Cause” determined If “Good Cause” determined  Penalties may be waived or refunded

34. Enforcement – Other Violations Use procedure in Section 16-924 Use procedure in Section 16-924 Also applies to Financial Disclosure violations! Also applies to Financial Disclosure violations! If Filing Officer has reasonable cause to believe there is a violation of CF law... If Filing Officer has reasonable cause to believe there is a violation of CF law... Must notify attorney Must notify attorney Attorney has discretion whether to prosecute Attorney 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?

35. Enforcement – Other Violations Increased complexity in CF Regulation Increased complexity in CF Regulation First Amendment cases removing restrictions First Amendment cases removing restrictions Statutory provisions unclear or conflicting Statutory provisions unclear or conflicting Committees & candidates more OK in gray areas Committees & candidates more OK in gray areas Resulting in more complaints of “other violations” Resulting in more complaints of “other violations” Independent Expenditure organizations / Non-profits Independent Expenditure organizations / Non-profits “Issue Advocacy” ads, mailers, Web sites “Issue Advocacy” ads, mailers, Web sites Trial Courts have referred issues back to filing officers! Trial Courts have referred issues back to filing officers!

36. Enforcement – Other Violations CF complaints now part of campaign strategy! CF complaints now part of campaign strategy! Impacts our ability to maintain perception of impartiality Impacts our ability to maintain perception of impartiality Enforcement issues – clerk / attorney not elected! Enforcement issues – clerk / attorney not elected! Resources to review and make reasonable cause finding Resources to review and make reasonable cause finding Enforcement issues – clerk / attorney not elected! Enforcement issues – clerk / attorney not elected! State Office of Administrative Hearings State Office of Administrative Hearings Will now conduct hearings and make recommendations on campaign finance violations Will now conduct hearings and make recommendations on campaign finance violations Recommendation to filing officer on reasonable cause Recommendation to filing officer on reasonable cause Recommendations to attorney on violation and enforcement Recommendations to attorney on violation and enforcement OAH contacting cities and towns about services OAH contacting cities and towns about services

37. Termination of Committees ALL Committees file a termination Statement of Org and $500 Exemption Statement of Org and $500 Exemption Precondition: must have ZERO Balance Precondition: must have ZERO Balance Committee must have no outstanding debts or obligations Committee must have no outstanding debts or obligations Any surplus money has been distributed Any surplus money has been distributed (May file report for distribution with termination)

38. Termination of Committees $500 Exemption Committees Must also terminate Must also terminate Previously – committees existed forever Previously – committees existed forever Must file at end of each “election cycle” Must file at end of each “election cycle” Election date? Election date? End of postelection reporting period? End of postelection reporting period? If do not file – terminate by operation of law 90 days after “end of election cycle” If do not file – terminate by operation of law 90 days after “end of election cycle” Civil penalty of $100 for not filing Term Stmt Civil penalty of $100 for not filing Term Stmt

39. Termination of Committees Committees with Outstanding Debt Committees with Outstanding Debt Cannot terminate (must have zero balance) Cannot terminate (must have zero balance) Candidate or Exploratory Committee Candidate or Exploratory Committee If Surplus, may transfer funds to subsequent committee and terminate, OR If Surplus, may transfer funds to subsequent committee and terminate, OR If Debt, file Annual No Activity Statement in lieu of other reports during calendar year If Debt, file Annual No Activity Statement in lieu of other reports during calendar year  Must begin filing reports if receive contributions

40. Termination of Committees Committees with Surplus Money Retain funds for use in subsequent election Retain funds for use in subsequent election Return surplus monies to the contributors Return surplus monies to the contributors Donate surplus monies according to law Donate 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.

41. Termination of Committees Committees Active in Multiple Jurisdictions May terminate activities in one jurisdiction and remain active in other jurisdictions May terminate activities in one jurisdiction and remain active in other jurisdictions Termination Statement must include additional statement that remaining monies will be used in other jurisdictions (part of form) Termination Statement must include additional statement that remaining monies will be used in other jurisdictions (part of form)

42. Use of City / Town Resources to Influence Elections Statutory prohibition Statutory prohibition Cannot use city / town resources to influence election Cannot use city / town resources to influence election “Resources” includes personnel, equipment, buildings, postage, anything of value “Resources” includes personnel, equipment, buildings, postage, anything of value City may issue neutral, informational bond pamphlets City may issue neutral, informational bond pamphlets Bond & Tax – only continue routine communications Bond & Tax – only continue routine communications Can use facilities for forums and debates Can use facilities for forums and debates Government may sponsor if informational only, sponsor remains neutral, allow all views Government may sponsor if informational only, sponsor remains neutral, allow all views Individual can use facility if separate event Individual can use facility if separate event

43. Use of City / Town Resources for Ballot Measures Enforcement and Penalties Enforcement and Penalties Attorney general or county attorney may initiate Attorney 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 mailings Information brochures and mailings Disseminate information ONLY Disseminate information ONLY Cannot advocate for a position Cannot advocate for a position Standard for violation – Kromko case (Tucson) Standard for violation – Kromko case (Tucson)  The communication “taken as a whole, unambiguously urges a person to vote in a particular manner”

44. Campaign Finance 101 For City & Town Clerks Questions? End of Part 2 BALLOT MEASURE ELECTIONS