October 5, 2006

City Council discusses campaign actions, contributions, re-imbursement for expenditures

All delayed until Oct. 10 study session

By Carol Rosen
Staff Writer

Three important issues were discussed but deferred at Tuesday’s City Council meeting.

Recommendations proposing changes to the city’s campaign ordinance and establishing limits to campaign contributions and a memo to develop policies and guidelines for petty cash, reimbursement and procedures for expenditures were all pushed back to next Tuesday night’s study session, despite three members announcing they would be absent from that meeting.

If votes take place next week on campaign ordinances, they must be unanimous for passage, according to City Attorney Rick Doyle, because eight votes are needed to pass them.

The council members concurred on deferring the items because more time is needed to address them, according to Doyle.

Election ordinances
Both District 4 City Councilmember Chuck Reed and Doyle’s recommendations to change the city’s campaign ordinance and ordinances establishing campaign contribution limits were scheduled to be heard concurrently.

Doyle’s memo recommends adoption of “an urgency ordinance and approval of a regular ordinance” that would amend the city’s municipal code reinstating limits on campaign contributions to independent committees as well as suspending section 12.06.310, which rules that independent committee contributions be segregated allowing contributions over $250 as long as the money over that amount is not used to influence the city council or mayoral elections. The urgency is necessary in order to ensure the rules govern the current election.

The recommendations stem from a federal district court ruling “challenging 12.06.310 as unconstitutionally vague and overboard under the Due Process Clause and as violating free expression under the [U.S. Constitution’s] First Amendment.” That ruling takes away city authority to enforce campaign contribution limits to independent committees. The limit, according to Doyle’s memo, “prevents circumvention of contribution limits to candidates for city council and mayor and their controlled committees by large individual contributors…”

The court ruling was in response to an Elections Commission ruling that upheld the sections in response to a San Jose/Silicon Valley Chamber of Commerce COMPAC mailer sent out just prior to the June primary denigrating mayoral candidate and Vice Mayor Cindy Chavez. COMPAC challenged the Elections Commission ruling.

Reed’s memo suggests that the council make changes to amend the election code to be in compliance with the first and 14th U.S. Constitutional amendments. He added that additional changes can be made to allow San Jose citizens to “follow the activity of independent expenditure committees during the election process. It is important that we have full disclosure and that we make it easier for the public to follow the money” spent by such committees, according to his memo.

His memo was also called urgent. It requires independent expenditure committees to file with the city at the same time they file activities with the state. It also requires all committees to file copies of literature or electronic media they paid for with their reports.

According to Reed, the city clerk would post all of these filings on the city’s Web site within 24 hours. Reed’s proposal also requires the city attorney to send letters to independent expenditure committees notifying them they must comply with city ordinances that remain in effect. It also would direct the staff to bring recommendations for contribution limits that meet constitutional standards.

Finally, Reed suggested the Elections Commission review the ordinance “to determine any changes that need to be made, or any other steps that can be taken, such as education or auditing to address” problems that appeared in campaign reports filed in the primary; accepting campaign contributions prior to the campaign contribution start date; failing to name contributors; failing to disclose expenditures made by sub-vendors; failing to disclose late expenditures in a timely manner and reporting contributions exceeding the $500 per person limit.

Legal letters
Two attorneys sent letters to Doyle expressing concern that the ordinance was too hasty and could be dismissed because of the first and 14th amendments. Lance Olson, an attorney with Olson Hagel & Fishburn LLP, suggested the city council “proceed deliberately and thoughtfully to craft a law that will be upheld by the courts and at the same time accomplish the basic goals sought by the city.”

He suggested that the proposed ordinance was “a rush to judgment and has not been properly considered. …City residents have not had ample opportunity to comment or review the draft notice, “ the letter said.

In addition, Hanson claimed the proposal too broad. It “fails to impose a regulatory regime over political communications similar to that contained in federal law over corporations and labor organizations. It also applies to any group of more than one resident that wants to spend more than $500 each even if the purpose of the citizens’ communication is wholly unrelated to advocating the election or defeat of city candidates.”

That means that, for example, “10 members of a neighborhood association could not collectively pay for a billboard costing more than $5,000 to urge election of a city council member if the billboard was displayed within 60 days of a run-off election.”

James Sutton, from San Francisco’s Sutton Law Firm, agreed with Hanson. Sutton’s letter said the “proposed ordinance violates the exact same First Amendment concerns cited by Judge Wares’ order and exposes the city to additional attorney fees arising from a possible legal challenge.”

He urged council members to reject the new ordinance “and instead instruct the city attorney to draft an ordinance focusing on disclosure rather than limits, and which does not otherwise run afoul of the first amendment.” Copies of his letter were also sent to COMPAC chair Mike Fox, Jr. and San Jose Silicon Valley Chamber CEO Pat Dando.
Expenditures, petty cash, credit cards

Doyle also drafted a memo to meet District 2 Councilmember Forrest Williams’ request for guidelines and policies on council member use of petty cash and reimbursement procedures for expenses made with personal funds as well as city-issued credit cards.

William’s request stems from last week’s announcement that Reed, who is also running for mayor, had written personal checks for more than $39,000 worth of expenditures for memberships, donations, events and ads, for which he requested reimbursement which he subsequently received from the city. Several council members, including his mayoral opponent Cindy Chavez, were upset that a council member had spent taxpayer money on seemingly personal expenditures. Reed repaid the city the entire amount late last week.

Last week Doyle expressed concern about some of Reed’s expenditures being religious in nature, which is illegal under federal and state law. His 38-page memo provided five pages of discussion recommending the council consolidate and clarify all the existing policies into one that would delineate expenses for donations, memberships, ads, travel, meals and lodging as well as any other expenses. The new guidelines would also amend the municipal code to increase the office holder or friends account limits to allow their use for specific constituent services.

Once into the debate, things heated up a bit. Reed, who said he agreed with the recommendation, said he felt the “policy was based on a higher standard. I should have held myself to a higher standard, and I’m sorry I did not.”

However, he said that office holder accounts should be abolished or at the very least have more stringent rules than Doyle had recommended. Office holder accounts are funds contributed to the council member by supporters. It can be money that is left over from campaigns or funds contributed to help constituents.

District 1 Councilmember Linda LeZotte agreed with Reed. “I don’t believe we should ask people to give us money. Once I’d used up what was left after the campaign that was it. It was gone. At the same time, she questioned if taxpayer money should be used. “Sometimes, you have to reach out in order to be effective,” she said.

In contrast, Chavez said the current guidelines have a great deal of clarity. She noted that the so-called “friends” account also has rules—for example, it can’t be used for campaigning. She went on to list a number of other rules that are available.

“We don’t need new rules, we need a common sense approach. Go back to the rules for discussion. I think the city council has had them for a number of years. ”

Chavez said she would like to eliminate the use of personal checks by council members. “It gives the impression that it’s a personal contribution,” even when it’s not. Reed wrote personal checks to several organizations.
Williams, wants to see things spelled out clearly.

Public speakers voiced concern about using taxpayer money. One said that there should be a limit. Another expressed her displeasure over “Reed’s misappropriation of funds” and that she had serious concerns. She said she was glad he paid it back, “but now is the time to let the sun shine in and be open about things.”

Another member of the public described spending “taxpayer money for personal use’ as a “deceptive practice,” claiming that many non-profits were misled by Reed’s actions. He suggested that Reed should “take a look at your own ethics. We don’t need new rules, that’s a ruse to cover yourself for spending $40,000.”