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Yesterday, PublicCEO ran Part 1 of this article that explored the relationship between free speech and campaign finance laws, Super PACs and their influence on campaign finance, and how the U.S. Supreme Court’s Citizens United decision has changed the legal landscape. (Click here to read Part 1 in full.) While federal and state laws highly regulate many forms of campaign finance, there are also some actions that local agencies can take. Today’s article provides an overview of these various options.

In the immortal words of the late California Assembly Speaker Jesse Unruh, “Money is the mother’s milk of politics.” Over the years, there have been many attempts to “wean the baby from mother’s milk” however such efforts have proven challenging. California law imposes strict dollar limits on contributions to candidates running for State office, political action committees under the candidate’s control (“controlled committees”) and political parties. However, California law leaves the issue of local campaign contribution limits to local agencies. Further, as yesterday’s article noted, recent U.S. Supreme Court decisions have identified certain elements of campaign finance where government may not regulate (such as contributions to and expenditures by Super PACs).

Campaign Disclosure in Local Elections
Although the U.S. Supreme Court generally frowns upon limiting the dollar amount of campaign contributions and expenditures, it has repeatedly affirmed the government’s right to enact reasonable campaign finance disclosure rules. In California, Fair Political Practices Commission regulations, issued under the Political Reform Act’s authority, set out detailed rules for establishing campaign committees, public disclosure of campaign contributions and expenditures, as well as disclosure in political advertising.

While state law does not set dollar limits for local campaigns, the disclosure rules apply to both state and local campaigns. Campaign contributions as small as $25 must be reported to the FPPC. Contributions of $100 or more require even more detailed disclosure. Further, anonymous and cash contributions that exceed $100 are prohibited – requiring some sort of “paper trail” to identify individuals donating even modest contributions. The rules surrounding such contributions are too detailed to list here. What is important to note is that California intensively regulates campaign finance disclosure for local elections.

Local Agencies and Campaign Finance Regulation
This most recent line of Supreme Court decisions regarding campaign finance may leave local agency officials scratching their heads, wondering “What the heck can we do about this?!”

What local agencies can do:

  • Establish a per-election dollar limit on direct contributions to candidates and their controlled committees. Such a limit may apply to contributions from natural persons, corporations, unions and regular PACs. Recall that Super PACs may not make such direct contributions and the local agency could adopt such a ban in its local code. Local agencies must carefully consider several factors to arrive at a Constitutionally defensible dollar limit that include the agency’s size, media costs, news media coverage and other similar factors.
  • Establish a voluntary total contribution cap. In essence, a candidate agrees not to accept more contributions than a pre-determined limit (e.g., $25,000 per election from all sources). While a mandatory cap would likely be unconstitutional, a voluntary cap would square with the First Amendment. A local agency may also offer non-monetary incentives to candidates who agree to a cap. One of the most common non-monetary incentives is placing an asterisk or symbol besides the person’s name in the ballot indicating he or she has agreed to the cap. However, a local agency may not offer monetary incentives for agreeing to a cap (e.g., allowing a candidate to collect $500 per donor if he or she agrees to the cap, but only $250 if he or she does not agree to the cap).
  • Prohibit contributions from contractors or other applicants with pending matters before the city council/governing board. Alternatively, a local agency may adopt a rule requiring a sitting elected official to recuse himself or herself from a decision if the elected official received more than a certain amount of campaign contributions from the applicant. The Political Reform Act already has such a rule in place for appointed officials who have received more than $250 from an applicant within the prior 12 months. Either rule would require supporting evidence of actual or perceived past corruption that it is addressing.
  • In addition to contractors and others, prohibit contributions from registered lobbyists within the city. Again, such a rule would have to be supported by evidence of actual or perceived past corruption that it is addressing.
  • Local agencies may augment the State regulatory scheme with more stringent local campaign disclosure rules, as long as those rules do not conflict with state law or FPPC regulations (per the Political Reform Act). However, existing FPPC regulations are already very detailed. For example, the FPPC prescribes font size, duration and content of disclosures in political advertisements. Most larger agencies (particularly large charter cities) have established their own bodies of local campaign disclosure law. However, most small- to medium-sized agencies simply rely on the existing State regulatory scheme.
  • Publish FPPC filings and other required disclosures in the local newspaper or on the agency’s website. Some agencies have even developed a searchable local database for this information. Even though campaign disclosure is subject to the First Amendment, merely republishing public and factual information about campaign finances would easily pass Constitutional muster.

What local agencies cannot do:

  • Limit contributions, to or expenditures by, “independent expenditure committees” (Super PACs). While Super PAC’s may not make direct contributions to local candidates or their controlled committees, the Citizens United decision held that these organizations may collect and spend unlimited amounts of money for independent political advocacy.
  • Establish a mandatory total contribution cap for candidates.
  • Offer monetary incentives for agreeing to a total contribution cap.
  • Establish a total contribution cap that limits how much one may give to all candidates for office during a particular election.
  • Establish local campaign disclosure rules that conflict with state law or FPPC regulations.
  • Limit contributions or expenditures by ballot measure committees. The Supreme Court has said that such limits do not serve a sufficient anti-corruption purpose when the focus of the election is a ballot measure rather than a candidate.
  • Limit contributions or expenditures of a candidate’s personal funds.

Due to First Amendment and free speech concerns, campaign finance is a very complex issue in the field of elections law and there are a number of areas that the Courts have said local agencies simply may not regulate. That being said, local agencies are not completely helpless in regulating this field. It does, however, require great care and consideration when crafting local rules to address this issue effectively and, most importantly, Constitutionally.

Originally published on on Sept. 29, 2016. Republished with permission.

Note: This article originally appeared on the now-defunct BBKnowledge blog, where Best Best & Krieger authors shared their knowledge on emerging issues in public agency law.

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