Campaign Spending Commission

CSC Newsletter – January 2018, Vol. 24, No. 1

NEW AND IMPROVED CAMPAIGN SPENDING COMMISSION WEBSITE

In recognition that our website continues to be the most valuable resource for committees and the public, we revitalized it and gave it a makeover in anticipation of the 2018 election. We hope you find that it is easily navigable and improves accessibility to the information you seek. If you have any questions, please do not hesitate to contact us for assistance.

REMINDER TO ALL COMMITTEES TO FILE THE SUPPLEMENTAL REPORT

The next report for all committees is the Supplemental Report covering the period July 1, 2017 to December 31, 2017. This report must be electronically filed on your respective filing systems (i.e., candidate filing system (CFS) or noncandidate committee filing system (NCFS)) no later than 11:59 p.m. Hawaiian standard time on Wednesday, January 31, 2018.

Failure to file this report by the deadline will result in a fine and, if you are a candidate committee or noncandidate committee (see, Act 108, SLH 2017), your committee’s name will be posted on the Commission website under “Candidate Committees That Failed to File or Correct a Report” or “Noncandidate Committees That Failed to File or Correct a Report.” Moreover, if a fine is assessed against your committee and you fail to timely pay it, Commission staff will issue a complaint against your committee and set it for consideration at the next public Commission meeting. Therefore, we encourage all committees to timely file their reports.

As a reminder, committees do not have to wait until the January 31st deadline to file the report. The reporting period for the Supplemental Report ended on December 31st so the report can be filed as early as January 1st, but no later than January 31st.

NEW – UPDATED STRATEGIC PLAN

The Commission recently updated its Strategic Plan which helps shape the Commission’s future, sets longer term priorities, and establishes the foundation to make choices in the short term to influence the future. The Strategic Plan identifies the following six goals:

To improve campaign finance laws and rules to increase transparency, compliance, and ensure the integrity of the campaign finance process;
To provide training, education and access to committees for purposes of compliance with, and increasing awareness of, campaign finance laws and rules;
To increase education, awareness, and access for the public;
To explore, examine, and implement technological advances and capacities to improve access, reduce paperwork, and increase compliance;
To obtain compliance with campaign finance laws and rules through enforcement actions;
To ensure organizational and institutional capacity.

The Commission also updated its Mission Statement as follows: “ Our mission is to maintain the integrity and transparency of the campaign finance process by enforcing the law, educating the public, administering public financing, and training campaign committees in order to encourage compliance.”

Click here to view the updated Strategic Plan that went into effect on January 1, 2018. We would like to thank Cecelia Chang, Director of the Center for Alternative Dispute Resolution (“CADR”), who facilitated the strategic plan discussions with the Commission and the public at the Commission’s October and November 2017 meetings.

NEW – ALTERNATIVE METHOD TO MAKE PAYMENTS FOR CAMPAIGN FINANCE VIOLATIONS

Committees who are assessed an administrative fine will be informed by the Commission that they will have the option to pay their fine not only by check, money order, or cash, but effective January 2018, they may pay their fine online via PayPal using their PayPal account or a guest account. Committees that pay using a PayPal account may use a credit or debit card, Automated Clearing House (ACH), or their PayPal balance. Committees that pay as a guest may only use a credit or debit card. Once you have chosen which method you will use to pay (i.e., PayPal account or guest account), then you will need to enter the appropriate information (i.e., debit/credit card information, ACH information, etc.), your email address, and click Pay Now. You will then receive a PayPal confirmation at the email address you provided and Commission staff would receive an email that a payment had been made. The Commission staff would then attribute the payment accordingly.

Notably, there will be no fee to use this alternative option for paying an administrative fine. The Commission will be absorbing the fee of 2.9% of the total payment plus $0.30. However, if at any point in time the Commission is unable to afford these fees or the fees are approaching the state procurement threshold, we will so notify the committees that we must stop accepting online payments. Until then, the Commission would like to extend this alternative payment method to achieve a higher level of compliance and offer better convenience to the committees.

NEW – WIKI MEETINGS WITH COMMISSION STAFF

If you are a new candidate or noncandidate committee, consider scheduling a 20-minute wiki meeting with Commission staff to answer your questions concerning campaign finance. Because these meetings are short and to maximize your time with Commission staff, we strongly recommend that you review the recently updated Guidebook for Candidate Committees or Guidebook for Noncandidate Committees then come prepared with your questions. We also recommend that your treasurer attend this meeting as it is always helpful for him/her to know Commission staff who often will call them if there is a concern. Click here to sign up for available dates and time slots.

It has always been our primary goal to help committees comply with the campaign finance requirements so we hope you consider taking advantage of this opportunity so that your experience running for office or participating in the 2018 election is a positive one.

RESTORATION OF OPERATIONS TO STATE GENERAL FUNDS AND REMINDER TO CHECK OFF THE $3 BOX ON YOUR 2018 TAX RETURN

Although the Commission was successful in restoring operations to general funds in the last legislative session (Act 49, SLH 2017), we still urge you to continue to check off the $3 “yes” checkbox on your 2018 state tax return which permits $3 from state funds (or $6 if married and filing a joint return) to be allocated to the Hawaii Election Campaign Fund. The health and sustainability of public funding depends on greater participation of Hawaii taxpayers in checking off the $3 checkbox. Our thanks to Common Cause Hawaii for their commitment and efforts in promoting this outreach.

What You Need to Know about the Hawaii Election Campaign Fund

By marking the $3 “Yes” checkbox for the Hawaii Election Campaign Fund, you support the work of the Hawaii Campaign Spending Commission. The Commission serves Hawaii citizens by helping to ensure that:

Campaign contributions and expenditures are lawful and transparent; and
Qualified candidates have an opportunity to run for office and receive funding for their campaigns.

Choose “Yes” on your tax return

It does NOT reduce the amount of your refund or increase the amount of your tax payment.

PROPOSED LEGISLATION FOR THE 2018 LEGISLATIVE SESSION

For the 2018 legislative session, the Commission has submitted six measures to the President of the Senate and the Speaker of the House for introduction. Many of these proposals were presented for consideration in the prior legislative session but were not passed.

Proposal CSC-01 (18) – Amends Hawaii Revised Statutes (HRS) §11-410 by raising the amount of the fine that can be assessed against a Super PAC (that receives at least one contribution of more than $10,000 from one person or has made expenditures of more than $10,000 in aggregate, in an election period) from $1,000 to $5,000 and to permit the fine to be up to three times the amount of the unlawful contribution or expenditure.
Proposal CSC-02 (18) – Amends HRS §11-341 (electioneering communications) by changing “disclosure date” to when the electioneering communication is publicly distributed rather than when the contract for the electioneering communication is executed. Practically, this makes more sense and is in line with federal law. Also, it deletes “communications that constitute expenditures by the expending organization” from the exceptions to the definition of “electioneering communications” to make it clear that candidate and noncandidate committees are required to file statements of information.
Proposal CSC-03 (18) – Amends HRS §11-322(a) to eliminate the requirement that contributions be reported in the organizational report of candidate committees. The Commission has not required candidates to report contributions in the organizational report.
Proposal CSC-04 (18) – Amends HRS §11-323(a) to eliminate the requirement that contributions be reported in the organizational report of noncandidate committees. The Commission has not required noncandidate committees to report contributions in the organizational report.
Proposal CSC-05 (18) – Amends HRS §11-324(e) to require treasurers of noncandidate committees to keep information about the employer and occupation of contributors for contributions that aggregate more than $100 in an election period.
Proposal CSC-06 (18) – Amends HRS 11-339 to require candidates who do not intend to have more than $1,000 in activity to provide notice to the Commission of such intent by June 30^th of an election year and to require noncandidate committees who do not intend to have more than $1,000 in activity to provide notice to the Commission of such intent by the 5^th calendar day prior to the due date of the Preliminary Primary Report.

UPDATING ORGANIZATIONAL REPORTS

Beginning on January 12, 2018, candidate committees that login to the candidate filing system (CFS) and noncandidate committees that login to the noncandidate committee filing system (NCFS) will be presented with their Organizatonal Report. Please take the time to review your Organizational Report and make any needed changes.

HRS §§11-322(b) and 11-323(b) provides that any change in information previously reported in the organizational report shall be electronically filed with the commission within ten days of the change being brought to the attention of the committee chairperson or treasurer.

REPORTING SCHEDULES

New reporting schedules have been posted on our website and are provided via the link below for your convenience to track upcoming reporting deadlines. The reporting schedules are also available in the Commission’s downloadable calendar and can be downloaded to your digital calendar or your computer or mobile device.

Remember to add the necessary reports to your schedule in your respective electronic filing system (CFS and NCFS). These reports must be electronically filed no later than 11:59 p.m. Hawaiian standard time on the day of the deadline. You may also want to consider filing the reports early to avoid penalties because the reporting deadline is always a few days or weeks after the reporting period has closed.

Please remember that when you electronically file your reports with the Commission, candidates, treasurers, and chairpersons (only in noncandidate committees) are certifying that the information contained in the filed reports are true, complete, and accurate. Therefore, it is strongly advised that you verify your reports before you file them since the Commission will rely on the electronically filed information which could generate an inquiry/investigation.

DOWNLOADABLE CALENDAR AVAILABLE ON THE COMMISSION’S WEBSITE

An updated and downloadable calendar of events including (but not limited to) the candidate committee and noncandidate committee reporting schedules, the Commission’s monthly meeting schedule, and the State holidays can be downloaded by individuals into their Apple, Google, Microsoft, Outlook, and Yahoo calendars as well as many other calendar programs that use the standard iCal format, from the Commission’s website. View the Commission’s Downloadable Calendar.

ADVERTISEMENT DISCLAIMERS AND ADMINISTRATIVE FINES FOR VIOLATIONS

Advertisement disclaimers must now be on signs and banners because these items are no longer considered sundry items. Under HRS §11-391(a), any advertisement that is broadcast, televised, circulated, published, distributed, or otherwise communicated, including by electronic means, shall:

(1) Contain the name and address of the candidate, candidate committee, noncandidate committee, or other person paying for the advertisement;
(2) Contain a notice in a prominent location stating either that:

(A) The advertisement has the approval and authority of the candidate; provided that an advertisement paid for by a candidate, candidate committee, or ballot issue committee does not need to include the notice; or
(B) The advertisement has not been approved by the candidate; and

(3) Not contain false information about the time, date, place, or means of voting.

HRS §11-391(b) further provides that “[t]he fine for violation of this section, if assessed by the commission, shall not exceed $25 for each advertisement that lacks the information required by this section or provides prohibited information, and shall not exceed an aggregate amount of $5,000.

The Commission has adopted a Schedule of Fines pursuant to Hawaii Administrative Rules (HAR) §3-160-73(a). The fine schedule is available for viewing on the Commission’s website at https://ags.hawaii.gov/campaign/schedule-of-fines/. For advertisements missing a disclaimer, the fine schedule provides for a fine of $25 per advertisement for the 1^st violation, a fine of $100 per advertisement for the 2^nd violation, and a fine of $500 per advertisement for the 3^rd violation. Fines for further violations shall be determined by the Commission via a complaint, but shall not exceed an aggregate amount of $5,000.

If this is your first or second advertisement disclaimer violation, and the fine exceeds $25, a Conciliation Agreement which will result in a lower fine amount may be discussed with Commission staff subject to approval by the Commission at a public meeting conducted pursuant to HRS chapter 92.

The Commission is taking these matters very seriously. If you receive a notification from the Commission, we strongly recommend that your review all of your pending advertisements to see that they have the proper disclaimers, and if not, take the necessary measures to rectify them before the advertisements are made public.

ELECTIONEERING COMMUNICATIONS

An electioneering communication means any advertisement that is broadcast from a cable, satellite, television, or radio broadcast station; published in any periodical or newspaper or by electronic means; or sent by mail at a bulk rate, and that: (1) Refers to a clearly identifiable candidate; (2) Is made, or scheduled to be made, either within 30 days prior to a primary or initial special election (i.e., July 11, 2018) or within 60 days prior to a general or special election (i.e., September 6, 2018); and (3) Is not susceptible to any reasonable interpretation other than as an appeal to vote for or against a specific candidate.

Persons, which include an individual, a partnership, a candidate committee or noncandidate committee, a party, an association, a corporation, a business entity, an organization, or a labor union and its auxiliary committees, who make electioneering communications in an aggregate amount of more than $2,000 during any calendar year, are statutorily required to file a Statement of Information for Electioneering Communications within 24 hours of executing a contract relating to an electioneering communication advertisement. Note: See Proposal CSC-02 (18) under “Proposed Legislation For The 2018 Legislative Session” which will change this to within 24 hours of any date on which an electioneering communication advertisement is publicly distributed.

The Statement of Information is available on the Commission’s website and it must contain information set forth in HRS §11-341 and HRS §11-393. It can be submitted by eSign or by printing and signing a writeable/printable PDF. Persons who fail to submit this form timely will be in violation of the campaign finance laws.

Notably, this form must be filed in addition to the filing of any other required report.

$1,000 OR LESS AGGREGATE CONTRIBUTIONS AND EXPENDITURES

If your committee’s aggregate contributions and aggregate expenditures for the 2018 election period will total $1,000 or less, remember to check off the box on your Organizational Report with the Commission. Pursuant to HRS §11-339, you need only electronically file the Final Election Period Report due on December 6, 2018. If you exceed the $1,000 limit, you will then be required to electronically file all the other required reports. Note: See Proposal CSC-06 (18) under “Proposed Legislation For The 2018 Legislative Session” which will require committees to declare their intent by a designated date.

REMINDERS FOR CANDIDATES ON THE 2018 BALLOT

From the date a candidate files nomination papers to the date of the general election on November 6, 2018, candidate committees are prohibited from making charitable donations with campaign funds.

From the nomination paper deadline on June 5, 2018 to the general election on November 6, 2018, candidate committees are prohibited from using campaign funds to award scholarships to full-time students attending an institution of higher learning or a vocational education school.

If you use campaign funds to purchase 2 tickets to another candidate’s fundraiser, remember to keep the tickets for your records.

If you plan on having a fundraiser for which the amount of the ticket is more than $25 per person, you must file a Notice of Intent to Hold a Fundraiser with the Commission prior to the fundraiser’s start time and before the Commission’s office closes for the day at 4:30 p.m., Hawaiian Standard Time. Failure to comply with this requirement will result in a fine.

If your committee is using a debit card, it is important to timely and accurately report all expenditures on the committee’s disclosure report.

If you need assistance and the Commission’s office is closed, please visit our website to see the various tools available (i.e., cyber videos, guidebooks and manuals) that will assist you, answer any questions, and/or help you to file reports in the electronic filing system.

GUIDANCE ON CANDIDATE COMMITTEE CONTRIBUTIONS TO CHARITABLE/COMMUNITY OR NON-PROFIT ORGANIZATIONS

Under HRS §11-381(a)(3), candidate committees may make donations to any community service, educational, youth, recreational, charitable, scientific, or literary organization as long as the total amount of all donations is no more than twice the maximum amount that one person may contribute to that candidate pursuant to HRS §11-357 and the donations cannot be made from the date the candidate files nomination papers to the date of the general election.

The Commission has been aware of candidate committees’ donations to charitable/community or non-profit organizations being reported as advertising that is directly related to the candidate’s campaign under HRS §11-381(a)(1). In these instances, the candidate committee is characterizing its donation as advertising because the candidate committee is being recognized as a sponsor in the charitable/community or non-profit organization’s program or acknowledgment materials. Given these circumstances, the Commission is likely to inquire further since HRS §11-381(a)(3) has amount and time limitations for donations to charitable or community organizations, while advertising directly related to a candidate’s campaign provision (i.e., HRS §11-381(a)(1)) has no limitations. Generally, if the nonprofit organization reports the expenditure by the candidate committee as a tax-exempt donation to the IRS or records the expenditure as a gift on its books, the Commission will treat the expenditure likewise, and thus, the statutory amount and time limitations will apply. However, if the nonprofit organization reports the expenditure as income to the IRS, or otherwise treats the expenditure as income on its books, the Commission will consider whether the expenditure is permissible as being directly related to the candidate’s campaign.

VIOLATIONS OF THE CAMPAIGN FINANCE LAWS

The following candidate committees violated the Hawaii campaign finance laws and have failed to comply with the Commission’s orders by refusing to file required disclosure reports and/or pay assessed fines. Pursuant to HRS §11-410(d), the Commission has been pursuing enforcement actions with the assistance from the Attorney General’s Office – Civil Recoveries Division. Furthermore, pursuant to HRS §11-156, a candidate who has unfiled disclosure reports or unpaid fines will not receive a certificate of election should that candidate win in a subsequent election.

Raymond Banda, Friends of Raymond Banda
Henry Kahula, Jr., Henry Kahula for Council
Toagaifasa Mataafa, Friends of Junior Mataafa
Creighton Higa, Friends of Creighton Pono Higa

2018 STANDARD MILEAGE RATE ANNOUNCED BY INTERNAL REVENUE SERVICE (IRS)

For those committees that seek reimbursement from campaign funds for the campaign related use of a personal vehicle, the federal standard mileage rate for 2018 is 54.5 cents per mile (which is more than last year). See IRS Notice 2018-03 (Section 3) which was adopted by Comptroller’s Memorandum No. 2017-30. The Commission reminds these committees that a daily mileage log noting the campaign use and personal use of the personal vehicle satisfies recordkeeping requirements of Hawaii Administrative Rules §3-160-23. See, Hawaii Administrative Rules §3-160-45(b)(1)(B).

RESULTS OF THE COMMISSION’S 2017 ONLINE SURVEY

Mahalo to everyone who responded to our 2017 Online Survey. View the 2017 Survey Results and the Report on 2017 Annual Online Survey in the minutes of the Commission’s monthly meeting held on November 8, 2017.

2018 MEETING SCHEDULE

Commission meetings for 2018 are scheduled for the 2nd Wednesday of each month at 10:00 a.m. in Conference Room 204, Leiopapa A Kamehameha Building, 235 S. Beretania Street, Honolulu, Hawaii 96813. View the 2018 Meeting Schedule. Meeting location, dates and times are subject to change so please check the “2018 Meeting Schedule” page prior to attending a meeting.