Minutes for September 6, 2017 Meeting

Posted on Oct 12, 2017 in Main, Minutes

Campaign Spending Commission
Leiopapa A Kamehameha Building, Room 204
September 6, 2017
10:00 a.m.

Commissioners Present
Bryan Luke, Kenneth Goodenow, Adrienne Yoshihara, Gregory Shoda, Eldon Ching

Commissioners Excused
None

Staff Present
Kristin Izumi-Nitao, Tony Baldomero, Gary Kam, Jessica Richey
Deputy Attorney General Valri Kunimoto

Call to Order
Chair Luke called the meeting to order at 10:01 a.m.

Consideration and Approval of Minutes on 6/14/17 and 7/12/17
Chair Luke asked for comments or changes.  He stated that the consideration of the minutes of the 6/14/17 meeting were continued from the 7/12/17 meeting due to Mr. Michael Palcic’s representations that they did not include other remarks made by him.  Chair Luke asked Administrative Assistant Richey what was the outcome of listening to the tape of the meeting.  Administrative Assistant Richey reported that the tape recording of the 6/14/17 meeting was reviewed and was found to be inaudible.

Vice Chair Goodenow sought the following amendment to the 7/12/17 minutes:

  • Page 6, 9th paragraph to read:  “Commissioner Goodenow acknowledged that abuse of the law is possible, however, sponsorship of a team is highly sought after and that there are ordinary and necessary expenses to outfit a team.”

Commissioner Yoshihara sought the following amendment to the 7/12/17 minutes:

  • Page 6, last paragraph, to eliminate the “(???)” from the beginning of the 3rd

Chair Luke called for a motion to approve the minutes as amended.

Commissioner Shoda moved to approve the minutes of the 6/14/17 meeting and the 7/12/17 meeting as amended.  Motion seconded by Commissioner Ching.  Motion carried (5-0).

Mr. Palcic distributed a handout to the Commissioners regarding his request for additional agenda items for the 9/6/17 meeting.

Chair Luke acknowledged Mr. Palcic’s request to have items added to the 9/6/17 meeting agenda and stated that Commission staff already responded to his request.  Mr. Palcic stated that he did not receive Commission staff’s response.  Commission staff handed Mr. Palcic a copy of the response which was dated and mailed to him on August 31, 2017.  Chair Luke explained that Mr. Palcic’s changes to the Candidate Filing System (“CFS”) were discussed.  Chair Luke recalled that Mr. Palcic worked with Associate Director Baldomero, and Associate Director Baldomero worked with a CPA.  Chair Luke reiterated that the Commission made a decision to accept the recommendation from staff.

Vice Chair Goodenow stated that it would be improper to have any further discussion since the items were not on the agenda.  Vice Chair Goodenow stated that the discussion could continue at a later meeting if it is listed on the agenda.  Mr. Palcic responded that the Commission could discuss, but could not take action on it. Vice Chair Goodenow replied that he disagreed and that under the Sunshine Law, there could be no discussion or deliberation outside of a meeting unless it was a publicly noticed agenda item.  Mr. Palcic stated that he submitted his request for agenda items in a timely manner, and the response drafted by the Executive Director did not make sense and excluded public participation at Commission meetings.

Mr. Palcic requested that he be present during Executive Session to discuss Civil No. 15-1-1147-06, The Committee to Elect Julia Allen, et al. v. Campaign Spending Commission, et al.  He stated that the case had been discussed in the past in secret and that it appeared that it would be discussed again today in secret.  Mr. Palcic stated that he had input and that he would like to testify on this matter.  In his opinion, the Commission is being misled by staff and its attorneys.

Chair Luke clarified that the Commission will be discussing attorney-client privileged matters that have arisen from his case and that he was neither the client nor the attorney.  Chair Luke stated that the Commission had the right to meet with their attorney for as many times as necessary for purposes of discussing procedural and legal matters.

Mr. Palcic distributed a document to the Commissioners. [*Commission staff did not receive a copy.]

New Business
Executive Director Izumi-Nitao stated that the next three (3) matters concern the late filing of the Supplemental Report which was due on July 31, 2017.  These proposed Conciliation Agreements were a result of investigations pursuant to HRS §11-314(7) to determine whether there had been a violation of the Hawaii campaign spending laws.  The committees in all matters have been informed of the violation(s) in a letter from Commission staff.  Further, they have been notified of today’s meeting and received a copy of the proposed Conciliation Agreement.  Executive Director Izumi-Nitao recommended that the Commission make a preliminary determination of probable cause that a violation had been committed, waive further proceedings, and approve the settlement amounts stated in each of the proposed agreements.

*Proposed Conciliation Agreement No. 18-01 – In Re the Matter of Friends of Byron Young
Executive Director Izumi-Nitao requested that the Commission assess a reduced fine from $200 to $66.67.  Chair Luke asked if there were any comments or questions.

Commissioner Yoshihara sought the following amendment for all the Conciliation Agreements:

  • Page 2, item #6 to read: “. . . , Commission staff informed Respondent of its failure to file the Supplemental Report and that an administrative fine would be imposed pursuant to HRS §11-340.”

Chair Luke called for a vote.  Vice Chair Goodenow moved to approve proposed Conciliation Agreement No. 18-01 as amended.  Motion seconded by Commissioner Yoshihara.  Motion carried (5-0).

*Proposed Conciliation Agreement No. 18-02 – In Re the Matter of Friends of David Farrell
Executive Director Izumi-Nitao requested that the Commission assess a reduced fine from $200 to $66.67.  Chair Luke asked if there were any comments or questions.

Chair Luke called for a vote.  Vice Chair Goodenow moved to approve proposed Conciliation Agreement No. 18-02 as amended.  Motion seconded by Commissioner Ching.  Motion carried (5-0).

*Proposed Conciliation Agreement No. 18-03 – In Re the Matter of Friends of Jeffrey Coakley

Executive Director Izumi-Nitao requested that the Commission assess a reduced fine from $150 to $75.  Chair Luke asked if there were any comments or questions.

Chair Luke called for a vote.  Vice Chair Goodenow moved to approve proposed Conciliation Agreement No. 18-03 as amended.  Motion seconded by Commissioner Yoshihara.  Motion carried (5-0).

*Docket No. 18-01 – In Re the Matter of Kealoha Pisciotta, Leilani Kaapuni, and Friends of Kealoha Pisciotta
Executive Director Izumi-Nitao reported that a complaint had been filed against candidate Kealoha Pisciotta, treasurer Leilani Kaapuni, and the candidate committee called Friends of Kealoha Pisciotta for failing to report in their Final Election Period Report a $1,039.52 expenditure to Pacific Media Group for campaign advertising on 11/1/16 in violation of HRS §11-331 and §11-333.

HRS §11-331 provides that every report required to be filed by a candidate committee shall be certified as complete and accurate by the candidate and the treasurer.  HRS §11-333 provides that the candidate and treasurer shall file reports that disclose the committee’s expenditures for the reporting period and election period.  Pursuant to HRS §11-334, Respondents’ Final Election Period Report covering the period 10/25/16 to 11/8/16 was due on 12/8/16.  Respondents filed this report on 12/8/16, but failed to report the $1,039.52 expenditure to Pacific Media Group.  They corrected this error by amending their report on or about 7/31/17.  Executive Director Izumi-Nitao recommended that pursuant to HRS §11-405(a), the Commission issue a preliminary determination of probable cause that the Hawaii campaign finance law had been violated, assess an administrative fine in the amount of $250 against Respondents, order that the fine be paid from the candidate’s personal funds if the candidate committee’s funds are insufficient to pay the fine, and order that any and all administrative penalties be deposited in the general fund pursuant to HRS §11-410(e).

Executive Director Izumi-Nitao stated that the Respondents have asked that the fine be waived in a letter dated 8/14/17 which was received by Commission staff on 8/30/17 after the complaint had been filed.  Respondent Pisciotta explained that the expenditure was not reported because the receipt had not been turned in right away and it was somehow overlooked when expenditures were reported for that period.  Respondent Pisciotta further stated that it was not their intent to withhold this information from the Commission and acknowledged that the expenditure had been reported late.  Respondent Pisciotta would like to use the balance in her campaign checking account of $283.01 to hold an appreciation lunch for her volunteers.

Commissioner Ching asked if the Respondent had a late report in the past.  Administrative Assistant Richey replied that in the last election period Respondent had a Conciliation Agreement for a late report.  Commissioner Ching stated that he felt inclined to treat this case as a “late report” and reduce the fine amount by half, similar to that of a second late report with a Conciliation Agreement.

Commissioner Yoshihara disagreed with the reduced fine amount because the expenditure that the Respondent failed to report was over $1,000.  In her opinion, this expenditure should not have been overlooked especially since the committee did not spend very much money during the campaign.  Commissioner Shoda agreed.

Commissioner Ching moved to make a preliminary determination that probable cause exists that a violation had been committed and to reduce the fine to $125.  Motion seconded by Vice Chair Goodenow.  Motion failed (1-4) (Chair Luke, Vice Chair Goodenow, Commissioner Yoshihara, and Commissioner Shoda opposed).

Vice Chair Goodenow moved to make a preliminary determination that probable cause exists that a violation had been committed and to accept the fine and terms stated in the complaint.  Motion seconded by Commissioner Yoshihara.  Motion carried (4-1) (Commissioner Ching opposed).

*Docket No. 18-03 – In Re the Matter of Christy Gusman and Christy Kajiwara-Gusman
Executive Director Izumi-Nitao reported that a complaint had been filed against candidate and treasurer Christy Gusman and the candidate committed called Christy Kajiwara-Gusman for the late filing of the Supplemental Report in violation of HRS §11-334(b).

Executive Director Izumi-Nitao stated that Respondents were required to file the Supplemental Report for the period covering 1/1/17 to 6/30/17 no later than 11:59 p.m. Hawaii standard time on 7/31/17.  Respondents did not file this report by the deadline.  On 8/1/17, Commission staff sent Respondents a letter via first class mail informing them that they had not filed the Supplemental Report and that a fine would be imposed.  This letter was addressed to the Respondents at the addresses listed on their Organizational Report.  On 8/8/17, Respondents filed the Supplemental Report resulting in a $200 late report fine.  A fine letter was sent to them on 8/8/17 and asked that they pay the fine by 8/22/17 or a complaint would be issued.

Executive Director Izumi-Nitao reported that the fine was not paid by 8/22/17 and that Commission staff left messages for Respondents on 8/23/17, 8/28/17, and 8/30/17.  Respondents did not return Commission staff’s calls.  On 8/30/17, Commission staff sent Respondents a copy of the complaint and set the matter for the 9/6/17 Commission agenda.

Executive Director Izumi-Nitao recommended that pursuant to HRS §11-405(a), the Commission make a preliminary determination of probable cause that the Hawaii campaign finance law had been violated, assess a fine in the amount of $200 against Respondents, order that the fine be paid from the candidate’s personal funds if the candidate committee’s funds are insufficient to pay the fine, and order that any and all administrative penalties be deposited in the general fund pursuant to HRS §11-340(g).

Vice Chair Goodenow moved to make a preliminary determination that probable cause exists that a violation had been committed and to accept the fine and terms stated in the complaint.  Motion seconded by Commissioner Yoshihara.  Motion carried (5-0).

*Chair Luke asked for a motion to amend the agenda to take out of order and address Docket No. 15-15 – In Re the Matter of Pacific Resource Partnership PAC, a Noncandidate Committee and John White, as its Treasurer and Chairperson, and in his Individual Capacity and Docket No. 15-48 – In Re the Matter of Pacific Resource Partnership PAC and John D. White, Jr., under Old Business.  Commissioner Yoshihara moved to amend the agenda for the aforementioned reason.  Motion seconded by Vice Chair Goodenow.  Motion carried (5-0).

*Docket No. 15-15 – In Re the Matter of Pacific Resource Partnership PAC, a Noncandidate Committee, and John White, as its Treasurer and Chairperson, and in his Individual Capacity
General Counsel Kam reported that this matter had been continued from the 7/12/17 Commission meeting to permit the attorneys to discuss with their clients potential civil penalties concerning this complaint filed by Ben Cayetano. General Counsel Kam reported the following:

-On 6/2/14, Civil Beat emailed to Commission staff 488 pages of emails between Respondents and various consultants that appeared to be working on a campaign in opposition to Cayetano’s 2012 campaign for Mayor.  These emails showed that consultation began sometime in February 2012.  Respondent Pacific Resource Partnership PAC filed its organizational report on 6/1/12. Commission staff asked for and received invoices from Respondents relating to these consultants.

-Commission staff determined that Respondents failed to report $363,477.60 in expenditures to three vendors:  (1) Hoakea Communications; (2) Andrew S. Winer, AAL; and (3) Stanford Campaigns.

-These expenditures should have been reported in five reports:  (1) Preliminary Primary Report; (2) Final Primary Report; (3) Preliminary General Report; (4) Final Election Period Report; and (5) the Supplemental Report.

-Commission staff informed Respondents that the fine for failure to report expenditures, under the Commission’s administrative fine guidelines, was $250 per report.  Thus, Respondents fine would amount to $1,250.  Respondents paid this fine.

-On 8/29/14, Cayetano filed this complaint.  He alleged that Respondents failed to: (1) file an organizational report within 10 days of spending more than $1,000; (2) disclose independent expenditures; and (3) report the name of the candidate supported or opposed by the independent expenditures.  He asked that his complaint be referred for prosecution.
-Commission staff and Respondents recommended that the Commission affirm the fine that Respondents already had paid and that the complaint be dismissed.
-On 11/19/14, the Commission referred the complaint for prosecution and ordered the Commission staff to return the fine paid by Respondents.  The Commission reserved jurisdiction to consider the assessment of a fine should prosecution be declined.
-On 11/21/14, Commission staff returned the fine that Respondent had paid.
-On 7/11/17, the Commission received a confidential letter from Attorney General’s Office that stated that prosecution was declined because of a procedural defect.
-On 9/1/17, the Commission received a letter from the Attorney General’s Office that stated that it was exercising its prosecutorial discretion in declining to prosecute this matter.

General Counsel Kam recommended that the Commission find probable cause exists to believe that Respondents have violated the campaign finance law by failing to disclose expenditures and assess a fine of $1,250 against Respondents which was the amount of the original fine.

General Counsel Kam reported that the Commission staff received an email from Respondents’ attorney, Mr. McCorriston.  The email stated that: “PRP and Mr. White would like to bring these matters to a close. They have been ongoing for 3+ years and relate to an election that took place almost 5 years ago. While PRP and Mr. White believe that the expenses cited in by Docket 15-15 did not clearly fall with the statutory definition of ‘expenditure’ and that the failure to disclose the one payment to Mission Control in Docket 15-48 was inadvertent, PRP is willing to pay the proposed fines of $1,250 and $1,000, respectively, to close out these matters. We appreciate the Commission’s work in resolving the dockets and look forward to working with the Commission going forward.”

Vice Chair Goodenow moved to make a preliminary determination that probable cause exists that a violation had been committed and to accept the fine and terms stated in the complaint.  Motion seconded by Commissioner Ching.  Motion carried (5-0).

*Docket No. 15-48 – In Re the Matter of Pacific Resource Partnership PAC and John D. White, Jr.
General Counsel Kam reported that this matter had been continued from the 7/12/17 Commission meeting to permit the attorneys to discuss with their clients potential civil penalties concerning this complaint filed by the Executive Director alleging Respondents’ failure to report expenditures supporting Carol Fukunaga.  General Counsel Kam reported the following:

-On 9/5/14, four independent campaign mailers in support of Carol Fukunaga, who ran in the 2012 special election to fill a Honolulu city council seat, paid for by Respondents, were anonymously sent to the Commission.

-Upon review of the reports, it did not appear that Respondents had not reported expenditures for these mailers.
-On 9/5/14, Commission staff submitted the mailers to Respondents and asked for an explanation.  On 9/24/14, Respondents replied that they did not report $86,182.69 in expenditures that paid for these independent mailers in support of Fukunaga.
-All of the expenditures should have been reported in the Preliminary General Report.
-On 10/16/14, the Executive Director filed this complaint against Respondents for the failure to report expenditures.  Commission staff recommended a fine of $1,000 or, in the alternative, to refer the matter for prosecution in light of Respondents’ conduct in Docket No. 15-15.
-On 11/19/14, the Commission referred the complaint for prosecution.  The Commission reserved jurisdiction to consider the assessment of a fine should prosecution be declined.
-On 7/11/17, the Commission received a confidential letter from the Attorney General’s Office that stated that prosecution was declined because of insufficient evidence.
-On 9/1/17, the Commission received a letter from the Attorney General’s Office that it was exercising it prosecutorial discretion in declining to prosecute this matter.

General Counsel Kam recommended that the Commission find that probable cause exists to believe that Respondents have violated the campaign finance law by failing to disclose expenditures and assess a fine of $1,000 against Respondents.

Commissioner Shoda stated that he thought it was a shame that prosecution was not being pursued.  He expressed his concern that there is so much money being moved around and the public does not have any input on.  In his opinion, the best next step would be to accept the recommendation of staff.

Vice Chair Goodenow moved to make a preliminary determination that probable cause exists that a violation had been committed and to accept the fine and terms stated in the complaint.  Motion seconded by Commissioner Yoshihara.  Motion carried (5-0).

*Chair Luke returned to the items on the agenda in their regular order.

*CSC Annual Report for FY 2017
Executive Director Izumi-Nitao presented for discussion and approval the Commission’s Annual Report for Fiscal Year 2017 covering the period 7/1/16 through 6/30/17.  Upon approval, the report will be posted on the Commission’s website.  The report is written based on the Commission’s 5-year Strategic Plan.

GOAL – To simplify and clarify campaign finance laws in order to improve implementation and compliance.

This goal typically addresses legislation, administrative rules, and advisory opinions.

For the 2017 Legislative Session, the Commission submitted 11 measures of which 4 were passed by the legislature and signed by the Governor.  They were:

Act 97 (H.B. 280) – Effective 7/5/17, this Act amended HRS §11-334 by clarifying the due dates of preliminary, final, and supplemental reports to be filed with the Commission, requiring a candidate to file the Final Election Period Report three (3) business days before the date the candidate is to be sworn into office, and requiring that the Supplemental Report for candidate committees due on January 31st be filed annually.

Act 98 (H.B. 279) – Effective 7/5/17, this Act amended HRS §11-363 by specifying that certain types of dissemination, distribution, republication, and use of certain types of campaign materials or the financing of such by any person shall not be considered to be a contribution to a candidate.

Act 108 (H.B. 281) – Effective 7/10/17, this Act amended HRS §11-340 to require the Commission to publish on its website the names of all noncandidate committees that fail to file a report or to correct a report within two weeks of notification by the Commission.

Act 109 (H.B. 282) – Effective 7/10/17, this Act amended HRS §11-340 to clarify that increased fines may apply if a noncandidate committee fails to timely file a 2nd Preliminary General Report.

Other legislation of significance that the Commission provided written/oral testimony and supported included Act 49 (H.B. 100), the Executive budget bill, which restored the funding of Commission operations to general funds.  The Commission was close to declaring that the funds in the Hawaii Election Campaign Fund (“HECF”) were nearing depletion such that there would be no public funding in the 2018 election, but thanks to the inclusion of our operational budget in the Executive budget, the HECF is expected to be able to finance qualified public funding candidates in the 2018 elections.

As for the Commission’s administrative rules, the Governor approved the Commission’s proposed amendments in December 2016.  The amendments made non-substantive changes for the purposes of style and clarity, housekeeping changes, as well as addressed changes to the campaign finance laws such as implementation of the hardship waiver in HRS §11-393(c) (Act 112, Haw. Sess. Laws 2013), which requires Super PACs to identify its top contributors in their advertisements, and the defining of “close to depletion” and “near depletion” of the HECF which will impact the operation of the partial public financing program.

As for Advisory Opinions, none were requested.  However, Advisory Opinion No. 16-02 was issued on 8/10/16, and thus, was discussed in this annual report.  This opinion addressed a law firm’s request concerning the establishment of a hybrid PAC, or two affiliated PACS, with one being a traditional noncandidate committee directly supporting candidates and the other being a noncandidate committee making only independent expenditures (“Super PAC”).  The opinion also addressed the application of HRS §11-363(a) to a person’s dissemination, distribution, or republication of a candidate’s campaign material, as well as a Super PAC’s use of a candidate’s polling data to produce independent expenditures.

GOAL – To increase public education, awareness, and access.

This goal typically addresses communication, awareness, and training efforts to inform and educate the committees, stakeholders, and the public on campaign finance laws and rules on the Commission’s website and other media applications.

The Commission continues to drive the committees, stakeholders, and the public to its website to accomplish this goal.  During this fiscal year, we had 107,645 hits (which was an increase from last year which yielded 93,715 hits).  We have also made sure that the data visualization tools and searchable databases were updated with the most recent reporting data filed by committees.  Throughout the 2016 election, the Commission compiled and summarized data as well as shared information with the Commissioners and the public at its meetings and in its newsletters.  In the 2016 election, there were 269 candidates running for 104 seats up for election out of 128 elective seats in the state of Hawaii and its four counties.  Nineteen (19) candidates were unopposed and ten (10) incumbent candidates decided not to run for their seat.  Twenty-eight (28) candidates received a total of $202,190.49 in public funding.  Lastly, 249 fundraisers were held in 2016 with 62 of those fundraisers occurring during the 2017 legislative session by legislators.

In anticipation of the 2016 election, campaign finance presentations were delivered to candidates, committees, and the public.

As for communications with committees and stakeholders, the Commission employed its email system 84 times (which was an increase from last year of 68 times) and we have 843 total subscribers.  As for tweets, we issued 321 tweets this fiscal year.

GOAL – Increase the technological capacity to improve access, reduce paperwork, and increase compliance.

For the 2016 election, the Commission employed eSign forms for committees to use as an additional and alternative way to submit forms for the 2016 election.  The success of eSign was tremendous and the Commission received and processed 893 eSign documents during this reporting period.

The Commission also commenced research on identifying online fine payments mechanisms, but ultimately, decided to delay launching this additional payment method until FY 2018 to better effectuate its employment both internally and externally.

GOAL – Upgrade the training for and ability of the committees to comply with campaign finance laws.

In anticipation of the 2016 election, the Commission offered training to committees to improve compliance with campaign finance law – twice on Kauai, twice on Maui, twice in Hilo, and four times in Honolulu with 150 registrants who attended presentations on candidate committees, noncandidate committees, and public financing.  The Commission also reviewed and updated its cyber learning videos, guidebooks, and manuals which were then made available on the Commission’s website

GOAL – Encourage compliance.

To address violations, the Commission has been invoking administrative fines pursuant to HRS §11-410(a) and (h) as a means to take a stronger punitive stance to those committees who violate campaign finance laws.  For those committees who do not comply with Commission orders, the Attorney General’s Office – Civil Recoveries Division has been assisting the Commission to obtain judicial enforcement of Commission orders.

During this fiscal year, which represents an election year, there were 36 complaints of which:

  • 21 complaints yielded a preliminary determination of a campaign finance violation resulting in $6,125 in assessed administrative fines
    • 4 of the 21 complaints yielded a preliminary determination of a campaign finance violation, but due to noncompliance, were referred to the Attorney General’s Office – Civil Recoveries Division to seek judicial enforcement pursuant to HRS §11-410(d)
  • 9 complaints were withdrawn or dismissed due to a finding of no campaign finance violation(s) or compliance prior to the complaint being heard by the Commission at a HRS Sunshine Meeting
  • 1 complaint failed due to a tie vote
  • 1 complaint was referred for criminal prosecution
  • 4 complaints are pending

There were 67 conciliation agreements which were approved resulting in a total of $11,483.54 in administrative fines during this fiscal year.

A total of $56,965.12 was assessed in administrative fines and $28,376 was escheated to the Hawaii Election Campaign Fund due to campaign finance violations.  Most of the Commission’s enforcement actions were a result of late or unfiled reports.  Because this was an election year, there were at least four reports filed by approximately 650 committees.  Due to late filed reports, a total of $26,327.47 was assessed in fines which did not involve a complaint or a conciliation agreement from 115 candidate committees and 64 noncandidate committees.  Notably, this was the first election that the public was able to view all reports filed by the candidates prior to the general election.

Other campaign finance violations that occurred during this period that did not include the issuance of an administrative complaint or a conciliation agreement which resulted in a total of $13,029.11 in assessed fines include:

  • 26 advertisements missing the proper disclaimer resulting in $650 in fines
  • 18 failures to report a contribution resulting in $4,500 in fines
  • 11 failures to report expenditures resulting in $2,750 in fines
  • 8 late fundraiser notices resulting in $250 in fines
  • 6 excess contributors resulting in $2,950 in fines
  • 3 community/charitable contributions made during a prohibited period resulting in $700 in fines
  • 2 failures to report a loan resulting in $200 in fines
  • 2 prohibited expenditures resulting in $166.45 in fines
  • 1 prohibited use of campaign funds for personal use resulting in a $862.66 fine

GOAL – Increase and stabilize CSC’s institutional capacity to carry out its mission.

The Commission’s beginning balance at the close of fiscal year 2016 was $1,513,301.40.  In fiscal year 2017, a total of $211,495.04 in revenue was realized and a total of $926,613.89 in expenditures was incurred, thereby closing fiscal year 2017 with a balance of $795,546.22.

For the past 11 fiscal years (FY 2007 – FY 2017), the Commission has been operating at a net deficit and the fund has not been generating enough revenue to sustain operations.

Primary revenue sources for the Hawaii Election Campaign Fund are generated from the $3 state income tax check-off, the interest generated from the principal, and any funds that escheat to the HECF pursuant to campaign finance laws.  This year, the $3 tax check-off generated $164,254 (which is $15,581 less than last year), the interest yielded $9,274.49 (which is $1,530.07 less than last year), and the escheats/false name/surplus/anonymous contributions totaled $34,273.52 (which is $28,103.58 more than last year).  Although we regularly remind people about the $3 tax check-off through newsletters, public appearances, informational and educational materials, as well as request the Comptroller to approve paystub messages to government employees, the revenue from the tax check-offs is inadequate.

Fortunately, this legislative session, the Commission’s operating expenses including salaries and administrative expenses were absorbed by the Executive Branch and approved in Act 49 (H.B. 100).  The Commission was close to declaring that the funds in the HECF were nearing depletion such that there would be no public funding in the 2018 election, but thanks to Act 49, the HECF is expected to be able to pay for public funding for qualified candidates in the 2018 election.

As for staff transitions, there were none and Administrative Assistant Richey acclimated quickly.  As for Commissioners, there are 3 holdovers of whom only 2 expressed an interest in holding over for a second 4-year term.

Chair Luke asked if there were any questions or comments regarding the report.

Commissioner Ching asked for more clarification on the hardship waiver in HRS §11-393(c) (Act 112, Haw. Sess. Laws 2013).  Executive Director Izumi-Nitao replied that when the statute was passed, it provided for a hardship waiver that the Commission would have to define.  The Commission proposed a rule which defined hardship waiver which was approved by the Governor.

General Counsel Kam stated that the hardship waiver definition is found in HAR §3-160-49(b) which provides that the requirement to disclose the top contributors shall not apply to radio or other audio advertisement under 30 seconds in duration, or television or other video advertisement, under 20 seconds in duration.  General Counsel Kam reported that he researched other jurisdictions and the Brennan Law Center in coming up with this recommendation.  Until the Commission can get some real-world application of the rule, General Counsel Kam’s opinion was that the duration of the audio and visual advertisements was sufficient.

Commissioner Ching expressed his concern that the public may have a hard time understanding the application for the hardship waiver.

Chair Luke called for a vote to approve the Annual Report.  Vice Chair Goodenow moved to approve the Commission’s Annual Report for FY 2017.  Motion seconded by Commissioner Yoshihara.  Motion carried (5-0).

Old Business
*Discussion and Update of Commission Legislation and/or Other Campaign Finance Related Bills/Resolutions for the 2017 Legislative Session
General Counsel Kam stated that since the last meeting, the Governor signed H.B. 281, H.D. 1, S.D. 1, C.D. 1 into law as Act 108 which requires the Commission to publish on its website the names of all noncandidate committees that fail to file a report or to correct a report within two weeks of the Commission’s notice to correct.  The Governor also signed H.B. 282, H.D. 1, S.D. 1, C.D. 1 into law as Act 109 which clarifies that an increase fine will apply to noncandidate committees who fail to timely file the 2nd Preliminary General Report.  He further stated that these last 2 acts wrap up the 2017 Legislative Session.

Vice Chair Goodenow inquired about the bills that did not pass in the 2017 legislative session.  Vice Chair Goodenow noted that he was surprised that the bill regarding contributions in the Organizational Report was not passed.  General Counsel Kam replied that since the Commission is not requiring the committees to report their contributions in the Organizational Report, the legislature could have found it not necessary to pass.  Also, General Counsel Kam noted that reporting contributions in the Organizational Report was not how the filing system was set-up.

Commissioner Shoda asked General Counsel Kam if the Commission should be enforcing committees to report their contributions in the Organizational Report.  General Counsel Kam replied that it would be difficult to enforce since the filing system was not designed to report contributions in the Organizational Report.

Associate Director Baldomero stated that typically candidates do not raise money until the candidate committee is registered because normally contributors do not give contributions unless the candidate is registered.  A candidate is considered registered when the candidate files nomination papers, and within 10 days, files an Organizational Report, or if a candidate spends or receives contributions of over $100, and within 10 days, files an Organizational Report.  In the past, usually the former occurs more frequently.

Chair Luke asked about a situation in which a candidate was given a $50 contribution from a friend and whether the candidate needed to report that contribution if the candidate was not yet registered.  Associate Director Baldomero replied that the candidate could accept the contribution and report the $50 contribution in their first disclosure report.

General Counsel Kam stated that a new package of proposed bills will be brought before the Commission for approval around November.  Executive Director Izumi-Nitao noted that the Commission bills which did not pass were technically still viable since it is a biennium legislative period; however, the Commission typically prepares new bills as a precaution.

Report from Executive Director
Report on Compliance of Filing Timely Disclosure Reports
Executive Director Izumi-Nitao reported the following compliance with the filing of the Supplemental Report which was due on 7/31/17.

-321 candidate committees were required to file of which 273 filed on time (85%), 44 did not file (14%), and 4 filed late (1%).  To date, only 3 have not filed (which represent committees that were referred to the Attorney General – Civil Recoveries Division (“AG-CRD”) for collections).
-251 noncandidate committees were required to file of which 239 filed on time (95%), 8 did not file (3%), and 4 filed late (2%).  To date, only 4 have not filed (which represent committees that were referred to AG-CRD for collections).

Associate Director Baldomero stated that the new guidance regarding the Commission’s calculation of late report fines was used to calculate fines for 3 candidate committees that filed late reports with unpaid expenditures. Two (2) of the candidates would have had a $0 fine; however, due to this new guidance, were fined.  The 3rd candidate would have had a $200 fine but, due to the guidance, was fined $750.

As for the Commission orders that were referred to AG-CRD, 5 of the 13 referrals have not been resolved (i.e., Henry Kahula, Creighton Higa, Eric Ryan, Raymond Banda, and Junior Mataafa).

Update on Searchable Database and Data Visualizations
Associate Director Baldomero reported that at the 6/14/17 Commission meeting, there was an issue regarding the renewal of the Socrata contract.  He stated that pursuant to HRS §11-331(f), the Commission is required to have committee data in a searchable database and that Socrata’s platform was used for this purpose.  He reported that the funding for this contract has never been paid for by the Commission’s budget; however, there was a possibility that the state was not going to pay for the renewal of the contract which was why the Commission staff brought it to the Commission’s attention.  Associate Director Baldomero stated that fortunately the contract was renegotiated with a 57% decrease in the amount and was renewed by ETS.

He further stated that the data sets which comprise over 500,000 data records that go back 10 years, will remain at status quo in addition to the data visualizations applications.  As far as contingencies, Associate Director Baldomero reported that he is in discussion with Socrata regarding the possibility that if the state does not renew its contract for the following year, whether Socrata could separate the Commission’s data sets out of the state contract and what the cost would be.  Socrata will respond with an amount so that in the event that this should this occur, the Commission can consider the cost into its budget submission.  As of right now, the Commission does not have a budget for this service.

Associate Director Baldomero reported that Socrata’s previous contract was $290,000, and the current contract is $125,000 which is effective 9/1/17 thru 8/31/18.

Commissioner Shoda asked if the current contract was statewide.  Associate Director Baldomero replied in the affirmative.

Discussion on Topics for 2017 Annual Online Survey
Executive Director Izumi-Nitao reported that this was the 6th year for this survey and that it would represent activity for FY 2017.  She stated that this survey was a 5-10 minute web-based survey to help the Commission improve and evaluate the effectiveness of our operations and communications as well as to provide feedback.  The survey would cover 6 areas (i.e., relationship to CSC, communication or access to CSC, education/training provided by CSC, compliance and enforcement information, public funding issues, and other general matters.  She stated that if there were no changes or edits, staff would like to launch this survey on 9/11/17 and keep it open until 10/31/17.  She further stated that staff would share the survey results at the November meeting and then publish the results on the Commission’s website.

Discussion of 2017 COGEL Conference
Executive Director Izumi-Nitao reported that the 2017 COGEL Conference is scheduled for December 3-6, 2017 in Toronto, Canada.  She asked the Commission if there were 2 Commissioners who were available to attend along with her and Associate Director Baldomero.

It was decided that Chair Luke would also attend and possibly Vice Chair Goodenow.  Vice Chair Goodenow commented that he would prefer a new Commissioner (if appointed) to go.

Discussion of 2018 Strategic Planning
Executive Director Izumi-Nitao reported that the Commission’s current strategic plan is in effect from 2013 to 2018.  She recommended that the Commission start strategic planning meetings in October and stated that she would take a look and make suggestions for their consideration.

It was agreed that the Commission’s meeting on 10/11/17 would start at 9 a.m. to permit this process to commence.

Discussion of 2017 Commission Meeting Dates
Executive Director Izumi-Nitao reported that there may be problems with the upcoming Commission meeting dates.  It was agreed that 10/11/17, 11/8/17, and 12/13/17 (to be followed with a Commission holiday lunch) would work.  Further, it was agreed that the meetings would start at 9 a.m. for strategic planning sessions to be followed by the Sunshine meetings to start at 10 a.m.

Chair Luke asked for a motion to convene Executive Session to:  (1) Consider and approve Executive Session minutes from the Commission meeting on 7/12/17; (2) Pursuant to HRS §92-5(a)(4), to consult with the Commission’s attorney on questions and issues pertaining to the Commission’s powers duties, privileges, immunities, and liabilities concerning Docket No. 15-15 – In Re the Matter of Pacific Resource Partnership PAC, a Noncandidate Committee, and John White, as its Treasurer and Chairperson, and in his Individual Capacity   Docket No. 15-48 – In Re the Matter of Pacific Resource Partnership PAC and John D. White, Jr.  – for the failure to report expenditures; (3) Pursuant to HRS §92-5(a)(4), to consult with the Commission’s attorney on questions and issues pertaining to the Commission’s powers, duties, privileges, immunities, and liabilities concerning Docket No. 17-24 – In Re the Matter of Alan Arakawa and Friends of Alan Arakawa for the prohibited use of campaign funds; (4) Pursuant to HRS §92-5(a)(4), to consult with the Commission’s attorney on questions and issues pertaining to the Commission’s powers, duties, privileges, immunities, and liabilities concerning memorandum prepared by Deputy Attorney General Valri Kunimoto concerning the attorney-client relationship; (5) Pursuant to HRS §92-5(a)(4), to consult with the Commission’s attorney on questions and issues pertaining to the Commission’s powers, duties, privileges, immunities, and liabilities regarding a memorandum to be prepared by Deputy Attorney General Valri Kunimoto concerning the Commission’s actions with respect to paying the settlement amount set forth in Act 19, SLH 2017 which was negotiated by the Attorney General’s Office in Civil No. 15-1-1147-06, The Committee to Elect Julia Allen, et al. v. Campaign Spending Commission, et al.; and (6) Pursuant to HRS §92-5(a)(2), to review and consider Commission staff performance and compensation.

Vice Chair Goodenow moved to convene to Executive Session for the aforementioned reasons.  Motion seconded by Commissioner Yoshihara.  Motion carried (5-0).

Public Session reconvened at 12:16 p.m.

Commissioner Yoshihara moved to adjourn the meeting.  Motion seconded by Vice Chair Goodenow.  Motion carried (5-0).  Meeting adjourned at 12:17 p.m.

Next Meeting:
Scheduled for Wednesday, October 11, 2017.