Campaign Spending Commission

Campaign Spending Commission
Leiopapa A Kamehameha Building, Room 204
December 16, 2015
10:00 a.m.

Commissioners Present
Gregory Shoda, Eldon Ching, Bryan Luke
Excused – Adrienne Yoshihara

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

Call to Order
Chair Shoda called the meeting to order at 10:05 a.m.

Consideration and Approval of Minutes of November 18, 2015 Meeting
Commissioner Luke moved to approve the minutes of November 18, 2015.  Motion seconded by Commissioner Ching.  Motion carried (3-0).

New Business – None

Old Business
Draft Advisory Opinion 16-01 – Government Contractors
General Counsel Kam reported that the draft had been deferred from the November 18, 2015 meeting for the Attorney General’s Office review of the draft advisory opinion.  The Attorney General’s Office suggested two modifications.  Staff made the modifications and recommended that the draft advisory opinion be approved.

Commissioner Ching moved to approve the draft advisory opinion.  Motion seconded by Commissioner Luke.  Motion carried (3-0).

Docket No. 16-15 – In Re the Matter of Matthew LoPresti v. Rida Cabanilla
General Counsel Kam reported that this matter was deferred from the November 18, 2015 meeting to permit Respondent Cabanilla time to submit documents showing that she used personal funds to pay for the mailers.

On 11/27/15, Commission staff received a faxed copy of Respondent Cabanilla’s negotiated personal check, which indicates that she paid for the mailer with personal funds.

Complainant LoPresti has been informed that Respondent Cabanilla did not used campaign funds to pay for the mailer and that staff will recommend that the complaint be dismissed.  Complainant LoPresti agreed with staff’s recommendation upon being told of proof provided by Respondent.

Staff recommended that the complaint be dismissed for failure to provide sufficient statements to support a claim that a law or rule had been violated pursuant to Hawaii Administrative Rule §3-160-71(3).

Commissioner Luke moved to dismiss the complaint pursuant to Hawaii Administrative Rule §3-160-71(3).  Motion seconded by Commissioner Ching.  Motion carried (3-0).

Discussion and Approval of Proposed Amendments to the Hawaii Administrative Rules Affecting Campaign Spending Commission
General Counsel Kam stated that this should be an update on the proposed rules, and that the proposed rules were approved at the last meeting and have been submitted to the Attorney General’s Office for review.  When approval as to form has been received from the Attorney General’s Office, staff will submit a request to conduct public hearing to the Governor’s Office.

Chair Shoda asked Deputy Attorney General Kunimoto the status of the review because of the importance of funding.  Deputy Attorney General Kunimoto stated the review is in process, but that the rules are pretty extensive.

Mr. Michael Palcic asked because of a contested case regarding reporting of expenditures, whether a rule change regarding reporting of expenditures was being considered.  Chair Shoda and General Counsel Kam responded that no changes to rules concerning the reporting of expenditures was being made.  Chair Shoda further stated that if a change is deemed fit, then the Commission would speak to staff about making the necessary changes.

General Counsel Kam stated that the contested case is a separate matter and that the Commission should continue with the agenda.

Deputy Attorney General Kunimoto stated regarding the contested case, that the Commission considered the matter and that a decision is forthcoming.  She also stated that the contested case is a separate matter and not a part of this public meeting.

Report from Executive Director
Update on Gubernatorial Appointment of New Campaign Spending Commissioner
Executive Director Izumi-Nitao reported that the matter is still pending.  She informed Commissioners that she has made monthly calls to the Boards and Commissions Office regarding the appointment of a fifth member.

Report on Compliance of Filing Timely Disclosure Reports
Executive Director Izumi-Nitao reported that Commission staff has sent demand letters to committees informing them that they have 14 days to pay the assessed fine and/or file outstanding reports or the Attorney General’s Office will be filing collection proceedings.  Commission staff also met with the Attorney General’s Civil Recoveries Division to identify what materials will be needed to proceed with the filings.

Mr. Michael Palcic commented that Commission staff seems intent on punishing committees by applying the maximum fines on “manini” cases.

Chair Shoda commented that Mr. Palcic’s concerns have been noted and that he is entitled to a prompt decision in the contested case matter.

Report on 2015 COGEL Conference
Executive Director Izumi-Nitao reported that there were 450 participants and that she, Associate Director Tony Baldomero, Commissioner Eldon Ching, Les Kondo (State Ethics Executive Director and General Counsel), and Senator Les Ihara attended from Hawaii.  The conference continues to provide invaluable information and opportunities to learn about other campaign finance offices, litigation, legislation, enforcement, and new developments and trends.

This year Hawaii’s involvement included Executive Director Izumi-Nitao being a member of the Steering and Nominating Committees and Commissioner Ching hosting a breakfast table topic for Commissioners.

Executive Director Izumi-Nitao further reported that Hawaii is well placed in the campaign finance world, and that the area we are excelling in is data visualization and enforcement, especially with regard to Super PACs.  She also noted that the areas that the Commission needs to be aware of and monitor include evolving electronic filing systems, Super PACs, and dark money groups.

The next COGEL Conference is scheduled for December 11-14, 2016 in New Orleans, Louisiana, and Executive Director Izumi-Nitao recommended that 2 Commissioners attend with staff.

Commissioner Ching reported that he found the conference to be educational and enlightening.  He hosted a breakfast table topic on Commissioners.  The discussion centered on how other Commissioners are appointed, the roles between staff and Commissioners, and how the collection of fines are handled by other states.  He also stated that he found the sessions on ethics and pop-up and scam PACs to be very interesting.  He also noted that the Commission’s enforcement regarding Sierra Club’s republication of a candidate’s campaign material was recognized at the conference.

Associate Director Baldomero reported that he also thought the sessions and plenary sessions were great.  He reported on four topics of interest at the COGEL Conference – Super PACs, dark money groups, political parties, and social media in elections.  He stated that there was extensive discussion on Super PACs regarding the definition of coordinated activities and that Hawaii is at the forefront in actively pursuing violations of coordinated activities between Super PACs and candidates.  He also stated that dark money groups continue to be a national issue because they can raise unlimited money without disclosing their donors and spend that money on political activities, as long as the activity is not the group’s primary purpose.  Regarding political parties, he stated that there is national concern over the weakening of political parties because of the restrictions placed on soft money and the rising of Super PACs due to Citizens United.  Lastly, he reported that it was stated at the conference that $11.7 billion is projected to be spent in the 2016 election with $1 billion of that going to digital spending and $700 million in Facebook advertising alone.

Chair Shoda commented that the COGEL Conference is good source for information and learning about new developments and trends in campaign finance.

Update on Government Private Cloud (“GPC”) Migration
Associate Director Baldomero reported that the because of unforeseen circumstances the planned migration of the Commission’s 8 filing systems to the GPC server did not happen as planned.  There were 4 power failures in the building where the servers are housed.  The Enterprise Technology Services Office is planning to move the servers from their current location to a private vendor and then to the University of Hawaii.  Staff decided to wait until the servers are stable and the response time of the filing systems are adequate before migrating to the GPC servers.

Update on CSC Budget Request
Executive Director Izumi-Nitao reported that CSC’s budget request did not make the Executive Budget for the coming fiscal year.  The request will be resubmitted in the next biennium budget.

The joint legislative budget briefing is scheduled for January 6, 2016.

Mr. Michael Palcic commented that fines collected should be deposited into the general fund, but that a fine he paid was not deposited into the general fund as required.  General Counsel Kam stated that funds collected are deposited into an account and then transferred to the general fund.  Administrative Assistant Kojima explained that the Budget & Finance procedure is to deposit funds collected into the State bank account.  Then, after the deposit is made, paperwork is done to transfer fines collected into the general fund.

Report on Credit Card Payments
Associate Director Baldomero reported that when a penalty is assessed, payment is made either by cash or check.  Commission staff is currently looking into two options for credit card payments.

The first option is PayPal which is not an approved vendor.  They will charge 2.9% plus $0.30 per transaction that will be taken from the gross payment.  PayPal will be an online payment system only.  We will receive a check from PayPal which we will then be deposited into the State bank account.

The second option is Hawaii Information Consortium which is an approved vendor that will charge 2.9% per transaction.  The Commission will be invoiced the fee on a monthly basis.  The proposed system will be an online payment system which will also generate, issue, accept and track payments.  The payments will also be directly deposited into the State bank account.  Commission staff is currently reviewing the Statement of Work received from Hawaii Information Consortium.

Report on January 2016 CSC Newsletter
Executive Director Izumi-Nitao reported that the Commission staff will be publishing the next newsletter in mid-January.  Items to be included are:

-Reminder to File the Supplemental Report;
-Yamada v. Shoda Decision;
-New Laws Going into Effect;
-Proposed 2016 Legislation;
-Candidate Committee and Noncandidate Committee Reporting Schedules;
-Violations of the Campaign Finance Laws;
-Reminders and Tips for Those Running in the 2016 Election;
-Viewing Data Visualization of Reports;
-Options if Not Running in the 2016 Election;
-Status of the Hawaii Election Campaign Fund;
-$3 Check-Off Reminder;
-Hawaii Administrative Rules Being Revised;
-Results of the Commission’s 2015 Online Survey;
-2016 Commission Meeting Schedule; and
-Upcoming Events.

Chair Shoda moved to convene Executive Session to consult with attorney pursuant to HRS §92-5(a)(4).  Motion seconded by Commissioner Luke.  Motion carried (3-0).

Public session reconvened – 11:00 a.m.

Next Meeting:
Scheduled for Wednesday, January 13, 2016.

Commissioner Luke moved to adjourn meeting.  Motion seconded Commissioner Ching. Motion carried (3-0).  Meeting adjourned at 11:00 a.m.