Campaign Spending Commission

Campaign Spending Commission
Leiopapa A Kamehameha Building, Room 204
January 11, 2017
10:00 a.m.

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

Commissioners Absent
Kenneth Goodenow

Staff Present
Kristin Izumi-Nitao, Tony Baldomero, Gary Kam, Jessica Richey
Supervising Deputy Attorney General Pat Ohara

Call to Order
Chair Luke called the meeting to order at 10:04 a.m.

Consideration and Approval of Minutes on 12/7/16
Chair Luke asked for comments or changes.  Vice Chair Yoshihara commented that the minutes fluctuate from present to past tense and advised that it should be in the past tense for future application.

Chair Luke called for a vote to approve the minutes.

Commissioner Ching moved to approve the minutes of 12/7/16.  Motion seconded by Commissioner Shoda.  Motion carried (4-0).

New Business
Executive Director Izumi-Nitao stated that the next four (4) matters concern the late filing of the Final Election Period Report which was due on December 8, 2016.  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. 17-46 – In Re the Matter of Friends of Jeffrey Coakley
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Final Election Period Report and requested that the Commission assess a reduced fine from $200 to $70.  Chair Luke asked if there were any comments or questions.

Vice Chair Yoshihara commented that the Proposed Conciliation Agreement should include a provision that the parties agreed that Respondents received the Commission’s letters and thus were notified of the violation.  Executive Director Izumi-Nitao responded that this fact will be added to the Proposed Conciliation Agreements henceforth.

Chair Luke called for a vote.  Vice Chair Yoshihara moved to approve proposed Conciliation Agreement No. 17-46.  Motion seconded by Commissioner Shoda.  Motion carried (4-0).

*Proposed Conciliation Agreement No. 17-47 – In Re the Matter of Friends of Randy Gonce
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Final Election Period Report and requested that the Commission assess a reduced fine from $100 to $35.  Chair Luke asked if there were any comments or questions.  There were none.  Chair Luke called for a vote.

Commissioner Ching moved to approve proposed Conciliation Agreement No. 17-47.  Motion seconded by Vice Chair Yoshihara.  Motion carried (4-0).

*Proposed Conciliation Agreement No. 17-48 – In Re the Matter of Save Our City, LLC
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Final Election Period Report and requested that the Commission assess a reduced fine from $1,150 to $383.33.  Chair Luke asked if there were any comments or questions.  There were none.  Chair Luke called for a vote.

Vice Chair Yoshihara moved to approve proposed Conciliation Agreement No. 17-48.  Motion seconded by Commissioner Ching.  Motion carried (4-0).

*Proposed Conciliation Agreement No. 17-49 – In Re the Matter of Cowser Team
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Final Election Period Report and requested that the Commission assess a reduced fine from $57.81 to $19.27.  Chair Luke asked if there were any comments or questions.  There were none.  Chair Luke called for a vote.

Vice Chair Yoshihara moved to approve proposed Conciliation Agreement No. 17-49.  Motion seconded by Commissioner Ching.  Motion carried (4-0).

*Docket No. 17-26 – In Re the Matter of Sharon Har, Ian Caitano, and Friends of Sharon Har
and
*Docket No. 17-29 – In Re the Matter of James Tokioka, Ian Caitano, and Friends of James Kunane Tokioka
Chair Luke asked to advance Docket No. 17-29 to be heard along with Docket No. 17-26.  Respondent Har and Respondent Tokioka were present and agreed.

Vice Chair Yoshihara acknowledged receipt of Respondent Har’s materials and asked whether General Counsel Kam and/or Supervising Deputy Attorney General Ohara had the chance to review the packet of materials.  General Counsel Kam and Supervising Deputy Attorney General Ohara reported in the negative.  Vice Chair Yoshihara acknowledged that she too had not had the opportunity to review the packet.  Respondent Har asked whether they could proceed today and present their position because it would involve going through the materials with the Commissioners whereupon Chair Luke informed her that they would proceed.

Executive Director Izumi-Nitao reported that a complaint had been filed against Sharon Har, Ian Caitano, and Friends of Sharon Har (“Respondents”) in Docket No. 17-26 and against James Tokioka, Ian Caitano, and Friends of James Kunane Tokioka (“Respondents”) in Docket No. 17-29 for the late filing of the Final Election Period Report and the failure to pay the $300 fine.

Executive Director Izumi-Nitao reported that although the complaints concern different committees, the reason why the report at issue was filed late was the same because both committees have the same treasurer.  With respect to Docket No. 17-26, Executive Director Izumi-Nitao reported that Respondent Har ran in the 2016 election for House District 42.  Pursuant to HRS §11-334(a), Respondents were required to timely file the Final Election Period Report for the period covering 8/14/16 through 11/8/16 no later than 11:59 p.m. Hawaii standard time on 12/8/16.  Respondents did not electronically file this report until 12/14/16 which was 6 days late resulting in a fine of $300 which Respondents were informed to pay no later than 12/29/16 otherwise a complaint would ensue.

On 12/21/16, Commission staff spoke with Respondent Har and learned that Respondent Caitano, the committee treasurer, was in the hospital, and therefore, unable to file the report by the deadline.  Notably, Respondent Caitano filed the report as soon as he was discharged.  Staff was further informed that Respondents’ records were with Respondent Caitano so Respondent Har was unable to file the report.

With respect to Docket No. 17-29, Executive Director Izumi-Nitao reported that Respondent Tokioka ran in the 2016 election for House District 15.  Pursuant to HRS §11-334(a), Respondents were required to timely file the Final Election Period Report for the period covering 8/14/16 through 11/8/16 no later than 11:59 p.m. Hawaii standard time on 12/8/16.  Respondents did not electronically file this report until 12/14/16 which was 6 days late resulting a fine of $300 which Respondents were informed to pay no later than 12/29/16 otherwise a complaint would ensue.

For these reasons, Executive Director Izumi-Nitao recommended that the Commission make a preliminary determination of probable cause that the Hawaii campaign spending law had been violated pursuant to HRS §11-405(a), assess an administrative fine of $300 in each docket, order that the fines be paid from the candidate’s personal funds if the candidate committee’s funds are insufficient to pay the fines, and order that any and all fines be deposited in the general fund pursuant to HRS §§11-340(g).

Chair Luke asked whether Respondents were eligible for conciliation agreements to which Executive Director Izumi-Nitao responded in the negative because Respondents have filed late reports in the past and because Respondents indicated that they wanted to challenge the fine and the violation.  Therefore, these complaints ensued.  Notably, Executive Director Izumi-Nitao further noted that there was an error made in the caption of Count I on page 3 of the complaint in Docket No. 17-26; specifically, it referenced the Final Primary Report rather than the Final Election Period Report.  As such, she notified Respondents in Docket No. 17-26 on 12/28/16 and further informed Respondents that she would so notify the Commissioners and amend the complaint at the meeting.  Chair Luke acknowledged the amendment to the complaint.

Respondent Har stated that she was appearing on behalf of herself, Respondent Tokioka, and Respondent Caitano who was readmitted to the hospital on 12/20/16 (see, Exhibit C in her materials) and could not be present today.  Respondent Har requested that the complaints in both dockets be summarily dismissed and expunged from Respondents’ records.  Respondent Har proceeded with the following comments and timeline:

• Respondent Caitano has served as her campaign treasurer since 2006 and as Respondent Tokioka’s campaign treasurer since 2007
• As the campaign treasurer, Respondent Caitano filed all of their campaign spending reports
• Respondents’ campaign bank statements were sent directly to Respondent Caitano’s work address
• When filing any campaign spending report, Respondent Caitano cross referenced all transactions with the bank statements to ensure accuracy to comply with HRS §11-340(a)
• On or about 11/1/16, Respondent Caitano began experiencing stomach issues and was admitted to hospital on 11/17/16 for gallstones
• Between 11/18/16 and 11/30/16, Respondent Caitano was advised that he would most likely require surgery, and was advised to stop taking all medication
• Upon ceasing all medication, Respondent Caitano’s condition worsened leading to a 12/2/16 emergency surgeryto which he was discharged on 12/3/16 (see, Exhibit A of her materials)
• On 12/6/16, Respondent Caitano was readmitted to the hospital for pancreatitis and was not discharged until 12/14/16 (see, Exhibit B of her materials)
• On 12/6/16, Respondent Caitano did not have his cell phone and did not contact Respondents as to his condition or whereabouts
• On 12/8/16, the date the Final Election Period Report was due, Respondent Caitano was in the hospital and physically unable to file Respondents’ reports
• On 12/12/16, Respondents discovered that their reports had not been filed due to a friend informing them that their committee names were posted on the Commission’s website for failing to file a report
• Respondents did not learn of Respondent Caitano’s hospitalization until 12/14/16 when he informed them of his situation
• On 12/14/16, Respondent Caitano filed Respondents’ reports
• On 12/18/16, Respondent Caitano was readmitted to the hospital and remains hospitalized to date (see, Exhibit C of her materials)

Chair Luke asked if there had been any communication between Respondents Har and Tokioka and Respondent Caitano to which Respondent Har responded in the negative until 12/14/16 and Respondent Tokioka responded that they were texting but had not heard back from him as of 12/1/16.  Respondent Har stated that at no time had Respondent Caitano disclosed his medical condition until 12/14/16.  Further, she stated that both Respondents have removed Respondent Caitano as their treasurers and amended their Organizational Report on 12/14/16.

Respondent Har proceeded to make the following arguments:

• Respondents’ failure to file their reports by the deadline were due to exigent circumstances (i.e., Respondents were precluded from filing their reports on the deadline due to Respondent Caitano’s hospitalization and because Respondent Caitano was the only person who had access to Respondents’ bank statements)
• Respondents were unable to file their reports prior to the deadline because their bank statements for November 2016 were not sent to Respondent Caitano until after he was hospitalized
• Pursuant to HRS §11-340(a), Commission fines cannot be imposed for failure to file reports before the deadline
• Even if Respondents could have filed their reports before the deadline, to do so would have suborned violations of HRS §§11-340(a) and 11-412 which mandate that reports filed be true and accurate and imposes criminal sanctions for knowingly, recklessly, or intentionally filing false reports
• Pursuant to the legislative history of HRS §11-340(a), Commission fines are discretionary, not mandatory, thereby demonstrating that the legislature recognized that exigent circumstances could be considered

Respondent Har requested that the Commission exercise their discretion by not assessing the fines for the late filing of the Final Election Period Report and by summarily dismissing the complaints pursuant to HRS §11-404.  She further commented that campaigning today is different and that opponents look for campaign finance violations to attack candidates.

Chair Luke asked if Respondents considered changing their access to their campaign bank statements to which Respondent Har responded in the affirmative.

Vice Chair Yoshihara inquired as to whether bank statements were the only way to check the accuracy of their reports.  Chair Luke also inquired about online access to their bank accounts.  Respondent Har replied that bank statements contain information including bank charges and interest that need to be accounted for in the reports and further stated that did not feel that it was necessary for her committee to incur fees on bank online access.

Vice Chair Yoshihara stated that there was insufficient time to review Respondent Har’s materials which were produced today, and therefore, recommended that the Commission continue the matter to the next meeting to permit review of Respondents’ documents.  Vice Chair Yoshihara moved to continue Docket No. 17-26 and Docket No. 17-29 to the February 15, 2017 Commission Meeting.  Motion seconded by Commissioner Ching.  Motion carried (4-0).

*Docket No. 17-27 – In Re the Matter of Elite Concrete, LLC
Executive Director Izumi-Nitao reported that a complaint had been filed against Elite Concrete, LLC, for the failure to register with the Commission by filing an Organizational Report.

In the 1^st Preliminary Primary Report for the reporting period of 1/1/16 through 6/30/16, Friends of Napua Greig-Nakasone reported a contribution from Respondent in the amount of $1,250 on or about 3/7/16.  Because Respondent gave more than $1,000 to a candidate committee, pursuant to HRS §11-321, it was a noncandidate committee that was required to register and file reports with the Commission.  On 10/18/16, Commission staff sent Respondent a letter (Notice to Register with the Campaign Spending Commission and Notice to File Report(s)) via first class mail informing Respondent that its campaign contribution to a candidate committee required that Respondent register and file reports with the Commission pursuant to HRS §11-321.  A Noncandidate Committee Electronic Filing Form and a Reporting Schedule were enclosed in the letter.

HRS §11-302 provides that any organization, association, party, or individual that makes or receives contributions to influence the nomination for election, or the election, of any candidate to office, is considered to be a noncandidate committee.  HRS §11-321 provides that noncandidate committees must register with the Commission by filing an organizational report with the Commission within ten (10) days of making expenditures (i.e., making contributions to candidate committees) of more than $1,000 in the aggregate in a two-year election period.

On 10/31/16, 11/9/16, 11/15/16, and 11/22/16, Commission staff contacted Respondent about registering and filing reports.  Voicemails were left for Respondent which included the possibility of a complaint being filed if they did not register with the Commission and file reports.  On 11/22/16, 12/2/16, and 12/19/16, Commission staff called Christine Smith, the treasurer of Friends of Napua Greig-Nakasone, to determine whether they had a better contact number for Respondent.  Messages were left for the treasurer who did not return the Commission’s call.  Respondent did not register with the Commission by filing the Organizational Report nor filed the relevant report disclosing its contribution to Friends of Napua Greig-Nakasone.  On 12/29/16, Commission staff sent Respondent a copy of the Complaint and set the matter on the 1/11/17 Campaign Spending Commission Agenda.

For these reasons, Executive Director Izumi-Nitao recommended that the Commission make a preliminary determination of probable cause that the Hawaii campaign spending law has been violated pursuant to HRS §11-405(a), assess an administrative fine of $100, order that any and all fines be deposited in the general fund pursuant to HRS §11-340(g), order that Respondent register with the Commission by filing the Organizational Report within 2 weeks of receipt of the order, and order that Respondent file all outstanding reports including but not limited to the report covering the relevant period in which they made a candidate committee contribution.

Commissioner Ching asked about the process of locating new noncandidate committees.  Associate Director Baldomero responded that staff conducts searches on the Internet and the DCCA website as well as contacts campaign treasurers to identify contact information for new noncandidate committees.

Commissioner Ching 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 Vice Chair Yoshihara.  Motion carried (4-0).

*Docket No. 17-27 – In Re the Matter of Gaya International, LLC
Executive Director Izumi-Nitao reported that a complaint had been filed against Gaya International, LLC, for the failure to register with the Commission by filing an Organizational Report.

In the 1^st Preliminary Primary Report for the reporting period of 1/1/16 through 6/30/16, Caldwell for Mayor reported a contribution from Respondent in the amount of $4,000 on or about 5/10/16.  Because Respondent gave more than $1,000 to a candidate committee, pursuant to HRS §11-321, it was a noncandidate committee that was required to register and file reports with the Commission.  On 10/18/16, Commission staff sent Respondent a letter (Notice to Register with the Campaign Spending Commission and Notice to File Report(s)) via first class mail informing Respondent that its campaign contribution to a candidate committee required that Respondent register and file reports with the Commission pursuant to HRS §11-321.  A Noncandidate Committee Electronic Filing Form and a Reporting Schedule were enclosed in the letter.

HRS §11-302 provides that any organization, association, party, or individual that makes or receives contributions to influence the nomination for election, or the election, of any candidate to office, is considered to be a noncandidate committee.  HRS §11-321 provides that noncandidate committees must register with the Commission by filing an organizational report with the Commission within ten (10) days of making expenditures (i.e., making contributions to candidate committees) of more than $1,000 in the aggregate in a two-year election period.

Because attempts to locate a contact number for Respondent were unsuccessful, on 11/9/16, Commission staff called Laurie Choy, the treasurer of Caldwell for Mayor, to determine whether they had any contact information for Respondent.  Notably, Laurie Choy told Commission staff that she informs large contributors such as Respondent of the requirement to register with the Commission and file reports.  Laurie Choy did not have any contact information on Respondent.

Respondent did not register with the Commission by filing the Organizational Report nor filed the relevant report disclosing its contribution to Caldwell for Mayor.  On 12/29/16, Commission staff sent Respondent a copy of the Complaint and set the matter on the 1/11/17 Campaign Spending Commission Agenda.

For these reasons, Executive Director Izumi-Nitao recommended that the Commission make a preliminary determination of probable cause that the Hawaii campaign spending law has been violated pursuant to HRS §11-405(a), assess an administrative fine of $100, order that any and all fines be deposited in the general fund pursuant to HRS §§11-340(g), order that Respondent register with the Commission by filing the Organizational Report within 2 weeks of receipt of the order; and order that Respondent file all outstanding reports including but not limited to the report covering the relevant period in which they made a candidate committee contribution.

Vice Chair Yoshihara commented about the following errors in the complaint on page 3:

• The heading should read Docket No. “17-28” and not “17-27”; and

• Under Count I, in enumerated paragraph #3, it should read: “Respondent made a campaign contribution that aggregated more than $1,000 to a candidate committee called Caldwell for Mayor which required that Respondent register and file reports with the Commission pursuant to HRS §11-321.”

Commissioner Shoda 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 amended complaint.  Motion seconded by Commissioner Ching.  Motion carried (4-0).

*Consideration of Comments Submitted by Mr. Michael G. Palcic, Chairman, The Committee to Elect Julia Allen, Concerning Changes to Headings and Combining Expenditure Election Period Totals on the Candidate Committee Disclosure Reports Filed on the Candidate Filing System
Mr. Michael Palcic distributed hand-outs to Commissioners and staff to aid his presentation in clarifying information on the Commission’s Disclosure Report and bringing the report form into compliance with proper accounting and applicable statutes.  The hand-outs consisted of the original form of the Disclosure Report, the revised or altered form of the Disclosure Report which changed the term “Disbursements” to “Expenditures,” and Mr. Palcic’s proposed form of the Disclosure Report with his suggested changes.

Mr. Palcic addressed the revised or altered form of the Disclosure Report by stating that the substitution of the term “expenditure” for the term “disbursement” was erroneous.  He stated that not every disbursement from a campaign treasury met the definition of “expenditure” as it is precisely defined in the statute.  For example, the repayment of a loan was not an “expenditure” hence the use of the word “disbursement” on the Disclosure Report form was appropriate.

Mr. Palcic proceeded to address his suggested changes.  He stated that the Disclosure Report was primarily a cash accounting report that has accrual elements incorporated into it.  He made the following suggestions:

• To change the title of Section III of the Disclosure Report to “Summary of Receipts, Disbursements and Account Balances” to reflect the section’s intended purpose of reporting cash receipts less cash disbursements to arrive at the balance in the campaign treasury.
• To change Line 5 of Section III by substituting the term “Expenditures” with the term “Disbursements” because “expenditures” were not reported in this section of the Disclosure Report form.
• To change the title of Section IV of the Disclosure Report from “Detailed Summary of Receipts and Expenditures” to “Detailed Summary of Receipts, Expenditures and Disbursements” to reflect items that were reported in that section.
• To change the sub-heading for Lines 16 to 21 in Section IV from “Expenditures” to “Expenditures and Disbursements” because not all expenditures were disbursements (i.e., expenditures paid) and not all disbursements were expenditures (i.e., unpaid expenditures paid and loan repayments).

Mr. Palcic then went into a detailed analysis of Lines 16 to 21 suggesting text changes to Line 16 (“Expenditures Made” to “Expenditures Paid”), Line 18 (“Unpaid Expenditures Paid or Forgiven” to “Unpaid Expenditures Paid or Forgiven this Period”), Line 19 (“Subtotal Expenditures” to “Total Disbursements”), and Line 21 (“Total Expenditures (Add Lines 19 and 20)” to “Total Expenditures (Add Lines 16 and 20)”).  He explained that Line 16 in Column A represented the total expenditures paid in the current reporting period and Column B represented total expenditures paid in the election period to date.  He suggested that Line 16, Column B incorporated unpaid expenditures that were paid or forgiven in the election period and were currently being reported on Line 18, Column B because these previously unpaid expenditures have become “Expenditures Paid.”  Mr. Palcic stated that Line 17 in Column A represented disbursements made in the current period to repay loans and Column B represented disbursements made to repay loans in the election period to date.  He stated that the repayment of a loan was a disbursement and was not an “expenditure” as defined in the statute.  Mr. Palcic explained that Line 18 in Column A represented disbursements to unpaid expenditures in the current reporting period and that this disbursement was not an “expenditure” as defined in the statute because these accrued liabilities were reported as unpaid expenditures in prior reporting periods (Line 20).  He suggested that Line 18, Column B which represented disbursements to unpaid expenditures paid in the election period to date, be eliminated and incorporated in Line 16, Column B because these were now “Expenditures Paid.”  Mr. Palcic stated that Line 19, Columns A and B would report a sum of Lines 16 through 18 and represented all moneys disbursed from the campaign treasury as well as the forgiveness of loans and unpaid expenditures which require offsetting contributions in the “Receipts” section of Section IV on the Disclosure Report.  He explained that Line 20 in Column A represented unpaid expenditures incurred in the current period and Column B represented unpaid expenditures incurred to date.  He concluded by stating that Line 21, Columns A and B would report a sum of Lines 16 and 20 and represented all expenditures, both paid and unpaid, for the current period and election period to date.

Chair Luke commented that they will take a look at Mr. Palcic’s proposal and asked staff to work with accounting professionals to see if it were possible to revise the reports taking into account statutory and general accounting principles.

Mr. Palcic asked the Commissioners for their opinion and whether they agreed to his proposal as well as arguments.  Supervising Deputy Attorney General Ohara instructed Mr. Palcic that this was not the proper forum for an open discussion.  Chair Luke stated that he had no questions.

Old Business
*Consideration, Discussion, Update, and Approval of Commission Legislation and/or Other Campaign Finance Related Bills/Resolutions for the 2017 Legislative Session
General Counsel Kam reported that the Commission’s 11 bills were discussed with subject matter committee chairs in the House and Senate and a meeting with Speaker Joseph Souki was set for this afternoon.  A meeting with President Kouchi was not set yet.  The 2017 Legislature opens on 1/18/17.  Once the legislature commences, General Counsel Kam stated that he will be tracking our bills as well as other campaign finance related bills/resolutions and report to the Commissioners at their monthly meetings until the end of session.

Report from Executive Director
Update on Gubernatorial Appointment of New Commissioners
Executive Director Izumi-Nitao reported that Sharon Ibarra, Director of Boards & Commissions, was discussing the matter with Mike McCartney, Governor Ige’s Chief of Staff.

Report on Compliance of Filing Timely Disclosure Reports
With respect to the Commission orders that were referred to the Attorney General’s Office – Civil Recoveries Division (“AG-CRD”), AG-CRD reported that 4 referrals were resolved and 9 referrals were outstanding of which 3 were pending or before First Circuit Court (Faye Hanohano – non-compliance with court order;

Nora Pajimola – working out a payment plan and compliance with Commission orders; and Green Leaf Group – Petition set for 2/15/17).

As for the report on compliance of filing timely disclosure reports in the 2016 election, Executive Director Izumi-Nitao reported that for the Final Election Period Report, only 1 out of 251 candidate committees did not file (i.e., Junior Mataafa) and 4 out of 254 noncandidate committees did not file (i.e., Eric Ryan’s committees).  As for the Late Contributions/Expenditures Report which was due on 11/7/16, 5 candidate committees and 4 noncandidate committees did not file.  The next report will be the Supplemental Report for all registered candidate and noncandidate committees which is due 1/31/17.

Update on the Issuance of Certification of Compliance with Office of Elections & County Clerks
Commission staff has been in regular communication with the Office of Elections and the county clerks concerning certification of elected officials.  By law, certification is necessary for the elected official to be sworn into office.  As of today, all candidates who won in the 2016 election have been certified except for Representative Kaniela Ing.  Efforts to obtain his compliance have been made by Commission staff.

Update on the Amendments to the Commission’s Administrative Rules
The Commission’s administrative rules went into effect on 12/9/16 and have been posted on the Commission’s website.

Update on the CSC Budget
Executive Director Izumi-Nitao reported that the Commission is seeking $505,585 in general funds to pay for Commission salaries and operations.  She stated that this request is in the Executive budget and was approved by Department of Accounting & General Services, Budget & Finance, and the Governor’s office.  Executive Director Izumi-Nitao and Associate Director Baldomero appeared at the 1/10/17 House Finance Committee and will appear at the 1/18/17 Senate Ways & Means Committee to testify in support of this funding request.  Based on staff’s computations, it is projected that the Hawaii Election Campaign Fund will be “close to depletion” in July 2017 and will be “near depletion” in November 2017.  She reported that unless there is a significant increase in revenues, there will be no public funding in the 2018 election.

Report on the CSC January 2017 CSC Newsletter
Executive Director Izumi-Nitao reported that staff has been preparing the January 2017 CSC newsletter to include the following items:

• Summary of the 2016 Election
• Reminder to All Committees to File the Supplemental Report
• New Reporting Schedules
• CSC Legislation for the 2017 Legislative Session
• Status of the Hawaii Election Campaign Fund and Reminder to Check Off $3 on Your 2017 Tax Return
• Availability of a Downloadable Calendar on the Commission’s Website
• Termination of Committee Registration with the Commission
• Overwhelming Successof the Employment of eSign Forms
• New Amendments to the Commission’s Administrative Rules
• 2017 Standard Mileage Rate Announced by Internal Revenue Service (“IRS”)
• 2017 Annual Meeting Schedule
• Results of the Commission’s 2016 Online Survey

Executive Director Izumi-Nitao asked if there were any questions or requests for additional items.  Publication is targeted for 1/17/17.

Summary of the 2016 Election
Associate Director Baldomero reported and/or commented on the following:

• There were 269 candidates who ran in the 2016 election
• Total receipts received was $14,456,145.65
• Total expenditures made was $12,221,766.11
• There were 104 out of 128 seats up for election of which 94 candidates were incumbents, 126 candidates were challengers, and 49 candidates ran for open seats
• Top 10 receipts from candidate committees
• Top 10 contributions received by candidate committees
• Top 10 loans to candidate committees
• Top 10 expenditures made by candidate committees
• Breakdown of expenditures based on authorized use
• Breakdown of expenditures by category
• Top 10 candidates’ cost per vote
• Top 10 candidate committees with a surplus
• Amount of partial public funds distributed was $202,190.49 to 28 candidates
• 247 fundraiser notices filed for fundraisers held in 2016

Associate Director stated that his summary and a broader analysis would be posted to the Commission’s website after the meeting.

Report on the 2016 COGEL Conference
Executive Director Izumi-Nitao reported that this year’s COGEL Conference was held on 12/11/16 to 12/14/16 in New Orleans, LA.  She thanked the Commission for the opportunity for her and General Counsel Kam to attend the conference.  She further thanked Chair Luke and Commissioner Goodenow for taking the time to attend the conference and to learn more about campaign finance and governmental ethics laws.

As an overview, Executive Director Izumi-Nitao stated that there were 417 participants of which 147 were first time attendees.  Overall, there were 7 members from Hawaii including the 4 from CSC, Executive Director & General Counsel Dan Gluck from the State Ethics Commission, Commissioner Reynaldo Graulty from the State Ethics Commission, and Senator Les Ihara.  She stated that it was an invaluable experience and that we continue to learn about other campaign finance offices, litigation, legislation, enforcement, and new developments/trends.  A copy of the bluebook which showcased all the state’s activities was distributed and copies were given to the Commissioners who did not attend the conference this year.

As for an assessment, Executive Director Izumi-Nitao reported that Hawaii continues to be well placed in the campaign finance world and that we continue to excel in areas of data visualizations and enforcement of violations (especially, Super PACs).  Areas that we need to be aware of and monitor include evolving electronic filing systems, Super PAC activities, and dark money groups.

Chair Luke reported that it was an interesting experience to see what other states are doing, that Hawaii was more sophisticated in some areas, that it was surprising to see other states with less staff and resources, that Hawaii was on par or ahead of other states in making things more transparent, that we struggle with similar issues shared by other states, and that Executive Director Izumi-Nitao was well regarded at the conference.

General Counsel Kam reported that he enjoyed the conference and sought out sessions on campaign finance legislation and case law as well as investigative techniques.  He also stated that he got to reconnect with his colleagues in other states as well as members of the FEC.

Commissioner Ching asked about any updates about our decision in the Sierra Club republication case.  General Counsel Kam replied that he spoke with the Brennan Law Center who were very supportive of this kind of enforcement and commented that the FEC cannot act on these issue due to their 3-3 composition of members.  He further stated that campaigns are pushing the envelope because of the FEC’s inability to decide.

Executive Director Izumi-Nitao stated that next year’s annual conference will be held on 12/3/17 to 12/6/17 in Toronto, Canada.  She recommended that 2 Commissioners attend the conference with her and Associate Director Baldomero.

Chair Luke asked for a motion to convene Executive Session to:  (1) Consider and approve Executive Session minutes from the Commission meeting on 12/7/16; (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. 17-24 – In Re the Matter of Alan Arakawa and Friends of Alan Arakawa for the prohibited use of campaign funds; and (3) Pursuant to HRS §92-5(a)(2), to review and consider Commission staff performance and compensation.

Vice Chair Yoshihara moved to convene Executive Session for the aforementioned reasons.  Motion seconded by Commissioner Shoda.  Motion carried (4-0).

Public session reconvened at 12:47 p.m.

*Pursuant to Hawaii Revised Statutes section 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
Chair Luke announced that in Executive Session it was decided that the Attorney General would prepare a legal opinion concerning their questions and issues, and that the matter would be continued to the 2/15/17 Commission Meeting where in Executive Session the Commissioners would discuss the Attorney General’s legal opinion with them.

Vice Chair Yoshihara moved to adjourn the meeting.  Motion seconded by Commissioner Shoda.  Motion carried (4-0).  Meeting adjourned at 12:50 p.m.

Next Meeting:
Scheduled for Wednesday, February 15, 2017.