Minutes for September 14, 2016 Meeting

Posted in Minutes

Campaign Spending Commission
Leiopapa A Kamehameha Building, Room 204
September 14, 2016
10:00 a.m.

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

Commissioners Absent
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 10:03 a.m.

Consideration and Approval of Minutes on 8/10/16 and 8/31/16
Chair Luke asked for comments or changes.

Commissioner Shoda inquired about the settlement amounts for the 3 conciliation agreements and stated that the minutes should reflect the reduced amounts for better transparency. Chair Luke stated that the amounts are in the record and are available. Commissioner Goodenow commented that it might be helpful if the reduced amounts were in the minutes for quicker reference. Chair Luke asked if the minutes of 8/10/16 should be amended or whether this should be handled prospectively. Executive Director Izumi-Nitao stated that she does not believe that the reduced amounts were a part of the motions made by the Commissioners and does not believe that the amounts were mentioned in the meeting discussion, but offered that the Respondents knew what the amounts were as a result of the negotiated conciliation agreements and that the amounts were set forth in the proposed conciliation agreements which were part of the record. For purposes of transparency and more immediacy, General Counsel Kam recommended that the Commission agendas reflect the reduced amounts in the future. Vice Chair Yoshihara agreed.

Chair Luke called for a vote to approve the minutes.

Commissioner Goodenow moved to approve the minutes of 8/10/16. Motion seconded by Vice Chair Yoshihara. Motion carried (5-0).

Commissioner Goodenow moved to approve the minutes of 8/31/16. Motion seconded by Vice Chair Yoshihara. Motion carried (5-0).

New Business
Chair Luke stated that if there were no objections, he moved to amend the agenda to take Docket No. 17-14 – In Re the Matter of Forward Progress out of order because the attorney, Mr. William McCorriston, was present. Motion seconded by Vice Chair Yoshihara. Motion carried (5-0).

*Docket No. 17-14 – In Re the Matter of Forward Progress
General Counsel Kam reported that the complaint was received by Respondent’s attorney in Washington D.C. last week and that they need more time to respond. He therefore had no objection to continuing the matter to the Commission’s next meeting on 10/12/16.

Mr. William McCorriston represented that he is Respondent’s local counsel and that they would like the opportunity to submit a written response for the Commissioners’ consideration.

Commissioner Goodenow moved to continue the matter until the 10/14/16 Commission meeting. Motion seconded by Commissioner Shoda. Motion carried (5-0).

Executive Director Izumi-Nitao stated that the next fourteen (14) matters concern the late filing of either the Supplemental Report which was due on 8/1/16, the 2^nd Preliminary Report which was due on 8/3/16, or the Preliminary Primary Report which was due on 8/3/16. These proposed Conciliation Agreements were a result of investigations initiated by the Commission in August 2016 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 in a letter from Commission staff of the violation. 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. 17-04 – In Re the Matter of Friends of Marc Pa’aluhi
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the 2^nd Preliminary Primary Report and requests that they assess a reduced fine of $100. 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. 17-04. Motion seconded by Commissioner Shoda. Motion carried (5-0).

*Proposed Conciliation Agreement No. 17-05 – In Re the Matter of Velasco Campaign 2016
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the 2^nd Preliminary Primary Report and requests that they assess a reduced fine of $101.57. Chair Luke asked if there were any comments or questions. There were none. Chair Luke called for a vote.

Commissioner Shoda moved to approve proposed Conciliation Agreement No. 17-05. Motion seconded by Commissioner Goodenow. Motion carried (5-0).

*Proposed Conciliation Agreement No. 17-06 – In Re the Matter of Anne Stevens for Hawaii
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Supplemental Report and requests that they assess a reduced fine of $100. She further informed the Commission that the agenda is incorrect to the extent that it reflects the late filing of the 2^nd Preliminary Primary Report rather than the Supplemental Report and asked Chair Luke to seek a motion to amend the agenda for purposes of correcting this error.

Commissioner Shoda moved to amend the agenda to reflect the late filing of the Supplemental Report for Proposed Conciliation Agreement No. 17-06. Motion seconded by Commissioner Goodenow. Motion carried (5-0).

As to the Proposed Conciliation Agreement No. 17-06, 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. 17-06. Motion seconded by Commissioner Goodenow. Motion carried (5-0).

*Proposed Conciliation Agreement No. 17-07 – In Re the Matter of Richard S. Fukushima
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the 2^nd Preliminary Primary Report and requests that they assess a reduced fine of $100. 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. 17-07. Motion seconded by Commissioner Goodenow. Motion carried (5-0).

*Proposed Conciliation Agreement No. 17-08 – In Re the Matter of Friends of Luana Jones
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the 2^nd Preliminary Primary Report and requests that they assess a reduced fine of $100. 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. 17-08. Motion seconded by Commissioner Goodenow. Motion carried (5-0).

*Proposed Conciliation Agreement No. 17-09 – In Re the Matter of Committee to Elect Ron Gonzales – Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Supplemental Report and requests that they assess a reduced fine of $70. Chair Luke asked if there were any comments or questions. There were none. Chair Luke called for a vote.

Commissioner Shoda moved to approve proposed Conciliation Agreement No. 17-09. Motion seconded by Commissioner Ching. Motion carried (5-0).

*Proposed Conciliation Agreement No. 17-10 – In Re the Matter of Kapaa III, LLC
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Preliminary Primary Report and requests that they assess a reduced fine of $100. 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. 17-10. Motion seconded by Vice Chair Yoshihara. Motion carried (5-0).

*Proposed Conciliation Agreement No. 17-11 – In Re the Matter of Hawaii Funeral Industry Political Action Committee
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Preliminary Primary Report and requests that they assess a reduced fine of $100. Chair Luke asked if there were any comments or questions. There were none. Chair Luke called for a vote.

Commissioner Goodenow moved to approve proposed Conciliation Agreement No. 17-11. Motion seconded by Vice Chair Yoshihara. Motion carried (5-0).

*Proposed Conciliation Agreement No. 17-12 – In Re the Matter of BioTork, LLC
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Preliminary Primary Report and requests that they assess a reduced fine of $100. Chair Luke asked if there were any comments or questions. There were none. Chair Luke called for a vote.

Commissioner Goodenow moved to approve proposed Conciliation Agreement No. 17-12. Motion seconded by Vice Chair Yoshihara. Motion carried (5-0).

*Proposed Conciliation Agreement No. 17-13 – In Re the Matter of Alana Kay for Mayor
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Supplemental Report and requests that they assess a reduced fine of $70. 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. 17-13. Motion seconded by Commissioner Goodenow. Motion carried (5-0).

*Proposed Conciliation Agreement No. 17-14 – In Re the Matter of Outrigger Enterprises Inc. PAC
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Preliminary Primary Report and requests that they assess a reduced fine of $1,950. 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. 17-14. Motion seconded by Commissioner Goodenow. Motion carried (5-0).

*Proposed Conciliation Agreement No. 17-15 – In Re the Matter of Friends of Kealii Makekau
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the 2^nd Preliminary Primary Report and requests that they assess a reduced fine of $100. Chair Luke asked if there were any comments or questions. There were none. Chair Luke called for a vote.

Commissioner Goodenow moved to approve proposed Conciliation Agreement No. 17-15. Motion seconded by Vice Chair Yoshihara. Motion carried (5-0).

*Proposed Conciliation Agreement No. 17-16 – In Re the Matter of Aulani Ka’aihue
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Supplemental Report and requests that they assess a reduced fine of $70. Chair Luke asked if there were any comments or questions. There were none. Chair Luke called for a vote.

Commissioner Shoda moved to approve proposed Conciliation Agreement No. 17-16. Motion seconded by Commissioner Goodenow. Motion carried (5-0).

*Proposed Conciliation Agreement No. 17-17 – In Re the Matter of Susan Halvorsen for State House
Executive Director Izumi-Nitao explained that this proposed conciliation agreement concerns the late filing of the Supplemental Report and requests that they assess a reduced fine of $70. Chair Luke asked if there were any comments or questions. There were none. Chair Luke called for a vote.

Commissioner Shoda moved to approve proposed Conciliation Agreement No. 17-17. Motion seconded by Commissioner Ching. Motion carried (5-0).

*Docket No. 17-07 – In Re the Matter of Hinaleimoana Wong-Kalu and Friends of Hina Wong-Kalu
Executive Director Izumi-Nitao reported that a complaint had been filed against candidate and treasurer Hinaleimoana Wong-Kalu and the candidate committee called Friends of Hina Wong-Kalu for the failure to file the Supplemental Report.

Respondent is not running in the 2016 election and was not named on the 2016 ballot. Pursuant to HRS §§11-333(a) and 11-334(a), Respondents are required to timely file accurate supplemental reports. The Supplemental Report for the period covering 1/1/16 to 6/30/16 was due no later than 11:59 p.m. Hawaii standard time on 8/1/16. Respondents did not file this report by the deadline.

Notably, five (5) days later, on 8/29/16, Respondent came to the Commission’s office and filed the Supplemental Report. Respondent also submitted a letter dated 9/9/16 for the Commissioners’ consideration. Respondent has expressed an interest in terminating her committee registration, but her last report shows a surplus of $3,911.22.

Nonetheless, 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 $500 for the violation, 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 fines be deposited in the general fund pursuant to HRS §11-340(g).

Vice Chair Yoshihara 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 Goodenow. Motion carried (5-0).

Hinaleimoana Wong-Kalu appeared at 11 a.m. after the complaint was decided. She testified that she was an active candidate in 2014 and may want to consider running in the future. She said that she submitted a letter explaining her delinquency and offers no excuse. She commented that she is unable to manage all her duties, she is a caregiver for her mother who had a stroke, she is not employed full-time, she teaches a class in prison, her husband left her after being married for 6 years, she is the former chair of the burial council, and she did not intentionally or purposefully forego her responsibilities. The money shown on her report is not what is in the committee’s bank account and she understands that she needs to go through her committee’s bank records and look at the filed reports.

Commissioner Ching asked if a payment plan can be an option to which she replied she will try to comply. Further discussion ensued, but ultimately, she was advised to work the fine payment out with Commission staff and that the fine would stand.

*Docket No. 17-08 – In Re the Matter of Coalition for Green Jobs NOW! and David DuRoss
Executive Director Izumi-Nitao reported that a complaint had been filed against Coalition for Green Jobs NOW! and the chairperson and treasurer David DuRoss for the failure to file the Preliminary Primary Report.

Respondent is a noncandidate committee making only independent expenditures registered with the Commission. Pursuant to HRS §§11-335(a) and 11-336, Respondents are required to timely file accurate preliminary primary reports. The Preliminary Primary Report for the period covering 1/1/16 to 7/29/16 was due no later than 11:59 p.m. Hawaii standard time on 8/3/16. Respondents did not file this report by the deadline.

On 9/2/16, Commission staff reviewed Respondent’s disclosure reports. Since registering with the Commission on 9/28/15, there has been zero activity and only one previously filed report (i.e., the Supplemental Report for the period covering 7/1/15 through 12/31/15). Commission staff called Respondent on 9/2/16 about termination of committee registration due to the inactivity as well as whether they would declare that their aggregate contributions and aggregate expenditures for the election period would total $1,000 or less such that they would only be required to file the Final Election Period Report (which is not due until 12/8/16) pursuant to HRS §11-339. Respondents did not return the Commission’s call.

Executive Director Izumi-Nitao recommended that because staff is uncertain whether Respondents fall in the $1,000 or less category, she asked to withdraw the complaint because it may not be ripe. Notably, Respondents did not file the Final Primary Report for the period covering 7/30/16 through 8/13/16 which was due on 9/2/16. Commission staff sent them a “Notice of Late Report” as well as a letter requesting whether they fall within the $1,000 or less category pursuant to HRS §11-339. If Respondents fail to respond to the Commission and fail to file reports, this will preserve the violation.

Commissioner Goodenow moved to withdraw the complaint. Motion seconded by Vice Chair Yoshihara. Motion carried (5-0).

*Docket No. 17-09 – In Re the Matter of Coalition for Responsible Government and David Dinner
Executive Director Izumi-Nitao reported that a complaint had been filed against Coalition for Responsible Government and the treasurer David Dinner for the failure to file the Preliminary Primary Report.

Respondent is a noncandidate ballot issue committee registered with the Commission. Notably, it should have been terminated after the 2008 election. Nonetheless, pursuant to HRS §11-335(a) and 11-336, Respondents timely filed its reports until the Preliminary Primary Report for the period covering 1/1/16 to 7/29/16 which was due not later than 11:59 p.m. Hawaii standard time on 8/3/16. Respondents did not file this report by the deadline.

On 8/23/16, chairperson Carl Imparato submitted a response via email to the Commission. He claimed that Respondent’s aggregate contributions and aggregate expenditures for the election period would total $1,000 or less, and therefore, pursuant to HRS §11-339, they would only be required to file the Final Election Period Report (which is not due until 12/8/16). While this may be true, Executive Director Izumi-Nitao discussed the matter further with Mr. Imparato whereupon he understood that after the 2008 election, the law was changed which required that ballot issue committees be terminated within 90 days after the election for which the issue appeared on the ballot. As such, his termination request was set forth in an email dated 9/2/16. Executive Director Izumi-Nitao recommended that the complaint be dismissed.

Commissioner Goodenow moved to dismiss the complaint. Motion seconded by Commissioner Ching. Motion carried (5-0).

*Docket No. 17-10 – In Re the Matter of Rebecca Leau, Arlene Larrna, and Friends of Becky Leau
Executive Director Izumi-Nitao reported that a complaint had been filed against candidate Rebecca Leau, treasurer Arlene Larrna, and the candidate committee called Friends of Becky Leau for the late filing of the Supplemental Report.

On 8/2/16, Commission staff sent Respondents a “Notice of Late Report” via first class mail informing them that the Supplemental Report had not been filed and that a fine would be imposed. The letter was addressed to Respondents at the addresses listed on their Organizational Report. Respondents filed the report on 8/8/16. On 8/9/16, Commission staff sent Respondents a “Notice of Fine for Late Report” via first class mail informing them that a fine of $200 had been assessed for the late filing of the report. Because Respondents did not voluntarily pay the late report fine, on 8/29/16, Commission staff sent Respondents a copy of the complaint and informed them that the matter would be set on the 9/14/16 Commission Agenda.

Notably, on 9/7/16, Becky Leau called Commission staff and informed them that she would pay the fine. On 9/12/16, Commission staff received her fine payment of $200. As such, Executive Director Izumi-Nitao recommended that the complaint be dismissed due to compliance.

Commissioner Goodenow moved to dismiss the complaint. Motion seconded by Vice Chair Yoshihara. Motion carried (5-0).

*Docket No. 17-11 – In Re the Matter of Hawaii Electrical Workers, Local 722 and Rodney Capello
Executive Director Izumi-Nitao reported that a complaint had been filed against Hawaii Electrical Workers, Local 722 and treasurer Rodney Capello for the failure to file the Preliminary Primary Report.

Executive Director Izumi-Nitao asked that the Commission continue this matter to the 10/12/16 Commission meeting as it involves the dissolution of the noncandidate committee’s sponsoring entity union. She informed the Commissioners that this noncandidate committee’s union was dissolved by the parent union due to misuse of funds and placed into a trust with a sister organization. This dissolution however may not affect or concern the noncandidate committee so she is working with the attorney who is helping out the trustee sister organization in resolving these matters. Attempts are being made to terminate this noncandidate committee; however, it appears that there was over $6,000 which was transferred when this noncandidate committee’s bank account was closed. The reports filed by the noncandidate committee do not show a surplus, but rather are at zero. Executive Director Izumi-Nitao recommended that the Commission continue the matter to permit her time to understand this situation with the attorney helping out.

Commissioner Goodenow moved to continue the matter until the 10/12/16 Commission meeting. Motion seconded by Commissioner Shoda. Motion carried (5-0).

*Docket No. 17-12 – In Re the Matter of Equality Hawaii Action Fund and Jacce Mikulanec
Executive Director Izumi-Nitao reported that a complaint had been filed against Equality Hawaii Action Fund and chairperson Jacce Mikulanec for the late filing of the Preliminary Primary Report.

Respondent is a noncandidate committee registered with the Commission. Pursuant to HRS §§11-335(a) and 11-336, Respondents are required to timely file accurate preliminary primary reports. The Preliminary Primary Report for the period covering 1/1/16 to 7/29/16 was due no later than 11:59 p.m. Hawaii standard time on 8/3/16. Respondents did not file this report by the deadline.

On 8/4/16, Commission staff sent Respondents a “Notice of Late Report” via first class mail informing them that the Preliminary Primary Report had not been filed and that a fine would be imposed. The letter was addressed to Respondents at the addresses listed on their Organizational Report. Respondents filed the report on 8/4/16. On 8/5/16, Commission staff sent Respondents a “Notice of Fine for Late Report” via first class mail informing them that a fine of $300 had been assessed for the late filing of the report. Because Respondents did not voluntarily pay the late report fine, on 8/29/16, Commission staff sent Respondents a copy of the complaint and informed them that the matter would be set on the 9/14/16 Commission Agenda.

Notably, prior to sending the complaint, Commission staff tried to contact chairperson Jacce Mikulanec about payment of the fine as well as whether Respondent would be terminating their committee registration. Respondents did not respond.

Commissioner 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 Vice Chair Yoshihara. Motion carried (5-0).

*Docket No. 17-15 – In Re the Matter of Tiare Lawrence, Terez Amato Lindsey, and Tiare Lawrence for Maui
Executive Director Izumi-Nitao reported that a complaint had been filed against candidate Tiare Lawrence, treasurer Terez Amato Lindsey, and the candidate committee called Tiare Lawrence for Maui for exceeding the expenditure limits.

Respondent filed nomination papers to be a 2016 candidate for the State House of Representatives, District 12. HRS §11-423 provides that a candidate may voluntarily agree to limit the candidate’s expenditures and those of the candidate’s candidate committee or committees and the candidate’s party on the candidate’s behalf by filing an affidavit with the Commission. By subscribing and signing this affidavit before a notary, Respondent voluntarily agreed to comply with the expenditure limit set for the office which is sought. In this case, Respondent agreed to a $20,523 expenditure limit for each election.

Under HRS §11-426, a candidate who exceeds the expenditure limit for that election shall: (1) Notify all opponents, the office of elections, and the Commission by telephone and writing on the day the expenditure limit is exceeded; (2) Pay the balance of the full filing fee for filing nomination papers with the Office of Elections; and (3) Provide reasonable notice to all contributors within 30 days of exceeding the limit that the expenditure limit was exceeded.

Upon review of Respondents’ 2^nd Preliminary Primary Report for the period covering 7/1/16 through 7/29/16, Commission staff noticed that Respondents exceeded the expenditure limit. More specifically, for this election, Respondents’ expenditures totaled $22,892.05 (i.e., an overage of $2,369.05).

Respondents did not comply with the provisions set forth under HRS §11-326 upon exceeding the expenditure limit. On 9/1/16, Commission staff called Respondents to inform them of this matter. On 9/2/16, Commission staff sent Respondents a copy of the complaint and informed them that the matter would be set on the 9/14/16 Commission Agenda.

Notably, on 9/6/16, Respondents called the Commission to inform us that they exceeded the expenditure limit and submitted a written notification. Further, we understand that she paid the balance of the full filing fee for filing nomination papers with the Maui County Clerk’s Office.

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 $500 for the violation, order that the fine be paid from the candidate’s personal funds if the candidate committee’s funds are insufficient to pay the fine, order that any and all fines be deposited in the general fund pursuant to HRS §11-410(e), and order that within 2 weeks of receipt of this Order, Respondents: (a) Notify all opponents, the Office of Elections, and the Commission by telephone and writing that they exceeded the expenditure limit; (2) Pay the balance of the full filing fee for filing nomination papers with the Office of Elections (i.e., $225); and (3) Provide reasonable notice to all contributors that Respondents exceeded the expenditure limit.

Commissioner Goodenow asked what the maximum fine would be. General Counsel Kam responded that it would be $1,000.

Commissioner Goodenow asked if no violation would be found had Respondents provided notice. Vice Chair Yoshihara commented that there is a violation for breaching the affidavit to not exceed the expenditure limit.

Vice Chair Yoshihara asked about the policy reason behind this violation. General Counsel Kam responded that it may be to not let big money come into the election. He further commented that in the past, contributors could receive a tax deduction if the candidate agreed to abide by the expenditure limits, but that this deduction has since been removed. In 2013, he tried to modify the statute to eliminate the need to notify contributors if candidates exceeded the expenditure limit, but that the House Judiciary felt that it was important to keep.

Commissioner Goodenow asked about the benefits associated with signing the affidavit to not exceed the expenditure limit. Associate Director Baldomero responded that candidates receive a discounted filing fee and are eligible for public funding. Commissioner Shoda asked whether Respondents received public funding. Associate Director Baldomero responded no.

Associate Director Baldomero reported that there was another candidate (Dennis Miller) who exceeded the expenditure limit, but that he complied with the requirements under HRS §11-426 upon exceeding the limit. He further stated that in the 2014 election, there were 3 candidates who exceeded the limit, but that they too complied with the HRS §11-426 requirements.

Commissioner Goodenow commented that abiding by expenditure limits appears to have its benefits and that a $500 administrative fine for failing to notify the appropriate parties within the time designated by the law is appropriate.

Executive Director Izumi-Nitao stated that she will amend the Administrative Fine Guidelines Schedule to reflect this fine amount.

*CSC Annual Report for FY 2016
Executive Director Izumi-Nitao presented for discussion and approval the Commission’s Annual Report for Fiscal Year 2016 covering the period 7/1/15 through 6/30/16. 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 2016 Legislative Session, the Commission submitted 4 measures which were not passed by the legislature.

Other legislation of significance was H.B. 2156 and its companion bill H.B. 2438. This bill was submitted by legislators to address the Commission’s funding concerns. It proposed to amend HRS §11-314 to have the general revenues fund the Commission’s operating expenses including staff salaries and fringe benefits as well as appropriate moneys to the Commission for operating expenses. In its final form, this bill did not address Commission funding, but rather, amended HRS §11-381(a)(8) to include expenses incurred for memberships in civic or community groups as ordinary and necessary expenses of an office holder. The Commission opposed the bill in its amended form, but it was enacted on July 12, 2016 as Act 247.

There was a lot of activity this fiscal year to amend the Commission’s administrative rules which ultimately culminated in the Commission’s ability to go to public hearing on 8/31/16.

As for Advisory Opinions, two were issued this fiscal year. Advisory Opinion No. 16-01 which addressed a law firm’s request concerning the applicability of HRS §11-355, the government contractor ban, to the federal political action committee (“PAC”) of the parent company of an entity that is subject to the ban as a government contractor. And, Advisory Opinion No. 16-03, which addressed the General Contractors Association of Hawaii’s request concerning the aggregation of contributions made by a noncandidate committee and personal contributions made by the board members of the noncandidate committee.

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 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. On the last day of filing nomination papers for the 2016 election (i.e., 6/7/16), the Commission captured, compiled, and summarized the data and shared the information with the public for purpose of obtaining a birds-eye view of the upcoming election. In June 2016, the Commission created and launched a downloadable calendar of events including (but not limited to) the candidate committee and noncandidate committee reporting schedules, the Commission’s monthly meeting schedule, and the State holidays.

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 68 times and we have 922 total subscribers. As for tweets, we issued 494 tweets this fiscal year.

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

During this period, there were 3 modifications to the Commission’s noncandidate committee electronic filing system (“NCFS”) as a result of legislative enactments to improve transparency and disclosure. They were: (1) Adding a preliminary general report on October 1 in a general election year; (2) Requiring Super PACs who received contributions aggregating more than $10,000 on their disclosure reports and greater than $5,000 on their late contribution reports from contributing entities that are not individuals, for-profit business entities, or labor unions, to report additional information; and (3) Adding a new report called the Late Expenditure Report for Super PACs if they have independent expenditures that aggregate more than $500 made 14 and 4 calendar days prior to an election.

The Commission also modified the Statement of Information for Electioneering Communications form and made it available for the 2016 election.

On 2/1/16, the Commission employed eSign forms for committees to use as an additional and alternative way to submit forms for the 2016 election. The new tool was made available through the Office of Enterprise Technology Services’ commitment to employ new technology to improve government efficiency, services, and communication. The success of this employment has been tremendous to the Commission. To date, we have received almost 800 eSign documents since we launched this application.

The Commission also commenced research on identifying online fine payments mechanisms, but ultimately, decided to delay launching this additional payment method until FY 2017 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.

For the 2016 election, Office of Elections agreed to include on their Candidate Profile worksheet, a section that the candidate would initial acknowledging that he/she understood that they need to register with the Commission and file reports. Prior to, and after each election, the Commission meets with the Office of Elections to ensure the process of certifying compliance that campaign finance reports had been filed and payments of fines had been made so that the winning candidates are able to be sworn into office.

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.

In anticipation of the 2016 election, the Commission 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 a non-election year, there were 38 complaints which recommended fines totaling $13,687.50 and an escheat of $3,677.57. Of these 38 complaints:

16 complaints yielded a preliminary determination of a campaign finance violation
11 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)
6 complaints were dismissed due to a finding of no campaign finance violation(s)
3 complaints were referred for criminal prosecution
2 complaints are pending

There were 3 conciliation agreements which were approved resulting in a total of $457 in administrative fines during this fiscal year.

A total of $20,638.94 was collected in fines and $6,169.94 was escheated to the Hawaii Election Campaign Fund as a result of campaign finance violations. Most of the Commission’s enforcement actions were a result of late or unfiled reports. During this period, there were two Supplemental Reports that were due. Due to late or unfiled Supplemental Reports, a total of $5,735.31 was collected from 98 candidate committees and 34 noncandidate committees. Other campaign finance violations occurring during this period that did not include the issuance of an administrative complaint included:

8 late fundraiser notices resulting in $200 in fines
5 prohibited expenditures resulting in $275.14 in fines
1 failure to report expenditures resulting in a $1,500 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 2015 was $1,868,180.86. In fiscal year 2016, a total of $336,709.37 in revenue was realized and a total of $691,588.83 in expenditures was incurred, thereby closing fiscal year 2016 with a balance of $1,513,301.40.

For the past 10 fiscal years (FY 2007 – FY 2016), 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 $179,835 (which is $17,697 more than last year), the interest yielded $10,794.56, and the escheats/false name/surplus/anonymous contributions totaled $6,169.94. 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.

During this fiscal year’s legislative session, attempts were made to have the Executive Branch absorb the Commission’s operating expenses including salaries and administrative expenses. This was unsuccessful as were legislative efforts.

As for staff transitions, during this period, on 3/1/16, the Commission’s Administrative Assistant of 35 years retired. Fortunately, a new Administrative Assistant was hired and started work three weeks later. Also, during this period, we had 2 new Commissioners sworn in.

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

Deputy Attorney General Kunimoto recommended a change to the language on page 2 concerning the Commission’s bills not passing this year. She recommended that the sentence read: “The Commission’s bills failed to pass the Legislature.”

Associate Director Baldomero stated that the escheat amount of $6,788.85 on pages 10 and 11 be corrected to $6,169.94.

Chair Luke called for a vote to approve the Annual Report as amended.

Commissioner Shoda moved to approve the Commission’s Annual Report for FY 2016 with amendments. Motion seconded by Vice Chair Yoshihara. Motion carried (5-0).

Old Business – None

Mr. Mike Palcic requested to speak on the matter previously discussed in Docket No. 17-15. However, he proceeded to comment that there has been no movement on Docket No. 15-94 – In Re the Matter of Committee to Elect Julia Allen.

Commissioner Goodenow stated that this matter is not on the agenda and that they are not able to discuss it pursuant to Sunshine laws.

Mr. Mike Palcic offered further comments concerning Docket No. 15-94 and further commented about the calculation of expenditure limits in reference to Docket No. 17-15. Associate Director Baldomero responded to his questions about calculating the expenditure limits in 2016 by stating that the expenditure limits are calculated on a per election basis with the primary period defined as January 1, 2016 through August 13, 2016 and the general period defined as August 14, 2016 through November 8, 2016.

Commissioner Goodenow reiterated his concerns that these matters are not before them and that it should be put on the agenda to comply with Sunshine laws.

Deputy Attorney General Kunimoto clarified that his comments concern the contested case hearing which was remanded by the First Circuit Court to assess the fine. The order concerning the remand has not been finalized.

Mr. Mike Palcic made comments concerning the $19,132 expenditure limit associated with the Committee to Elect Julia Allen that they agreed to for the 2016 elections. Specifically, he was concerned whether the committee’s unpaid expenditures from the 2014 election and part of Docket No. 15-94 would be counted towards the expenditure limit in the 2016 election. Associate Director Tony Baldomero reiterated the definition of the 2016 expenditure limit periods and stated that the 2014 election’s unpaid expenditures would not be included with the 2016 election expenditures when the expenditure limits are calculated.

Report from Executive Director
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”), there are 6 remaining (i.e., Faye Hanohano, Creighton Higa, Henry Kahula, Curtis Lake, Nora Pajimola, and Raymond Banda).

As for the report on compliance of filing timely disclosure reports in 2016, Executive Director Izumi-Nitao reported that:

-For the Final Primary Report (covering the period of 7/30/16 – 8/13/16) which was due on 9/2/16:

There were 220 candidate committees that were required to file → 205 filed on time, 4 filed late, & 11 did not file (5%)
As of today, 3 have not filed
There were 254 noncandidate committees that were required to file → 230 filed on time, 4 filed late, & 20 did not file
As of today, 11 have not filed

-The next report will be the 1^st Preliminary General Report (covering the period 8/14/16 through 9/26/16) for noncandidate committees which is due on 10/3/16

-Following that, the next report will be the Preliminary General Report (covering the period 8/14/16 through 10/24/16 or 1/1/16 through 10/24/16 if you are a candidate only running in the general election) for candidates running in the 2016 election and the 2^nd Preliminary General Report (covering the period 9/27/16 through 10/24/16) for noncandidate committees which are both due on 10/31/16

-So, the 10/12/16 Commission Meeting is the last meeting before the general election on 11/8/16

Report on Online PayPal Payments
Associate Director Baldomero reported that Commission staff has been working on a process to permit fine payments to be paid online and that the technology is available. However, the project was suspended to permit staff to assess the internal and external management of these operations until after the 2016 election.

Discussion on Topics for 2016 Annual Online Survey
Executive Director Izumi-Nitao reported that this is the 5^th year that we are doing this survey which will review fiscal year 2016. It is a web-based survey to help improve and evaluate the effectiveness of the Commission’s operations and communications. The survey will cover 6 areas: Relationship to the Commission; Communication with/or Access to the Commission; Education and Training provided by the Commission; Compliance and Enforcement; Public Funding; and Other General Matters.

The survey is set to launch on 9/15/16 until 10/15/16. The survey findings will be shared with the Commissioners at a subsequent meeting and then published on the Commission’s website.

Executive Director Izumi-Nitao asked if there were any questions, requested edits, or additions to the survey. There were none.

Update on the 2016 Election
Since the primary election on 8/13/16, Associate Director Baldomero offered the following comments as we go into the general election on 11/8/16 which were set forth on a hand-out.

-There were 38 outright winning candidates from the primary election which includes 3 non-incumbents (Harry Kim, Tim Richards, and Jennifer Ruggles)
-There were 95 unsuccessful candidates from the primary election
-There were 135 candidates that were successful in the primary election and moved on to the general election
-The interesting races in the general election to name a few are: Honolulu Mayor; Senate Districts 9 and 13; House Districts 29, 31, 34, 36, 41, 43, 44, and 47; Hawaii County Council Districts 3 and 4; Maui County Council – all districts; Kauai Prosecutor; Kauai County Council; and, OHA At-Large and Hawaii Districts.

Update on Partial Public Funding and the Hawaii Election Campaign Fund
Associate Director Baldomero reported that a total of 18 candidates have qualified for and received public funding totaling $96,355.76 to date. He further stated that he has 6 additional applications pending review which would increase the public funding total to $120,520.16 if approved. These totals fall within the projected estimates for this election. Fifteen of the 18 candidates who received public funding in the primary election have advanced to the general election so there is a high possibility that they could apply for public funding in the general election. This creates a lot of uncertainty in attempting to determine the total amount of public funding disbursed in the election.

As for the Hawaii Election Campaign Fund, at the close of FY 2016, the fund balance is at $1,513,301.40.

Report on 2016 Ballot Issues
Associate Director Baldomero reported that there are 35 proposed amendments to the State Constitution and County charters that will be on the general election ballot: (1) 2 to the Hawaii State Constitution; (2) 20 to the Honolulu City Charter; (3) 1 to the Hawaii County Charter; (4) 5 to the Maui County Charter; and (5) 7 to the Kauai County Charter. No ballot issue committees have registered with the Commission for any of these ballot issues to date.

He commented that in the 2014 election, there were 13 ballot issue committees that spent $12.5 million.

Chair Luke asked for a motion to convene Executive Session to consider and approve Executive Session minutes from the Commission meeting on 8/10/16.

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

Public session reconvened at 12:08 p.m.

Chair Luke asked for a motion to adjourn the meeting. Commissioner Goodenow moved to adjourn the meeting. Motion seconded by Vice Chair Yoshihara. Motion carried (5-0). Meeting adjourned at 12:09 p.m.

Next Meeting:
Scheduled for Wednesday, October 12, 2016.

Campaign Spending Commission

Minutes for September 14, 2016 Meeting

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