CSC Newsletter – July 2019, Vol. 25, No. 2

Posted in Newsletter

REMINDER TO ALL COMMITTEES TO FILE THE SUPPLEMENTAL REPORT

The next report for all committees is the Supplemental Report.  Because of the Honolulu City Council, District 4, Special Election (“2019 Special Election”) on April 13, 2019, your reporting period may differ depending on your circumstances.

  • If you were a Candidate Who Ran in the 2019 Special Election (i.e., Tommy Waters and Trevor Ozawa), your reporting period is April 14, 2019 to June 30, 2019.
  • If you are a Candidate Who Did Not Run in the 2019 Special Election (i.e., all Candidate Committees except for Tommy Waters and Trevor Ozawa), your reporting period is January 1, 2019 to June 30, 2019.
  • If you are a Noncandidate Committee, your reporting period is April 14, 2019 to June 30, 2019.

This report must be electronically filed on your respective filing systems (i.e., Candidate Filing System (CFS) or Noncandidate Committee Filing System (NCFS)) no later than 11:59 p.m. Hawaiian standard time on Wednesday, July 31, 2019.

Failure to file your report by the July 31st deadline will result in a fine and the posting of your committee’s name on the Commission website under “Candidate Committees That Failed to File or Correct a Report” or “Noncandidate Committees That Failed to File or Correct a Report.”  Moreover, if a fine is assessed against your committee and you fail to timely pay it, Commission staff will issue a complaint against your committee and set it for consideration at the next public Commission meeting.  Therefore, we encourage all committees to timely file their reports.

As a reminder, the reporting period for the Supplemental Report ended on June 30th so the report can be filed as early as July 1st, but no later than July 31st.  Committees do not have to wait until the July 31st deadline to file this report.

SUMMARY OF THE 2019 SPECIAL ELECTION

We have posted on our website a summary of the data reported by Trevor Ozawa and Tommy Waters who ran in the 2019 Special Election for the Honolulu City Council, District 4 seat.  Of particular interest is the activity of the Super PACs who supported/opposed these candidates during the 2019 Special Election with $130,150 being spent by the AiKea to oppose Trevor Ozawa, and a combined $44,764.17 being spent by AiKea and UPW to support Tommy Waters.

The 2019 Special Election saw Tommy Waters outraise Trevor Ozawa $310,481.87 to $227,051 and outspend him $268,216.52 to 232,953.26.  This was in contrast to the 2018 elections which saw Trevor Ozawa outraise Tommy Waters $551,255.16 to $177,128.62 (3 to 1 ratio) and outspend him $530,541.88 to $212,039.44 (2.5 to 1 ratio).  Click here to view the 2019 Special Election summary as well as a summary of the data reported by these candidates for their 2014 and 2018 contests including totals raised and spent. The summary also provides information on the vote counts, cost per vote, and totals raised and spent by Super PACs during these elections.

NEW LAWS GOING INTO EFFECT AND REVIEW OF 2019 LEGISLATIVE SESSION

There are three (3) new laws from the 2019 Legislative Session.  They are:

  • Act 8 (H.B. 165) – This bill was introduced on behalf of the Commission.  Requires candidate committees to inform the Commission if they are $1,000 or less by June 30th of an election year and noncandidate committees to inform the Commission if they are $1,000 or less by the fifth calendar day before the due date of the preliminary report.
  • Act 107 (S.B. 197 H.D. 1) – Allows donations to charities and scholarship awards prior to the day after the general election if the candidate wins outright or loses in the primary election.  Donations to charities and scholarship awards are currently prohibited from the filing of nomination papers through the general election for charitable donations, or from the nomination paper filing deadline through the general election for scholarship awards.
  • Act 241 (S.B. 138 H.D. 1) – This bill was introduced on behalf of the Commission.  Requires an October 1st report for candidate committees and the House added another report on April 30th for candidate committees whose candidates file nomination papers by April 25th of an election year.

The Commission submitted five (5) bills this year and only two of the three mentioned above were passed.

EFFECT OF ACT 8 (H.B. 165) – $1,000 OR LESS AGGREGATE CONTRIBUTIONS AND EXPENDITURES

If you believe your committee’s aggregate contributions and aggregate expenditures for the 2020 election period will total $1,000 or less, you will need to check off the box on your Organizational Report with the Commission no later than June 30, 2020 for candidate committees or July 24, 2020 for noncandidate committees.  The 2020 election period runs from November 7, 2018 through November 3, 2020 for candidates running for a 2-year office, typically from November 9, 2016 through November 3, 2020 for candidates running for a 4-year office, and April 19, 2019 through November 3, 2020 for noncandidate committees.  In doing so, pursuant to HRS §11-339, you need only electronically file the Final Election Period Report due on December 3, 2020, and subsequent Supplemental Reports after the election if you do not terminate your candidate committee registration with the Commission.  If you exceed the $1,000 limit, you will then be required to electronically file all the other required reports from the period in which the $1,000 limit was exceeded.

EFFECT OF ACT 241 (S.B. 138) – NEW REPORTS FOR CANDIDATE COMMITTEES RUNNING IN THE 2020 ELECTION

Unless you are a candidate committee that has declared that it does not intend to receive or spend more than $1,000 for the 2020 election, the number of PRIMARY ELECTION reports you will be required to file will depend on whether you file nomination papers before or after April 25, 2020.

If you file nomination papers by April 25, 2020, you will be required to file these reports at a minimum:

  • 1st Preliminary Primary Report covering the period January 1, 2020 to April 25, 2020 (due on April 30, 2020);
  • 2nd Preliminary Primary Report covering the period April 26, 2020 to June 30, 2020 (due on July 9, 2020);
  • 3rd Preliminary Primary Report covering the period July 1, 2020 to July 24, 2020 (due on July 29, 2020); and
  • Final Primary Report covering the period July 25, 2020 to August 8, 2020 (due on August 28, 2020).

If you file nomination papers after April 25, 2020, you will be required to file these reports at a minimum:

  • 2nd Preliminary Primary Report covering the period January 1, 2020 to June 30, 2020 (due on July 9, 2020);
  • 3rd Preliminary Primary Report covering the period July 1, 2020 to July 24, 2020 (due on July 29, 2020); and
  • Final Primary Report covering the period July 25, 2020 to August 8, 2020 (due on August 28, 2020).

With respect to GENERAL ELECTION reports, all candidates running in the 2020 election (regardless of when you filed nomination papers) will be required to file at a minimum these following reports:

  • 1st Preliminary General Report covering the period August 9, 2020 to September 26, 2020 (or January 1, 2020 to September 26, 2020 for candidates whose names did not appear on the Primary Election ballot but will appear on the General Election ballot) (due on October 1, 2020);
  • 2nd Preliminary General Report covering the period September 27, 2020 to October 19, 2020 (due on October 26, 2020); and
  • Final Election Period Report covering the period October 20, 2020 to November 3, 2020 (due on December 3, 2020 unless you will be sworn in prior to this date – i.e., Kauai County officials then the due date is on November 27, 2020).

NEW – REPORTING SCHEDULES

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

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

Failure to file any report by the deadline will result in a fine and the name of your committee will be posted on the Commission’s website under “Candidate Committees That Failed to File or Correct a Report” or “Noncandidate Committees That Failed to File or Correct a Report.”  Further, if a fine is assessed against your committee and you fail to timely pay it, Commission staff will issue a complaint against your committee and set it for consideration at the next public Commission meeting.  Therefore, we encourage all committees to timely file their reports and pay any fines.

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

TERMINATION OF COMMITTEE REGISTRATION WITH THE COMMISSION

If you are a candidate who does not anticipate running in a future State or county election, or you are a noncandidate committee that does not intend to participate in future State or county elections, and your committee has no surplus or deficit in campaign funds, you may want to consider terminating your registration with the Commission.  If so, you will need to complete and submit the following documents:  (1) A “Request for Termination of Registration” form for candidate committees or “Request for Termination of Registration” form for noncandidate committees; and (2) A closing bank statement verifying that your committee’s bank account has been closed.  Further, you must not have any outstanding fines or unresolved matters with the Commission.  Assuming everything is in order, the Commission will approve your termination request and you will no longer be required to electronically file reports with the Commission.

UPDATING ORGANIZATIONAL REPORTS

As of July 1, 2019, candidate committees that login to the Candidate Filing System (CFS) and noncandidate committees that login to the Noncandidate Committee Filing System (NCFS) will be presented with their Organizational Report. Please take the time to review your Organizational Report and make any needed changes.

HRS §§11-322(b) and 11-323(b) provides that any change in information previously reported in the organizational report shall be electronically filed with the commission within 10 days of the change being brought to the attention of the committee chairperson or treasurer.  Failure to do so may result in a fine as well as prevent the Commission from communicating with you.

CONSIDERATIONS IF YOU ARE A CANDIDATE PLANNING ON RUNNING IN THE 2020 ELECTION

We offer the following reminders and tips to candidates and their committees who are planning their campaign for election or reelection in 2020.  This is not a conclusive list so for more information please call us at (808) 586-0285, stop by our office at 235 S. Beretania Street, Room 300, or visit our website.

  • If you are a new candidate, consider downloading and printing committee guidebooks, manuals, and reporting schedules as well as viewing our cyber-learning videos on the Commission’s website. Registration for training will be announced in early 2020.
  • Make sure you have advertisement disclaimers on your signs and banners. This may also be a good chance to take inventory of your past or older signs to make sure they have the necessary disclaimers.
  • Review and update all information on your Organizational Report – oftentimes, phone numbers and addresses have changed.
  • If you are entering into contracts for electioneering communications, make sure you file your Statement of Information for Electioneering Communications within 24 hours with the Commission to avoid any fines.
  • Consider doing some campaign research of past elections or of opponent data by using the Commission’s data visualization tool.
  • Take a look at the 2020 expenditure limits and maximum available public funding amounts to see if participating in the voluntary partial public funding program is a viable option for your campaign.
  • If you plan on having a fundraiser for which the amount of the ticket is more than $25 per person, remember to file a Notice of Intent to Hold a Fundraiser with the Commission prior to the fundraiser’s start time and before the Commission’s office closes for the day at 4:30 p.m., Hawaiian standard time. Failure to comply with this requirement will result in a fine.
  • If your committee is using a debit card, please keep detailed records that will allow you to timely and accurately report all expenditures on the committee’s disclosure report.
  • If your committee would like to make charitable donations or award scholarships to full-time students attending an institution of higher learning or vocational education school, now is a good time before you file nomination papers to make these expenditures as long as you do not exceed two times your contribution limit (i.e., $2,000, $4,000, or $6,000).
    • From the date a candidate files nomination papers to the date of the general election on November 3, 2020, candidate committees are prohibited from making charitable donations with campaign funds, unless a candidate wins outright or loses in the primary election then the prohibition applies from the date a candidate files nomination papers to the date of the primary election on August 8, 2020.
    • From the nomination paper deadline on June 2, 2020 to the general election on November 3, 2020, candidate committees are prohibited from using campaign funds to award scholarships to full-time students attending an institution of higher learning or a vocational education school, unless a candidate wins outright or loses in the primary election then the prohibition applies from the nomination paper deadline to the date of the primary election on August 8, 2020.
  • If a Super PAC approaches your candidate committee, it is important to remember that its support of your nomination or election to office must be “independent” and that you and your agents such as committee officers are not “coordinating” campaign activities with them. If either of these circumstances occur, then the spending done by the Super PAC on your behalf will be deemed to be a contribution to your campaign subject to your contribution limit and the Super PAC will lose its status as a Super PAC, and thus, subject them to the contribution limits of noncandidate committees.
  • A Super PAC’s use of your campaign material, without your knowledge or consent, in the Super PAC’s “independent” advertising on your behalf, will be considered a contribution to your campaign. This will likely result in an excess contribution on the part of the Super PAC for which a fine will be assessed by the Commission against the Super PAC.
  • Be aware that expenditures or any other “coordinated activity” made by any person including an individual, party, corporation, business entity or labor union for the benefit of a candidate in cooperation, consultation, or concert with, or at the request or suggestion of, a candidate, candidate committee, or their agents, shall be considered to be a contribution to the candidate and expenditure by the candidate.

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

ADVERTISEMENT DISCLAIMERS AND ADMINISTRATIVE FINES FOR VIOLATIONS

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

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

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

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

Failure to have the advertisement disclaimer will result in a fine pursuant to HRS §11-391(b) which provides that “[t]he fine for violation of this section, if assessed by the commission, shall not exceed $25 for each advertisement that lacks the information required by this section or provides prohibited information, and shall not exceed an aggregate amount of $5,000.”

The Commission has adopted a Schedule of Fines pursuant to Hawaii Administrative Rules (HAR) §3-160-73(a).  For advertisements missing a disclaimer, the fine schedule provides for a fine of $25 per advertisement for the 1st violation, a fine of $100 per advertisement for the 2nd violation, and a fine of $500 per advertisement for the 3rd violation.  Fines for further violations shall be determined by the Commission via a complaint, but shall not exceed an aggregate amount of $5,000.

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

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

ELECTIONEERING COMMUNICATIONS

An electioneering communication means any advertisement that is broadcast from a cable, satellite, television, or radio broadcast station; published in any periodical or newspaper or by electronic means; or sent by mail at a bulk rate, and that:  (1) Refers to a clearly identifiable candidate; (2) Is made, or scheduled to be made, either within 30 days prior to a primary or initial special election (i.e., July 9, 2020) or within 60 days prior to a general or special election (i.e., September 4, 2020); and (3) Is not susceptible to any reasonable interpretation other than as an appeal to vote for or against a specific candidate.

Persons, which include an individual, a partnership, a candidate committee or noncandidate committee, a party, an association, a corporation, a business entity, an organization, or a labor union and its auxiliary committees, who make electioneering communications in an aggregate amount of more than $2,000 during any calendar year, are statutorily required to file a Statement of Information for Electioneering Communications within 24 hours of executing a contract relating to an electioneering communication advertisement.

Once you have filed a Statement of Information, you will need to continue to file Statements of Information for all future electioneering communications even if the amount is under $2,000 because your committee met this threshold with the previous filing.

The Statement of Information is being updated for the 2020 election and will be posted soon.  The form must contain information set forth in HRS §11-341 and HRS §11-393, and can be submitted by eSign or by printing and signing a writeable/printable PDF.  Persons who fail to submit this form timely will be in violation of the campaign finance laws.

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

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

Under HRS §11-381(a)(3), candidate committees may make donations to any community service, educational, youth, recreational, charitable, scientific, or literary organization as long as the total amount of all donations is no more than twice the maximum amount that one person may contribute to that candidate pursuant to HRS §11-357 and the donations cannot be made from the date the candidate files nomination papers to the date of the general election, unless a candidate wins outright or loses in the primary election then the prohibition applies from the date a candidate files nomination papers to the date of the primary election on August 8, 2020.

The Commission has been aware of candidate committees’ donations to charitable/community or non-profit organizations being reported as advertising that is directly related to the candidate’s campaign under HRS §11-381(a)(1).  In these instances, the candidate committee is characterizing its donation as advertising because the candidate committee is being recognized as a sponsor in the charitable/community or non-profit organization’s program or acknowledgment materials.  Given these circumstances, the Commission is likely to inquire further since HRS §11-381(a)(3) has amount and time limitations for donations to charitable or community organizations, while advertising directly related to a candidate’s campaign provision (i.e., HRS §11-381(a)(1)) has no limitations.  Generally, if the nonprofit organization reports the expenditure by the candidate committee as a tax-exempt donation to the IRS or records the expenditure as a gift on its books, the Commission will treat the expenditure likewise, and thus, the statutory amount and time limitations will apply.  However, if the nonprofit organization reports the expenditure as income to the IRS, or otherwise treats the expenditure as income on its books, the Commission will consider whether the expenditure is permissible as being directly related to the candidate’s campaign.  If the person soliciting the expenditure does not know if the organization will be treating the expenditure as a donation or income, the Commission advises that the candidate committee not make the payment to the nonprofit organization from campaign funds.  Of course, a candidate is always allowed to make an expenditure to these organizations from personal funds.