Ohio Ballot Initiatives Qualify

EDITORIAL

Derek Cressman

After certifying a recall petition against state Senate President Ben Stevens in August, the state Division of Elections ruled in September that the petition did not state reasons sufficiently significant under Alaska law to recall Stevens. Recall organizers claim Stevens violated his oath of office by seeking to appropriate money for education from Alaska’s Permanent Fund instead of from taxpayers, including an oil company for which Stevens did some consulting work. Under Alaska law, elected officials can be recalled for lack of fitness, incompetence, neglect of duties, and corruption.
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A conference committee removed a provision from an elections bill that would have allowed state political parties to raise unrestricted soft money. The provision had been inserted into the House bill by Sen. Gene Therriault, R-North Pole, and approved by the Senate. Therriault argued that his goal was to redirect money from independent groups back to the parties for party-building efforts. The conference committee took three minutes to remove Therriault’s provision and pass an amended version.

Arizona State Representative David Burnell Smith is now one step closer to getting booted from office for violating the state’s Clean Elections Law after an administrative judge affirmed the Clean Elections Commission’s decision to remove him from office. The Commission has since ratified its earlier decision. Smith plans to take the judge’s decision to court, where he will challenge the constitutionality of Arizona’s voluntary spending limits. Mr. Smith has also been ordered to repay the $34,625 in public funds he received for his campaign, and pay a civil penalty of $10,000.In Arizona’s publicly financed elections, candidates who seek public funds for their campaigns must agree to abide by a spending limit. This helps to ensure that public dollars are truly being spent to level the playing field for all candidates, rather than to subsidize the campaigns of those backed by private cash. Smith, a lawyer, got in trouble by overspending the AZ limit by some $6,000 (17% over the limit) and for obscuring some of his expenditures.

On July 22, the Arkansas Ethics Commission doubled the permissible amount of contributions to Arkansas state campaigns from $1,000 to $2,000 in compliance with HB 2978, passed earlier this year. This means Arkansas now has the same campaign finance limits as federal races, and we’ve all seen how well those worked in the last election!

Led by the whopping $75 million pharmaceutical companies have kicked in to their California ballot initiative fund, nearly $150 million has been raised for this year’s special election. With the exception of Prop 73 (parental notification of abortion), the battle is generally between Governor Schwarzenegger’s corporate-backed agenda and labor unions. Governor Schwarzenegger has raised some $27 million into his various committees; labor unions have raised nearly $50 million, $35 million coming from the California Teachers Association.

Litigation
Prop 77 (redistricting commission) proponents circulated a slightly different version of the initiative from that which was approved by the Attorney General’s office. Attorney General Bill Lockyer filed suit against the measure, claiming that the differences between the two versions were sufficient to remove Prop 77 from the ballot. After two lower courts agreed to strike the measure, the California Supreme Court restored the measure to the ballot, holding that without evidence that the differences between the two versions “were likely to have misled the persons who signed the initiative petition ... it would not be appropriate to deny the electorate the opportunity to vote on Proposition 77.’
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On May 31, TheRestofUs.org filed a request for a preliminary injunction against Governor Schwarzenegger’s California Recovery Team based on the Recovery Team’s ongoing contributions to Governor Schwarzenegger’s re-election campaign. These contributions took many forms, including paying for the “JoinArnold” website, which until TheRestofUs.org filed its preliminary injunction request, actively promoted Schwarzenegger’s qualifications as a candidate and expressly solicited donations for Schwarzenegger’s official re-election committee. California law limits contributions to $5,000 to those committees which in turn make contributions to candidates.

Schwarzenegger has used the Recovery Team as his primary fundraising vehicle, taking in nearly $34 million since he became governor. The Recovery Team’s official status as a general purpose ballot committee has enabled Schwarzenegger to evade the state’s incredibly high contribution limits ($22,300 per election for gubernatorial candidates) and to rake in six- and seven-figure donations from wealthy interests to finance his agenda.

Governor’s Contract Creates Conflict of Interest
Newspapers revealed that just two days before he took office, Governor Schwarzenegger signed a contract with a tabloid publisher to be the executive editor of two of its muscle magazines. The contract paid Schwarzenegger a minimum of $1 million a year, and potentially much more depending on the magazines’ advertising revenues, which derive largely from ads for dietary supplements.

Schwarzenegger was able to keep the details of the contract secret until American Media’s corporate filings revealed its terms because the official beneficiary for the contract was Oak Productions, Schwarzenegger’s company. California disclosure law only requires officials to list the sources of income and amount ranges, rather than specific terms.

While the notion of a public official under contract to a private group is bad enough, Schwarzenegger vetoed a 2004 bill that would have regulated the supplement industry, the major source of ad revenue for his employer. After TheRestofUs.org and others took Schwarzenegger to task for his contract (see back page), the Governor dropped his contract, although kept the $1 million he had already earned from the publishing company.

The Connecticut House and Senate conspired in early June to kill a promising campaign finance law. The Senate passed a reform bill by a 24-12 vote on June 8 at 2:57 A.M. An hour and a half later, the House passed a more comprehensive version by 92-43.
By passing different versions of reform and refusing to come to a compromise, both houses gave their members cover to say that they have voted for reform while blaming the other chamber. Governor Jodi Rell, who had initially signaled her possible opposition to public financing, came out in support of the idea and promised to sign comprehensive reform legislation that included public financing for both statewide and legislative offices. It may have been a bluff, but the Democrats who control the legislature couldn’t get their act together to find out. This legislative buck-passing is a common technique to avoid doing the people’s business. Nebraska has solved the problem by adopting a unicameral legislature, something perhaps Connecticut should consider.

After the legislative failure, Governor Rell convened a working panel of legislators to discuss campaign reforms. The panel has considered a program of voluntary public financing, tightening restrictions on contributions from lobbyists, and imposing limits on contributions from leadership PACs. The group has a self-imposed deadline of September 15.

The demand for reform in Connecticut was galvanized by the conviction of former Governor John Rowland on charges that he received hundreds of thousands of dollars worth of free services from state contractors, many of whom were also political patrons of Rowland. Citizen organizations like Connecticut Citizen Action Group and Common Cause continue to push the Governor and the legislature to pass these much-needed reforms.

A coalition of citizen groups and former elected officials are working on gathering signatures for a trio of ballot initiatives that would change the way Florida’s congressional and legislative districts are drawn. Sponsored by the Committee for Fair Elections, the three initiatives would: shift the responsibility for drawing the districts from politicians to an independent panel, create a set of standards that the panel would use in drawing the districts, and fix the Florida gerrymander in time for the 2008 elections. More than 250,000 signatures have been gathered for the initiatives.

Although all three initiatives were vetted and approved by the Secretary of State’s office, that office withdrew the certification for the standards initiative after newspaper reports showed that the ballot summary for that initiative was 81 words – six words longer than the 75-word limit under Florida law. Supporters of the initiatives, including ACORN, Common Cause, and Florida PIRG, have indicated that they will pursue the matter in court.

The standards laid out in the stricken initiative go beyond those currently set forth in the state constitution, and include the following requirements: that districts be compact and, where practicable, utilize existing political and geographical boundaries; that districts, where practicable, preserve communities of interest; that districts not be drawn to favor an incumbent, political party or other person; that competitive districts should be favored and that districts not consider the residence of any individual, except to comply with the constitution or laws of the United States.
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By pulling in $3.02 million in his quest to replace current termed-out Governor Jeb Bush, 2006 gubernatorial candidate and Florida Chief Financial Officer Jim Gallagher set a state record for fundraising in a quarter – until his likely primary opponent, Attorney General Charlie Crist, announced that he had raised some $3.8 million. The previous record of $3 million was set by Governor Bush in 1998.

Fundraiser par excellence Governor Rod Blagojevich unveiled a campaign finance proposal after a series of scandals involving state contractors – who also happened to be major campaign contributors to the governor. Under Blagojevich’s plan, legislative and statewide candidates would be limited to raising $2,000 from individuals and $5,000 from political action committees per election, the same limits that have done little to improve federal elections. The proposal would, however, completely ban the unlimited millions of dollars in corporate and labor union political donations that flow into Illinois politics this year.

Governor Ernie Fletcher issued blanket pardons to nine current or former members of his administration who were indicted in an investigation into the practices of the state’s personnel department. The grand jury had charged the individuals with misdemeanor violations of the state’s personnel law for allegedly basing hirings on political considerations rather than merit. The pardon includes people who have not yet been charged. Fletcher has indicated that he will not pardon himself.

The state Senate approved SCR 25, a resolution asking Congress to propose a constitutional amendment to replace the Electoral College with a popular vote to pick a president. The move comes after two hotly contested presidential elections in which the results of the Electoral College differed or very nearly differed from the outcome of the national popular vote. In 2000, Al Gore lost the Electoral College despite winning the popular vote. In 2004, a change of a mere 21,575 votes from Bush to Kerry in three states - Iowa, New Mexico, and Nevada - would have resulted in a 269-269 tie in the Electoral College. Had some 70,000 Ohio voters switched from Bush to Kerry, Kerry would have won the presidency despite receiving some 3 million fewer votes than Bush.

The Attorney General has certified for further circulation a petition which would create an Independent Redistricting Commission to draw up legislative districts, instead of the legislature doing so as is currently required. Common Cause is leading efforts to promote the reform.

State Representative Dave Andersen introduced a resolution to turn the state’s redistricting over to a nine-member independent commission. The commission would be bi-partisan, with four members selected by Republicans and four selected by Democrats, with the ninth member chosen by the eight others. Currently, districts are drawn by the Michigan legislature, which has an inherent self-interest to draw safe districts that protect the seats and careers of its members.

A case involving campaign contributions from lawyers to judges is generating interest in reforming the state’s system of financing judicial elections. In the case, a state supreme court justice, two lower court judges, and a prominent trial lawyer were acquitted on counts of bribery and mail fraud. The lawyer was accused of using campaign contributions, loan guarantees, and gifts to secure favorable rulings from the judges.

In 2004, three Mississippi state supreme court races saw $2.6 million raised, most of which came from trial lawyers and pro-business groups. Past efforts at comprehensive campaign finance in the state have been derailed by Governor Barbour, who has resisted efforts to limit corporate and PAC contributions.

Nebraska Board of Regent Member David Hergert may face impeachment by the state legislature for violating Nebraska’s law governing its publicly financed elections. In June, the Legislature gave Hergert 60 days to resign for the violations. When he didn’t, the Legislature voted 31-0 to ask Hergert to resign.

Like many systems of public financing, Nebraska’s provides candidates with more funds if their opponents pass certain threshold amounts of spending. This allows candidates to compete with big spenders. Nebraska law requires candidates to estimate their spending to determine how much their opponents should get. If a candidate exceeds that estimate, they must notify the Accountability and Disclosure Commission so that their opponent can receive the additional funds. Hergert underestimated his spending by half and failed to disclose it to the Commission. His opponent was not only subjected to attack ads bought with the excess funds, but was deprived of the public funds he might have spent to defend himself. In other words, Hergert won the election by cheating. The University of Nebraska student government has also voted unanimously to call on Hergert to resign.

On June 30, New Hampshire’s Governor John Lynch signed a bill prohibiting gifts worth more than $50 to elected officials. HB 424 prohibits state and county officials from taking cash gifts that are not donated to a political campaign, and bans officials from receiving “a thing of value” worth more than $50. The impetus for the bill stemmed from revelations that two public officials had each received more than $60,000 worth of unreported gifts. When one of the officials refiled her disclosure form, it was rife with gifts, including checks, from groups trying to influence policy.

Another Princeton lawyer, Bruce Afran, accused Republican nominee Doug Forrester, the owner of Heartland Fidelity Insurance Company, of violating New Jersey’s prohibition on campaign contributions from insurance companies. Forrester has largely self-financed his own campaigns to the tune of more than $10 million and has contributed hundreds of thousands of dollars to other New Jersey candidates.

The Albuquerque City Council voted to send the Open and Ethical Elections Code referendum to the October 4 citywide ballot.  If successful, the referendum would create a system of publicly financed elections for local races. The need for the law is all the more apparent with the revelation that current mayor Martin Chavez has raised nearly $1 million for his re-election campaign, an enormous sum for a city of Albuquerque’s size.

The people of Albuquerque have already voted once to limit the influence of money in local elections. In 1974, the city’s voters approved mandatory spending limits for city campaigns. Those limits were successful until the Tenth Circuit Court of Appeals invalidated the limits after a losing mayoral candidate filed suit against them. Public financing would be the easiest way for voters to re-establish spending limits, although they would be voluntary this time around.

The Center for Governmental Studies and the New York City Voter Assistance Commission have launched the New York City Video Voter Guide. According to CGS, every candidate facing an opponent in a party primary election on Tuesday, September 13, 2005 for the offices of Mayor, Comptroller, Public Advocate, Borough President and City Council was offered the opportunity to videotape a statement. These statements, made in the language of the candidate’s choice, convey their reasons for seeking office and reflect the key planks of their platforms.

The guide features statements from 91 of the 105 eligible candidates, and will run continuously from now until the election on the New York City Channel, NYC-TV 74, which reaches approximately 1.7 million cable households in the five boroughs.

The Video Voter Guide is a great way for candidates to reach out to voters and inform the electorate of their positions, without having to spend millions of dollars. Throw in a public debate or two, a campaign website, and some public appearances, and we’ve got a reasonable way for candidates to communicate to voters that doesn’t require spending millions of dollars on TV ads or media consultants.

A coalition including Democracy North Carolina and North Carolina Common Cause successfully fought for lobbying reform. The reforms signed into law include:

n Reporting for everything that lobbyists spend on lawmakers above $10 per day to lobby or create goodwill. Currently only expenses incurred while discussing specific legislation have to be reported. According to Democracy NC, more than 90 percent of lobbyists report spending zero dollars on legislators.

n Monthly reports of what lobbyists are spending on gifts to legislators while the legislature is in session. Otherwise reports are quarterly. Currently lobbyists only report their expenses twice a year.

n Expanded regulation of lobbying to the Executive Branch. Currently there are no laws that regulate lobbying the Executive Branch.

n A six month cooling off period before legislators can become lobbyists. Currently a legislator can immediately move from voting in the public interest to lobbying for the special interests.

Issue 4 is a response to the gerrymandered congressional and legislative districts that were drawn by a Republican dominated commission in 2001. The RON amendment would establish an independent, bipartisan commission to redraw districts on a more fair basis, much like Prop. 77 in California. While California’s redistricting proposal is largely backed by Arnold Schwarzenegger and Republican donors and the Ohio proposal is backed by some labor groups and traditionally Democratic donors, TheRestofUs.org was the first citizens group to back both initiatives.

Supporters of the Ohio reform initiatives have expected opposition from entrenched politicians and wealthy special interests since the campaign began in May. That opposition emerged as Ohio First, a group headed by former President of the Ohio Senate and current lobbyist Richard Finan and represented by at least three of Ohio’s biggest law firms. The group has not revealed its financial backers.

Ohio First has filed two lawsuits against the Secretary of State relating to the reform initiatives, both based on frivolous legal arguments. The first lawsuit claimed that the initiatives should be disqualified because they did not include the language that would be deleted from the state constitution. The Supreme Court threw out that suit in short order. A second lawsuit has also been tossed.

Both houses of the Oregon Legislature passed bills related to campaign finance, although neither house took any steps to rein in the influence of money in politics.

Governor Ted Kulongoski signed HB 3458 into law, stiffening penalties for illegally using campaign money for private purposes and requiring frequent online reporting of campaign contributions. The bill was prompted by the scandal in which then-Rep. Dan Doyle used anywhere from $60,000 to $150,000 of campaign money for his personal use.
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Due to a uniquely draconian interpretation of the state constitution, Oregon is one of five states without any limitations whatsoever on campaign contributions – corporations can contribute directly to any campaign or committee, and wealthy individuals can contribute millions to a state candidate. A citizen effort to gather signatures on two reform initiatives continues to gather steam. The initiatives would amend the constitution to allow the state’s citizens to check the influence money in politics and would create a tough system of low contribution limits for both candidates and outside electioneering groups.
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Portland’s Voter Owned Elections Ordinance, a system of publicly financing elections passed by the City Council earlier this year to level the playing field for local elections, is under attack by a group trying to overturn the law with an opposing initiative. The city’s Voter Owned Elections Ordinance was passed after multiple public hearings on the issue and several delays to ensure that the public had opportunity to learn about the ordinance and weigh in on the issue. The initiative process plays an important role in representative democracy, ensuring that the majority rules, not a handful of wealthy and powerful interests. The initiative opposing Voter Owned Elections would have just the opposite effect.

The sting operation, dubbed Tennessee Waltz, used a sham company called E-Cycle to offer money to public officials in exchange for favorable votes.

On September 8, a Travis County grand jury indicted the Texas Association for Business and Texans for a Republican Majority (TRMPAC), a political committee founded by U.S. House Majority Leader Tom DeLay, on felony charges of violating election laws by using corporate money to influence 2002 state legislative races. Three TRMPAC operatives were indicted in 2004 for the same scheme.

Texas law prohibits the use of corporate political contributions for anything beyond operating expenses. TRMPAC and TAB allegedly funneled money from at least eight different corporations to various legislative candidates. The contributions were part of the DeLay-led effort to seize control of the Texas legislature and redraw the state’s districts to benefit his party.

The Supreme Court will likely announce whether it will take the case by October 3.

A court struck down a law prohibiting political candidates from lying about their opponents on the grounds that it is an unconstitutional violation of free speech and chills political discourse. The court relied heavily on a 1998 state Supreme Court decision that struck down a similar law prohibiting false statements in initiative and ballot-measure campaigns.

After two 527 groups spent $5.6 million on a state supreme court race last year, officials are considering regulating electioneering groups. Of the $5.6 million, $2.5 million came from the CEO of an energy company; another $1.4 million came from the Consumer Attorneys of West Virginia.

Governor Manchin sponsored a bill that would require 527 groups to report their donations and spending to the secretary of state’s office on a regular basis, just like candidates and political action committees. It would also cap at $25,000 the contributions individuals can make to such groups.

In September, Wisconsin lawmakers upheld a new State Elections Board rule that prevents candidates from transferring funds from their federal campaign accounts to state campaign accounts. Earlier, the Assembly Committee on Campaigns and Elections had voted to reject the restrictions.

FEC Rules Federal Officeholders Can Operate Soft Money Accounts

The Federal Election Commission (FEC) continued its tradition of undermining the nation’s campaign finance laws in an advisory opinion to two California congressmen.

Reps. Howard Berman (D – Hollywood) and John Doolittle (R – Roseville) asked the FEC if they could raise unlimited contributions to combat Proposition 77, an initiative backed by Governor Schwarzenegger and TheRestofUs.org that would take the job of drawing California’s congressional and legislative districts away from the legislature and turn it over to a board of retired judges. Although the FEC’s staff attorney advised the Commission that the answer was no, after pressure from politicians like Reps. Doolittle and Nancy Pelosi, the FEC answered with a resounding yes on August 18.

The Bipartisan Campaign Reform Act of 2002 sets limits on the funds federal candidates may solicit, receive, direct, transfer, beg for, or spend “in connection with any election other than an election for Federal office.” 2 U.S.C. 441i(e)(1)(B). In 2003, Arizona Rep. Jeff Flake asked the FEC if this provision meant any money he raised to support a ballot measure repealing Arizona’s Clean Elections law (public financing for candidates) was subject to the BRCA’s $5,000 limit on contributions to a federal officeholder’s committees. In its advisory opinion to Flake finding that his committee supporting the ballot measure was subject to the $5,000 limit, the FEC stated the following:

“The Commission finds that all activities of a ballot measure committee “established, financed, maintained or controlled” by a Federal candidate . . . are “in connection with any election other than an election for Federal office.” This includes activity in the signature-gathering and ballot qualification stage, as well as activity to win passage of the measure after it qualifies for the ballot.”

In other words, the $5,000 limits apply to any election, in complete opposition to the FEC’s Berman/Doolittle advisory opinion.

The courts have already forced the FEC to rewrite some of its regulations implementing the BCRA because those regulations were so far astray from the language and intent of the statute. The Berman/Doolittle opinion is another example of the FEC overstepping its bounds to undermine the nation’s law, and means that federal candidates may now be free to open and operate soft-money accounts in relation to state ballot measures.

Competing Versions of 527 Legislation Stall in Congress

The 2004 presidential election saw the rise in power and notoriety of groups known as 527 organizations (for the chapter of the IRS Code under which they are organized). Although many of these organizations very clearly were attempting to influence the outcome of federal elections, the FEC found that they were not subject to the rules and limits governing political action committees. By the time the smoke had cleared, 527 groups had spent some $550 million on elections, more than half of which they spent on the presidential election. The vast majority of money raised by the groups came in donations from the -rich in chunks of $1 million and up.

In response to the FEC’s inaction and the 527s’ clear efforts to influence federal elections, Congress took up the issue earlier this year. Different sides have proposed two totally different responses, one which would apply the same rules to 527s that attempt to influence federal elections as apply to federal PACs; one which would lift the BCRA’s aggregate contribution limits and allow more money to political parties. It is unclear whether either approach will gain sufficient traction to pass.

Congressman Randy (“Duke”) Cunningham

Congressman Randy Cunningham of San Diego has been accused of demanding and receiving a bribe from a federal defense contractor, who bought Cunningham’s home for some $700,000 more than its market value, and then turned around and sold it for a loss. Federal prosecutors made the charge against Cunningham in documents filed with the court overseeing a grand jury investigation into Cunningham. While the prosecutors have not yet sought Cunningham’s indictment, it appears very probable that they will.

The sweetheart deal on the house was not the only favor Cunningham received from the contractor – the congressman also lived rent-free while in D.C. on the Duke Stir, a yacht named for Cunningham but owned by the same contractor. The contractor – MZM Inc. – received $163 million in defense contracts since receiving its first contract in 2002. Cunningham sits on the House subcommittee which oversees defense spending.

Since the allegations became public, Cunningham has announced he will not run for re-election. Federal authorities are currently trying to prevent Cunningham from selling the house he bought with the gains from the apparently illegal sale of his former home.

Ameriquest’s Money Fuels

California’s Special Election

Ameriquest’s $1,718,000 in ballot initiative contributions, largely filtered through intermediaries, accounted for just over 50% of the $3.4 million donated to the official committees for four initiatives from these committees. Ameriquest was the single largest contributor to the California Business PAC, run by the Chamber of Commerce, and the New Majority PAC and the second largest donor to the California Business Properties PAC.

It is unclear what Ameriquest’s interest is in altering teacher tenure (Prop 74), altering legislative redistricting (Prop 77), or cutting union workers political clout (prop 75).

However, as a major mortgage broker that has been accused of predatory lending practices, the company certainly has an interest in helping friendly politicians, such as Arnold Schwarzenegger, stay in office.

The Back Page:

Two Takes on the Same Situation
Analytical
“Anytime you have a public official who is taking money from companies with business before the state, it’s a conflict of interest.” -- Ned Wigglesworth, analyst for TheRestofUs.org on The Daily Show with Jon Stewart, July 19, 2005, regarding Arnold Schwarzenegger’s veto of a bill to regulate body-building diet supplements while he was on the payroll of two body-building magazines. The supplement makers are heavy advertisers in these magazines, and Schwarzenegger received a percentage of all ad revenues.