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HomeMy WebLinkAboutMemo - Mail Packet - 7/7/2020 - Memorandum From Ryan Malarky And Delynn Coldiron Re: Clarification Regarding The Participation Of Political Action Committees And 527 Groups In City Elections And Relationship To City Political CommitCity Attorney’s Office 300 Laporte Avenue PO Box 580 Fort Collins, CO 80522 970.221.6520 970.221.6327 fcgov.com City Clerk 300 LaPorte Avenue PO Box 580 Fort Collins, CO 80522 970.221.6515 fcgov.com/cityclerk June 25, 2020 TO: Mayor Troxell and City Councilmembers THRU: 'DULQ$WWHEHUU\&LW\0DQDJHU Kelly DiMartino, Deputy City Manager &DUULH'DJJHWW$WWRUQH\ FROM: Ryan Malarky, Assistant City Attorney Delynn Coldiron, City Clerk RE: Clarification regarding the participation of political action committees and 527 groups in City elections and relationship to City “political committees” This memorandum responds to questions raised by City Council at its June 2, 2020, meeting and subsequently discussed briefly by the Election Code Committee at its June 5, 2020, meeting. At the June 2nd Council meeting, some Councilmembers mentioned “political action committees” and “527 groups,” and Councilmembers asked for clarification about what the City Code requires with respect to the participation of political action committees and 527 groups in City elections. There was also a request for clarification as to whether the Code contains limits on contributions to political committees and whether political committees can coordinate with candidate committees. The Bottom Line provides answers to these specific questions, while the Discussion provides an overview of the Code requirements for political committees. In addition, a chart outlining the types of committees established under the City’s campaign finance provisions and related requirements and restrictions is attached. The City Clerk’s Office and the City Attorney’s Office will keep these questions in mind and suggest additional clarifying Code language as Code changes are prepared for City Council this summer. Bottom Line: 1. A “political action committee” (“PAC”) is an entity regulated at the federal level by the Federal Elections Commission. The term encompasses several different types of committees or associations, including but not limited to separately segregated funds of corporations or labor organizations, Super PACs, and Leadership PACs. The State of Colorado does not expressly y      Mayor Troxell and City Councilmembers June 25, 2020 Page 2 of 4 regulate PACs. However, to the extent a PAC’s conduct meets the state definition of a political committee, the PAC must register and comply with requirements for political committees. “527 groups” are political organizations that are tax-exempt under the federal Internal Revenue Code, and which are organized to support or oppose candidates. In certain instances, the State does require 527 groups to register as “political organizations.” The City Code does not specifically address PACs or 527 groups. However, to the extent PACs or 527 groups involve themselves in City elections and their conduct meets the City Code’s definition of a political committee, the Code requires that such organizations register and comply with the reporting requirements for a political committee. If a group does not fall within the City’s definition of “political committee”, expenditures in City elections would fall under the requirements for independent expenditures. 2. The City Code establishes various types of campaign committees, including “political committees” and does not limit the amount of contribution that can be made to political committees. 3. City Code Section 7-135(h) prohibits candidate committees, issue committees, small-scale issue committees and political committees from coordinating expenditures with other such committees in a way to avoid the restrictions on campaign contributions, expenditures or reporting. In addition, the Code amendments in 2018 were intended to preclude contributions by political committees to other committees. Because it would likely be helpful to include a more explicit statement in the Code that political committees are prohibited from coordinating campaign efforts with candidate committees and from making contributions to other committees, additional language reinforcing this prohibition will be included as part of upcoming amendments to the campaign finance provisions planned for later this summer. Discussion: The Colorado Fair Campaign Practices Act (“FCPA”) was enacted at the state level in January 1997, replacing the former Campaign Reform Act. The focus of campaign regulations in state law has historically been written with a focus on the regulation of state candidates, followed by county candidates. Many of the provisions of the FCPA are not relevant to municipal candidates. In November 2000, the City of Fort Collins, as a home-rule municipality, adopted its own campaign finance laws in lieu of those contained in state law. It was the stated intent of the City Council to “entirely occupy the field of regulating the conduct of City elections and . . . the campaign activities of persons who are seeking local elective office or supporting or opposing local ballot issues or contributing to the political campaigns relating to such candidates or issues.” At the time, the local laws were modeled after language contained in the FCPA, excluding provisions, or portions thereof, that were not relevant in municipal campaigns.      Mayor Troxell and City Councilmembers June 25, 2020 Page 3 of 4 Local Definition of Political Committee When City’s campaign laws were enacted in 2000, the definition of “political committee” in the City Code read as follows: Political committee shall mean two (2) or more persons who are elected, appointed, or chosen, or have associated themselves, for the purpose of making contributions to candidate committees, issue committees, or other political committees, or for the purpose of making independent expenditures. Political committee shall not include issue committees, or candidate committees as otherwise defined in this Section. This language mirrored the original definition in the FCPA with the exclusion of a reference to political parties. The definition remained unaltered in the City Code until September 2018 when it was amended in the following manner: Political committee shall mean: (1) twoTwo (2) or more persons who are elected, appointed or chosen, or have associated themselves, for the purpose of accepting contributions or making expenditures to support or oppose one (1) or more candidatescontributions to candidate committees, issue committees or other political committees, or for the purpose of making independent expenditures. (2) Any person that has accepted contributions for the purpose of supporting or opposing one (1) or more candidates. Political committee shall not include: (1) Issue committees or candidate committees as otherwise defined in this Section; or (2) Any partnership, committee, association, corporation, labor organization or other organization or group of persons previously established for a primary purpose outside of the scope of this Article. The 2018 amendments were intended to better define a political committee and remove any overlap with other committees or types of expenditures. In particular, the 2018 amendments: x Made clear that two or more persons who either take contributions or make expenditures to support or oppose candidates must register as a political      Mayor Troxell and City Councilmembers June 25, 2020 Page 4 of 4 committee. Previously, registration was not required until such persons received contributions and made expenditures. x Made clear that any person that accepts contributions to support or oppose candidates must register. The Code broadly defines a person as any individual, partnership, committee, association, corporation, labor organization or other organization or group of persons. x Made clear that candidate committees will not also be considered political committees. x Removed the language allowing political committees to make contributions to other committees. x Limited activities of a political committee to supporting or opposing candidates. x Eliminated the ability of political committees to make independent expenditures. x Removed language that excluded from the registration requirements any partnership, committee, association, corporation, labor organization or other organization or group of persons previously established for a primary purpose outside of the scope of the City’s campaign regulations from the definition of political committee. City Code Section 7-135(h) prohibits candidate committees, issue committees, small-scale issue committees, and political committees from coordinating expenditures with other such committees to circumvent any restrictions or limitations in the Code on campaign contributions, expenditures or reporting requirements. Independent expenditures are, by their definition, not coordinated with a candidate committee. The same holds true in the FCPA and related provisions in the Colorado Constitution. The Colorado Constitution does set a limit on contributions that can be made to, and accepted by candidate committees, including contributions made by political committees, under the State campaign finance regulatory system. Since the City does not allow political committees to make contributions to candidate committees, there is no direct comparison. Both the Colorado Constitution and City Code allow political committees to make direct expenditures supporting candidates. In order to make more explicit both of these points (both coordination by political committees and payments by political committees to other committees are prohibited), staff will include language to that effect in the Code amendments coming forward later this summer for Council’s consideration. Attachment      COMPARISON OF VARIOUS TYPES OF COMMITTEES FOR ELECTION PURPOSES Definition Registration required? Required to File Campaign Finance Reports? Can Accept Contributions? Can Make Contributions to Other Committees? Can Make Expenditures? Subject to “Paid for By” requirement? Candidate Committee A person, including the candidate, or persons with the common purpose of receiving contributions or making expenditures under the authority of a candidate. A candidate shall have only one (1) candidate committee. A candidate committee shall be considered open and active until the committee has filed a termination report with the City Clerk. Yes Yes Yes Councilmember candidate- $75/person Mayoral candidate- $100/person No Yes Yes Political Committee (1) Two (2) or more persons who are elected, appointed or chosen, or have associated themselves, for the purpose of accepting contributions or making expenditures to support or oppose one (1) or more candidates. (2) Any person that has accepted contributions for the purpose of supporting or opposing one (1) or more candidates. Political committee shall not include candidate committees as otherwise defined in this Section. Yes Yes Yes No Yes Yes Small-scale Issue Committee A committee otherwise meeting the definition of issue committee that has accepted or made contributions or expenditures in an amount that does not exceed five thousand dollars ($5,000.) during an applicable election cycle for the major purpose of supporting or opposing any ballot issue or ballot question. Once a small-scale issue committee accepts contributions/makes expenditures in excess of $5,000, the small-scale issue committee must register as an issue committee and file reports about the contributions or expenditures it has made or received since the beginning of its existence as a small-scale issue committee. (See Issue Committee) Not until it accepts contributions/makes expenditures in an aggregate amount that exceeds $200 Not until it accepts contributions/makes expenditures in an aggregate amount that exceeds $5000 (and then they become an issue committee) Yes No Yes Not until it accepts contributions/makes expenditures in an aggregate amount between $200 and $5000 Issue Committee (1) Two (2) or more persons who are elected, appointed or chosen, or have associated themselves, for the purpose of accepting contributions or making expenditures to support or oppose any ballot issue or ballot question; or (2) Any person that has accepted contributions for the purpose of supporting or opposing any ballot issue or ballot question. Issue committee shall not include small-scale issue committees as otherwise defined in this Section. Yes Yes Yes No Yes Yes Person making an Independent Expenditure Independent expenditure means the payment of money by any person for the purpose of advocating the election, defeat or recall of a candidate, which expenditure is not controlled by, or coordinated with, any candidate or any agent of such candidate. Independent expenditure includes expenditures for political messages which unambiguously refer to any specific public office or candidate for such office. Independent expenditure also includes the payment of money by any person for supporting or opposing a ballot issue or ballot question that is not controlled by, or coordinated with, an issue committee or a small-scale issue committee. Independent expenditure shall include, but not be limited to, advertisements placed for a fee on another person's website or advertisement space provided for no fee or a reduced fee where a fee ordinarily would have been charged. Independent expenditure shall not include: (1) Expenditures made by persons in the regular course and scope of their business and political messages sent solely to their members; (2) Expenditures made by small-scale issue committees; or (3) Any news articles, editorial endorsements, opinion or commentary writings, or letters to the editor printed in a newspaper, magazine or other periodical not owned or controlled by the candidate, or communications other than advertisements posted or published on the internet for no fee. No Yes When expenditures total in the aggregate more than $250 No No Yes Yes When expenditures total in the aggregate more than $250 Person means any individual, partnership, committee, association, corporation, labor organization or other organization or group of persons.