CSC Newsletter - January 2007, Vol. 13, No. 1

NEW CANDIDATE FILING SYSTEM

Candidates and elected officials will have to file their January 30, 2007 Supplemental Reports on the new Candidate Filing System, which replaces HERTS2. The Commission held twenty-two training classes on Oahu and the neighbor islands, from November through January, on how to use the new system. Candidates and elected officials were sent letters notifying them they could attend training classes or they could choose to learn the system on their own. The system is very intuitive. If you haven’t received your User Manual, please call our office to request one at (808) 586-0285.

MANDATORY ELECTRONIC FILING TO BE ENFORCED FOR
SENATE, HOUSE AND OHA CANDIDATES AS OF JANUARY 30, 2007

Pursuant to Hawaii Revised Statutes section 11-195, a candidate or candidate committee for the offices of Senate, House of Representatives, or the Office of Hawaiian Affairs shall file required reports by electronic means (as well as all other offices, except the Board of Education).

MANUALLY FILED SUPPLEMENTAL REPORTS WILL NOT BE
ACCEPTED FOR CANDIDATES REQUIRED TO FILE ELECTRONICALLY

No manually filed Candidate Committee Supplemental Reports, other than the Board of Education, will be accepted. The only other exception is candidates with contributions or expenditures of less than $5,000 for the entire election period.

NONCANDIDATE COMMITTEE SYSTEM

A web-based Noncandidate Committee Filing System (“NC System”) was developed prior to the Candidate Filing System. However, before the NC System was implemented, the Candidate Filing System was completed and was even more user-friendly then the NC System. Thus, we are working on yet another web-based NC System that will hopefully be ready to go by May, 2008. It will be based on the candidate model and  will be very intuitive and easy to use.

LIST OF FINES

The following number of fines have been imposed in 2006:

Late Reports - 293 Candidate Committees, 357 Noncandidate Committees
Unreported Expenditure - 1
Excess Contributions - 23 fines totaling $96,928.96
Prohibited Use of Disclosure Report - 1
Advertising Violations - 8
Non-Resident Contribution - 1

REVIEW OF 2004-2006 REPORTS CONTINUES

Many candidates are receiving letters from the Commission asking for corrections in Disclosure Reports and the proper documentation for loans. Once we are caught up (in about 12 to 18 months), we can catch any errors or violations earlier, so they can be addressed in a more timely manner.

STRATEGIC PLANNING

We have started working with our Strategic Planner to develop a five year plan, so we can properly align our resources and focus our efforts. We will be sending out questionnaires to  many of you shortly. Please note that the Commission office will be closed February 28 and March 1, 2007 for a two-day strategic planning retreat.

IMPORTANT NOTICES

CSC Meetings
February 14, 2007
February 28-March 1, 2007
April 11, 2007
May 9, 2007
June 13, 2007

CSC Reports
Next report due for:
Candidates
Supplemental-January 30, 2007

Noncandidate Committee
Supplemental-January 30, 2007

PROPOSED 2007 LEGISLATION

A draft of our 2007 proposed legislation may be found on our website at www.hawaii.gov/campaign. In summary, we are proposing: to require noncandidate committees to file electronically effective January 1, 2008; to exclude grassroots internet activity (except for paid activity) from the definitions of contribution and expenditure (similar to federal law); to repeal the exemption from electronic filing for a candidate with contributions or expenditures of less than $5,000 and to repeal the waiver for a candidate or committee without access to a computer or the internet; to increase the expenditure limit which will increase public financing for candidates; and to require a noncandidate committee that exceeds the $1,000 threshold within thirty days prior to an election to register within two days (rather than ten days).

RECODIFICATION OF THE HAWAII REVISED STATUTES

The Commission is embarking on a recodification of the campaign contributions and expenditures subpart of the Hawaii Revised Statutes. The purpose of the recodification is to clarify, make consistent, and provide continuity to an area of law that has been amended numerous times over the years. We will be forming an Advisory Committee later in 2007 and we will keep you informed.

HAWAII ADMINISTRATIVE RULES

The proposed Hawaii Administrative Rules were put into “government channels” in December, 2005. When we receive approval, we will post a notice for public hearing. Part of the delay was a desire not to change the rules in the heat of the election. After the rules are adopted, we will post the rules on our website and publish notices about training classes.

NEW ADVISORY OPINIONS (“AO”)

A brief summary of the 2006 Advisory Opinions (“AO”) follows:

AO 06-01 - The Sponsoring Organization is the “donor” to a noncandidate committee when signatory employers to a collective bargaining agreement make payments to the Labor-Management Cooperation Fund (“Sponsoring Organization”) which then makes payments to its Committee.

AO 06-02 - If the candidate pays the reasonable commercial rate for advertising in a non-profit newsletter, the candidate has made an expenditure. If the candidate pays more than the reasonable commercial rate for advertising in a non-profit newsletter, the additional amount above the reasonable commercial rate will be considered a contribution to the non-profit.

AO 06-03 - When a ticket is given to a candidate, without cost, to attend a non-profit event, if the ticket is provided to the candidate to influence the candidate’s nomination for election, or election to office, the fair market value of the meal portion of the ticket is a non-monetary contribution. The presumption is that the provision of the ticket is to influence the candidate’s nomination for election, or election to office.

AO 06-04 - The Commission recommends that charitable fundraising functions and campaign fundraisers be held as separate and distinct events to avoid having funds raised at charitable functions attributed as campaign contributions. If a candidate organizes, sponsors or sanctions, directly or indirectly, a charitable fundraising function, i.e. a golf tournament or banquet, the Commission makes certain recommendations so that funds raised may not be attributed as contributions to the candidate.

AO 06-05 - This involves the establishment of an Internal Revenue Code section 501 (c) (3) charitable organization by a candidate or an agent of the candidate. The concern is potential access to the candidate with no concomitant disclosure reporting. Thus, to avoid the attribution of donations as contributions to the candidate, the Commission makes certain recommendations.

AO 06-06 - A committee who receives donated property, including artwork, and sells the property at a fundraiser for more than its reasonable market value must report the donation of property as a nonmonetary contribution, and the “reasonable market value” of the contribution on the date received. If the property is sold, the amount by which the purchase price exceeds the reasonable market value of the property is a contribution from the purchaser of the property.

AO 06-07 (Pending)

AO 06-08 - When signatory employers to a collective bargaining agreement make payments directly to a noncandidate committee pursuant to the Agreement, the Commission responds that the employees are the “donors” to the committee.

UPDATE OF ADVISORY OPINION AND LETTERS

The Commission reviewed 20 Advisory Letters and 83 Advisory Opinions to date. We used “shepardization” to identify and label advisory opinions and letters that were obsolete or modified. Obsolete advisory opinions remain on the website to help understand where the Commission has been, and to shed light on where the Commission is headed. An advisory opinion   remains in effect if no notation appears beside it.