Oregon House will vote on capping fines for campaign finance violations
June 14, 2011
SALEM -- Oregon legislators are nearing a final vote on a bill that could dramatically lower the potential penalties that lawmakers – and other political candidates -- face for violating campaign finance reporting laws.
Senate Bill 270, which is nearing the last legislative step of passage on the House floor, would cap potential fines at $5,000 a month for any and all reporting violations. Under current law, each violation can be subject to a fine of as much as 10 percent of the dollar amount of the transaction, which could result in vastly larger penalties. Read more ...
Depending on whom you talk to, the $5,000 cap is either an invitation to fraud for campaigns that want to hide large contributions, or merely a sensible way to protect candidates and their treasurers from unfairly large fines for honest mistakes.
Dan Meek, a Portland attorney and a founder of the Independent Party of Oregon, has been fighting a lonely battle against the bill since shortly after it quietly passed the Senate on a unanimous yes vote in early March.
"It's too big of a loophole," says Meek. "A campaign could just opt out of the system, particularly if they are getting money they would rather people not know about."
But legislators say there needs to be a cap on how much liability they and their campaign treasurers face if they make an error while reporting transactions to the state. Kevin Neely, who has served as the treasurer for dozens of Democratic campaigns and handles their reporting requirements, is perhaps the most vociferous supporter of the bill.
Neely accuses Meek of "trying to imagine something that has never happened" in the annals of modern Oregon politics -- and that's illegally hiding a large contribution from public disclosure. At least, he acknowledges, that's the case as far as anyone knows.
Neely adds that anyone who did try to hide a big contribution -- say $500,000 to $1 million -- would quickly come under scrutiny from the news media or rival campaigns wanting to know why a campaign was able to spend so much more than it took in. That's a bigger disincentive for a shady campaign than a fine that may not be levied until months after the election, he says.
Neely also notes that the state has capped fines before. When it used to require campaigns to file regular reports, the cap was $10,000 per report. But the cap was eliminated in 2009 after the state switched to having campaigns report transactions on an internet database that is continuously updated.
Secretary of State Kate Brown, who oversees campaign finance law, hasn't taken a stand on the bill. Barry Pack, the deputy secretary of state, says Brown agreed there needed to be some cap and felt it was up to legislators to decide the amount.
"I don't know that there is some magic number out there," says Pack, adding that a $5,000 fine is still a "hefty price to pay."
SB 270 sat in the House Rules Committee for three months before it was brought up last Friday.
After a short discussion, the bill was then sent to the House floor on a 4-3 vote, with Rep. Chris Garrett, D-Lake Oswego, joining House Rules Co-chairman Andy Olson of Albany, and two other Republicans in voting yes. Rep. Vicki Berger, R-Salem, said she had a "volunteer treasurer who needs the base protections of the bill."
The other co-chairman, Rep. Dave Hunt, D-Gladstone, and two other Democrats voted no after Hunt discussed raising the cap to $10,000.
Hunt said afterwards that some cap was needed but that pegging it at $5,000 left "too much potential for trouble."
Comment Posted at Oregonian by Dan Meek
SB 270A would allow any committee or individual or other entity to disregard the reporting requirements for entire months at a time and face only a fine limited to $5,000 for each entire month, even if the committee or treasurer knowingly and deliberately refuses to identify the contributors.
Under the current system, each transaction not timely reported carries a potential fine limited to 1/2 of 1% of the amount of the transaction per day of lateness, with an overall cap of 10% of the amount of the transaction.
SB 270A is opposed by the Oregon Progressive Party, by Fair Elections Oregon, and by the Independent Party of Oregon. Testimony against the bill and an additional letter from Dan Meek to all legislators are available online at http://progparty.org/leg.
Individual donors (persons and entities) in statewide races now often contribute in excess of $100,000 (and sometimes even in excess of $1 million). [see note 1 below] Merely paying one fine of $5,000 per month could be considered very small in relation to the benefit of non-disclosure.
For example, say a ballot measure campaign received a $1 million in contributions during a calendar month from persons or entities likely to evoke strong public opinions, such as George Soros or Loren Parks or U.S. subsidiaries of the large corporations owned by the People's Liberation Army of China. [see note 2 below] A campaign might consider it worthwhile to pay one $5,000 penalty to avoid disclosing all of its contributors during that month. Even if the government subpoenas the banking records of the committee, the contributions can be received in the form of untraceable cash.
Note 1: The 2010 reports of the candidates for governor show the receipt of these huge contributions:
Note 2: Federal law does not regulate campaign contributions in state or local races by U.S. subsidiaries of foreign corporations. Chinese government-owned corporations have made significant contributions to U.S. political campaigns. See Special Report of the Select Committee on Intelligence of the United States Senate, January 6, 1999 To December 15, 2000 (August 3, 2001), Senate Report 107-51.