May 4 Election Wrap-up

Did Anti-Prop. 1 Jump the Ethical Gun?

Proposition 1, aka the "Austin Fair Elections Act," is now a dead issue. Voters rejected the attempt to provide a comprehensive system for taxpayer funding of city elections by a 3-1 margin. An important side issue raised during the campaign is still alive, however: whether an anti-Prop. 1 political action committee complied with campaign financing laws.

Shortly before the election, Clean Campaigns for Austin, which wrote the Fair Elections Act and heavily promoted Prop. 1, questioned how it was that the Citizens Committee for Proper Expenditure of Local Taxes could have announced its existence on April 24, appointed Ann E. Proctor its treasurer on April 25, and then -- within 48 hours, according to Fred Lewis, Clean Campaigns attorney and spokesman -- have anti-Prop. 1 billboards (see above) posted all over Austin. More importantly, Lewis wanted to know how they managed to do all that while simultaneously complying with state regulations. State law forbids PACs from receiving contributions or making expenditures above $500 (or receiving any pledges for such contributions and expenditures) until after a treasurer has been appointed, and official records show that CCPELT filed its treasurer appointment with the City Clerk's office on April 25 at 8:52am.

What even Clean Campaigns doesn't know, however, is that this Chronicle reporter saw one of the CCPELT billboards on April 24, approximately 12 hours before the appointment was filed. If that billboard cost more than $500, it alone would violate the law, as cited in the Texas Ethics Commission Rules. If a contract to supply the CCPELT billboards worth more than $500 was agreed to before April 25, that too would be a violation, regardless of whether any money actually changed hands.

Both Proctor and publicist Chuck McDonald, whom CCPELT hired to produce its billboard and mailout campaign, insisted that McDonald was not brought on board until after the appointment, as the law requires. "We had billboards and direct mail under way in hours," said McDonald, who is on retainer with the Real Estate Council of Austin (RECA), a major backer of CCPELT. Janice Cartwright, executive director of RECA and the person who appointed Proctor, also said no funding or posting of billboards took place before April 25.

Asked to explain how the billboard spotted on April 24 could have gone up a day before CCPELT filed, Cartwright said, "I don't know the answer to that question. I called my vendor [Reagan Advertising] and asked when the billboards went up, and he says he has no record of that. What I can tell you is that I wrote a check on April 25 for billboards. That is what I know."

Asked if she contracted with Reagan before April 25, she said, "The Committee did not, no." Asked if RECA contracted with Reagan before April 25, she said, "The Real Estate Council had a contract with Reagan and made an in-kind contribution on the 25th to the specific-purpose PAC [CCPELT]."

CCPELT filed its treasurer appointment on April 25 -- nine days before the election -- which means it now does not have to file a contribution and expenditure report until July. If it had filed even a day earlier, it would have had to file a C&E report on April 26. Lewis called this delay a "sleazy trick" -- albeit a legal one -- to allow CCPELT to avoid revealing its funding sources until after the election.

CCPELT admits as much. "I don't think there's any significance to that, clearly," said Cartwright, regarding the date of filing. But she added, "I think it was real important in my mind, in making a decision to form a specific-purpose PAC, for the purpose of opposing Prop. 1, that the message not be diluted by the messenger. And as you can see from [Fred Lewis' accusations], they wanted to turn it around into a campaign against the messenger, rather than taking on the message, which is that Prop. 1 is a bad idea. ... When you have a bad idea and can't defend it, then you look for other things to attack to make news. In this case, the attack is on the messenger, not the message. Clearly, there is no violation of the law. ... There were no pledges received before April 25. The lawyers that I spoke to at the Texas Ethics Commission assured me that I was following the letter of the law."

Karen Lundquist, legal counsel to the Texas Ethics Commission, told us she couldn't comment on the specifics of this incident since it hasn't been brought before the commission. However, she said that a PAC that spends money on billboards worth more than $500 before filing its treasurer appointment would be in violation of the law. And she added that a violation of the ethics law can carry criminal penalties of a fine of up to $4,000 or jail time of not more than one year, or civil penalties of up to $5,000 or three times the amount spent, whichever is greater.

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