Election Notes

Cleanliness, Godliness, and Money

"I recognize the irony," said Bill Bunch last week, as he attempted to explain why the so-called Clean Water Clean Government PAC, formed to promote Prop. 1 and Prop. 2 on the city election ballot, had apparently violated campaign finance laws by failing for several months to report roughly $74,000 in financial contributions underwriting the proposition campaign. That's only the most prominent of the alleged violations cited in overlapping complaints filed by the local Libertarians, as well as another group opposing the propositions, the Committee for Austin's Future. In a complaint filed last week with the Texas Ethics Commission, the committee charged the supporting groups and their representatives – Save Our Springs Alliance director Bunch, political consultant Glen Maxey, and CWCG treasurer Kathy Mitchell – with 10 separate violations of the state election code, ranging from failure to file required information or reports of political contributions and expenditures (seven charges) to failure to list required disclaimers on its political advertising (three charges). Spokespeople for CWCG say the apparent violations were simply oversights, that a belated April 13 disclosure is sufficient, and that it is now using the required disclaimers.

In a statement announcing the complaint, Greg Hartman of the CAF called for an apology from campaign proponents, adding, "The hypocrisy of running a campaign for a so-called open government proposition, while refusing to report all contributors and violating the simplest campaign laws would be comical, if it was not so sad." Maxey told In Fact Daily that "All expenditures and contributions, both in-kind and monetary, have been fully reported to the public by the Clean Water Clean Government PAC. … It has long been a campaign tactic to file complaints at the Texas Ethics Commission during the last weeks of a political campaign. We will await word from the Ethics Commission about these issues and respond accordingly at the appropriate time." (Since the alleged violations were not discoverable before April 13, date of the last CWCG filing, it would not have been possible to file a complaint much earlier.)

Bunch said that SOS, while heading up the petition campaign last fall to put the props on the ballot, had relied on Maxey's experience in last year's smoking ordinance campaign for his understanding that the expenditures need not be reported until the petitions are actually submitted. "Then we found out there had been a complaint filed [by the Libertarians] against the anti-smoking campaign for late filing," he said. "We asked [campaign finance attorney] Fred Lewis for his advice, and he said, 'I wish you had called me earlier.'"

Lewis says he's provided pro bono legal advice for the pro-props campaign (he's also listed as a $250 contributor), and that since the spirit of the law is public disclosure, the corrected late CWCG filings are sufficient to that spirit. "Our laws are designed to disclose financial information prior to the election and to restrict certain corporate contributions," he said. "Both purposes have been served, and the financial information is out there for people to argue about. … That's the big picture."

Yet the questions about the campaign's finances don't quite end with CWCG's disclosure. In its latest report, filed May 5 and covering one month, the campaign lists nearly $118,000 in contributions from the SOS Alliance (most of it in cash, some in labor and supplies). That brings the overall SOSA total since February to roughly $211,000, dwarfing even SOS board member Kirk Mitchell's personal contributions that come to a declared $80,000 (in addition to any prior Mitchell contributions made to SOS). Under federal tax laws, SOS is a 501(c)3 nonprofit, tax-exempt for contributors and therefore restricted from certain political activities, including any "substantial" amount of "lobbying" – defined in the tax code to include active support of ballot measures like the proposed charter amendments. According to Bunch, last year SOS filed documents with the IRS to allow the organization to spend up to 20% of its income in lobbying. Since SOS income in 2005 was about $900,000, said Bunch, and these expenditures occurred over the cusp of 2005 and 2006, "We'll be below that 20% limit." (The most recently available SOS federal tax filing reports an organizational income of about $790,000 for 2004.)

Does Bunch think using money contributed to SOS as tax-exempt charitable donations should be so readily converted to political advocacy? "It's no different than the Homebuilders Association using money from their general funds to oppose the propositions," he responded. (The Home Builders Association of Greater Austin contributed $50,000 to the Committee for Austin's Future.)

It will be up to the Ethics commission, and presumably, the IRS, to determine if indeed the CWCG PAC and its supporters adhered to the letter as well as the spirit of the law. The Commission can issue fines up to $500 per violation, and the IRS can presumably assess fines, revoke tax exempt status, or assess even harsher penalties. But neither agency will take action before months have passed – let alone Saturday's election.

The full contribution and expenditure reports for the various candidates and special purpose committees are available on the City Clerk's Web site at www.ci.austin.tx.us/election/cfreports.htm.

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KEYWORDS FOR THIS STORY

municipal elections, Bill Bunch, Clean Water Clean Government PAC, Texas Ethics Commission, Save Our Springs Alliance, Glen Maxey, Kathy Mitchell, Greg Hartman, Fred Lewis, Kirk Mitchell, Internal Revenue Service, Home Builders Association of Greater Austin

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