So, the Mayor has proposed some legislation to require businesses to reveal campaign contributions to let’s just say it – mostly fake front groups – and the Chamber is opposed and some alders seem real anxious to help them out. Why? The council will be voting on this tomorrow night.
LAST WEEK’S BOARD OF ESTIMATES DISCUSSION
And here is the discussion at the Board of Estimates.
Public Tesimony.
Mike McCabe: Director of Wisconsin Democracy Campaign. Says this ordinance touches on an area he lives and breathes but does not otherwise come to city meetings, but thought he would come and share some thoughts. He supports it and applauds the Mayor – says it is important and necessary response to the Citizen’s United decision – that ruling has had a huge impact on federal elections and a profound impact on state elections and if you haven’t seen or don’t recognize an impact on local elections yet, you will eventually, his experience is that practices that start at the federal election level filter to state and local levels and will be coming to communities near all of us. He thinks this is an important step for the city to take in responding to Citizen’s United. He says at the state level the impact they have seen, based on looking at the two elections before 2010 and after 2010 – 2006, 2008, 2010, 2012 and what they found at the state level is that spending has tripled under Citizen’s United. They already had a raging campaign arms race and they saw $124M spent in 2006 and 2008, those are eye-popping figures, but looking at the last two elections, but since the ruling, it was $392M in spending on state elections alone, that doesn’t count billions spent at federal levels across the country. The recall elections were different during that time. Those elections were post Citizen’s United, but even if you take those out, there is still $254M in spending. Spending still more than doubled. Spending isn’t going up by 5 or 10 or 20 percent, but exponentially. I’m sure that doesn’t surprise you. Most people’s understanding of that ruling is that it unleashed unlimited elections spending, so I’m not sure that’s alone a big surprise. What many don’t know is the devastating impact on transparency, it has rendered disclosure laws irrelevant and obsolete across the country. The irony is that the majority did come down on the side of opening the flood gates to unlimited spending by interest groups in American elections, but the court also squarely came down in favor of disclosure, a supermajority of the justices did, 8 of the 9 justices were in favor of disclosure, that Congress, the states and local units of government could pass laws. Congress has not acted. The State of Wisconsin has not acted. So what they have done is joined groups across the country petitioning the Federal Communications Commission to require on-line disclosure of all the political advertising. They have also joined with groups to go to the Security and Exchange Commission and encourage the SEC to encourage corporations to fully disclose their donations for political purposes. He thinks the mayor has a perfectly appropriate response for a local unit of government, to say lets have some disclosure. Citizen’s United has brought about the rise of dark money in our elections. Not only have they documented a large growth in spending, but even in the recall elections they could account for $137M in spending, $76M in outside interest groups, $49M of that we cannot trace to specific donors, we don’t know where that money came from. More than half of the money from special interest groups cannot be traced to donors. Only $1M of $176M you can look at a campaign finance report for, the rest came from IRS documents and other places. They look to federal agencies like the FCC or local government to give the public a better idea of where the money is coming from. Particularly where city contracts are at stake, he thinks this is money the public wants to know about and needs to know about. For the transparency to be created will be a great public service and it is not a public service that will be done by Congress. Or by our state government any time soon. So if there is going to be greater disclosure it will be local ordinances or actions by the FCC that give us what Congress and the State government won’t give us. He supports this, but offers for them to think about not simply saying 501(c)(4) and 527, might want to say 501(c). 501(c)(6) is Chambers of Commerce, 501(c)(3) are becoming engaged and they have filed complaints on three of them now. They become involved in electioneering at the state level. 527 organizations do have to disclose their donors to the IRS, so if you are willing to plow through donations at the IRS – that reporting should go straight to the city. 501(c)(4) groups are truly dark money, along with some others.
Denise DeMarr wants to understand what we are excluding.
Mayor Paul Soglin says that Mike May is out this week and suggests that they get the info by referring it or they can just ask that question at the council.
McCabe says that this is tight language, there are not a lot of exclusions. 501(c)(6) and (3) organizations might be involved. He says the vast majority of the political activity is 501(c)(4) and it captures a vast majority of the issues.
Dave Schmeidicke says public works contracts are controlled by state law and we can’t require that be provided. Sole source is not an RFP process, examples are IT services that are done. He says they often use the State of Wisconsin list of contractors for some services, we piggy back on the state banking contract so we don’t have a RFP process, we take advantage of a larger pool and don’t control the RFP process. CFC and CDBG, anything that is a federal contract is controlled by federal law and we can’t direct through ordinance those activities. The city manager contracts are not a procurement of services in a sense and there are state or federal regulations that might also prohibit disclosures in some cases.
Mayor says they tried to make it as broad as possible and then they took out areas they might have conflicts with.
Mike Verveer asks McCabe about the Chamber statement, particularly the part about “historical concerns” and “barriers to entrepenuers” engaging in the political process and the message it sends about politics being involved in the procurement process.
McCabe says that in Citizens United and a proceeding case there were lawyers before the Supreme Court arguing that disclosure would have a chilling effect on political participation and the United States Supreme Court disagreed, only Clarence Thomas came down against disclosure. The rest of the court said that disclosure does not have an unconstitutional or unacceptable chilling effect on participation. That is an argument that can be made, was made before the court and the even the court in its current composition whole-heartedly rejected it.
Verveer asks about what 501(c)(6) are – trade organizations, Chamber of Commerce. (c)(4) are social welfare but can do more than a (c)(3) which is more education. (c)(4) is tax exempt and don’t have to reveal their donors with the condition that their work is primarily social welfare and not political. They are seeing (c)(4)s being created, doing nothing by electioneering, dissolving and then recreating themselves for the next election. We are being gamed here by groups that are able to conceal their donors. 507 are purely political and do have to disclose their donors to the IRS. They are seeing groups in all three areas (c) 3, 4 and 6 straying into political activity after Citizen’s United.
Chris Schmidt asks about if other municpalities are doing this, because he thought the Chamber of Commerce’s point was more whether or not this would impact the bidders in our process.
McCabe can’t speak to that because they track money at the state level, they don’t track local ordinances across the country. (He repeats points he has made before) He says there is a vacuum that is leaving people in the dark and this would be a meaningful way to say look, if you want to do business in the City of Madison you have to be transparent and he doesn’t think that is an undue burden on anyone. The Court was challenged to find that disclosure was chilling, they said we will let the money flow, but units of government could call for disclosure.
Schmidt asks if they referred to municipalities.
McCabe says they referred to more than the federal government and it was a federal case, so it was a little unusual and he chose to say it extended beyond federal jurisdiction – but not sure if he used the word “municipality”, but it was striking that in a federal case he didn’t just say Congress can act, but took pains to say disclosure is ok. Anyone who wants to make an argument that this is on thin ice on constitutional arguments has a tough case to make.
Schmidt says that is interesting but not quite what he was getting at. He was more concerned about the participation in our process for the bidders.
DeMarb says that she is totally in support of this and doesn’t see how being transparent limits participation and doesn’t agree with the memo they got late and they should consider dropping (4) if there are (6) and (3) playing this way, then this is not right. They should be able to be transparent.
Larry Palm wants to back up a little bit, this is a contract with the city to perform services so he can’t see how this impacts their work, why don’t we ask city employees who plow our streets to disclose what campaigns they contribute to. This is a business we are asking to install 30 trees, why do we care if they did something in Iowa.
Mayor says they have been considering this for the last year and a half or two. What prompted the submission of the proposal was the aldermanic election in the 6th district and what happened was that someone, no one knows who, for sure, distributed materials designed to affect that election – it was not done by either of the candidates and there was an article that said maybe this was associated with a business in the 6th district. My feeling is that it was enough to say we need to do something about this. If we are having folks putting money into city elections, we should do as much as possible to have disclosure and let the public make its own decisions about the nature of the money and why.
Palm says that just makes it tougher for him. If that person or organization doesn’t make a contract with the city, he says if the Koch Brothers enter into a contract they will only have to disclose it going forward, not the last 20 years of money they gave. He is confused about a service, shouldn’t we be worried about the service we are getting not what they think on their free time.
Lisa Subeck says right know we already know who our snow plow drivers contribute to, she can enter their name in the Wisconsin Democracy Campaign database – individuals already have their contributions to the candidates disclosed. The corporations that give outside are not. Its a small group of folks that we would begin with, she is not sure if we could do it broader. The public has a right to know. If we do contract for a service and the money they make is later spent on political messages then the public has a right to know that.
Schmidt asks what contracts are covered, consultants, private snow plowing.
Schmedicke – design and engineering contracts, purchase of supplies or services, IT, office supplies, consulting contracts for economic development.
Schmidt asks about the 10% threshold for ownership. Would they possibly not know. Are there venture capitalists that invest that they might not know.
Mayor says if it is a publicly traded company then 10% ownership would be know and if it is a closely held corporation seems to me that whomever is running it would know who has 10%.
Clausius supports it, and wants more clarification at the city council. He says the situation in the 6th district was downright shocking and he understands that at the national and state level, but at the local level its friends and neighbors and if this at all precludes something like that from happening then he supports it.
Mayor says that he hadn’t thought about this until this discussion. He says as a canddiate himself, they have taken some contracts at the BOE, and that he would not want anyone to do this on his behalf, but if they did, he certainly thinks the public has the right to know if someone was writing checks to influence his campaign.
Palm appreciates that, but he is concerned not with the sentiment but the words amending the ordinance, he thinks that if something happens they might not be contracting with the City of Madison and we wouldn’t know anyways. He doesn’t think this goes to that. The flip side is it important for people to know anyways, but he doesn’t think that this addresses what happened in district 6. He also wants to know what other avenues they pursued to deal with this issue. He wishes there was more to zero in on that behavior instead of casting a wide net and finding out stuff and tracking it. He has major concerns about how it is written.
Verveer asks the Mayor about the (c)(4) vs (3) and (6).
Nayor wants to hear from Mike May when he gets back, hopes that they will pass and they will get answers between now and then.
Schmidt abstains because of questions he has for Michael May.
Passes – 2 abstentions.
ORDINANCE LANGUAGE
Is here.
STATEMENT FROM THE CHAMBER
Chamber Statement Re: Political Disclosure Ordinance
Chamber Says Ordinance Distracts from Real Challenges Facing the CityMADISON – In response to Madison Mayor Paul Soglin’s proposed political disclosure ordinance, Zach Brandon, president of the Greater Madison Chamber of Commerce said:
“The Greater Madison Chamber of Commerce believes in, and demonstrates, transparency of political contributions and supports a fair and equitable awarding of procurement contracts. The Chamber does not support this proposed ordinance given the lack of historical concerns in this area, the barriers it would impose to entrepreneurs attempting to do business with the city, the potential to chill political engagement and the wrong message it sends that politics are important in the Madison procurement process.”
