Over the last few days there’s been quite a bit of back-and-forth in the mayor’s race regarding out-of-city campaign contributions.  I want to quickly give my perspective on what’s happened and why, and then share the text of a legal brief from attorney Jim Cousar, who is widely acknowledged as Austin's leading authority on campaign finance law.

On Friday afternoon, May 1st, Brewster McCracken’s mayoral campaign filed their latest fundraising report.  On Saturday afternoon, my staff reviewed the report, and discovered that the McCracken campaign had accepted roughly $8,500 in out-of-city contributions above and beyond the legal cap for the general election, which is currently $33,000.

On Sunday morning, I reviewed the report myself and confirmed the totals.  We then briefed attorney Jim Cousar on the situation, who agreed that McCracken’s excess contributions appeared to violate the campaign finance laws contained in the Austin City Charter.

Believing that a law had been broken, we faced the choice of either doing nothing, filing a complaint with the Municipal Court - which is the only way that Texas law allows citizens to pursue possible municipal campaign finance violations - or giving the McCracken campaign an opportunity to respond, and perhaps return the money.

We chose to give the McCracken campaign a chance to respond, and so shared the information on Sunday afternoon with two City Hall reporters.  We shared the finance reports, the applicable sections of the City Charter and Code of Ordinances, and suggested that a violation had occurred, but offered no direct comment or speculation as to motive.

About four hours later, the McCracken campaign responded by alleging that we had misinterpreted the law, and saying that the City Charter actually allows candidates to accept additional out-of-city contributions in anticipation of participating in a run-off election.  (For what it’s worth, the McCracken campaign also responded on Sunday by characterizing our suggestion of a violation as a "baseless, desperate eleventh hour political accusation.”)

But while it’s true that the City Charter does allow candidates to accept an additional $22,000 in out-of-city contributions “in the case of a run-off election,” there is no language anywhere in the Charter that allows candidates to accept those funds before there even is a run-off election, nor is there any precedent for that interpretation.

Given the McCracken campaign’s response – advancing an unprecedented and, according to our attorney, unsupportable interpretation of the City Charter – we were left with the choice of either doing nothing or filing a complaint.  Believing it important to uphold the law – given especially that this is one of the duties of the mayor – we chose to file a complaint, and did so on Monday afternoon.

That’s where it stands.  In the 48 hours since we alleged the violation and filed the complaint, there have been repeated accusations of “dirty politics” from the McCracken campaign.  You can see, read, and hear some of those here, here, here, here, and here.

I regret that this has been the response, and I know that as a result this episode is likely to be a turn-off to some voters.  But the fact is that we have an honest disagreement about the law with Mr. McCracken, and I believe that simply doing nothing about it would have been wrong.  The court informed us when we filed the complaint that we could check on the status in two weeks; I am hopeful that the case will be resolved quickly.

Thanks for reading.  Please don’t hesitate to let us know if you have any questions.  Here is the legal briefing that’s been provided to me by Jim Cousar:

Austin City Charter Restrictions on Out of City Contributions

BACKGROUND

Prior to November 1997, there were no restrictions on the contributions an Austin Council or Mayoral candidate could accept from contributors living outside the City of Austin.  In the election of November 1997, the Austin City Charter was amended to include the following restriction:

Article III (Elections), Section 8:  Limitations on Campaign Contributions and Expenditures

(A) Limits on Contributions to Candidates

No candidate or his or he committee shall accept an aggregate contribution total of more than fifteen thousand dollars ($15,000) per election, and ten thousand dollars ($10,000) in the case of a runoff election, from sources other than natural persons eligible to vote in Austin.

This language (referred to as the "out of town contribution limit") remained in place from 1997 until May 2006, when the voters amended the City Charter by adopting the following replacement language as Section 8(A)(3):

(A) Limits on Contributions to Candidates

(3) No candidate or his or her committee shall accept an aggregate contribution total of more than $30,000 per election, and $20,000 in the case of a runoff election, from sources other than natural persons eligible to vote in a postal zip code completely or partially within the Austin city limits.

The 2006 amendment also included language indexing the contribution limits to inflation, so the current out of town contribution limits are higher than those in the 2006 amendment.

As can be seen by a comparison of the 1997 and the 2006 versions, the operative language of the out-of-town contribution limit did not change, although the amounts and the geographical criteria were revised.  The 2006 version of Article III, Section 8(A)(3) remains in place today.

In 2008, the City Council adopted a new version of the Austin Fair Campaign Chapter that made this contribution limit enforceable as a City Ordinance, with criminal penalties for violations.  A candidate who violates the out-of-town contribution limit today is subject to prosecution in municipal court, and monetary fines if convicted.

"LEGISLATIVE INTENT" AND INTERPRETING THE CITY CHARTER AMENDMENTS

Since the 1997 Charter Amendment originated as a voter petition, it does not really have "legislative history" in the way that statutes and ordinances enacted by elected officials have a legislative history.  The "lawmaker" for the Charter amendment adopted in 1997 and amended in 2008 was the electorate.  Under accepted principles of statutory construction, the only recognized sources for interpreting the language of such a voter-initiated provision are A) the plain language of the law; and B) circumstances existing at the time of its adoption indicating the "problem to be addressed."

The 2006 Charter Amendment was proposed not by the voters but by the City Council, but since the operative language goes back to the 1997 version, there is no additional "legislative history" to be gleaned from the 2006 election.  So, we turn back to "plain language" and the "problem to be addressed."

BACKGROUND ON THE 1997 CHARTER AMENDMENT

It is common knowledge that the 1997 provision restricting "out of town" contributions was part of a citizen initiative referred to as the "A Little Less Corruption" Charter Amendment.  The same amendment included a contribution cap of $100 per person, per election, and other limits on money in City elections.  The advocates who circulated the petitions and campaigned for its adoption complained about the amount of money then being raised and spent in Austin's municipal elections, and offered the "A Little Less Corruption" Amendment as a way to reduce the influence of money in City politics – including out-of-town money.

PLAIN LANGUAGE OF THE CHARTER AMENDMENT

Turning to "plain language" principles as a guide, it is clear that the language of Section 8(A)(3) does not allow a candidate to accept contributions for a runoff election until and unless there is a runoff election.

The operative restriction in Section 8(A)(3) is the provision "an aggregate contribution of $30,000 per election, and $20,000 in the case of a runoff election" (emphasis added).  The term "in the case of a runoff election" – which has been part of this section since 1997 – was included to make it clear that an additional dollar amount in out-of-town contributions could be accepted only if and when there is a runoff election.

Prior to a contested municipal election, such as the May election required by the Austin City Charter, it simply cannot be known whether there will be a runoff election for any particular place, even if there are multiple candidates on the ballot. The limiting language "in the case of a runoff election" must be read in that context.

It is worth noting that under Texas election law there is no legal presumption that any candidate will be in a runoff election.  Runoffs follow city elections, primaries and special elections, but not general elections.  Whenever a contested municipal election has more than two candidates, it is possible that one candidate will win without a runoff, and it is also possible that there will be a runoff, but that a candidate who expects to be in a runoff will not be in that runoff.  That is why the 1997 charter provision used the language "in the case of a runoff election" rather than language that assumes there will be a runoff election.

The same principle controls the "per contributor" dollar limits in the Charter.  The current $350 contribution limit means that a candidate may accept $350 per contributor before the May election: it does not mean a candidate may accept $700 in the hopes of reaching a runoff.  There have been "per contributor" limits in place since 1997 – first $100 and later $300 (indexed) – but no candidate has ever contended that he or she can accept double the stated contribution amount before the May election.

The term "aggregate contribution of $30,000" (emphasis added) also underlines the fact that only $30,000 can be accepted from those sources during the May election.  If the intent of the Charter amendment had been to allow a candidate in a May election to accept contributions both for that election and for a possible runoff, the amendment presumably would have read "an aggregate contribution of $50,000", with additional language providing for the allocation of that amount between the May election and the runoff.

Accordingly, the language "in the case of a runoff election" can only be read to mean that the two candidates actually in a runoff election – and only those two candidates – may accept funds from out-of-town contributors over and above the $30,000 cap.

THE "ACCEPT MONEY NOW BUT GIVE IT BACK LATER" ALTERNATIVE

It apparently has been suggested that this charter provision allows a City candidate to accept up to $50,000 (or the currently indexed amount) from out-of-town sources before the May election, and then return amounts over $30,000 if that candidate is not in a runoff.  This would necessarily involve identifying all contributors from out of town who gave money after the cap was reached, a special reporting designation for their contributions in the pre-election contribution and expenditure reports, and making sure that the campaign kept all their contributions as a special fund not spendable in the May election.  Given the charter's requirement that unsuccessful candidates not retain leftover funds accepted for a municipal election, this would have to be done promptly.

There simply is no basis in the charter language for assuming that the voters intended to create such a complicated scheme to quantify and separately account for legal and questionably legal contributions.  The out-of-town contribution limit language deals with how much may be accepted by a candidate, and when it may be accepted. Anything else is an unsupportable interpretation.

ANALAGOUS CAMPAIGN FINANCE LAWS HAVE EXTENSIVE RULES AND PROCEDURES FOR ALLOCATION

The out-of-town contribution cap is a fairly unusual provision in United States campaign finance law, but provisions setting one cap for the first election and a separate cap for a second election do exist in other campaign finance laws, including the laws regulating congressional candidates.  Under the Federal Election Campaign Act (FECA) and the rules of the Federal Election Commission (FEC), a candidate is subject to separate "per election" contribution limits.  That cap is currently $2,400 per election per individual contributor.

Under FECA and the FEC rules, a primary election, a primary runoff, a special election and a general election are all separate elections with separate contribution caps.  However, if a primary election candidate wishes to accept more than $2,400 from a contributor, the candidate must act under FEC rules that provide for written "designations" by the contributor addressing which elections the contribution should be counted against.

The applicable FEC rules, which run to many pages in Volume 11 of the Code of Federal Regulations, address not only "per election" contributions and designation requirements, but also the proper reporting of excessive contributions, the proper means of refunding them, and the FEC's requirements for prompt refund or reattribution of the excess amounts if a candidate does not move forward to the next election.  The rules are necessary to address these complex procedures.  No federal candidate would assume that he could accept contributions in excess of the legal limits in the absence of such specific legal authority.

SUMMARY

There is no legal basis in the City Charter for accepting additional out-of-town contributions, prior to the May election, once the cap has been reached.  Neither the plain language of the charter provision (which allows additional amounts only in the case of a runoff election), the legislative history of the Charter, nor analogous provisions of other campaign finance laws support that theory.  If a candidate has accepted more contributions from out-of-town contributors than the Charter allows, those amounts should be immediately refunded to the contributors.