Ethics, supes in showdown over reforms

Can we reform local politics in a Citizens United era? Or will some reforms just make things worse?

The San Francisco Ethics Commission could be facing a showdown with the Board of Supes in the next two weeks over a detailed, complex set of changes to the city’s campaign rules that board members first reviewed last week – but that the commission could put on the ballot without changes Feb. 16.

The commission in November, after months of discussion, sent a package to the board that finally got a hearing in the Budget and Finance Committee last week.

A lot of this is technical language, but it could have profound impacts on local politics.

The bill includes a lot of comprehensive reforms that make a lot of sense: It would, for example, ban commissioners from fundraising for the person who appointed them. It would mandate direct disclosure of who “bundles,” or collects donations, from individuals and delivers them to a candidate.

It also goes after some serious problems: As Lee Ann Pelham, executive director of ethics, told the committee members, since 2012 the largest contributors to local campaigns were entities that were seeking land-use approvals in the city. The new rules would extend an existing ban on city contractors giving money to any entity with a pending land-use decision.

Then there are new rules around politicians asking donors to give money to favored nonprofits, which are called “behested” contributions.

Overall, Sup. Aaron Peskin said, “this is a vast piece of ethics reform.”

And the way the City Charter works, the supes can either adopt the rules pretty much as they are – or the Ethics Commission can vote Feb. 16 to place the measure on the June 5 ballot.

“The commission has put the board in a tough spot,” Peskin said. “It’s hard to get this right in a handful of days.”

Peskin asked the commission to give the board a chance to vet the proposals and enact them as legislation over the next few months – and wait until November to do a ballot measure if what the supes approve doesn’t measure up.

It wouldn’t make that much difference: Under the current proposal from Ethics, the law wouldn’t take effect until January, 2019 anyway.

Pelham said she would pass that advice along to the commission – but under the City Charter, that panel can ignore the supes and put anything it wants on the June ballot.

The challenge in this legislation, several supervisors and members of the public noted, is to find a way to tighten the rules without discouraging small donors, driving more money to superPACs, and harming nonprofits that are already going to be scrambling under a Trump tax plan that removes a major incentive for people to donate to charities.

“The idea that everyone who gives $15 has to sign an affidavit that they understand the law, people will say no,” Peskin noted.

It’s not a new problem: When the laws around campaign finance get more complicated, the big donors and the well-funded candidates do just fine; they can pay for legal help. If the rules don’t make sense in the real world of campaigns, then they have the opposite effect of what’s intended.

I get what Ethics wants to address. San Francisco has become a sewer of shady money that mangles any idea of real democracy. For years, mayors appointed commissioners who were then expected to raise money for their patron. Real-estate and development interests so dominate the political ecosystem that it’s almost impossible to control them.

If it were up to me, I would suggest a couple of other things: An immediate disclosure rule for all independent-expenditure campaigns, so that nobody could do what a Breed-backing group just did, and put out an ad that nobody knows who paid for. All of those IE ads should also have to include the names – the real names – of the major donors.

Peskin also suggested that anyone who donates to a superPAC be required to fill out a detailed statement of financial interests, similar to what elected officials have to report.

I could also argue that the matching public funds that now help pay for local races should apply to superPAC money – that is, if Ron Conway spends $1 million attacking a candidate for mayor, that candidate should get $1 million to fight back.

Because the superPACs are now by far the biggest problem in local politics.

There are lots of little things that the supes suggested might need more work – it’s not clear whether a fundraising pitch includes a mass email or a social-media campaign. It’s not clear what “sought a favor” means. These are all things that can easily be fixed – but not if the measure goes on the ballot, where it will be a yes-or-no decision.

Then there’s an element that hasn’t had much discussion: Ethics wants to track how often elected and appointed officials recuse themselves from votes. Under the legislation, if an official asked for a recusal three times in a year, it would trigger an inquiry.

Some of the supes questioned that: After all, you want public officials to announce conflicts and avoid voting on issues where they have a financial interest. It can get pretty grainy: Peskin, for example, had to recuse himself from a land-use case that involved a property 1,000 yards from his house.

Pelham said that Ethics wants to look at cases where a commissioner or elected official is constantly asking for recusals – which might mean that person has so many conflicts that they can’t do their job.

One of the areas that has created the most conflict is the concept of “behested payments.” There’s plenty of room for abuse: Mayor Lee, for example, asked a lot of big players to give money to his pet causes (the Super Bowl, the America’s Cup) and that could give them access and influence at City Hall.

At the same time, local officials sometimes show up at fundraisers for legitimate community-based organizations and ask the crowd to kick in money.

It’s one of those gray areas that exist in a world where it’s impossible to do real campaign-finance reform (which would require overturning Buckley v Valeo and Citizens United and allowing limits on all political spending and full public financing of campaigns).

The supes have already passed new rules on disclosure of behested contributions; they have had, as Peskin noted, “31 days to work.”

Calvin Welch, a longtime housing advocate, told the committee that “there is a theory among some Ethics Commission members that at the very heart of public corruption in San Francisco is nonprofits.”

Kathie Lowry, who is on the board of Larkin Street Youth Centers, said that often public officials come to the group’s fundraisers and exhort the people in attendance to chip in money. Under the new rules, if fewer than 50 people are present, the official and all the donors would need to file reports.

Nonprofits that do social service work are going to have a tough year anyway: By some accounts, the Turmp tax bill, which increases the standard deduction, will reduce dramatically the number of people who will donate to charities and get a tax write-off. As much as $20 billion in charitable giving could be at risk.

Larry Bush, a member of Friends of Ethics, said that of $25 million in behested payments his group has tracked, “almost none went to nonprofits that provide human services.” The money went to things like the Super Bowl and America’s Cup committees.

Ben Becker, a member of the SF Berniecrats, said that “no citizens who are not affiliated with a nonprofit spoke against this. In SF, one hand washes the other.”

Which gets into some of the real tricky business here. There are nonprofits – and there are nonprofits, just as there are corporations – and there are corporations.

The entity that operates 48hills is a nonprofit corporation in the state of California. (We have received no “behested” money from any politician, and I suspect we never will.) Kaiser, Sutter Health, and other billion-dollar health-care operations are also “nonprofits,” which seems like a huge scam since they are all about making money.

Google and Wells Fargo are “corporations.” So are a whole lot of small community-based businesses. The Good Life and Rainbow Grocery, both employee-owned enterprises that contribute a lot to the life of SF, are legally corporations.

I’m not sure how you sort all of this out in the campaign-finance world.

In a perfect world, with no Buckley or Citizens United, all campaigns would be publicly financed, superPACs would be banned, and candidates would have a level playing field. In the political world we actually inhabit, encouraging campaigns to run on small donations, the way Bernie Sanders did, is a worthy goal.

Mandating transparency I also an excellent approach – but it only helps if the news media and voters pay attention to who is funding which campaigns. And the donors find ways to make that difficult.

So the supes – who both have to live with these rules and benefit from them – and the Ethics Commission members (only one of who has ever run for public office) could wind up at odds, with one version of a bill going through the legislative process and one going to the ballot, where these sorts of ethics reforms are normally popular.

And in the end, unless we can figure out what to do about the independent expenditures, the worst sort of political corruption will continue.

  • Friends of Ethics offered an approach to meet concerns. We suggested an exemption for nonprofits receiving city funding that provide human services to low income needy at no cost to them. The representatives of nonprofits who showed up rejected that as unworkable for them.
    Instead they wanted an exemption that includes not only charities, but also includes contributions to city officials own offices and staff, or to nonprofits that hire relatives of city officials, or that are engaged in outright advocacy that would include “same sex conversion programs,” or nonprofits set up by for-profit companies like the soft drink industry, and anything else that can apply for nonprofit status.
    Unsurprisingly, Friends of Ethics found that unsupportable.
    The Commissioners themselves asked those testifying to identify any harm they would face and indicate if they have received any behest payments. Not a single advocate claimed that they receive any behest payments. Rather they spoke of the “chill” that results with greater transparency. This was the same argument the Mormon Church used to claim it should not have to identify the donors to its campaign against Prop 8.
    Important to note that not a single donor identified as making behest payments testified against this. Also no self-identified commissioner testified against it. Nor did any political committee facing proposed increased disclosures testified against it. Nor did any entity receiing behest payments testify against it.
    Can this reform be improved? Absolutely. Friends of Ethics will suggest changes and amendments that will strengthen the anti-corruptionn features.

  • SF Sunset Guy

    “Nonprofits that do social service work are going to have a tough year anyway:

    Aren’t many or most SF based social service nonprofits funded directly by the city anyway? How will the new tax laws affect them?

    • Rosh HoshHosh

      Even if a nonprofit is subsidized by the city they still rely heavily on state and federal grants. Think of a program like HealthRight 360.

  • sebra leaves

    The major public opposition to the Ethic’s Commission bill came from the big non-profits connected to the development community. This bills will win or lose based on the emotional appeal of the concept. Voters will not be reading the fine print on this one.