Memo raises constitutionality concerns for reform measure aimed at big political donors

An Ethics Commission memo calls into question the constitutionality of a political contribution reform measure proposed by Supervisor Aaron Peskin this week and says it is unlikely it could be implemented in time for the June mayoral election.

Peskin’s proposal would require those who make large contributions to the political committees often referred to as Super PACs to disclose their investments in San Francisco.

The proposal was put forward as an amendment to a broad good government reform measure drafted by the Ethics Commission, which is intended to combat pay to play politics at City Hall. Peskin has said he hopes to see it approved in time to affect the June election for mayor.

SEE RELATED: Peskin wants big political donors to disclose investments

The commission will debate the the reform package Friday at 2 p.m. and could vote to place it on the June ballot. But the Board of Supervisors has asked the commission to instead work together to adopt a measure through the legislative process.

The reform package requires either voter approval or approval by both the Ethics Commission and the Board of Supervisors to become law.

Peskin’s proposal would require those who donate $10,000 or more to one political committee to disclose their financial investments of $10,000 or more in any business in San Francisco. That would also include the investments of their immediate family like spouses and dependents.

They would also need to disclose all business entities in San Francisco from which they receive compensation. Such disclosures would need to be made within 24 hours of the contribution.

The requirement is aimed at big donors, like tech investor Ron Conway.

In a Feb. 14 memo Ethics Commission staffers Pat Ford, a policy analyst, and Kyle Kundert, a senior policy analyst, raised a number of questions about Peskin’s proposal, questioning its constitutionality and casting doubt on whether they could implement it in time for the June mayor’s race.

“For certain donors, this could be an impracticable requirement,” said the Feb. 14 memo sent to the commission. “This is especially true for corporate donors and individuals with many holdings. If this requirement creates a high burden that chills political speech without a sufficient government interest, it could fail under a constitutional challenge.”

Peskin told the San Francisco Examiner Thursday that the “Ethics Commision staff is not the city attorney.”

“If the City Attorney signs this as to form, it means that we have a high likelihood of prevailing in a competent court of law,” Peskin said.

The memo also said it was unlikely Peskin’s proposal could have an impact on the June mayoral election.

“It is highly unlikely that staff would be able to implement electronic filing of a new disclosure form in such a short time,” the memo said. “Without implementing electronic filing, the proposed disclosure would have little informational value because all filings would have to be made on paper and the public would not be able to access the disclosures online.”

Peskin said, “If it’s a function of money, we will give them the resources that they need.”

“There are online portals on the Ethics Commission website,” he said. “These people can put their nose to the grindstone and get this done within a week or a month’s time.”

He added that it would be 30 days from the time of approval before the law could become effective, which should be plenty of time to implement it. “They should either get on board or get out of the way. Everybody from Mayor Farrell to the Board of Supervisors will give them the resources that they need.”

The memo also recommends the commission place the overall reform measure on the June ballot, after making several amendments. The broader reform package by the Ethics Commission addresses a host of issues, such as bundling of political contributions or cards for donors to sign to attest their contribution doesn’t violate restrictions on contributions.

Nonprofits had criticized the measure, saying it would chill their fundraising abilities. They objected mostly to proposed requirements around reporting of behested payments, those payments made to groups upon the request of city officials. But proposed amendments seemingly have addressed their concerns. Some of the changes were recommended by the Board of Supervisors Budget and Finance Committee, which held its first hearing on the commission’s proposal two weeks ago. A subsequent hearing was held Thursday.

One amendment strikes a reporting requirement for those who make behested payments and then support or oppose some government decision. The person would have to have a financial interest in the outcome for disclosure to kick in.

Another provision being recommended for removal would have prohibited those with a financial interest in a land use matter pending approval by The City from contributing to candidates, such as for Mayor or the Board of Supervisors. The memo said more time was needed to work out the nuances “considering the highly diffuse and technical nature of land use decision making in The City.”

As for those donor cards, after Peskin said two weeks ago that they may chill small donations, the memo recommends making them voluntary not mandatory.

In recent years, the Ethics Commission has sought to exert itself as a more powerful watchdog and commissioners have discussed using its power to go directly to the voters to pass reform, bypassing the more political legislative process. In this case, however, Peskin has encouraged the commission to work with supervisors to come up with a reform package the board could approve.

Depending on what happens Friday, Peskin said he may seek to have a joint meeting on Feb. 27 between the commission and the board to vote to finalize the reform measure.

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