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Saturday, November 03, 2018
Who Spent What, When, and Where on the Con-Con Referendum
By J. H. Snider Ph.D. @ 5:40 AM :: 760 Views :: Hawaii State Government

Who Spent What, When, and Where on the Con-Con Referendum

by J.H. Snider, Ph.D., Hawaiʻi State Constitutional Convention Clearinghouse

Hawaii’s Campaign Spending Commission states in its mission statement that it is “committed to maintaining integrity and transparency in political campaigns by making sure everyone has the opportunity to ‘follow the money.’” How good a job has it done fulfilling this mission in the campaign finance data it has reported regarding the constitutional convention referendum? And how good a job has the press done in not only reporting the flaws in the data reported by the Spending Commission but compensating for them with its own investigative reporting?

The Commission’s Con-Con Disclosures

Hawaii’s Campaign Spending Commission has four deadlines for reporting campaign finance data related to Hawaii’s Nov. 6, 2018 constitutional convention referendum: Oct. 1, Oct. 29, Nov. 5, and Dec. 6.

The end of the reporting period for each deadline precedes the deadline.  It is Sept. 26 for Oct. 1; Oct. 22 for Oct. 29; Nov. 2 for Nov. 5; and Nov. 6 (Election Day) for Dec. 6. 

Since reports are often filed at the last minute (filings are accepted until 11:59 pm), the press waits at least one extra day before reporting the results.  For example, the press reports for the period ending Oct. 22 appeared on Oct. 31 in the Honolulu Star-Advertiser and Nov. 1 in the Honolulu Civil Beat.

For the period ending Sept. 26, no contributions or expenditures were reported for either a yes or no campaign.

For the most recent period ending Oct. 22, the No Campaign under the name “Preserve Our Hawaii” reported contributions of $665,000 and expenditures of $612,513. Consistent with press reports observing no organized yes campaign, there were no reported contributions or expenditures for a yes campaign.

All the contributions to Preserve Our Hawaii were made by government unions. The National Education Association and its two Hawaii affiliates (the Hawaii State Teachers Association and University of Hawaii Professional Assembly) contributed 60% ($400,000), the Hawaii State Government Employees Association contributed 36% ($240,000), and the Hawaii Fire Fighters Association contributed $25,000 (4%). The dominant role of government unions in financing the no campaign is consistent with campaign finance disclosures in both other states and Hawaii during recent decades.

The contributions began on Sept. 28, thus missing the Sept. 26 close-of-business filing deadline by little more than 24 hours. Absentee ballots were mailed to voters on Oct. 17, with some receiving them as early as Oct. 18. Early walk-in voting began on Oct. 23. Given that the first news report on contributions and expenditures was Oct. 31, there were eight days of early voting and nineteen of absentee ballot voting before the public had any authoritative information about who was financing the no campaign, including the countless “Preserve Our Hawaii” ads shown on virtually every radio, TV, and newspaper outlet in Hawaii. According to Civil Beat, “By [Oct. 29], it’s likely that a majority of Hawaii voters will have already cast their ballots.” After the start of absentee and early voting, news and op-ed coverage of the convention referendum greatly diminished, so ads became the principal source of new information about the convention.

More than 99% of Preserve Our Hawaii’s reported expenditures cover the cost of producing and distributing ads.  Between Sept. 28 and Oct. 22 ads were reported placed in the following media:

  • Radio ads: KNDI, KKEA, KKOL, KDDB, KUMU, KRTR, KINE, KPHW, KUCD, KDNN, KZOO, KPOA, KJMD, KJKS, KLHI, KITH, KJMQ, KFMN, KQNG, KSHK, KSRF, KUAI KRYL, KRKH KHBC, KWXX/KAOY, KNWB-KMWB, KAP,KKBG, KKPV;
  • TV ads: KIKU, KITV, CW (NHON), Spectrum, KBFD, KHNL, KGMB, and KFVE;
  • Print ads: Honolulu Star-Advertiser, Hawaii Tribune, West Hawaii Today, Maui News, and The Garden Island;
  • Digital ads: Goodway, Spotx, Hawaiinewsnow.com, and Staradvertiser.com.

The first contribution to Preserve Our Hawaii was reported on Sept. 28, the same day ads were purchased and possibly launched on the following radio stations: KAPA, KKBG, KPVS,KWXX/KAOY, KNWB-KMWB, KHBC, KRYL, KRKH, KQNG, KSHK, KSRF, KUAI, KFMN, KITH, KJMQ, KPOA, KJMD, KJKS, KLHI.

The dates of Preserve Our Hawaii’s first contributions and expenditures are remarkable for two reasons. First, they both occur on the same date. Normally, substantial contributions come days or weeks before substantial expenditures. Businesses, too, generally won’t sell on credit to a major new customer, such as a short-lived political action committee, lacking an established credit record or assets to seize in the case of non-payment. One would also normally expect that professionally made ads take at least days, if not weeks or months, to prepare prior to being run on a commercial radio station. Leaving aside the question of how focus-group tested and professionally produced ads could have been generated in a fraction of a day, one might marvel at the masterful coordination required to do the following all on Sept. 28: 1) transfer money to Preserve Our Hawaii, 2) transfer money from Preserve Our Hawaii to Core Group One for its professional services, 3) transfer money from Preserve Our Hawaii to more than a dozen radio stations, and 4) get presumably some of the radio stations to run the ads on the same day, including during the narrow drive time windows most sought by advertisers. (Note that the campaign expenditure report provides information about the dates ad expenditures were made, not the dates that the ads were run. But it can reasonably be inferred that the ads did not run before the expenditures were made.)

Second, the contributions and expenditures both occurred little more than 24 hours after the disclosure deadline for reporting such contributions and expenditures. This fits the long-term pattern of no campaigns making contributions shortly after reporting deadlines.

Why would they do this? A major argument against calling a convention promoted by Preserve Our Hawaii is that well-heeled special interests favor a yes vote and will therefore, presumably, spend money to support a convention. As the Treasurer of the Hawaii State Teachers Association wrote in an op-ed: “Across the nation, support for … state-level Constitutional Conventions predominantly comes from right-wing organizations and Wall Street…. [V]oters should oppose a ConCon this year and… put people before profit.” But if no campaign contributions outgun yes campaign contributions by a factor of more than 100:1 and are also dominated by some of the most powerful special interests in contemporary Hawaii State politics—that is, government unions—this message is undercut, as people might ask themselves: “why would special interests spend so much to defeat a referendum on whether to call a state constitutional convention?” A related theme, that special interests favoring a yes campaign are from out of state, is also undercut when the only out-of-state money, in this case the National Education Association’s $250,000 contribution as of October 22, is on the side of the No Campaign.

If the past is a guide, most no coalition contributions and expenditures won’t occur until after the Oct. 22 deadline, when there are still 15 days to influence the election under the cover of darkness. The next reporting deadline doesn’t occur until the evening before the election, when most people have already made up their minds and the media in any case has no time to analyze the convention referendum reports—as well as the reports for more than a hundred candidate races.

And all this assumes that the reports are accurate. But the campaign finance disclosure system tends to depend on the court of public opinion rather than the court of law. And even when the press is remarkably diligent reporting irregularities after an election, it is hard to go after the PACs making the contributions and expenditures, when they will soon depart forever from the face of the earth and the public has already moved on to other interests. Rhode Island’s repeated experience with campaign finance disclosure violations by constitutional convention opponents illustrates how flawed and impractical enforcement can be.

A remarkable feature of constitutional convention news coverage is that it tends to wind down just as a no campaign’s advertising campaign accelerates and voters are paying most attention.  The news media seems to feel that it should publish its coverage before early voting begins. But that’s when no campaigns, which have the only substantial advertising budgets, go into high gear—assuming they are still worried that they might lose. 

In short, Hawaii’s campaign finance disclosure rules, especially its deadlines, create opportunities to ensure that disclosures don’t occur when they are politically relevant.

Internal vs. External Disclosures

Campaign finance disclosure laws for ballot referendums focus on contributions for an organization’s external rather than internal expenditures. Consequently, they have been most complete in encouraging disclosure of mass media advertising, including the hiring of vendors who are experts at developing and distributing such ads.

Campaign expenditures made within an organization need not be disclosed. These include having a staffer who is an expert on constitutional convention referendums, internal staff who are experts in conducting focus groups and in message development, internal staff who organize and administer the No Coalition, internal staff who conduct the tracking polls to see whether additional expenditures are needed to win the campaign, internal staff who are expert in writing grant proposals to seek money for an advertising campaign (in this case, from the National Education Association’s $60 million ballot initiatives fund), office space already owned or leased by the organization, and communications to members via email, newsletters, phone banks, and social media.

When there is a two-step flow of communications from an organization to its members and then to the general public, these are also considered non-disclosable internal contributions and expenditures. For example, if an organization distributes yard signs, handbills, car bumper stickers, and other media to its members, these are non-disclosable even if the members then use those media to influence the general public. A case study is New York in 2017, when the various unions opposed to a convention distributed more than 300,000 free yard signs to their members, who then placed those signs on their yards for tens of millions of New Yorkers to see. None of the production or distribution expenses associated with those yard signs needed to be disclosed.

Large vs. Small Organization Disclosures

The disparate treatment of internal vs. external expenditures means that large interest groups with massive organizations and memberships have an advantage over small ones, assuming it’s to a group’s advantage to keep its expenditures secret. That’s because small organizations must spend money externally to do what large organizations can do internally. The National Education Association and the Hawaii State Government Employees Association, the two leading contributors to Preserve Our Hawaii, are examples of large interest groups with massive organizations and memberships.

Direct vs. Indirect Disclosures

Only direct expenditures need to be disclosed.  For example, if Organization X contributes to Organization Y, who then either contributes or advocates in a way aligned with the interests of Organization X, the contribution of Organization X need not be disclosed. A case study is Rhode Island in 2014, when a union opposed to calling a constitutional convention referendum took advertising in the program brochure for the Rhode Island ACLU’s annual meeting, and the ACLU then contributed to the no coalition and advocated on its behalf. The contribution to the ACLU did not have to be disclosed because it was indirect and could arguably be said to be unrelated to the convention referendum.

Understated vs. Overstated Disclosures

The law is geared to prevent under reporting of campaign finance disclosures. Thus, there is little to prevent campaigns from overstating disclosures when it is in their interest to do so. Overstating contributions may work best with so-called in-kind contributions, which are non-cash contributions. Examples of common in-kind contributions are the value of campaigners’ time and the office and other materials allocated to their campaign.

From an individual filer’s perspective, the option to report a given in-kind contribution may be viewed as discretionary, which it is from a legal perspective. But from the perspective of a member of the public trying to compare the relative strength of yes and no campaigns, contribution totals can be misleading.

The problem is that whereas no advocates have traditionally sought to minimize the visibility of their contributions, yes advocates may seek to do the opposite. The reason is that yes campaigns tend to be tiny in comparison to no campaigns and their advocates know that journalists will be looking at and reporting on the campaign finance disclosures. A high contribution figure will give a yes advocate more credibility and publicity in major media for the issue or issues they are promoting. The publicity they seek may include not only the initial campaign finance news reports but follow-up interview shows and news reports where reporters want to fairly provide both yes and no advocates. Thus, they have an incentive to provide high estimates for the value of in-kind contributions, such as the value of their time and office space, devoted to advocating for a convention.

To my knowledge, no contributor listed on a campaign finance disclosure form has ever been punished for overstating contributions.

In 2018, no in-kind contributions were reported by Preserve Our Hawaii, the only group to file a campaign finance disclosure statement.

The Citizens United Bogeyman

Hawaii’s Campaign Spending Commission mission statement begins: “Since the U.S. Supreme Court’s landmark Citizens United decision in 2010, there has been a nationwide concern about the influence of big money being raised and spent on campaigns.” The Commission’s narrow focus on countering the impact of Citizens United may help explain its poor rules regarding periodic constitutional convention referendums.

Regardless of the problems with the Citizens United decision, it doesn’t justify the No Campaign’s overbroad use of it as a bogeyman to explain why dark money would dominate the convention process.

None of the campaign finance disclosure flaws described here relate to the U.S. Supreme Court’s 2010 Citizens United v. Federal Election Commission ruling. That’s because the ruling affected candidate, not referendum, campaigns. Prior to 2010, ballot committees in Hawaii could already spend unlimited amounts of cash for or against a referendum.

Press Coverage

The press should do a better job reporting on the strengths and weaknesses of the Campaign Spending Commission’s information, and supplement it by additional information, especially about ad campaigns.

The single biggest easy-to-correct omission is the press’s lack of reporting on the specific ads paid for with those campaign expenditures. Why this is so is unclear to me. One contributing factor might be the media’s positive dislike of reporting this type of information. Media outlets generally have a rule against mentioning the name of a competitor, which is hard to follow when analyzing ad campaigns on competitors’ media. They also as a rule don’t criticize substantial advertisers; that is, bite the hand that feeds them. 

Another contributing factor may be the relatively high cost of gathering such information.  The government (i.e., the Campaign Spending Commission) doesn’t collect detailed ad information, so news outlets would have to incur the expense of gathering the information on their own.  Doing so may be especially costly for radio and TV ads concerning statewide issues (which are exempt from government mandated disclosure rules concerning federal issues) because such ads are not searchable on the web. If a reporter doesn’t watch them in real time—and there are more than 40 such media outlets in Hawaii—they effectively become invisible. The problem of tracking social media ads may be even greater. Indeed, Congress is trying to mitigate this tracking problem with the Honest Ads Act, which would regulate online campaign advertisements on platforms such as Facebook and Google. On the other hand, social media advertising remains a relatively small part of the overall advertising mix.

Nevertheless, given the pervasiveness of no campaign ads during the immediate runup to the Nov. 6 referendum, the costs of gathering timely information about such ads should be minimal. Reporters, for example, could monitor the drivetime radio ads while walking or driving to work in the mornings and evenings. In any case, the media is likely to analyze those ads in their post-mortem after the election, so the question is one of timing. From the standpoint of meaningful democratic accountability on a periodic constitutional convention referendum, the only useful time to analyze those ads would be before the Nov. 6 referendum.

Press and Public Policy Recommendations

The Campaign Spending Commission exists because it provides valuable information to voters. The central importance of campaign spending in determining voters’ decisions on the convention referendum is reflected in the focus that the No Campaign has placed on the issue in its advertising, op-eds, and news interviews. There it argues that wealthy and out-of-state special interests favor a convention because a convention is an opportunity to effectively push their agenda. 

Meanwhile, the groups making such claims have sought to hide their own outsized contributions to no campaigns because open disclosure would conflict with their ad campaigns and other messaging. This pattern of hiding one’s out-sized resources is part of a larger messaging strategy, which includes hiding the No Campaign’s financiers and organizers behind a façade of more popular surrogates. It is these surrogates, in turn, who primarily make the Machiavellian argument about the role of monied interests favoring a state constitutional convention in Hawaii. 

Despite the many flaws in Hawaii’s campaign finance disclosure system concerning periodic state constitutional convention referendum campaigns, it does provide valuable information to voters. But to the extent the press doesn’t report on the data and its significance, collecting it is a waste of the public’s money.

The press should also do original research to supplement the Campaign Spending Commission’s data. For example, it should attempt to report on the type of internal organization expenditures that the Commission’s data omits, and it should provide more timely information on the ads that constitute the bulk of the expenditures.

The press also needs more public policy help to do its job. The campaign finance disclosure regime should be reconceptualized and reformed. For example, online disclosure of radio and TV ads for statewide issues should, at a minimum, be brought up to the same standard of disclosure mandated by the FCC for federal issues. And for the first time, as proposed by the Honest Ads Act, internet ads should be brought under a similar disclosure regime.

Conclusion

The next round of Campaign Spending Commission disclosures on the constitutional convention referendum should be posted by 11:59 pm on Monday, Nov. 5. Let’s hope the news media stay up until the wee hours of Nov. 6 so they can not only publicize the disclosures by the time the polls open on Election Day the next morning but do so with thoughtfulness. I wouldn’t bet on it.

---30---

J.H. Snider is editor of the The Hawaiʻi State Constitutional Convention Clearinghouse and author of Does the World Really Belong to the Living? The Decline of the Constitutional Convention in New York and Other US States, 1776–2015.  

LINK: Articles by J H Snider PhD

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