González received unanimous support for her legislation from the Seattle Ethics and Elections Commission on Wednesday, Oct. 30.
González received unanimous support for her legislation from the Seattle Ethics and Elections Commission on Wednesday, Oct. 30.

Seattle City Councilmember Lorena González has secured unanimous support from the city’s elections commission to proceed with legislation aimed at stemming the flow of corporate and foreign influence into local races by way of campaign contributions and independent expenditures.

González plans to introduce her campaign finance reform bill for referral by Nov. 12, and then begin addressing it in committee once the council’s fall budget process wraps up.

The legislation would block foreign-influenced corporations from contributing to political action committees or making its own independent expenditures in a city race, and it would also limit qualified donors to giving no more than $5,000 to a PAC to spend for or against a candidate for city office. However, it would not limit how much a PAC can spend.

González has been working on the bill since before this year’s primary election.

The Seattle Ethics and Elections Commission vetted the legislation back in August, expressing concerns about how it would stand up to legal challenges.

González came back with a revised bill on Oct. 30, two weeks after news broke that Amazon had invested another $1.05 million in this year’s city council election by way of a contribution to the Civic Alliance for a Sound Economy, the Seattle Metropolitan Chamber of Commerce’s political action committee. That brings Amazon’s total spending this election cycle to $1.45 million.

A donor can only contribute up to $500 to a candidate’s campaign, but currently can give as much money as they want to a PAC to spend promoting their interests through advertising, mailers, phone banking and canvassing.

A candidate is not allowed to coordinate with a PAC on how those contributions are spent or the messaging provided.

Under González’s bill, a donor would only be allowed to contribute up to $5,000 to an independent expenditure committee.

González said independent expenditures in Seattle during the 2013 election reached $556,000. PAC spending in 2019 was at $3.1 million as of Oct. 30, with the general election less than a week away.

The councilmember said her bill is critical to defending democracy against “an epidemic of big money” that makes people question whether elected leaders will continue to represent them and their interests.

SEEC Commissioner Eileen Norton said she’d supported the first version of González’s bill, but she still worried about it surviving a legal challenge.

“Whether it will pass and get through the courts, who knows?” she said.

González’s revised bill includes an exception to the $5,000 cap for limited contributor committees.

A limited contributor committee (LCC) would have to have existed for at least nine months and meet a threshold of donors. If the expenditure is for or against a district council campaign, at least 150 people would need to make a donation to the LCC. At least 400 donors would be required for an at-large council or city attorney campaign, and at least 600 in a mayoral race. The donations would be capped at $500.

This would allow union groups to participate, with their members making up the required donors to qualify as an LCC. González said unions are fundamentally different than corporations because they are powered by thousands of working-class people.

Norton said it’s possible corporations could simply find enough donors to create a spending loophole.

“I think grassroots fundraising is not as easy as it sounds,” González said.

Seattle Initiative 122 (Honest Elections) changed the campaign contribution limit to $500 - down from $700 - and also created the Democracy Voucher program, which provides each voter with $100 in vouchers each cycle to give to participating campaigns they support. Participants can only accept contributions of $250 per donor if running for council or city attorney, and $500 if campaigning for mayor.

Norton said I-122 did not close loopholes, and González agreed a consequence of the Democracy Voucher program has been an influx of independent expenditures that challenges candidates’ loyalty to the voucher program.

González acknowledged that the limited contributor committee option would require the SEEC to review hundreds more contributions, and said she believes more staffing for the commission would be required. She also would look to the commission to add rules for qualifying as an LCC if the city council allows them.

The Ninth Circuit Court of Appeals sided with the Long Beach Chamber of Commerce in a challenge against the City of Long Beach when it attempted to limit independent expenditures and donations to political groups.

González said she sees a case being made for her campaign reform legislation by building on the constitutionality established when the city’s Democracy Voucher framework was challenged. The Washington Supreme Court in July upheld the city’s publicly financed campaign structure in a lawsuit filed by the Pacific Legal Foundation. The councilmember said she has found attorneys willing to work with her pro bono when a case arise.

A foreign-influenced corporation is defined in González’s bill as a single foreign owner with a controlling interest of 1 percent or more, or two or more foreign owners controlling 5 percent or more.

González said her research shows foreign owners with at least 1 percent interest in a corporation tend to have direct access to board rooms and decision-making.

“It’s not like you or I, who might own a .00001 percent interest in X corporation,” she said. “We get to go to a shareholder meeting once a year and lift our card and vote.”

Norton agreed the percentage seemed low, but does carry weight.

“One percent doesn’t seem like a lot to me, but in that world it turns out it’s a lot,” she said.

A foreign-influenced corporation can also be one where a foreign owner is involved in its political activities in the United States, according to the legislation.

SEEC Commissioner Hardeep Rekhi said he doesn’t think corporations should be allowed to do something a foreigner can’t, referring to the 2010 Citizens United decision, which secured independent expenditures by corporations as a First Amendment right.

“It’s unfortunately a reality,” he said.

SEEC Commissioner Susan Taylor said it’s likely a filing with the Security and Exchange Commission (SEC) would need to be used as a threshold, as many people who own an interest in a corporation conduct business through a broker.

The commission unanimously approved having SEEC executive director Wayne Barnett and his staff draft a letter of support for the legislation, which González will couple with one from the Washington Public Disclosure Commission, assuming its members approve the revised version.

The campaign finance reform bill also requires PACs to provide a more thorough reporting of their spending, and for commercial advertisers to keep their records open and available to the public for viewing for no less than four years.

González said she expects there will need to be at least two executive sessions to get the language right, and she’s hoping to receive the SEEC’s letter of support before the first session on Dec. 2.

A final vote would ideally occur on Jan. 13, she said, at which point there will be a new council.

“I’ll be there though. We know that is true,” said González, who is not up for re-election this year, “unless I have this baby sooner. Even then, I’ll call in.”

CASE executive director Markham McIntyre issued a statement on Friday, pushing back against González’s attempt to curb the amount of funding PACs like his would be able to generate, alleging the city council is attempting to distract voters from issues like affordability, homelessness and traffic, and how it is failing to make progress on those fronts.

“Businesses made major donations to the ST3 campaign, as well to local levy campaigns for transportation, education, and housing, and we’re involved in two important statewide measures this year,” a portion of the statement reads. “However, once the business community highlighted the need for change and a functioning Seattle City Council, our contributions suddenly became an issue. Elections are up to voters – and we encourage voters to decide for themselves whether they want four more years of dysfunction and ineffectiveness from their City Council.”

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