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A Minnesota Supreme Court ruling makes statements of position of a city council that “promote” or “urge adoption” of a position on a ballot question potentially subject to campaign finance laws.
(Published Aug 22, 2012)
Many city councils have publicly expressed positions on two controversial constitutional amendments appearing in the next election. While city officials are generally free to express an opinion, cities should be aware that a recent ruling by the Minnesota Supreme Court now makes statements of position of a city council that “promote” or “urge adoption” of a position on a ballot question potentially subject to campaign finance laws.
In Abrahamson v. St. Louis County School District (pdf), A10-2162 (Aug. 10, 2012), the court held that a municipal corporation was a “corporation” for purposes of campaign finance laws and fair campaign practices. As a result, if a city acts to “promote or defeat a ballot question,” it will similarly be subject to these laws. The case leaves many unanswered questions, but it makes it imperative that cities consult their attorney before spending any money in either taking a position on a ballot question or even arguably urging others to adopt the city’s position.
Campaign finance laws (Minnesota Statutes, chapter 211A) require “corporations” acting to influence an election, including efforts promoting or defeating ballot questions, to report disbursements made and donations received relating to that effort that are worth more than $750. The report must be made to the campaign finance board within 14 days of the donation or disbursement. Expenditures or “disbursements” are broadly defined, but do not include a political subdivision’s “election-related expenditures required or authorized by law.”
This opinion not only affects clear statements of position, but also informational statements that may be found to urge passage or defeat by implication. Traditionally cities spend money on educational efforts related to ballot questions that will affect the city, offering data and information that informs the electorate of the city’s financial needs and the likely consequences of a ballot measure’s failure. Seeing value in an informed electorate, the attorney general and prior Minnesota case law have always validated these expenditures as “authorized by law.” A concurring opinion by a single justice in Abrahamson also reiterated there is still implied authority for cities to do this. However, the majority and binding opinion did not acknowledge such implied authority, so cities must work with their attorneys to determine how and to what extent they can tell voters what exactly they’re voting on.
Another consequence of the opinion is that cities must follow fair campaign practices. Fair campaign practice laws (Minnesota Statutes, chapter 211B) require, among other things, that corporations avoid intentionally false statements and statements made with reckless disregard as to whether they are false. Often if a political subdivision’s financial future rests on passage of a ballot item, the subdivision will want to keep citizens informed and to warn them if a failed measure could result in increased taxes.
In Abrahamson, a school district paid for literature related to a bond measure that said taxes could increase and a huge deficit could follow. The facts showed these statements were based on worst-case assumptions. But because of the potential for exaggeration or the “urging” effect of those statements, two justices on the court said the statements pertaining to a deficit should be investigated for reckless disregard of the truth.
For more information on city limitations on expenditures related to constitutional amendments, see the League’s newly updated document on this issue.