With just over a week before L.A.'s municipal elections, political fundraising has been going on at a fever pitch, and once the primaries are over, activity is likely to resume as the various interests make their final pick in the runoff.
For those inclined to commit dollars and/or time to local political campaigns, consider some of the rules and regulations.
First off, the March 8 primary is considered a separate event from the May 17 general election and so the fundraising tallies are counted separately.
The maximum contribution is $1,000 to any candidate for mayor in the primary election and $500 to any candidate for City Council, City Attorney or City Controller. Those same limits are in place for the general election. Be sure to designate which election the contribution is to be applied (this could avoid having to answer questions from the city's Ethics Commission).
Contributions subject to the above-referenced limits include the purchase price of a ticket to a fundraiser, extending (or forgiving) a loan to a candidate, or paying employees to work on a candidate's campaign. But contributing one's own time does not count as a campaign contribution, nor does the first $500 of costs incurred in hosting a fundraising event. So, if you spend $700 for food and drinks for a candidate fundraiser at your home or office, only $200 counts toward the applicable contribution limit.
With a few notable exceptions, businesses can contribute to local elections. A business also can donate employees' legal or accounting services to a candidate's committee, and such services will not count toward the applicable contribution limit. What a business cannot do is reimburse personnel for their political contributions.
Contributions by a married couple are not considered to be from a single source, even if only one spouse has income. Thus, each spouse may contribute up to $500 per candidate (or $1,000 per mayoral candidate) per election, and the couple can even contribute using a single check so long as both spouses sign the check or attach a statement regarding their marital status. Contributions from children under the age of 18 are treated as contributions from the parents, attributed equally to each parent.
Contributions from an individual and his or her business generally must be aggregated if the person holds at least 50 percent equity or has a majority of voting rights. An individual or business contributing $10,000 or more to any combination of candidates (or their committees) for state or local office during a calendar year must file a Major Donor and Independent Expenditure Committee Campaign Statement commonly known as "Form 461" with the Secretary of State.
The city of Los Angeles arguably has the most comprehensive local campaign finance laws in the nation. The Ethics Commission vigorously enforces these laws in the name of good governance and to the occasional embarrassment of prominent members of our business community. Avoiding such embarrassment (and possibly criminal liability) requires knowledge of applicable limitations and, in many cases, how to navigate them for maximum business advantage.
*Timothy Lappen is chairman of the family office practice group at the law firm of Jeffer Mangels Butler & Marmaro. Derek Jones is an associate in the firm's government practice group, whose specialties include campaign finance law.
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