Local Taxes

State Commission Fines School District $18,000 for Using Tax Dollars for Campaign

california fppc logo

The Fair Political Practices Commission (FPPC) voted March 18 to approve a stipulated settlement fining the city of Fountain Valley $18,000 for using tax dollars to campaign for a sales tax measure, in violation of the Political Reform Act.

Government entities are banned from spending public funds to advocate for or against ballot measures. Like many local governments, Fountain Valley attempted to get around this ban by paying for a magazine ad that presented a very positive view of Measure HH – a 1 percent sales tax increase on the ballot in 2016 – but did not specifically ask readers to vote “yes.” (Click on the letter below for a larger view.)

Despite the ban, the Political Reform Act includes a provision requiring any local government agency that spends $1,000 or more in public funds to advocate for or against a ballot measure to file as a campaign committee and comply with all provisions of the act related to campaign committees. This includes requirements to include disclosures on advertisements, as well as filing campaign statements and reports.

According to the FPPC, which administers campaign laws, Fountain Valley “violated the Act by failing to include a disclosure statement on an advertisement, sending prohibited campaign related mass mailing at public expense, failing to timely file one 24-hour independent expenditure report, and failing to timely file one semi-annual campaign statement.”

Measure HH, placed on the ballot by the Fountain Valley City Council, was approved with 59.8 percent of the vote in the November 2016 election. It imposes the 1 percent sales tax for 20 years, at an estimated cost of $11.5 million per year for taxpayers.

The city purchased advertisement space to promote Measure HH in Fountain Valley Living Magazine’s September and October issues, at a total cost of $1,600. This cost did not include expenses incurred to create the ads. These advertisements “unambiguously urged a vote in favor of Measure HH,” the FPPC noted.

Not only did the advertisements include narratives “concerning the merits of and need for Measure HH,” but they also contained language to persuade residents to vote for the ballot measure, the FPPC found. For example, the advertisements contained language such as the “state of California has taken approximately $100,000,000 of Fountain Valley’s money – causing reductions to the services our residents rely on,” and “[w]e all know that adequate firefighter staffing is necessary to prevent crime and save lives.” Measure HH would provide a “reliable source of locally controlled funding that can’t be taken by Sacramento,” the ad stated.

The stipulation reached between the FPPC and Fountain Valley declares that these advertisements “failed to display a proper advertisement disclosure statement” but did show the city’s seal, which might have suggested the city’s involvement.

The magazine ad was part of a larger effort by city leaders to campaign for the tax using tax dollars. The city included a letter with every water bill mailed to its residents containing similar messages to the magazine advertisements (paying a vendor $150 to print and insert these letters with the water bill) and sent an additional letter to specific “community leaders” urging a vote in favor of Measure HH. Although the city could not provide invoices or documentation regarding these letters’ costs, the FPPC estimated that the city paid approximately $30 to print and mail them.

The FPPC could have imposed a maximum penalty of $5,000 per count, or $20,000.

The stipulation states, “Because of the high degree of public harm, the Commission expressed a desire to pursue penalties at or above 90 percent of the maximum penalty when a governmental agency fails to properly disclose or report its campaign activities or engages in activities prohibited by the Act. For the foregoing reason, a penalty of $4,500 each for Counts 1 through 4 are recommended, for a total in the amount of $18,000.”