PROPOSED RULES

At its August 15, 2016, the Texas Ethics Commission voted to propose amendments to Texas Ethics Commission Rules §§ 20.61 and 26.1, and new Texas Ethics Commission Rules §§ 20.56 and 20.60. The proposals for Rules 20.56 and 20.61 relate to expenditures involving political consultants.

The Ethics Commission invites public comment on the proposals.  A written statement should be emailed to public_comment@ethics.state.tx.us, or mailed or delivered to Natalia Luna Ashley, Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070, or sent by facsimile (FAX) to (512) 463-5777.  A person who wants to offer spoken comments to the commission concerning a proposed rule may do so during the public comment period at any commission meeting when the commission considers the proposed rule.  Information concerning the time and location of commission meetings is available at http://www.ethics.state.tx.us/tec/meetings.htm.

§ 20.56. Expenditures Involving Consultants.
Text of Proposed Rule

§ 20.60. Reporting Political Expenditures for Processing Fees.
Text of Proposed Rule

§ 20.61. Purpose of Expenditure.
Text of Proposed Rule

§ 26.1. Disclosure Statement.
Text of Proposed Rule


§ 20.56. Expenditures Involving Consultants.
Text of Proposed Rule

The proposed new language is indicated by underlined text.

Chapter 20. REPORTING POLITICAL CONTRIBUTIONS AND EXPENDITURES

Subchapter B. GENERAL REPORTING RULES

§20.56. Expenditures Involving Consultants

(a) Beginning on January 1, 2017, an expenditure made by a consultant on behalf of a candidate, officeholder, political committee, or other filer which falls within the categories required by Texas Election Code § 254.031 must be reported as if the filer made the expenditure.

(b) The payee of an expenditure to which subsection (a) of this section applies is the particular person who receives payment from the consultant. The expenditure must be disclosed as if the filer made the expenditure directly to the particular person.

(c) The payee of an expenditure for consulting services made by a filer to a consultant is the consultant if:

(1) the expenditure is compensation for consulting services; or

(2) the expenditure is a payment to the consultant as a retainer, advance, or reimbursement for one or more expenditures made or to be made by the consultant on behalf of, but not at the direction of, the filer.

(d) “Consultant” means a person who performs consulting services in a professional capacity. “Consulting services” means services provided outside the traditional relationship of employer and employee to assist in a campaign for elective office or on a measure or to assist in performing a duty or engaging in an activity in connection with an elective office, including fundraising activities, voter outreach, creation and distribution of political advertising, and providing advice and strategy in conducting a campaign, but not including legal services.


§ 20.60. Reporting Political Expenditures for Processing Fees.
Text of Proposed Rule

The proposed new language is indicated by underlined text.

Chapter 20. REPORTING POLITICAL CONTRIBUTIONS

Subchapter B. GENERAL REPORTING RULES

§ 20.60. Reporting Political Expenditures for Processing Fees

(a) Multiple political expenditures made to a single payee during a reporting period for fees to process political contributions may be itemized as a single expenditure, in an amount equal to the combined total amount of the expenditures, if all the expenditures are made to a single payee for the same purpose.

(b) The purpose of an expenditure reported under subsection (a) of this section must include the dates of the first and last of the multiple expenditures made to a single payee during the reporting period.

(c) For reporting purposes, the date of an expenditure reported under subsection (a) of this section is the date of the first expenditure made to the payee during the reporting period, as provided by section 20.57 (Time of Making Expenditure) of this title.


§ 20.61. Purpose of Expenditure.
Text of Proposed Rule

The proposed new language is indicated by underlined text.
The deleted language is indicated by [strikethrough] text.

Chapter 20. REPORTING POLITICAL CONTRIBUTIONS AND EXPENDITUERS

Subchapter B. GENERAL REPORTING RULES

§ 20.61. Purpose of Expenditure

(a) For reporting required under Section 254.031 of the Election Code, the purpose of an expenditure means:

(1) A description of the category of goods, services, or other thing of value for which an expenditure is made.  Examples of acceptable categories include:

(A) advertising expense;

(B) accounting/banking;

(C) consulting services compensation (as provided by subsection (e) of this section) [expense];

(D) consulting services – no expenditure directed (as provided by subsection (e) of this section);

(E) [(D)] contributions/donations made by candidate/officeholder/political committee;

(F) [(E)] event expense;

(G) [(F)] fees;

(H) [(G)] food/beverage expense;

(I) [(H)] gifts/awards/memorials expense;

(J) [(I)] legal services;

(K) [(J)] loan repayment/reimbursement;

(L) [(K)] office overhead/rental expense;

(M) [(L)] polling expense;

(N) [(M)] printing expense;

(O) [(N)] salaries/wages/contract labor;

(P) [(O)] solicitation/fundraising expense;

(Q) [(P)] transportation equipment and related expense;

(R) [(Q)] travel in district;

(S) [(R)] travel out of district;

(T) [(S)] other political expenditures; and

(2) A brief statement or description of the candidate, officeholder, or political committee activity that is conducted by making the expenditure and an additional indication if the expenditure is an officeholder expenditure for living in Austin, Texas. The brief statement or description must include the item or service purchased and must be sufficiently specific, when considered within the context of the description of the category, to make the reason for the expenditure clear. Merely disclosing the category of goods, services, or other thing of value for which the expenditure is made does not adequately describe the purpose of an expenditure.

(b) The description of a political expenditure for travel outside of the state of Texas must provide the following:

(1) The name of the person or persons traveling on whose behalf the expenditure was made;

(2) The means of transportation;

(3) The name of the departure city or the name of each departure location;

(4) The name of the destination city or the name of each destination location;

(5) The dates on which the travel occurred; and

(6) The campaign or officeholder purpose of the travel, including the name of a conference, seminar, or other event.

(c) Except as provided by subsections [subsection] (d) and (e) of this section, this rule applies to expenditures made on or after July 1, 2010.

(d) The requirement to include an additional indication if an expenditure is an officeholder expenditure for living in Austin, Texas, applies to an expenditure made on or after July 1, 2014.

(e) Any expenditure made to a consultant under section 20.56(c) on or after January 1, 2017, must be disclosed, as applicable:

(1) with the category “consulting services compensation” and a description of “campaign consulting services,” or other appropriate description, if the expenditure is made solely as compensation for consulting services; or

(2) with the category “consulting services ­ no expenditure directed” and a more specific description, if the expenditure is made for any other purpose.

(f) [(e)] Comments:

The purpose of an expenditure must include both a description of the category of goods or services received in exchange for the expenditure and a brief statement or description of the candidate, officeholder, or political committee activity that is conducted by making the expenditure. A description of an expenditure that merely states the item or service purchased is not adequate because doing so does not allow a person reading the report to know the allowable activity for which an expenditure was made.

The following is a list of examples that describe how the purpose of an expenditure may be reported under section 20.61. This list is for illustrative purposes only. It is intended to provide helpful information and to assist filers in reporting the purpose of an expenditure under this rule. However, it is not, and is not intended to be, an exhaustive or an exclusive list of how a filer may permissibly report the purpose of an expenditure under this rule. The rule does not require the candidate or officeholder to identify by name or affiliation an individual or group with whom the candidate or officeholder meets.

(1) Example: Candidate X is seeking the office of State Representative, District 2000. She purchases an airline ticket from ABC Airlines to attend a campaign rally within District 2000. The acceptable category for this expenditure is “travel in district.” The candidate activity that is accomplished by making the expenditure is to attend a campaign rally. An acceptable brief statement is “airline ticket to attend campaign event.”

(2) Example: Candidate X purchases an airline ticket to attend a campaign event outside of District 2000 but within Texas, the acceptable category is “travel out of district.” The candidate activity that is accomplished by making the expenditure is to attend a campaign event. An acceptable brief statement is “airline ticket to attend campaign or officeholder event.”

(3) Example: Candidate X purchases an airline ticket to attend an officeholder related seminar outside of Texas. The acceptable method for the purpose of this expenditure is by selecting the “travel out of district” category and completing the “Schedule T” (used to report travel outside of Texas).

(4) Example: Candidate X contracts with an individual to do various campaign related tasks such as work on a campaign phone bank, sign distribution, and staffing the office. The acceptable category is “salaries/wages/contract labor.” The candidate activity that is accomplished by making the expenditure is to compensate an individual working on the campaign. An acceptable brief statement is “contract labor for campaign services.”

(5) Example: Officeholder X is seeking re-election and makes an expenditure to purchase a vehicle to use for campaign purposes and permissible officeholder purposes. The acceptable category is “transportation equipment and related expenses” and an acceptable brief description is “purchase of campaign/officeholder vehicle.”

(6) Example: Candidate X makes an expenditure to repair a flat tire on a campaign vehicle purchased with political funds. The acceptable category is “transportation equipment and related expenses” and an acceptable brief description is “campaign vehicle repairs.”

(7) Example: Officeholder X purchases flowers for a constituent. The acceptable category is “gifts/awards/memorials expense” and an acceptable brief description is “flowers for constituent.”

(8) Example: Political Committee XYZ makes a political contribution to Candidate X. The acceptable category is “contributions/donations made by candidate/officeholder/political committee” and an acceptable brief description is “campaign contribution.”

(9) Example: Candidate X makes an expenditure for a filing fee to get his name on the ballot. The acceptable category is “fees” and an acceptable brief description is “candidate filing fee.”

(10) Example: Officeholder X makes an expenditure to attend a seminar related to performing a duty or engaging in an activity in connection with the office.  The acceptable category is “fees” and an acceptable brief description is “attend officeholder seminar.”

(11) Example: Candidate X makes an expenditure for political advertising to be broadcast by radio. The acceptable category is “advertising expense” and an acceptable brief description is “political advertising.” Similarly, Candidate X makes an expenditure for political advertising to appear in a newspaper. The acceptable category is “advertising expense” and an acceptable brief description is “political advertising.”

(12) Example: Officeholder X makes expenditures for printing and postage to mail a letter to all of her constituents, thanking them for their participation during the legislative session. Acceptable categories are “advertising expense” OR “printing expense” and an acceptable brief description is “letter to constituents.”

(13) Example: Officeholder X makes an expenditure to pay the campaign office electric bill. The acceptable category is “office overhead/rental expense” and an acceptable brief description is “campaign office electric bill.”

(14) Example: Officeholder X makes an expenditure to purchase paper, postage, and other supplies for the campaign office. The acceptable category is “office overhead/rental expense” and an acceptable brief description is “campaign office supplies.”

(15) Example: Officeholder X makes an expenditure to pay the campaign office monthly rent. The acceptable category is “office overhead/rental expense” and an acceptable brief description is “campaign office rent.”

(16) Example: Candidate X hires a consultant for campaign consulting [fundraising] services, such as advice on matters of campaign strategy. The acceptable category is “consulting services compensation” [expense”] and an acceptable brief description is “campaign strategy services.”

(17) Example: Candidate X hires an independent consultant to provide consulting services by helping to produce and purchase political advertising to be broadcast on television. The candidate gives the consultant $100,000.

(A) Of that amount, the candidate pays $5,000 as compensation for consulting services to produce the advertising. The candidate must disclose a $5,000 expenditure to the consultant as the payee, the acceptable category is “consulting services compensation,” and an acceptable brief description is “political advertising.”

(B) The remaining $95,000 is used to purchase broadcast airtime on the three major broadcasting stations. The acceptable category of each expenditure is “advertising expenses” and an acceptable brief description is “political advertising.”

(18) [(17)] Example: Candidate/Officeholder X pays his attorney for legal fees related to either campaign matters or officeholder matters. The acceptable category is “legal services” and an acceptable brief description is “legal fees for campaign” or “for officeholder matters.”

(19) [(18)] Example: Candidate/Officeholder X makes food and beverage expenditures for a meeting with her constituents. The acceptable category is “food/beverage expense” and an acceptable brief statement is “meeting with constituents.”

(20) [(19)] Example: Candidate X makes food and beverage expenditures for a meeting to discuss candidate issues. The acceptable category is “food/beverage expense” and an acceptable brief statement is “meeting to discuss campaign issues.”

(21) [(20)] Example: Officeholder X makes food and beverage expenditures for a meeting to discuss officeholder issues. The acceptable category is “food/beverage expense” and an acceptable brief statement is “meeting to discuss officeholder issues.”

(22) [(21)] Example: Candidate/Officeholder X makes food and beverage expenditures for a meeting to discuss campaign and officeholder issues. The acceptable category is “food/beverage expense” and an acceptable brief statement is “meeting to discuss campaign/officeholder issues.”


§ 26.1. Disclosure Statement.
Text of Proposed Rule

The proposed new language is indicated by underlined text.
The deleted language is indicated by [strikethrough] text.

Chapter 26. POLITICAL AND LEGISLATIVE ADVERTISING

§ 26.1. Disclosure Statement

(a) A [The] disclosure statement that is required by Section 255.001, Election Code, must contain the words "political advertising" or any recognizable abbreviation, and must:

(1) appear on one line of text or on successive lines of text on the face of the political advertising; or

(2) be clearly spoken in the political advertising if the political advertising cannot include written text.

(b) A disclosure statement is not required on political advertising printed on letterhead stationery if the letterhead contains the full name of one of the following:

(1) the person who paid for the political advertising;

(2) the political committee authorizing the political advertising; or

(3) the candidate authorizing the political advertising.

(c) A disclosure statement is not required on campaign buttons, pins, or hats, or on objects whose size makes printing the disclosure impractical.

 
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