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This page contains a single entry from the blog posted on April 20, 2008 9:45 PM. The previous post in this blog was The Clinton fix is in. The next post in this blog is It's worth it for the time that I had. Many more can be found on the main index page or by looking through the archives.

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Sunday, April 20, 2008

City issues order -- Branam already violating it

We were planning to hold this one for the morning, but it's just too good to wait any longer.

On Friday at 5 in the afternoon -- just in time to be lost in weekend festivities -- the City of Portland issued its ruling on the investigation into whether City Council candidate John Branam had misspent publicly provided campaign funds by paying his campaign manager, Phil Busse, $20,000, and promising to pay him another $5,000 between now and the May 20 primary.

The ruling? That $25,000 was too much to pay Busse for the campaign -- it was beyond the $20,000 fair market value of his services. The city auditor ordered Branam not to pay Busse more than the $20,000 he had already received.

But get this: About an hour later, Branam reported to state elections officials that he had already paid Busse another $1,000, that very day!

We kid you not. At this writing, the breakdown of salary payments to Busse, gleaned from the ORESTAR system, is as follows:

DateAmount
Feb. 28$15,000
Mar. 6$ 1,000
Mar. 14$ 1,000
Mar. 28$ 1,000
Apr. 4$ 1,000
Apr. 7$ 1,000
Apr. 18$ 1,000
Total$21,000

In his ruling Friday, the city elections officer, Andrew Carlstrom, wrote in part:

2. The Auditor has determined that payments totaling $20,000 to Mr. Busse fall within the range of fair market value for three months work and will comply with City Code Section 2.10.090.C.6.

3. However, any further expenditures from John4PDX for "wages, salary, and benefits" to Mr. Busse will trigger a violation of City Code Section 2.10.090 and will result in a civil penalty. If John4PDX chooses to pay Mr. Busse in excess of $20,000, the Auditor will determine the expenditures to Mr. Busse exceed "fair market value" and you will be assessed a penalty twice the amount of the infraction, or ten thousand dollars. In addition, should this occur, you will be required to return the excess amount to the Campaign Finance Fund. Please note that, per City Code Section 2.10.220.A.6, civil penalties may not be paid with Campaign Finance Fund revenues.

4. Payments to Mr. Busse for reimbursement of expenses during the Primary Election Period will still be allowed. However, given that the original planned expenditures to Mr. Busse were to total $25,000, any further expenditures made by John4PDX to Mr. Busse for wages, salary, or benefits during the Primary Election Period will result in a violation and penalty.

5. The March 27, 2008 Service Agreement between John4PDX and Phil Busse must be amended to reflect total payments to Mr. Busse of $20,000 instead of $25,000 to eliminate any commitment to any additional amount. Please submit a copy of the amended signed agreement to the Auditor not later than 5:00 p.m., Wednesday, April 23, 2008.

Given that the ruling was issued the same day as the last $1,000 check cut to Busse, one wonders at what times of day the two events transpired. The auditor's decision was announced to the public at 5 p.m. -- when was it delivered by e-mail to Branam? Did Branam and Busse know about the ruling before the check was delivered to Busse? Before Busse negotiated it, if indeed he already has?

In any event, according to the terms of the ruling, it would appear that the Branam campaign has two options at this point: have Busse pay back the $1,000 he picked up on Friday (don't bet on that, people), or suffer the consequences. The consequences appear to be forfeiture of $1,000 out of the "clean money" pot, plus a $2,000 penalty, which Branam would have to pay out of his own pocket.

Here's an interesting question: What if a generous donor wanted to give Branam the $2,000 to pay the penalty? Could Branam accept that gift? Would it matter if the donor was a close relative? By taking taxpayer funds under the "voter-owed elections" system, does a candidate lose the right to receive, say, a birthday present from one's parents?

We doubt that the city code or regulations address these questions, but hey -- like everything else with "clean money," we're sure that City Hall will just make up some new rules on the fly. It's a swell system, and it's working just great.

There are some other troublesome aspects of the auditor's ruling as well. But those really can wait until tomorrow. The fact that Branam's already in violation of the order is story enough for tonight.

UPDATE, 4/21, 7:20 p.m.: More on this here.

Comments (21)

My bet is that the auditor's office will say that Branam's payment on April 18 was made before the ruling and is therefore excusable in some way. Branam will say he has a contractual obligation to pay his campaign manager as agreed until the ruling is issued.

Blackmer will probably spend an untold amount conducting the "investigation".

It would be very exciting if it is proven that Branam knowingly violated the ruling. As it stands now, though, it only has the appearance of impropriety.

Even if the check was cashed first thing Friday morning, it still violates the order. The order clearly states, with no apparent wiggle room, that anything more than $20,000 for three months of Phil Busse is more than fair market value:

If John4PDX chooses to pay Mr. Busse in excess of $20,000, the Auditor will determine the expenditures to Mr. Busse exceed "fair market value" and you will be assessed a penalty twice the amount of the infraction, or ten thousand dollars.

I agree that the ruling speaks for itself, but never underestimate the auditor's ability to create wiggle room with the rules of VOE.

I guess what I am saying is that it would be very surprising to me if Branam knew what this ruling said and went ahead and paid another grand over $20,000 anyway.

Since the ruling said a fine would be assessed of double the violation, Branam will presumably have to pay back $2,000, not the $5,000 he would have been fined had he given Busse the initially planned $5,000 more.

My reading of it is that had he paid $5,000 more to Busse, he would have been fined $10,000 out of his own pocket, plus required to pay another $5,000 back out of his remaining VOE pile.

As it now stands, those numbers appear to be $2,000 and $1,000, respectively.

Notice how once you take out society's actual desire to donate to a campaign, everything after that becomes artificial? If the campaign had raised the money itself and paid Phil Busse over 20 grand we would know it was market value because it happened. Instead we have the government staring into a crystal ball and determining what would have happened in a fair market - a fair market that this system negates in the first place. It's a nice glimpse at how some systems reward failure with more failures and require more supervision as they generate more hassle. Once you start pretending society wanted this guy to have the money, the BS multiplies on cue, and the bureaucrats have more to do. What a surprise! Ultimately the system is a success for the bureaucrats because they grow. Meanwhile without the funny money, Phil and this guy could have settled the deal themselves, probably for much less. So the system has actually established a fake fair market value now that has no tight connection to reality. I'm fascinated by this kind of stuff.

I'm neither fascinated nor amused with this continued waste of MY MONEY! Why is Blackmer not demanding repayment of the taxpayer money that Opie spent running for an office he had no intention of fulfilling? The only good thing about VOE is that it has a sunset.

In the words of his own ad:

"Portland needs someone we can trust"

If Branam gets in, he'll make Adams look like a tyro when it comes to game-playing with tax money.

I think Branam is just trying to stimulate the economy, one staffer at a time.

Besides which, this is no less ballsy than suing the EPA for an exemption to clean surface water regulations at the same time you decide to "opt-out" of cooperation with the FBI anti-terrorism task force.

I think Branam is just the guy we need to Keep Porkland Weird!

It's actually pretty hilarious that instead of raising money, VOE candidates are going to spend all of their time trying to navigate the rules, both known and unknown. I mean, up until now it's not like the city provided guidance on how much was too much to pay a campaign manager. For that matter, how much is too little? The city has fair wage ordinances for construction projects. . . perhaps we need one for VOE! Better yet, why not just make it a city job classification? That way they can unionize and bargain for city benefits.

What I don't understand is why Branam didn't cancel Busse's payment that day. They could have amended the entry but since it was filed after the Auditor's announcment it looks like a big middle finger to the office that is supposed to be policing it.

The Auditor's ruling is a slap on the wrist, but I think it served its purpose.

First, it got the perpetual graft machine called the Branam faux-paign to slow down. The guy will no longer be able to hand out money to anyone claiming to know what they're doing.

Second, it provided the first shot across the bough for Branam's faux-paign. The $1,000 payment on 4/18 may or may not have been with ill intent. But the next ill-advised payment will surely be over-ruled. The instant that Branam realizes he will have to run a viable campaign (and not one imagine-ered by candy-coated rainbows and dreams), he'll make sound financial decisions - which is all you can really ask of a politician.

Third, I imagine the Auditor's close reveiw of the Branam faux-paign is just begining.

How much does it cost to put up and run a web site with a couple of youtube clips? Hasn't Branam paid his web designer somewhere in the neighborhood of $20,000? The Auditor should be looking into that. Along that line of inquiry, ORESTAR does not include contact information for a good number of campaign workers. I recommend that the Auditor look into these people that are providing thousands of dollars worth of services to the faux-paign.

Who are these people?

Nothing positive for the City of Portland can come out of this faux-paign. It's an abuse of the system that has "desparate attempt for personal validation" written all over it.

Having said that, I appreciate the system's policing of faux-candidate Branam. Eventually the truth will be discovered.

If the truth is merely that Mr. Branam ran an ambitious yet monstrously wasteful campaign, then so be it. That will give him an honor not uncommon in politics.

If he has run a deceitful campaign that intentionally skirted the rules in an attempt to gain advantage, that will ultimately be borne out by the facts.

This blog tends to appeal to the conspiracy theorist that lurks within us all. However, I think the truth, as it relates to Mr. Branam, is simple: he doesn't have a clue what he's doing, and he's using The City's funds to try and figure it out.

When he's called out for not knowing what he's doing, he reacts by retro-fitting his actions to the rules he did not review in the first place.

Clearly, that's not the kind of person you want running a city. The man's integrity is lacking. That much is certain.

I'm not certain it's an integrity thing with Mr. Branam. I imagine that his seemingly endless string of gaffes has much more to do with inexperience and lack of adequate planning and preparation. He is quickly becoming the poster boy for everything that is wrong with VOE. At least we can thank him for that, right?

I still think that Mr. Sten overpaid Mr. I-Build-Everyone's-Web-Sites by at least 5 grand. See for yourself.

Maybe he was paying for something else? That would have been a perfect time and place for You-Know-Who to do a public service and form his own little PAC and post his own happy support/endorsement page all by himself, for free; to inform the public. What might his in-kind contribution be valued at if the Sten campaign were privately funded?

Can I obtain standing to object to each and every final decision to act or not to act on each and every expenditure that gets reviewed by the Auditor?

I demand that the Auditor post his review cycle (daily, weekly,monthly, irregular) for the expenditures and post a document noting his decision for each item, and the fair market value of each. Failure to note the fair market value determination should be actionable all by itself. (Then the Auditor could follow the land use planning self-funded scheme and bill the relevant campaign fund for the cost to review the expenditure plans.)

Bill does raise an interesting point: on what basis will the Auditor determine fair market value for a particular service once there is no more market?

Once you go into a VOE system, it seems to me that you have to let the candidates do whatever they want with the money, as long as it's related to the campaign.

If Branam overpays Busse, that's his decision to make. Perhaps Busse is a political genius, and this payment will help Branam get elected. Perhaps he's badly overpaying, and then Branam will lose.

But how can the Auditor possibly determine this?

Will there be a point where someone decides that their campaign is going to hire airplanes to sky write their campaign slogan across the city skies, and will the Auditor determine that this is not a good use of the money?

What about when new technologies emerge (e.g. not new at all--text messaging potential supporters). How can these possibly be "real market" tested if they are new and untested?

Who is the Auditor to make the decision about what constitutes reasonable allocation of resources?

Last question: how do Maine and Arizona do it?

I always thought our old friend Emilie did exactly what was reasonable if someone gave you over hundred grand to spend on a campaign - namely find a way to keep some of the bread in the family - and I loved the way the city wonks didn't want to admit it because they looked ridiculous.
Did the city auditor determine the fair market value of Emilie hiring her daughter? I know some other kid getting the money wouldn't have had the same value for Emilie.

The $1,000 payment on 4/18 may or may not have been with ill intent. But the next ill-advised payment will surely be over-ruled.

There's nothing in the order (or the rules) about intent. You're not allowed to pay people more than the fair market value of what they're providing, innocently or otherwise.

It's pretty clear how one assesses value: look at comparables. Luckily, salaries like these are all public information due to C&E reporting.

NOT everyone will be VOE races, there will still be many other political races that a reasonable person can look at, and one can look across VOE races to look for outliers.

Which is what the auditor did.

The question is not so much: what electoral services does someone choose, but did they pay reasonable rates for those services, instead of just giving their friends public money?

What about that other guy that used some of his money to fill potholes? Did he get that service for a fair market price?

"But the next ill-advised payment will surely be over-ruled."

BWAH-HA-HA!!!! How long have you been follwoing this horse opera?

I guess what I am saying is that it would be very surprising to me if Branam knew what this ruling said and went ahead and paid another grand over $20,000 anyway.

With all the crap that has been going on with this lovely VOE thing, it wouldnt surprise me at all.


MichaelO,

Sorry, but I am a statistician at heart, and I have to ask: what comparables? Unless you are controlling for a whole bunch of things about the city (size, composition, media markets), the race (opposing candidates, their fundraising ability, their visibility, incumbency) and the service paid for (how good is that consultant?), there is no way to determine "comparables".

This is a very complex undertaking. It's not like we have something like zillow to evaluate dozens and dozens of similarly situated properties.

If you look at how VOE has taken hold in Maine and Arizona, fewer and fewer races will become non-publcly funded.

I agree with Kari's post in another thread--the citizen's committee and the Auditor should be erring on the side of disengagement.

If someone is stupid enough to overpay for a service or consultant, that's their loss. The only thing we need to watch out for is phony payments to relatives.

Other than that, it's best to keep it hands off.


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