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Monday, April 21, 2008

Last Branam-Busse payment disappears from ORESTAR

I see that the city's timing of last Friday afternoon's announcement about City Council candidate John Branam's "clean money" shenanigans had the desired effect. The mainstream media gave it anemic coverage on Friday night and Saturday morning, nobody paid any attention to it, and today life goes on. The fact that Branam had already violated the city's order, reported here last night, seems to have had no traction at all. Perhaps the local government here wouldn't try to manipulate the local media so much if it weren't so easy.

Anyway, sometime today, the last payment of $1,000 by Branam to Busse, which appeared on the state's ORESTAR website all weekend, has disappeared. It had transaction ID number 287933, and it was posted at 6:12 p.m. on Friday.

The current state of affairs in the city's "voter-owed elections" public campaign finance fiasco raises a number of questions, one of whom I've already raised: Can someone give Branam money to pay any penalties that he personally will owe?

Here's another: What if Branam's campaign manager, Phil Busse, were to stop working right now? The city has ruled that he should be paid no more than $20,000 for working on the campaign for three months, up to the date of the election. He's already been paid that full amount, and maybe then some. And so if he quits, dies, becomes disabled, or gets fired today, Branam will have to pay the city back some of the salary, plus penalties -- right?

Allowing "clean money" folks to prepay big salaries, or big anything, is a bad practice. In Branam's case, of course, the suspicion was that he was not prepaying Busse for future services, but back-paying him for services performed before Branam was certified. That would have been against the rules, and no such violation was found -- although it was reported in the Merc (Busse's old employer) last Nov. 22 that "Branam has been campaigning for weeks—with former Mercury managing editor and mayoral candidate Phil Busse as his manager."

Anyway, that issue is now dead, but the question of what would happen if Busse stops working remains intriguing.

The other big issue to arise from this latest flap is an obvious basic flaw in the system: that once candidates get $150,000 or $200,000 of taxpayer money to run their campaigns, the city will inevitably wind up micromanaging their campaign expenditures. Worst of all, that policing will be done with "fair market value" as the standard.

Now, I know something about "fair market value." I make a good living explaining to people what it means. And I can tell you that it almost always means trouble. Opinions about "fair market value" routinely vary, and often wildly. When a law or a regulation uses that term, it virtually guarantees uncertainty, confusion, hard feelings, and controversy. What is the "fair market value" of the services performed by a campaign manager or staffer? One thing's for sure -- you'll never know for sure.

Comments (29)

Reggie Theus' comments on the last Branam post raised eyebrows. Allow R.T. to clarify why intent matters in relation to Branam's final (now retracted) $1,000 payment to Busse.

I made the statement with the understanding that the payment (as registered by ORESTAR) was probably made before the Auditor's ruling came out, and that it was only administratively processed thereafter.

In that respect, I see the evidence of his over-expenditure under a later-announced rule clarification as one that is eligible to be corrected via post-ruling action. Thus, his intent in making the final $1,000 payment was not to skirt the Auditor's ruling, but to uphold the contractual obligation he had with Busse.

I think Branam is unqualified for the position, and I don't believe him when he says that Busse was paid in advance for his work on the campaign (the evidence clearly points to the contrary - nice link Bojack). But he at least appears to be willing to play by the rules when those rules are clearly announced.

The Auditor's office should maintain contact with Branam's faux-paign. The best is yet to come, I can assure you.

Eventually Mr. Branam's half-truths will come back to bite him. My understanding is that he has provided sworn affidavits to the Auditor's office in relation to his faux-paign. Eventually, the items to which he has sworn will undo him.

Bojack - is there any way for you to do a FOIA request for the affidavits he has presented? I think your loyal army of readers need to dig into this information and assist the City's removal of a parasite from its coffers.

Chillin' in Sacto - reviewing off-season opportunities.
Reggie Theus

ORS 260.083(2) If an expenditure in an amount exceeding $100 is a prepayment or a deposit made in consideration for any services, supplies, equipment or other thing of value to be performed or furnished at a future date, that portion of the deposit that has been expended shall be listed as an expenditure and the unexpended portion of the deposit shall be listed as an account receivable.

I find this entry:

"245380 __ 02/28/2008 __ Original __ john4pdx __ Phil Busse __ Cash Expenditure __ $15,000.00"

As to the Friday payment, we learned from the legislator trips to the islands than one can amend a filing. Happens all the time. If I were a history student digging through primary sources -- years from now -- I would have to research this blog and not the state archives to find the information that you "allege" has a transaction ID 28793.

What is Portland's "occupation," anyway? (ORS 260.085)

The taxpayer's interest would be better served if Branam used his own money on a nice vacation to Hawaii and conducted the remainder of his primary campaign via internet and telephone.

That would enable Amanda Fritz to win the primary outright, and save us another $400,000 in voter owned yard signs.

As to where the money for a penalty comes from, City Code Section 2.10.220 A.4. says: "If a civil penalty has been imposed under this Section against a Candidate or the principal campaign committee of a Candidate, the Candidate shall be personally liable for the amount to be paid under this Section."

2.10.220 A.6. says: "Penalties may be paid from any private source. A penalty may be paid from committee funds and reported as an Expenditure on the committee's appropriate Contribution and Expenditure report. A penalty may not be paid from Campaign Finance Fund revenues."

So the Neil Kelly guy could pay fines for him? How "clean" is that?

Is the city going to follow Phil Busse around for the next four weeks and make sure he works full-time for Branam? What if Busse decides he isn't working any more without an additional paycheck? How will the city know?

What you have is a transferral of more power to elect officials from the people to the state. It's another way to damage campaigns the powers-that-be don't want to succeed while freeing up incumbents from the grind of fund-raising. There's so many more judgment calls by officials now and none of it can be based on reality. Why? Because we've entered the pretend game, as in "Pretend society wanted you to have this money."
Take Sho for example. In his case the ruling wasn't a partial penalty or a limit. He got the clean money death penalty. Even though - as I understand it - Sho followed what the city auditor told him along the way. In addition the state board of elections admitted they made a mistake with his case - again as I understand it.
But do they give Sho a break? No. He gets nothing from this system.
And because of that, his image could have suffered.
Or take Sten who gets the cash and then takes off after trying to set up his successor.
This system has created many new ways for the powerful to influence elections, and that's heading in the wrong direction.
That's why they spent so much time telling us it was designed to make it easier for the rest of us to take their jobs. As if.

(I'm not working for any candidate in the city council race - and I haven't even decided who I'm voting for.)

I know this won't be a popular view - but why should the city be micromanaging campaign expenditures anyway?

Once someone has qualified, as long as they're spending the campaign funds on legal purposes (no trips to Hawaii), why not allow campaigns to make any smart or dumb strategic they want?

If a candidate overpays staff, they'll have less for voter contact. If they pay too damn much for a website, they'll have less for voter contact.

What's next? "Gee, son, everybody knows you need at least 1500 points of TV a week to let a spot sink in -- but you only bought 500 points. Everybody knows that's a waste of money. We're canceling your TV buy."

Hell, if I was the city auditor, maybe I'd get to finally put my strong anti-lawn-sign views into city rule. No lawn signs for anyone!

If a candidate overpays staff, they'll have less for voter contact.

But if "staff" is the candidate's daughter, they'll have rent for the trailer they live in, a nice cell phone, and a brand-new laptop. Remember?

I wonder if Branam and Busse are ready to move to Glendive, Montana.

"why should the city be micromanaging campaign expenditures anyway?"

Because they are paid with taxpayer dollars. Otherwise, just cut them a check and let Emilie Boyles keep hers. Rules (FWIW) are rules. WHy just not let thme claim everything was done with the goal of being elected.

You don't think that if the candidates had to raise the money on their own, they would be paying some guy with no campaign experience $25K for two months work?

But if "staff" is the candidate's daughter, they'll have rent for the trailer they live in, a nice cell phone, and a brand-new laptop. Remember?

Yeah, that's true. I suppose the city ought to be on the lookout for fake staffers that aren't actually working for the campaign and don't have any qualifications for the job their supposedly being paid for.

But that's a far cry from arguing over a couple grand being paid to someone clearly qualified for his job and clearly doing the work.

Because they are paid with taxpayer dollars.

Look, the presidential campaigns are paid for with taxpayer dollars too -- have been for a couple of decades now... 100% in the general election and usually in part during the primary election (though not 2008 and 2004).

The feds have rules about what you can and can't spend campaign money on - but it doesn't make any difference whether it's privately raised or whether it comes through matching dollars in the presidential public finance fund.

I'd much prefer a set of clear bright-line rules, rather than the haphazard judgments of whoever's sitting in the city auditor's chair.

Jack's absolutely right about this "fair market value" business.

Kari...I would like to refer to your quote for a moment. "But that's a far cry from arguing over a couple grand being paid to someone clearly qualified for his job and clearly doing the work."

Read Busse's resume, it was included in the first set of documents the Branam camp sent to the auditor. Hardly any political experience, no campaign management experience. The only campaign he seemed to be involved with was his own mayoral bid which only won 8% of the vote. Is he worth more than twice what any other campaign manager in the race is making?

In terms of 'doing the work', look at the materials the Branam campaign has produced. He was passing out literature for months which had the wrong url listed! The guys endorsements are a who's who of Portland political lightweights and I haven't seen the campaign earn any positive media.

If that counts for being qualified and doing the job I'm in the wrong line of work.

why should the city be micromanaging campaign expenditures anyway?

If Mr. Branam faces a demand to return all or part of his illegal gifts, he just might demand that if he can't get it and keep it that no one should get any. Then the micro management problem would all just go away.

Does the city code provide only candidates a right to a hearing? I think so. Should I file a request with the City anyway, to preserve a rebuttal to a defense in state court that I failed to exhaust the remedies offered by the city? (See ORS 260.345(7), which provides that "a complaint shall be filed by an elector[.]")

The Auditor is on record noting that the $20,000 dollars for three months of advice represents fair market value. (Payment of anything less, I suppose, must necessarily be a prohibited in-kind contribution, but . . . ) The February 28 filing notes a $15,000 "expenditure" -- not "accounts receivable" as defined in ORS 260.083(2) -- to Mr. Busse. As such it could be for no more than roughly one week of work subsequent to City of Portland recognition of Mr. Branam as a participating candidate.

Fair market value for one week would be roughly $20,000 divided by twelve weeks, or $1,667. And, $15,000 minus $1,667 is $13,333 . . . for prohibited pay for past work or just a technical error in complying with the state statute requiring this "deposit" to be noted as an "account receivable."

If the $15,000 payment included a $13,333 deposit for future work, -- as the john4pdx team would assert in an amended filing to note it as an "account receivable -- why then were there a series of new payments thereafter, and not drawn from the deposit?

Is that enough?

Maybe the SoS can make the February 28 filing just disappear, in lieu of accepting an amendment.

Payment of anything less, I suppose, must necessarily be a prohibited in-kind contribution, but ...

Volunteer hours are NOT an in-kind contribution unless at the time the volunteer is being paid by a third party, in which case the third party is making the in-kind contribution.

VOE campaigns may receive an unlimited number of hours of people volunteering on their own time.

Yes, but the same issue can arise as to other benefits. Does a landlord make an in-kind donation if he or she provides space at a bargain rent? Does a merchant make a donation if he or she sells goods to the campaign at a highly favorable price? And if so, who makes the judgments about what is a market price?

In the end, much of the "system" rests on judgments about "value" -- which is a weak foundation indeed.

The city has no business financing politicians' campaigns. It will never work. Just like free wi-fi, takeover of PGE, SoWhat, the list goes on and on. Ideas that were best left on the drawing board.

Yes, but the same issue can arise as to other benefits. Does a landlord make an in-kind donation if he or she provides space at a bargain rent? Does a merchant make a donation if he or she sells goods to the campaign at a highly favorable price? And if so, who makes the judgments about what is a market price?

Short answer, yes. If someone provides the campaign with a discounted price that is not offered to others, the difference is an in-kind contribution.

But volunteer hours are specifically called out as being different.

The definition of in-kind comes from state law, not the VOE code.

What difference does that make? The city incorporates it into its dopey "system."

Which, BTW, forces hard-working people like me to pay for goofball political campaigns by people like you.

The difference is that the Secretary of State's election office would make the call on whether an in-kind contribution has occurred, and they have decades of experience with this. It's not breaking new ground.

VOE is becoming AME.
Auditor Managed Elections.
I think they need to appoint a commission and study it.

I noted the parenthetical to alert Mr Busse that he could not just return the money and claim he was (or became anew) just a volunteer after all. He and Mr. Branam made representations as part of the Auditor's review process. In the legal context, when a party makes factual assertions, as a tactical choice, they cannot thereafter change their position. Look up judicial estoppel. Think of it like moving your pawn forward in a chess match. You don't get to move it back, unless you're a kid. Or put another way, they are boxed in . . . in a box of their own making . . . maybe like losing one's queen through stupidity. (Nor could the Auditor retreat. Maybe they can all do a redo after all, real fast.)

"Look, the presidential campaigns are paid for with taxpayer dollars too"

Slight difference - those are voluntary contributions.

Erik et al have decided to take our money without any voter input and then have the nerve to call it VoE.

It is the most piss-poor designed thing when people like Emilie can rip it off, then Branam abuses it and even the know-it-all Chris Smith violate it and gets off scot-free.

However, someone outside the circle like Dozon mess up and they get the death penalty.

How do these stups keep getting elected?

I'm still looking forward to the expenditure reports after April 30th, when payroll tax deposits have to be made. Branam told W Week the Busse meets the contractor test "over the year", but I don't see anything about "over the year" in the IRS and Oregon tests for independent contractor status. Branam's statement tells me there was no withholding from Busse's wages and clearly there should have been.

Where's did the link to that IRS complaint form go?

Some unsolicited advice for Branam/Busse:

You may be tempted to try to clean up your act and continue the fight to get into the next round. But by now you must realize that if you somehow made it to the runoff, you are most certainly going to be toast in general election. Qualifying for another $200k in public financing to throw around must be tempting for you.

My advice is don't be fooled into betting against long odds just because you are holding a lot of house money. Right now you're like one of those contestants on Deal or No Deal that keeps shouting "no deal" after the odds stopped favoring you.

The smart move is to take the deal.

Since you know you are going to lose in the primary, you can spend the rest of your time figuring out how to skim off as much as possible from your remaining public funds.

There are so many loopholes in VOE, and you're both a lot more sophisticated than Emilie Boyles, so just put your heads together.

Here's one to get you started:

Even though the Auditor says you can't pay Busse for "wages, salary, benefits", nothing prevents Busse from quitting and you from hiring a company (owned by a third party) to provide "political consulting work" at "fair market rates" through the end of the campaign. It should be easy to find a political consultancy (that doesn't work in PDX) with a substantial resume that is willing charge your campaign top market rates. That company would then subcontract with Busse to perform campaign consulting services and they split the profit.

Do it right and you can probably skim another $30-40k from VOE to Busse.

Then Busse buys Branam's drinks, lift tickets and table dances for the next two years.

That was just off the top of my head, so I'm sure there are better ways to scam it. You guys are resourceful, so get to it.

Believe it or not a lot of people will thank you for doing this. You'll have our gratitude for exposing the VOE house of cards for what it really is, thereby hastening its demise and saving taxpayers millions of dollars in the future.

It is the only win-win scenario for Portland and you guys, so:


Isn't it intersting thst the current members of the City Council put VOE into place long before the taxpayers would have a chance to vote on it? Want to bet it gets dumped as soon as 2010 comes around? Especially after people see the amount of money being spent on people barely qualified to run anything.

In my conversation with the SoS's office this afternoon I discovered a problem with referencing "transaction ID number 28793" -- it contains only 5 digits when it should have 6 digits.

It looks like Jack dropped a digit while posting, his previous story was linking to transaction ID number: 287933.

I had only the one post up while on the phone. It is only one payment though in a series that followed the Feb 28 payment. Each such payment is consistent with pay for past work -- not future work.

The $13,333 number is enough to push it past the $12,000 limit that tripped up Sho, under the city code. He must be disqualified for any funds. 90 days, under the state statutes, has not yet passed since the Feb 21 acceptance of Mr. Branam as a qualifying candidate.

He is as fried as any chicken from KFC. I like mine extra crispy.

It looks like Jack dropped a digit while posting, his previous story was linking to transaction ID number: 287933.

Yes, that's right.

I notice that there are quite a few transactions that are in the "Miscellaneous Cash Expenditures $100 and under" category but are over $100.00. Here are a couple:


I think the system should refuse to let them post a transaction over $100 in the $100 and under category.

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