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Center for Transportation Excellence

Public Involvement & the Early Education Campaign – Ballot Measures

January 24, 2012

Christopher DeLacyHolland & Knight

BALLOT MEASURES

A Legal Overview

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WHAT IS A BALLOT MEASURE?

• Hybrid of the legislative and electoral process

• Involves both lobbying and political activity

• A form of direct democracy

• Creates, repeals, amends, modifies, or approves laws and constitutions

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TYPES OF BALLOT MEASURES

• Initiative

• Veto Referendum

• Legislative Referral

• Note: Can be state or local - no ballot measures at the federal level

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KEY TERMS: INITIATIVE

• Sometimes called popular, voter, or citizen initiatives

• Proposes new laws or constitutional amendments

• Can be direct or indirect

• May include tax and bond issues

• May be initiated by citizens

• Example: 2012 California Change in Term Limits Initiative (amends constitution to impose term limits)

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KEY TERM: VETO REFERENDUM

• Sometimes called a citizen referendum or legislative referendum

• Repeals an existing law or constitutional provision

• May include tax and bond issues

• May be initiated by citizens

• Example: 2012 North Dakota Property Tax Amendment, Measure 2 (repeals state property tax)

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KEY TERM: LEGISLATIVE REFERRAL

• Proposed legislation or constitutional amendments are put up for a popular vote

• May include bond and tax issues

• May only be initiated by state or local government

• Example: 2012 Nevada Harrah's Sports Arena Initiative (establishes new sales tax and bonds)

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BALLOT MEASURES: PROCESS

• Drafting of text

• Drafting title and summary

• Signature collection

• Certification for ballot

• Voter approval/disapproval

• Challenges

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BALLOT MEASURE COMMITTEES: BACKGROUND

• Committees created to support or oppose ballot measures

• Similar in structure to political committees (e.g., candidates, political parties, PACs)

• Must disclose contributions and expenditures

• Unlike political committees, not generally subject to source and amount contribution limits

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BALLOT MEASURE COMMITTEES: LEGAL

BACKGROUND

• First National Bank of Boston v. Belloti, 435 U.S. 765 (1978) (state statute prohibiting corporations from spending money on state referenda is unconstitutional)

• Citizens Against Rent Control v. Berkeley, 454 U.S. 290 (1981) (city ordinance limiting contributions to a referendum committee to $250 is unconstitutional)

• FEC Advisory Opinion 1980-95 (national banks may contribute to ballot measures)

• FEC Advisory Opinion 1989-32 (foreign nationals may contribute to ballot measures)

• Tip: Watch out for ballot measures associated with a candidate

BALLOT MEASURE COMMITTEES: STRUCTURE

• May be incorporated under state law as a non-profit

• Must apply for a taxpayer ID (EIN)

• Must open a separate bank account

• Must comply with the Internal Revenue Code

• Must comply with state and/or local laws, regulations, and rules

• Must register with state or local government once certain thresholds are met

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BALLOT MEASURE COMMITTEES: REGISTRATION AND REPORTING

Register with Secretary or State or City/County Clerk:

• Statement of Organization

• Periodic reports

• Amendments

• Termination report

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BALLOT MEASURE COMMITTEES: TAX ISSUES

• Are exempt from federal tax under IRC Section 501(c)(4) (not as 527 political organizations)

• May be exempt from state or local tax

• Contributions to ballot measure committees are considered lobbying expenditures by the IRS, not political campaign activity

• 501(c)(3) charitable organizations may contribute to a ballot measure committee (also 501(c)(4) community benefit organizations, (c)(5) labor unions, and (c)(6) trade associations may contribute)

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BALLOT MEASURES: GOVERNMENT PARTICIPATION

• Many jurisdictions prohibit the use of taxpayer funds and resources to support or oppose a ballot measure (it is considered political activity)

• Taxpayer funds may typically be used to evaluate and provide objective information, but may not be used to urge voters to support or oppose

• Taxpayer funds generally may not be contributed to ballot measures or ballot measure committees

• A public employee may usually support a ballot measure in their personal capacity, after work hours, as a volunteer

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BALLOT MEASURES

Questions?

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2099 Pennsylvania Avenue, N.W, Suite 100

Washington, D.C. 20006

202.457.7162

chris.delacy@hklaw.com

Christopher DeLacy