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The San Diego Association of Governments has twice misled voters about how much money the agency could raise through tax increases.
SANDAG’s pattern of behavior raises a simple question: Is it legal?
Pretty much, three election law experts said.
Some states have passed laws specifically prohibiting false statements during campaigns. When those laws have been challenged, though, courts have knocked them down on First Amendment grounds.
“From a legal point of view, courts – wrongly, in my opinion—have backed away from saying that you can fine or prosecute people for false speech,” said David Schultz, who teaches election law at the University of Minnesota. “What people would argue is, there is a First Amendment right to lie, and voters can sort it out.”
The issue for SANDAG has now spanned two elections. In 2004, the agency told voters a TransNet extension could bring in $14.2 billion for regional transportation needs. The agency had formally adopted an economic forecast 11 months earlier that concluded the half-cent sales tax would in fact raise just $12.9 billion, but the agency went to voters with the higher figure anyway.
And last November, the agency campaigned for Measure A on the premise that the new half-cent sales tax would bring in $18 billion for regional needs. Internal emails and documents show staffers panicked when they found a problem in the agency’s forecast. If the issue was fixed, the forecast would have projected closer to $14 billion, but agency leaders chose not to act on staff’s concerns.
SANDAG has also conceded that for nearly a year leading up to the 2016 election, it did not update the financing plan for its existing sales tax program with the most up-to-date costs of all of its projects. If it had, the total cost would have soared by $8 billion.
But the fact that SANDAG knew ahead of the election that the information it put before voters was not true isn’t legally relevant, said Michael Colantuono, a Northern California-based attorney with Colantuono, Highsmith & Whatley and an expert in elections, municipal law and local government revenue.
“It doesn’t change the legal consequences of their behavior,” he said. “It raises sharp questions about how they treat the public and how the public should feel about their government treating them that way.”
He said a plaintiff’s attorney could attempt to string all three instances of dishonesty together to establish intent, but he expects a judge wouldn’t be swayed.
“Government is regulated at the ballot box, not the jury box,” he said.
False claims made on the ballot have a short window before the election in which they can be challenged and a judge can order them changed, which happens fairly often. If no one challenges during that time, that’s basically it, Colantuono said.
After that, an interested party could challenge an election, but only based on whether the votes that were cast were done so legally and tallied for the right side, both Colantuono and Schultz said.
“We could almost always argue forever whether everything on the ballot was complete, right or materially misleading — we could argue forever, so we don’t,” Colantuono said. “We make it hard to sue people for what they say in elections so that people will feel free to talk about elections.”
“It comes down to a ‘but for’ standard – ‘but for this, results would have been different,’” said Schultz.
Under that standard, it’s difficult, bordering on impossible, to determine whether a false claim flipped an election result.
“That’s the standard, and courts just don’t want to re-do elections.”
Robert Fellmeth, executive director of the Center for Public Interest Law at University of San Diego, said the circumstances show SANDAG misled the public – and arguably knowingly lied – but there isn’t a clear remedy that could be criminally or civilly prosecuted.
“Needless to say, if it were otherwise, how many sanctions would our current president be facing?” he said.
There is one recourse for a public official: recall.
“This is a political remedy for a political offense,” Fellmeth said. “I believe that a knowing lie of enormous magnitude should have some additional check, but I am in the minority in that view.”
If an official is privately profiting off of the deceit, it could open up criminal prosecutions for fraud.
“I agree that we need a great deal of license for political claims,” Fellmeth said. “On the other hand, where someone is knowingly lying about a basic element behind a public policy, perhaps there should be a remedy, particularly where he or she is deliberately hiding the true facts. And doing so knowingly and with great public harm. In this case, it is an interesting form of public tax fraud.”
Schultz, however, said he believes a novel case could be brought against SANDAG not over election fraud but common law or securities fraud.
After TransNet was approved, SANDAG issued bonds against the future sales tax revenue so it could jump-start its building program. Even though there’s no evidence SANDAG deceived any of its actual bondholders, Schultz said he could imagine an argument that the agency deceived voters, which then allowed it to bring in bond investors.
“It’s a convoluted way to commit fraud, but it is,” Schultz said. “It’s almost like a Ponzi scheme. I’m deceiving the public to create a false vote, that could then be used to induce bond investors. That’s – boy – there’s a good amount of fraud in that.”
The issue could turn on how much the agency was intentionally misleading voters, versus hoping for an impossible scenario. For instance, a politician could say she wanted to slash taxes to achieve 4 percent economic growth. There may not be clear evidence that’s possible, but the promise could be protected as campaign speech.
“This isn’t hoping and praying and making campaign promises,” he said. “You have substitutions of data that make it sound like people (at SANDAG) knew they had bad data that they were trying to use to make people do misleading things,” he said.
Colantuono was skeptical such a challenge would find success against a public debt issuer.
“That’d be a novel argument for a private issuer,” he said. “It’s a stretch against a public issuer.”
The law treats campaign promises differently than it does official statements made to investors. What’s regulated, he said, is that the agency makes adequate disclosures when it issues debt, and continuing disclosures as long as the debt is in the marketplace.
Again, he said the legal theory is that the political process is itself a regulation on public debt issuance.
“All public agencies are obliged to do is disclose,” he said. “We aren’t liable to common law fraud. That’s a judge-made law that applies only to private agencies.”