Zappone was told in 2021 he was following campaign laws. Will he now be punished for it?

Jun. 22—The state Public Disclosure Commission deferred action at a meeting in Spokane on Thursday on whether Spokane City Councilman Zack Zappone will be found retroactively in violation of a recently reinterpreted campaign disclosure law.

The state agency issued a decision in May that radically changes how a state law is interpreted on how candidates can transfer leftover funds from prior campaigns. Zappone and agency staff agree that his 2021 campaign for city council violated the law under the new interpretation, but it's not clear whether the agency's commission will choose to give Zappone a slap on the wrist or waive the complaint.

"I think the Commission's perspective is that this is a difficult enough issue that we need to spend a little bit of quality time thinking it through and looking at what the ramifications are," said PDC Commission Chair Fred Jarrett Thursday afternoon. "And we don't want to do something that is precipitous, that sets a precedent that we will end up regretting in the future."

State law allows a candidate to transfer funds from a prior campaign to a new one for the same office as a lump sum without having to follow many of the normal rules for new donations. For years, the PDC issued guidance suggesting the same rules applied if the transfer was for an election to a different kind of office.

This interpretation impacted donation limits.

Currently, the state limits individual donors to $1,200 to a candidate for a particular election, up to $2,400 for both the primary and general election.

When candidates rolled over funds from a prior campaign, including donations from a maxed-out donor, into a new campaign, they could receive another $2,400 from that donor for the new election cycle without violating donation limits. It also meant candidates didn't have to provide the same information about the donors whose funds they were rolling into the new campaign and were not required to receive written permission from donors to use their funds in a new election.

The PDC clarified in May that law only applied for those running for the same office. Transferring funds to run for a different office qualifies as a new donation, the agency ruled. Plus, those rolled over donations have to include the full suite of donor information, including the contributor's name, address and more, depending on the size of the donation.

The law itself didn't change, only the PDC's interpretation of it. That's left some wondering: can years-old campaigns that followed the agency's advice at the time now be penalized ?

Two weeks before the PDC published its new interpretation, but after it appeared to be headed in that direction, the agency received a complaint alleging Zappone should be held liable for rolling over nearly $7,900 from his failed 2020 state legislature run into his successful 2021 city council campaign without providing details about donors and counting them against contribution limits. It came from Glen Morgan, a prolific filer of campaign disclosure complaints against left-leaning candidates who has in some years launched a majority of all complaints received by the PDC, PubliCola reported in 2018.

At Thursday's meeting, held in Spokane as part of an effort for the commission to conduct its business in communities across the state, an affiliate from the campaign of state gubernatorial candidate Bob Ferguson addressed the commission about the Zappone allegations in a public comment. Lawyer Zach Pekelis of the Pacifica Law Group in Seattle opposed the allegations that Zappone violated state law, arguing such a finding would require other political candidates — including Ferguson — track down contributor information for campaign funds that were transferred in the past.

Pekelis said past individual campaign contributor information was not recorded at the time when surplus funds were transferred in a lump sum because the law did not call for it. Changing that policy now would cost the Ferguson campaign significant time and money, the lawyer said, because they'd have to go back through thousands of campaign donations.

Ferguson campaign spokesperson Wellesley Daniels declined to comment further Thursday, saying the public comments spoke for themselves.

Staff with the PDC noted that Zappone's violation was due to his "good faith reliance on PDC staff's prior guidance," and recommended against a monetary penalty or other remedial action.

In brief testimony, Zappone noted that he was asked to refund about $500 from his 2021 city council campaign.

"It's not really significant to me," Zappone said. "But I think this sets a precedent for future campaigns and future complaints, and that could have severe negative impacts on other campaigns and candidates, or they would have to be refunded retroactively years ago, which could be a personal detriment to them."

He also raised concerns that his case could shake faith in PDC guidance going forward.

PDC staff noted that the outcome of Zappone's case would likely guide future enforcement actions, and that there are likely many other past candidates who could be retroactively liable.