PORTLAND — The state Ethics Commission should not investigate allegations against the state’s largest daily newspaper for its role in Portland’s 2010 elected mayor referendum, the panel’s executive director said.

But Jonathan Wayne, executive director of the Maine Commission on Governmental Ethics and Election Practices, said commission staff was sympathetic to the complaint filed by Thomas Valleau and recommends a change in state election law.

The Ethics Commission is scheduled to take up the complaint on Thursday, Feb. 17.

At issue is $46,500 in free advertising given to the Elect Our Mayor political action committee the week before the election by Maine Today Media, which owns The Press Herald/Maine Sunday Telegram and other papers.

After a preliminary investigation by commission staff, Wayne advised the commission in a memo not to investigate Valleau’s complaint, which contends that the newspaper should have registered as a Ballot Question Committee.

Instead, the ads were disclosed in the Elect Our Mayor PAC’s 14-day post-election report, which listed the Portland Regional Chamber as contributing more than $46,500 in advertising to the campaign via the Press Herald.

A notation said, “The Portland Press Herald did not charge the Portland Regional Chamber for the ad space.”

Wayne said commission staff believe the donation was reported appropriately, and the public was reasonably informed in accordance with election law.

However, he pointed out that the newspaper’s argument that it is exempt from campaign finance laws under the First Amendment “seemed strained and should not be accepted by the Commission uncritically.”

The newspaper admitted knowing the chamber wanted the ads to promote the elected mayor issue, but did not exercise control over the content.

The paper, which also supported the referendum, claimed the ads were “not a donation” but a “an exchange of value for value” to further a business arrangement with the chamber.

That arrangement allows the paper to be a major chamber sponsor for less than the required $25,000 a year, in exchange for a weekly quarter-page ad. Chamber CEO Godfrey Wood estimated the arrangement has existed since September 2010.

But Wayne was skeptical about that explanation, since the newspaper did not receive an additional benefit for free ads.

“In spite of the explanation offered by the newspaper, the Commission staff continues to believe that the term ‘gift’ or ‘donation’ is a straight-forward, accurate way to describe the transaction,” Wayne said in the Feb. 8 memo.

Wayne said ethics staff “appreciates (Valleau’s) concern” that the donation was not disclosed to readers before the election, but noted that media ethics were outside the commission’s jurisdiction.

But he also said staff would like to see election laws changed, so that major contributions like the one made by the newspaper within 13 days of the election would have to be reported within 24 hours.

Current election law only requires PACs to report single expenditures of $500 or more within 24 hours, but not contributions.

Wayne provided commissioners with 25 examples of contributions of $25,000 or more within 13 days of the last two elections.

The 2010 list includes a $130,000 contribution from Penn National Gaming, which runs Hollywood Slots in Bangor, to Citizens Against the Oxford Casino; and $50,000 from the University of New England, which has a dental hygiene training program, in support of a $5 million dental bond, about $3.5 million of which was designated for a university.

The 2009 list includes about $340,000 in contributions from the National Organization for Marriage, which opposed Maine’s gay marriage referendum.

Wayne said staff last year lobbied the Legislature to change the law, but no action was taken.

“The Commission staff hopes the Legislature will revisit this issue and require large contributions over a certain threshold ($10,000? $25,000?) to be reported more promptly,” Wayne said in his memo.

The Ethics Commission will is scheduled to hear additional testimony on Valleau’s complaint on Thursday, before deciding whether to drop the investigation.

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