04/15/1996 01:30 PM Senate JUD

            SB 191 ELECTION CAMPAIGN FINANCE REFORM                           
                                                                              
 SENATOR TIM KELLY, prime sponsor of SB 191, stated 33,000 Alaskans            
 signed an initiative to put a campaign finance reform vote on the             
 ballot in November if the legislature does not pass similar                   
 legislation.  Three legal opinions on SB 191 have been solicited;             
 all raise constitutional questions.  In his opinion, if the                   
 legislature attempts to fix all of the constitutional questions, a            
 disservice will be done to the 33,000 Alaskans who voted for                  
 campaign finance reform, and the legislation will not be                      
 substantially similar to the initiative.  U.S. Representative Don             
 Young is conducting his annual benchmark poll at this time.  At               
 Senator Kelly's request, the poll contains a question about                   
 campaign finance reform.  So far 80.4 percent of those polled favor           
 reform.  He recommended the committee work on version M of SB 191.            
                                                                               
 Number 051                                                                    
                                                                               
 JACK CHENOWETH, Division of Legal Services, described a draft                 
 committee substitute (version M) of SB 191.  Version M accommodates           
 changes made by the Senate State Affairs, House State Affairs, and            
 House Judiciary Committees.  The starting point for SB 191 was the            
 initiative that appeared on the ballot.  Version M addresses                  
 questions that came up in the committee process, and was directed             
 by a working group comprised of Senator Kelly, Representatives                
 James and Finkelstein, and APOC members.  The changes in version M            
 are as follows.                                                               
                                                                               
 The initiative included an indexing feature so that at five-year              
 intervals the dollar amounts would be recalculated to account for             
 inflation: that feature was deleted.  The provision in the                    
 initiative requiring individuals to register before making campaign           
 contributions was also deleted.  The cash contribution limit of               
 $100 was reduced to $25 in the initiative, but restored to $100 in            
 version M.  The prohibition on honoraria payments during the course           
 of a campaign was changed to allow a limited payment comparable to            
 honoraria based upon services actually provided by a candidate.               
 Campaign funds may not be raised in years in which there is no                
 election.  If running for election or re-election for Governor,               
 funds may be raised during the period beginning January 1 of the              
 election year.  Candidates for legislative offices may raise funds            
 beginning June 1 of the year in which re-election is sought.  For             
 other offices (state special elections and municipal elections)               
 there is a five month window period before the date of the                    
 election.                                                                     
                                                                               
 The initiative allows candidates to accept and expend loans from              
 family members.  That provision is not included in version M.                 
 Technical changes were made to the APOC report filing procedure.              
 The use of surplus campaign funds was expanded to allow return of             
 contributions to contributors, to allow a carry-forward, or to                
 allow a portion of a contribution to a legislative office                     
 allowance.  Felony criminal penalty provisions were removed so that           
 all violations are misdemeanor offenses.  The "paid for by"                   
 requirements were loosened in light of a U.S. Supreme Court                   
 decision within the last year.  The bill includes definitions for             
 terms used within the initiative such as "publically funded                   
 entities."  The use of charitable gaming, with the exception of               
 raffles and lotteries, for the support of political activities,               
 would be banned.  The ban on contributions from out-of-state                  
 sources was modified to allow a limited contribution.  The maximum            
 amounts that can be contributed to campaigns was increased and                
 altered depending upon the nature of the campaign.  The procedures            
 for placing questions on campaign practices before APOC and the               
 Superior Court were amended.  The small campaign exemption in which           
 disclosure is not necessary was raised from $1,000 to $2,500.  The            
 severability provision, which appears in the initiative, was                  
 included.  The bill has an immediate effective date, and requires             
 the Lt. Governor to place the initiative on the ballot if this                
 legislation is not found to be substantially similar to the                   
 initiative.                                                                   
                                                                               
 Number 186                                                                    
                                                                               
 CHAIRMAN TAYLOR commented the legislation is an attempt to mirror             
 the initiative, however most people who signed the initiative did             
 not understand its contents.  He asked if the legislation contains            
 provisions that are patently unconstitutional.                                
                                                                               
 MR. CHENOWETH replied there are provisions in the initiative that             
 were carried forward to the legislation that are constitutionally             
 questionable.  The law in this area is changing as the Supreme                
 Court wrestles with various issues and has made only a few key                
 decisions to date.                                                            
                                                                               
 CHAIRMAN TAYLOR questioned whether the legislature has the                    
 responsibility to review the initiative and craft a bill that is              
 constitutional, to rubber stamp the legislation, or let the                   
 initiative appear on the ballot for a vote, knowing full well there           
 are provisions within it that are unconstitutional.  He believed              
 that would be fraud on the public since the average voter will not            
 understand the constitutional ramifications of the initiative.                
                                                                               
 MR. CHENOWETH responded the alternative to passing legislation is             
 to allow the initiative to go forward as presented.  It appears the           
 Attorney General's Office is prepared to defend the provisions                
 within the initiative.  The Division of Legal Services has                    
 attempted, in response to opinions from Av Gross and Mike Frank, to           
 pick up the most troublesome features in the initiative and address           
 them to reduce or eliminate the possibility that those provisions             
 will be found unconstitutional as a violation of the First                    
 Amendment.  He could not guarantee version M will succeed, but                
 believed the constitutional questions that remain are no worse than           
 what came to the legislature in the form of the initiative.                   
                                                                               
 CHAIRMAN TAYLOR felt if the legislature knows that something is               
 patently unconstitutional, it has an obligation to remove it, no              
 matter how many people signed the initiative.  Most of the people             
 who signed the initiative are most likely unaware that it will                
 forfeit a good portion of one's constitutional rights.                        
                                                                               
 SENATOR ADAMS arrived at 1:52 p.m.                                            
                                                                               
 There being no one else wishing to testify on SB 191, CHAIRMAN                
 TAYLOR announced the bill would be held until Friday to enable more           
 work to be done on the measure.