Legislature(1995 - 1996)
04/19/1996 01:30 PM Senate JUD
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
SB 191 ELECTION CAMPAIGN FINANCE REFORM
SENATOR MILLER moved to adopt CSSB 191(JUD) (version R), in lieu of
the original bill. There being no objection, version R was
adopted.
SENATOR ADAMS arrived at 1:38 p.m.
SUSAN BURKE, an attorney with the law firm of Gross and Burke,
explained her original involvement with SB 191 began when Senator
Kelly, on behalf of the Legislative Council, asked her to review
the campaign finance initiative and advise the Council about any
provisions in the initiative that might violate the Constitution.
She prepared an opinion for the Council, dated February 12, in
which she identified a number of sections which raise significant
issues. She believes some of the issues, if challenged, would be
found violative by the court, others are not as clear.
CHAIRMAN TAYLOR questioned whether the issues are questionable only
on constitutional grounds. MS. BURKE believed most of the
provisions might violate the First Amendment.
MS. BURKE informed committee members she identified the sections of
the Senate State Affairs committee substitute that are virtually
certain to be found invalid if challenged in court at Senator
Taylor's request. In her personal view, when dealing with First
Amendment rights, it is not good public policy to enact statutes
that violate those rights, and then require citizens to go to the
expense and trouble of filing a lawsuit in order to vindicate those
rights. When conducting the review of the bill, she also kept in
mind that the legislature was required to enact a substantially
similar measure to the initiative. The Alaska Supreme Court has
decided only one case interpreting the substantially similar
provision of the Constitution. In that decision, the Supreme Court
determined if the legislature enacts a measure that is
substantially similar to an initiative that is scheduled to go on
the ballot, the initiative would be removed from the ballot and the
law would take effect. In that case, the Supreme Court gave the
legislature a lot of discretion, particularly in legislation of
this nature, to make changes and fine tune the provisions. In her
opinion the bill in its current form is still substantially similar
to the initiative.
MS. BURKE discussed the provisions most vulnerable to
constitutional attack, and as a result no longer appear in version
R. The initiative contained different amounts of contribution
limitations for individuals and groups. The individual limit was
$500; the group limit was $250. The only basis the courts have
ever found for upholding limits on the amounts that can be
contributed to a candidate is to avoid corruption or the appearance
of corruption which allows the federal and state governments to
place limits on contribution amounts. In her opinion, it is no
more corrupt for a group to contribute to a candidate than for an
individual to contribute to a candidate, therefore there is no
justification for a difference in the amounts. Rather than reduce
the individual contributions to $250 to keep them equal, version R
raises the group limit to $500. Additionally, cases from other
jurisdictions suggest that at some point, campaign contributions
can be set so low that the limits have no rational relationship
between preventing corruption or the appearance of corruption and
very low limits have been thrown out on that basis.
MS. BURKE explained a second provision which prohibited certain
business entities, other than corporations and labor unions, from
making contributions. The U.S. Supreme Court has upheld
prohibitions against corporate contributions and labor union
contributions, but there is no case that has upheld limitations on
other forms of business entities. Version R clarifies that other
kinds of business entities, other than corporations or labor
unions, can contribute to candidates.
CHAIRMAN TAYLOR asked how much those entities can contribute. MS.
BURKE replied the same amount as individuals. CHAIRMAN TAYLOR
asked if all entities, including individuals, groups, and
businesses, would have the same limitation, and whether the only
exception would be political parties.
MS. BURKE clarified that she was previously referring to the amount
that can be contributed to a group is $250 but the same idea
applies. If an individual contributes to a group, that individual
is one step removed from contributing directly to a candidate.
MS. BURKE explained the initiative had a provision which banned
non-resident contributions. The State Affairs Committee placed
limits on the dollar amounts that candidates could accept from non-
residents. That provision raises two constitutional questions: the
first being the First Amendment rights of non-residents to engage
in political activity. There are non-residents who have every bit
as much interest in political activity in Alaska as residents. The
fact that someone is a non-resident raises the privileges and
immunities clause. The fact that non-residents do not have the
right to vote is insufficient reason to limit the amount they can
contribute, other than to hold them to the same limitation as
residents. A federal district court case in Oregon held people
cannot be prohibited from making contributions to people in
election districts outside of the district in which they reside.
CHAIRMAN TAYLOR noted as the committee substitute existed, if a
person lived within a given House District in Anchorage, under the
initiative, he/she would have been precluded from contributing to
a candidate who lived across the street but was in a different
district.
SENATOR ADAMS commented that a person who could not contribute to
another candidate could contribute to the candidate's political
party, who could then contribute to the candidate. MS. BURKE
agreed, but noted the group would have been limited to contributing
$1,000.
MS. BURKE stated the Senate State Affairs Committee raised the
limit that groups could contribute to candidates from $500 to
$1000. She believed the amount individuals can contribute to
groups should be the same as the amount groups can contribute,
based on her previous argument. She asked the committee to review
that issue. In response to Senator Adams' comment, she stated did
not think it is possible to close every loophole, but the bill can
set reasonable limits that are enforceable, and contain reporting
requirements.
Number 278
SENATOR ADAMS commented that many legislators have to travel around
their districts via airplane, which is expensive. He said he would
prefer to have a geographical difference provision contained in the
bill for those legislators.
MS. BURKE responded that one solution is to raise the contribution
limit from $500 to $750. If that is the legislature's considered
judgment, the court might well give the legislature the benefit of
the doubt in terms of substantial similarity.
CHAIRMAN TAYLOR emphasized that is has been his concern throughout
the deliberations on this bill, to maintain as much of the original
integrity of the initiative as possible, even though he may
personally disagree with the purpose, thrust and overall intent of
the initiative. If the legislature is going to create a vehicle
which is substantially similar to the initiative, it must truly be
very similar. His primary concern is that by adhering to the
intent of the initiative, the legislature not defraud the public as
it would be fraudulent to take an unconstitutional issue, place it
before the voters, knowing full well it is patently
unconstitutional, and then through bumper sticker politics to
convince people this is a saving grace called "campaign finance
reform." The legislature's role in this process is not to make
substantive changes from the initiative, but to ensure that the
legislation is not patently unconstitutional.
MS. BURKE felt the legislature has broader discretion according to
the Alaska Supreme Court decision on the phrase "substantially
similar." CHAIRMAN TAYLOR stated he appreciates the fact the
legislature could go further than that, but to do so would do a
disservice to what the petitioners were requesting. They have the
right to have the policy matters heard in a public forum, not the
legislative forum. He repeated the legislature should be doing the
cleanup that is ethically required, not take positions on matters
of policy. In his opinion, there are many disagreeable things
within the initiative, yet it was foisted on the public as an all-
encompassing solution to a perceived problem that does not exist.
MS. BURKE commented that in performing the exercise she was hired
to do she did only what was requested which was to address the
constitutional issues. The substantial similarity issue is for the
legislature to decide.
MS. BURKE discussed the prohibition against lobbyists making cross-
district contributions which was deleted from version R. There are
cases out of California that suggest that restrictions on
lobbyists' contributions cannot be any greater than on anyone else.
Although there are restrictions that can be placed on lobbyists
activities, the contribution prohibition crosses the line. Also,
the initiative contains a prohibition on the use of campaign funds
to make contributions to other candidates. A Ninth Circuit Court
of Appeals case ruled candidates cannot be prohibited from using
campaign funds to make contributions to other candidates, subject
to the same dollar limits as everyone else.
CHAIRMAN TAYLOR clarified if he wished to contribute funds from his
campaign to another candidate, he could do so, but would be limited
to the same amount as anyone else. MS. BURKE replied yes, and
added he could write a personal check or write a check from his
campaign funds, but could not do both. The State Affairs committee
substitute, contained a time limitation on contributions by
candidates for governor or lieutenant governor. It effectively
prohibits a candidate for governor or lieutenant governor from
contributing to any other candidate. Based on the same Ninth
Circuit case, it would most likely be found to be unconstitutional.
CHAIRMAN TAYLOR asked if the same amount limitation would apply to
the governor and lieutenant governor. MS. BURKE replied
affirmatively.
MS. BURKE explained the final section that should be deleted
relates to the remedy provision in the initiative. That provision
provides that campaign violations dealt with purely
administratively (by the APOC) would have one set of penalties
imposed. If, however, the complainant takes the candidate to
Superior Court, the penalties and fines are tripled. That
provision would not withstand equal protection scrutiny as there is
no rational basis for it. There is also a provision that deals
with reasonable attorneys' fees. That provision may involve a
court rule change which cannot be done by initiative.
CHAIRMAN TAYLOR asked if that provision was deleted from version R.
MS. BURKE replied that is correct.
CHAIRMAN TAYLOR commented if the proponents of this initiative
wished to be fair at all, along with their headhunter provision,
the least they could have done was to have provided that if a
specious complaint was brought, the person bringing the complaint
could have been subjected to three times the defendant's costs and
to give the defendant the opportunity to file suit against the
complainant personally. MS. BURKE noted that would have been
symmetrical.
MS. BURKE informed the committee the initiative contains a
provision that allows a private person who goes to Superior Court
to be fined one-half. She and Mr. Chenoweth agreed that would
dedicate the prohibition against either dedicated funds or the
requirement that state funds must be appropriated by the
legislature before they can be spent by anyone therefore it was
removed from version R.
MS. BURKE concluded by saying in her review of the State Affairs
committee substitute, she deleted provisions that were clearly
unconstitutional. If the question was a close one, the provision
was left in the bill.
Number 435
JACK CHENOWETH, Division of Legal Services, emphasized the starting
point of this project was an effort to take the State Affairs
committee substitute and move it back toward the last version on
the House side. The changes made were based on the removal of any
provisions in which a serious constitutional violation could be
asserted. Conforming changes were also made. The initiative, and
other versions of the bill, make use of the terms "proposition" and
"question" as those terms are defined in the election code already.
In the context of the last U.S. Supreme Court decision in this area
covering the anonymous contributions in the "paid for by"
requirement, "proposition" was confined to things that were in the
nature of submissions to the electorate that some would regard as
issue-related rather than candidate-related. Candidate-related
issues, such as retention of judges, were not included. Because
that change implicated how municipalities might adapt their laws,
that approach was taken toward the changes that affect
municipalities.
SENATOR ADAMS asked if Sections 1 - 29 fit right under the subject
of election campaign laws. MR. CHENOWETH replied the decision as
to whether the bill is substantially similar to the initiative will
be decided by the Lieutenant Governor.
SENATOR ADAMS asked if it would be to the legislature's advantage
to make the legislation substantially similar to the initiative so
that the initiative is not put on the ballot. MR. CHENOWETH
replied that is a policy call on the part of the legislature. To
this point, previous committees have added material to the
initiative.
CHAIRMAN TAYLOR indicated the it is his intention to make the
legislation as close to the initiative as possible. If the odds of
a provision being found constitutional were 60:40, it was retained
in the legislation, but if the odds were close to zero, that
provision was removed. The initiative was rather vague on given
subjects and did not address specific instances. To that extent,
the bill only includes cleanup language sufficient to define what
needs to be reported.
MS. BURKE believed one good example to be the provisions in version
R that limit the window of campaigning. That provision goes well
beyond the reform specified in the initiative.
CHAIRMAN TAYLOR asked what amount a candidate can carry forward
from one campaign to the next. MS. BURKE replied this is another
area that is unclear constitutionally. There is a Ninth Circuit
case and an Eighth Circuit case that say a candidate cannot be
prohibited from using money collected in one campaign on another
campaign. This provision does not prohibit the use of those funds,
but contains a limitation on the dollar amount.
CHAIRMAN TAYLOR asked what the initiative contained. MS. BURKE
recalled the initiative had an outright prohibition which is
unconstitutional. CHAIRMAN TAYLOR indicated the language in
version R remains as similar as possible to the initiative on this
issue by removing the prohibition but limiting the dollar amount.
MS. BURKE felt that although that section raises constitutional
issues, it is not clearly unconstitutional so she recommended it be
left in.
CHAIRMAN TAYLOR believed the actual amounts would be less than 10
percent of an average campaign race.
Number 556
SENATOR GREEN found it to be ironic that the findings and purpose
section of the bill states that highly qualified citizens are
dissuaded from running for public office due to the high cost of
election campaigns, yet the remainder of the bill reduces access to
funds.
SENATOR MILLER moved CSSB 191(JUD) out of committee with individual
recommendations. SENATOR ADAMS objected, but removed his
objection, therefore the motion carried.
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