Legislature(2017 - 2018)BELTZ 105 (TSBldg)

02/15/2017 01:30 PM JUDICIARY

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Heard & Held
Heard & Held
        SB   5-POLITICAL CONTRIBUTION LIMITS/PROHIBITION                                                                    
2:12:05 PM                                                                                                                    
CHAIR   COGHILL  reconvened   the  meeting   and  announced   the                                                               
consideration of SB 5. [CSSB  5(STA), 30-LS0112\U, was before the                                                               
2:12:19 PM                                                                                                                    
SENATOR  MEYER,  sponsor  of SB  5,  introduced  the  legislation                                                               
paraphrasing the following sponsor statement:                                                                                   
     In  an  effort  to  restore  public  trust  and  reduce                                                                    
     corruption,  or the  appearance of  corruption, in  our                                                                    
     campaign   finance   system,   in   1996   the   Alaska                                                                    
     legislature passed  sweeping campaign  finance reforms.                                                                    
     Included  in  legislation  was  a  prohibition  on  all                                                                    
     contributions  by lobbyists  to  candidates outside  of                                                                    
     their own  election district. What was  not anticipated                                                                    
     or addressed by the 1996  reforms, and is an issue that                                                                    
     arose during  this last election cycle,  is the ability                                                                    
     for  a lobbyist  to  contribute to  a political  action                                                                    
     group  that  is controlled  by  a  legislator or  other                                                                    
     candidate  for the  legislature. This  loophole in  the                                                                    
     law  allows a  sitting legislator,  or a  candidate for                                                                    
     the legislature, to solicit,  raise, and disperse funds                                                                    
     from  lobbyists,  on  behalf   of  a  group  that  they                                                                    
     control,  thus circumventing  the  limit on  lobbyists'                                                                    
     contributions   to  candidates.   Further,  our   state                                                                    
     statutes  explicitly state  that a  legislator may  not                                                                    
     solicit or accept  funds in order to  influence a state                                                                    
     election during a regular  or special session, however,                                                                    
     there  is  no  clear prohibition  against  a  political                                                                    
     action group  controlled by a  legislator doing  so. In                                                                    
     addition,  SB 5  includes a  prohibition on  dispersing                                                                    
     funds during a legislative session.                                                                                        
     Senate Bill 5 will amend  our state statutes to bolster                                                                    
     our campaign finance laws by:                                                                                              
     1. Closing  the loophole that allows  lobbyists to make                                                                    
     political  campaign contributions  to groups  headed by                                                                    
     current  lawmakers and  candidates for  the legislature                                                                    
     outside of their district, and                                                                                             
     2.  Preventing groups  controlled  by  a legislator  or                                                                    
     candidate   for   the  legislature   from   soliciting,                                                                    
     raising,  or  dispersing  funds  during  a  regular  or                                                                    
     special legislative session.                                                                                               
     This   measure   is   intended   to   protect   against                                                                    
     corruption-  or  the   appearance  of  corruption-  and                                                                    
     restore  the   public's  confidence  in   our  campaign                                                                    
     finance structure.                                                                                                         
2:15:26 PM                                                                                                                    
EDRA  MORLEDGE, Staff,  Senator  Kevin Meyer,  said the  original                                                               
version of SB 5 contained a  drafting error and the State Affairs                                                               
CS corrected  it. She suggested  that the easiest way  to explain                                                               
the drafting error is to go through the sectional summary. She                                                                  
reviewed the following:                                                                                                         
     Section 1  is a  new section which  places restrictions                                                                    
     on  solicitation  and  acceptance of  contributions  by                                                                    
     groups controlled by legislators  or candidates for the                                                                    
     state legislature during a legislative session.                                                                            
     The original version also included  in that section the                                                                    
     restriction  on expending  funds  during a  legislative                                                                    
     session, which  we still  have in  the bill.  It's just                                                                    
     that those were  both contained in the  same section in                                                                    
     the original  bill and they  needed to be  broken apart                                                                    
     because   they're  two   different  sections   of  this                                                                    
     Section   2   is   rewritten   to   prohibit   lobbyist                                                                    
     contributions to  candidates for the  state legislature                                                                    
     or  to   groups  that  are  controlled   by  a  sitting                                                                    
     legislator or a candidate for the legislature.                                                                             
     Section 3 regards prohibited  contributions and this is                                                                    
     the new  section. This section  makes an  exception for                                                                    
     contributions  by lobbyists  eligible to  vote only  in                                                                    
     that  candidate's district,  which is  part of  current                                                                    
     law but for the purpose  of drafting this bill, they're                                                                    
     broken out into these new sections.                                                                                        
     Section  4 is  limitations on  expenditures. This  is a                                                                    
     new section pertaining just  to these groups controlled                                                                    
     by  legislators or  candidates  for state  legislature.                                                                    
     This  basically brings  these groups  in line  with how                                                                    
     individual    candidates   operate,    which   is    no                                                                    
     expenditures during a legislative session.                                                                                 
     Section 5  is the  definition section. One  sentence or                                                                    
     some words that  were added to the  introduction of the                                                                    
     definitions, which  is on page  2, line 28 and  29, the                                                                    
     drafter  of  the bill  put  in  the words  "unless  the                                                                    
     context requires  otherwise" and then goes  on into the                                                                    
     definitions. That's  just to  remove any sort  of legal                                                                    
     ambiguity that  might be  construed by  the definitions                                                                    
     so they apply just to this chapter.                                                                                        
CHAIR COGHILL summarized that, at this point, contributions are                                                                 
within context of what is in current law.                                                                                       
MS. MORLEDGE replied that's correct.                                                                                            
2:19:24 PM                                                                                                                    
SENATOR COSTELLO referred  to the language in  the new subsection                                                               
(j) on page 2, lines 9-11,  and questioned whether the phrase "is                                                               
eligible to  vote" is tight  enough to prohibit  certain lobbyist                                                               
contributions.  She  pointed  out  that  there  is  a  difference                                                               
between eligible to vote and able to vote.                                                                                      
She  also  asked Ms.  Morledge  if  she  had discussed  with  the                                                               
drafter whether the word "controlled  by" that appears on page 1,                                                               
line7, and  page 2,  line 2,  is the  appropriate word.  "I think                                                               
that the  intent is that the  person is a part  of this political                                                               
action committee,  but 'controlled by' indicates  they might have                                                               
just control of it but they  may not be listed as a participating                                                               
MS. MORLEDGE  said the language regarding  lobbyist contributions                                                               
is  existing law.  Currently it  is in  subsection (g)  and SB  5                                                               
places  it  in  a  new  subsection (j).  She  added,  "We  didn't                                                               
contemplate,  perhaps,  a lobbyist  moving  to  a new  district."                                                               
Regarding  the  second  question,  she   said  she  did  ask  for                                                               
clarification and guidance from the  drafter as to how the Alaska                                                               
Public Offices  Commission might  interpret the  word "controlled                                                               
CHAIR  COGHILL noted  that Mr.  Bullard with  Legal Services  and                                                               
Heather Hebdon from APOC are available to answer questions.                                                                     
2:22:52 PM                                                                                                                    
SENATOR COSTELLO asked  Mr. Bullard if the  words "controlled by"                                                               
is adequate for the intention of the bill.                                                                                      
ALPHEUS   BULLARD,   Legislative   Counsel,   Legislative   Legal                                                               
Services,   Legislative   Affairs   Agency,   said   the   phrase                                                               
"controlled by" is not defined for  purposes of the bill so it is                                                               
left  to APOC  to define  it in  regulation. "If  the legislature                                                               
chooses not to provide a  specific definition for the purposes of                                                               
the bill's  provisions, I don't think  it's too great a  grant of                                                               
legislative  discretion to  allow the  commission to  decide what                                                               
'controlled by'  might mean in  this instance." He added  that it                                                               
could also be defined on the facts of each case.                                                                                
2:24:16 PM                                                                                                                    
SENATOR  WIELECHOWSKI  asked  if   the  bill  would  still  allow                                                               
political action committees to contribute  to legislators who are                                                               
controlling PACS.                                                                                                               
MS. MORLEDGE said yes.                                                                                                          
SENATOR  WIELECHOWSKI  asked: 1)  if  contributions  from out  of                                                               
state would  still be  prohibited, and  2) what  the contribution                                                               
limits would be.                                                                                                                
MS. MORLEDGE deferred the question to APOC.                                                                                     
2:25:05 PM                                                                                                                    
SENATOR WIELECHOWSKI  asked how much money  a PAC that is  set up                                                               
by a  legislator can  accept from  out of state  and if  they can                                                               
accept money from an out of state PAC.                                                                                          
HEATHER  HEBDON,   Executive  Director,  Alaska   Public  Offices                                                               
Commission   (APOC),   Anchorage,   Alaska,  confirmed   that   a                                                               
legislator who  has formed  a PAC could  accept money  from other                                                               
groups.  As far  as groups  based  outside of  Alaska, there  are                                                               
limits that pertain  to those as well.  Generally, groups outside                                                               
of Alaska  are not  permitted to contribute  to a  candidate, but                                                               
they could  form the  group and  register the  group from  out of                                                               
state. However,  90 percent of  their contributions must  be from                                                               
Alaska residents.  It would not  change the  group's contribution                                                               
limits. They would  be able to accept $500  from individuals, but                                                               
90 percent of their contributions must be from Alaska residents.                                                                
SENATOR  WIELECHOWSKI   asked  if  political   action  committees                                                               
outside of  Alaska, could contribute  that 10 percent  of outside                                                               
MS. HEBDON  answered yes but  they would  be limited to  a $1,000                                                               
contribution limit from that outside PAC.                                                                                       
2:28:02 PM                                                                                                                    
SENATOR  WIELECHOWSKI  asked  if a  legislator  could  contribute                                                               
money to his/her campaign or  make an independent expenditure for                                                               
his/her  campaign,   using  funds   from  the   political  action                                                               
committee he/she controls.                                                                                                      
MS  HEBDON  answered yes.  Contributions  a  legislator makes  to                                                               
his/her own campaign  would be limited to  $1,000, whereas making                                                               
independent expenditures on behalf  of his/her own campaign would                                                               
be unlimited.                                                                                                                   
SENATOR  WIELECHOWSKI  said his  understanding  has  been that  a                                                               
legislator could  not coordinate between  independent expenditure                                                               
groups  and the  candidate. "If  a legislator  controls the  PAC,                                                               
isn't that coordination?"                                                                                                       
MS HEBDON replied  that is part of the concern  APOC has with the                                                               
bill. It does not define "controlled by."                                                                                       
2:29:24 PM                                                                                                                    
CHAIR COGHILL said  that is an excellent point  and something the                                                               
committee should ponder                                                                                                         
SENATOR WIELECHOWSKI asked  the sponsor if there is  a reason for                                                               
not simply banning these groups from forming.                                                                                   
MS. MORLEDGE opined  that banning these groups  would infringe on                                                               
an  individual's  First  Amendment  right  to  free  speech.  The                                                               
sponsor researched  that initially and placing  sideboards seemed                                                               
to be the best option.  There was no contemplation of overhauling                                                               
the entire  campaign finance structure.  The intent was  to close                                                               
the loophole that came to light last year.                                                                                      
2:30:56 PM                                                                                                                    
SENATOR  WIELECHOWSKI noted  he saw  a legal  opinion that  talks                                                               
about  legitimate  government  interest in  restricting  campaign                                                               
contributions,  and  it  seems  that it  would  be  a  legitimate                                                               
government  interest  to say  candidates  cannot  have their  own                                                               
political action committees. He asked to hear from Mr. Bullard.                                                                 
MR. BULLARD  explained that if  a legislator  forms a PAC  and it                                                               
makes contributions  or expenditures  that help  the legislator's                                                               
own campaign,  then that group  will be defined as  the candidate                                                               
under AS 15.13.400(1)(A)  or AS 15.13.400(1)(B)(v). Contributions                                                               
to  that  group will  be  aggregated  with contributions  to  the                                                               
candidate  for purposes  of the  campaign finance  statutes. That                                                               
group is  no longer just  a political  action committee, it  is a                                                               
political  action committee  that is  one and  the same  with the                                                               
candidate's  campaign. That  situation is  addressed in  existing                                                               
CHAIR COGHILL observed  that it's not a question  of arm's length                                                               
because once  they do that  combination they can't  be considered                                                               
an independent expenditure.                                                                                                     
MR.  BULLARD replied  that is  his conclusion.  As to  whether it                                                               
would be a  narrowly tailored remedy to  prohibit all legislative                                                               
PACs, he  said the  only rationale accepted  by the  U.S. Supreme                                                               
Court for  limiting campaign contributions is  corruption and the                                                               
threat of corruption. A PAC  that can skirt existing contribution                                                               
limits  to  legislators  poses  the  threat  of  corruption.  For                                                               
example, if a  legislator wishes to raise money  towards a ballot                                                               
initiative, he didn't believe a  court would find that preventing                                                               
the existence of a group  that relates to that ballot proposition                                                               
could   be  construed   to  be   narrowly  tailored   to  prevent                                                               
2:34:39 PM                                                                                                                    
SENATOR  WIELECHOWSKI  asked  if   the  bill  could  be  narrowly                                                               
tailored enough to prohibit  collecting campaign contributions to                                                               
give to other candidates.                                                                                                       
MR. BULLARD  said he  hadn't looked at  that question  and didn't                                                               
know what a court would find.                                                                                                   
2:35:29 PM                                                                                                                    
SENATOR COSTELLO referenced  page 1, line 9, and page  2, lines 4                                                               
and 26, that specifically talks  about the legislature. She asked                                                               
if he  had contemplated using  a broader  term, such as  a person                                                               
who files for public office.                                                                                                    
MR. BULLARD suggested he ask the sponsor.                                                                                       
2:36:47 PM                                                                                                                    
SENATOR  MEYER  said  he  wouldn't be  opposed  to  changing  the                                                               
SENATOR COSTELLO suggested  changing the wording on  page 2, line                                                               
4, to reference "an individual who becomes a candidate."                                                                        
CHAIR   COGHILL  suggested   replacing  the   words  "the   state                                                               
legislature" to  "public office." He opined  that transparency of                                                               
reporting requirements are a large part of accountability.                                                                      
Finding no  further questions, he  stated he  would hold SB  5 in                                                               
committee for further consideration.                                                                                            

Document Name Date/Time Subjects
SB 5 - Fiscal Note.pdf SJUD 2/15/2017 1:30:00 PM
SB 5
SB 5 - Summary of Changes (D to U).pdf SJUD 2/15/2017 1:30:00 PM
SB 5
SB 5 - Written Testimony Shively.pdf SJUD 2/15/2017 1:30:00 PM
SB 5
SB 5 - Written Testimony Willis.pdf SJUD 2/15/2017 1:30:00 PM
SB 5
SB 5 - Contribution Limit Chart.pdf SJUD 2/15/2017 1:30:00 PM
SB 5
SB 5 - Group Definition AS 15.13.400.pdf SJUD 2/15/2017 1:30:00 PM
SB 5
SB 5 - Sectional Summary.pdf SJUD 2/15/2017 1:30:00 PM
SB 5
SB 5 - Sponsor Statement.pdf SJUD 2/15/2017 1:30:00 PM
SB 5
SB 5 - Legal Memorandum.pdf SJUD 2/15/2017 1:30:00 PM
SB 5
SB 55 - Sponsor Statement.pdf SJUD 2/15/2017 1:30:00 PM
SB 55
SB 55 - Bill Contents.pdf SJUD 2/15/2017 1:30:00 PM
SB 55
SB 55 - ACJC Recommendations.pdf SJUD 2/15/2017 1:30:00 PM
SB 55
SB 55 - Sectional Summary.pdf SJUD 2/15/2017 1:30:00 PM
SB 55