Legislature(2001 - 2002)

04/23/2002 03:45 PM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
               SB 363-CAMPAIGN FINANCE PROVISIONS                                                                         
                                                                                                                                
CHAIRMAN THERIAULT  said that the  committee would now take  up SB                                                              
363 regarding  issue ads and what  is taking place in  Congress in                                                              
regards  to soft-money  issue  ads.   SB 363  tries  to achieve  a                                                              
better understanding  of issue  ads and  express advocacy  and the                                                              
line between  them.  He said that  he is trying to come  up with a                                                              
workable definition  of an  "electioneering communication."   This                                                              
moves towards  express advocacy  and has a  clear intent  to shape                                                              
the outcome of an election.                                                                                                     
                                                                                                                                
MR. JOE BALASH,  staff to Senate State Affairs  Committee, pointed                                                              
out that on  page 1, line 11  in the section describing  the "paid                                                              
for by"  statement that all  communications are supposed  to have,                                                              
the language "and  the total production costs  of the advertising"                                                              
was added.   He said that section  was intended to be  part of the                                                              
overall disclosure in Sec. 2 dealing  with when a communication is                                                              
made by a group.                                                                                                                
                                                                                                                                
SENATOR PHILLIPS asked if that was a drafting error.                                                                            
                                                                                                                                
MR. BALASH said yes.                                                                                                            
                                                                                                                                
SENATOR PHILLIPS asked if Mr. Balash  was proposing to delete that                                                              
language and add it in Section 2.                                                                                               
                                                                                                                                
MR. BALASH said yes, it could be inserted into line 2 on page 2.                                                                
                                                                                                                                
CHAIRMAN  THERRIAULT  asked if  Mr.  Balash  had spoken  to  legal                                                              
drafters about that.                                                                                                            
                                                                                                                                
MR. BALASH said yes.                                                                                                            
                                                                                                                                
SENATOR  PHILLIPS  asked  if  that   would  be  reflected  in  the                                                              
committee substitute.                                                                                                           
                                                                                                                                
CHAIRMAN THERRIAULT  said yes.   He said  that he planned  to take                                                              
public testimony today  to figure out areas of concern  in SB 363.                                                              
There might be some additions, deletions or clarifications.                                                                     
                                                                                                                                
SENATOR  PHILLIPS said  that he  wanted  to clarify  that for  the                                                              
record.                                                                                                                         
                                                                                                                                
CHAIRMAN THERRIAULT said that was  something that should have been                                                              
caught before it was introduced.                                                                                                
                                                                                                                                
MR.  BALASH noted  the  language on  page 3  starting  on line  10                                                              
dealing  with a  definition  of an  electioneering  communication,                                                              
"Must,  when  read as  a  whole,  and with  limited  reference  to                                                              
external   events,  be   susceptible   of   no  other   reasonable                                                              
interpretation  but as  an exhortation  to vote  for or against  a                                                              
specific candidate,"  came directly from  a decision in  the '80's                                                              
         th                                                                                                                     
by the  9  Circuit Court  of Appeals.   The United  States Supreme                                                              
Court has one  major decision saying that express  advocacy may be                                                              
regulated  as speech and  issue advocacy  is in  the free  zone of                                                              
political  expression.   However,  the Court  didn't provide  much                                                              
                                               th                                                                               
guidance as to where  to draw the line.  The 9   Circuit Court did                                                              
issue  a decision  using the  language  cited in  the bill,  which                                                              
wasn't accepted  by the  United States  Supreme Court for  further                                                              
consideration, so Alaska takes that as the rule of law.                                                                         
                                                                                                                                
CHAIRMAN THERRIAULT  asked if the Supreme Court chose  not to take                                                              
                                                         th                                                                     
the issue  up to provide  clarification, therefore the  9  Circuit                                                              
decision became the law.                                                                                                        
                                                                                                                                
MR. BALASH said that was correct.                                                                                               
                                                                                                                                
CHAIRMAN  THERRIAULT said  that case  was the  Furgatch case.   He                                                              
noted  that  there were  a  number  of examples  in  the  campaign                                                              
finance paper  in the packets of  radio or TV  advertisements that                                                              
were clearly issue ads.  He said  that issue ads can easily become                                                              
express advocacy  with the change  of a few  words and there  is a                                                              
gray area in between issue ads and  express advocacy.  Rather than                                                              
try to draw a  clear line between issue ads  and express advocacy,                                                              
SB  363 sought  to  identify "electioneering  communications"  and                                                              
determine what  kinds of limitations  or disclosure they  can have                                                              
on the gray area between advocacy  and expression.  The courts had                                                              
said that if you  write a law and it's overly  vague and broad and                                                              
people can't  tell what side  of the line  they fall on, it  has a                                                              
chilling effect  on expression.   The McCain-Feingold  legislation                                                              
drew a line of 30 days from a primary  election and 60 days from a                                                              
general election  so the  courts couldn't  say that people  didn't                                                              
know  and  therefore   out  of  fear  they  are   refraining  from                                                              
expressing  themselves.  He  said that  SB 363  tries to  draw the                                                              
line between  "electioneering communication"  and when  the person                                                              
clearly is  trying to impact the  outcome of an election.   In the                                                              
Buckley v.  Valeo case,  the court  put together  a list  of words                                                              
that  indicated  express advocacy,  using  the phrase  "such  as."                                                              
Some of the  courts have said that  if you don't use  the words on                                                              
that  list,  then you're  okay.    However,  the language  of  the                                                              
decision  says "words such  as," so  he feels  that it wasn't  the                                                              
intent of the court to provide a definitive list of words.                                                                      
                                                                                                                                
CHAIRMAN THERRIAULT said SB 363 attempts  to come up with a common                                                              
sense   definition  and   application   of   that  definition   in                                                              
restrictions  and requirements  for  disclosure of  the source  of                                                              
that money as we get closer and closer to an election.                                                                          
                                                                                                                                
MS. BONNIE JACK said that she is  glad that the bill clarifies the                                                              
location of total  production costs of advertising,  but she still                                                              
has a question about that.  Most  of the time during a campaign it                                                              
is hard to  come up with total  production costs when  you haven't                                                              
completed the project  yet.  But SB 363 asks  for total production                                                              
costs.  She used  an example of initial costs  of printed material                                                              
as compared with  reprinting costs.  She wondered  if you included                                                              
the  first time  you  printed  it, or  if  you only  included  the                                                              
reprinting costs.   She  noted that the  same sort of  thing would                                                              
happen if you made a TV commercial,  and then used the sound track                                                              
from the TV  commercial and put it  in a radio commercial,  how do                                                              
you determine  what the  total costs  were?   She wondered  if you                                                              
included in  the radio costs the  cost of the TV commercial.   She                                                              
said  that she  is confused  and doesn't  know what  this bill  is                                                              
getting at.   She noted that the  bill had been introduced  on the                                                              
  th                                                                                                                            
18   on April  and  she would  like  to see  a  sponsor letter  to                                                              
explain  why this  was done.   She  noted that  the Alaska  Public                                                              
Offices Commission  (APOC) was  all about  disclosure, and  if you                                                              
just disclosed  everything, including  the costs, where  the money                                                              
comes from,  what the  expenses are,  she would  think that  would                                                              
take  care of it.   She  cited, the  language "a  party group,  or                                                              
nongroup  entity making  a communication"  in line  14 on page  1.                                                              
She asked  why you  should  have to repeat  all this.   If  you're                                                              
advocating  for a  candidate, you  have to  file with  APOC.   She                                                              
doesn't  understand the  purpose  behind this.   Page  3, line  12                                                              
makes reference to  a "vote for or against a  specific candidate."                                                              
She wondered about ballot propositions  or initiatives?  She feels                                                              
the  bill was  put together  too  quickly and  the drafting  error                                                              
proves that point.  She feels that  there was not a lot of thought                                                              
put into the bill.  It bothers her  that this type of bill was put                                                              
together so late in a sine die session.   She would like to see SB                                                              
363 thrown out.                                                                                                                 
                                                                                                                                
CHAIRMAN  THERRIAULT  said  that  was  why there  is  a  committee                                                              
process.                                                                                                                        
                                                                                                                                
MS. BROOKE  MILES, Director  of APOC,  said that  this bill  would                                                              
make  no  change   to  campaign  disclosure  law   except  to  add                                                              
additional  requirements  for all  candidates,  groups,  non-group                                                              
entities and parties  to place the production costs  at the end of                                                              
the "paid  for by" disclosure.   She  pointed out that  production                                                              
costs could be  professional services donated, which  is permitted                                                              
as  a result  of  SB 103,  and  therefore would  not  seen in  the                                                              
production costs.   There are requirements by  the Commission that                                                              
this information has  to be readable and the costs  will also have                                                              
to be  readable.  FCC  costs would also  be included in  radio and                                                              
television.   All communications  that are  intended to  influence                                                              
the outcome of  an election or a ballot proposition  are currently                                                              
covered   by  the   campaign   disclosure   law,  which   requires                                                              
registration,    periodic    reports   and    identification    of                                                              
communications.  She said that if  Sec. 2 is intended to require a                                                              
24-hour  expenditure  report,  which  was  part  of  the  original                                                              
campaign disclosure  law but was  thrown out by Buckley  v. Valeo,                                                              
then it should  probably be done  in the sections that  talk about                                                              
reports, that being Sec. 1 of Sec. 040 of the law.                                                                              
                                                                                                                                
She said  that APOC  hasn't  had the chance  to look  at the  bill                                                              
closely yet.  She offers her comments  on behalf of the Commission                                                              
staff who  have looked at the  bill.  APOC discussed  the question                                                              
of drawing a  line between issue advocacy and  express advocacy at                                                              
length during their meeting in March  and determined that it would                                                              
be best  for them to  look at each  case on a case-by-case  basis.                                                              
She noted that  election communications rules are all  in AS 15.56                                                              
and the enforcement  burden of that would fall to  the Division of                                                              
Elections, the  Commission has no  authority over that.   But when                                                              
people are looking to the campaign  disclosure law to get guidance                                                              
on  what's  required, they  may  not  fall  to the  definition  of                                                              
electioneering communications in AS 15.60.                                                                                      
                                                                                                                                
She noted that the  fiscal note sent over by the  APOC was modest,                                                              
but SB  363 would  impact APOC  because approximately  80%  of the                                                              
inquiries  pending to  move toward  complaint  actions start  with                                                              
"paid for  by" questions and  concerns.  If  SB 363 were  to pass,                                                              
they would  have to disclose  total production costs,  which might                                                              
be  inaccurate  or missing,  that  would  have  to match  what  is                                                              
finally reported on the campaign  disclosure reports or they would                                                              
be subject to a  penalty of $50 per day for a  false or inaccurate                                                              
claim.  The fiscal note would include  funding for a hearing, some                                                              
travel to conduct  training to help people and  printing paper and                                                              
postage.  She  noted that this would be the  second major campaign                                                              
disclosure  revision and  it would  occur during  the most  active                                                              
election session in  over ten years and APOC's  budget had already                                                              
been significantly decreased.                                                                                                   
                                                                                                                                
CHAIRMAN THERRIAULT  said that  he wanted to  talk about  the 15-5                                                              
reports.                                                                                                                        
                                                                                                                                
MS. MILES asked if he was referring to the contributor reports.                                                                 
                                                                                                                                
CHAIRMAN  THERRIAULT  said he  understood  that  this might  be  a                                                              
holdover  from previous  times in  which  APOC personnel  expended                                                              
time and energy  needlessly.  He asked if this  was something that                                                              
no longer serves a useful purpose.                                                                                              
                                                                                                                                
5:00 pm                                                                                                                         
                                                                                                                                
MS. MILES  said  that it could  save a  little time  by no  longer                                                              
needing to enter  the 15-5 reports into their database.   The 15-5                                                              
report was  an evolutionary  process in  public information.   She                                                              
explained   that  the   1996   campaign  finance   revision,   the                                                              
Legislature  wanted  to delete  the  requirement  to file  a  15-5                                                              
entirely, but  APOC was uncomfortable  with that and they  came up                                                              
with  a  system in  which  a  report  is required  only  when  the                                                              
contribution  is more than  $500 and  it must  be filed  within 30                                                              
days.   This was changed  again in SB  103 so that  candidates can                                                              
file  the report  on behalf  of the  contributor.   At that  point                                                              
since the candidate  is not only filing their own  report but also                                                              
filing the  contributor's report, it  is no longer a  useful check                                                              
and balance.  She feels that the  $500 limit is a little chilling.                                                              
Campaign disclosure  reports show a  lot of contributions  at $499                                                              
or   even  $499.99   to  keep   the  burden   of  reporting   from                                                              
contributors.   She  agrees that  the report  is not  of much  use                                                              
anymore, but  in the  past it provided  useful information  to the                                                              
public during  the times that  campaign disclosure  reports aren't                                                              
filed.   It still  does that  to a  degree with  respect to  large                                                              
contributions to ballot proposition  groups.  But other than that,                                                              
it wasn't needed much.                                                                                                          
                                                                                                                                
CHAIRMAN THERRIAULT noted that the  original disclosure amount was                                                              
more than $500 on the 15-5s.                                                                                                    
                                                                                                                                
MS. MILES said that the 15-5s were  required when people gave $250                                                              
or more.                                                                                                                        
                                                                                                                                
CHAIRMAN THERRIAULT said there was  still a provision that said as                                                              
you get  close to  the election  if a  person with  either one  or                                                              
multiple contributions  over $250,  you would  still have  the 24-                                                              
hour requirement for filing a report.                                                                                           
                                                                                                                                
MS.  MILES said  that  contributors have  never  been required  to                                                              
report in  24 hours.   Contributors used to  have 10 days  if they                                                              
contributed more than $250.  Now  they have 30 days when they give                                                              
$500.    And they  can't  give  more  than  $500 to  a  candidate.                                                              
Candidates must  report a  contribution of more  than $250  from a                                                              
single source  during the 9 days  that precede the election  in an                                                              
abbreviated format within 24 hours.   This information is repeated                                                              
in further detail in the 10-day-after  report.  She noted that the                                                              
contributor reports and 24-hour reports  are two different things.                                                              
She thinks  that a lot  of discussion  came about because  APOC at                                                              
their  March  meeting  directed staff  to  begin  assessing  civil                                                              
penalties  at  the  statutory  level  of  $50  per  day  that  the                                                              
contributor  reports are  late.   She feels  that many  candidates                                                              
have concerns regarding that.                                                                                                   
                                                                                                                                
CHAIRMAN  THERRIAULT asked  if there  were  any further  comments,                                                              
questions from  committee members, or  anybody else who  wished to                                                              
testify.                                                                                                                        
                                                                                                                                
SB 363 was held in committee.                                                                                                   

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