CS FOR SENATE BILL NO. 363(STA) "An Act relating to communications and elections, to reporting of contributions and expenditures, and to campaign misconduct in the second degree; relating to disclosure by individuals of contributions to candidates; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. SENATOR GENE THERRIAULT stated that this bill was generated by the Senate State Affairs Committee and clarifies regulations involving campaign contributions to candidates and issue-advertising guidelines for State elections. He noted these issues are also being addressed at the federal level. He voiced that citizen concerns about how contributions to candidates and issues could "influence the outcomes of campaigns" has resulted in a "compelling interest" to prohibit certain types of issue advertising while working within the parameters of the United States' constitution regarding freedom of speech. He mentioned that State regulations recognize "express advocacy" as advertising that, instead of educating people about a general issue or public policy, attempts to influence the outcome of the campaign. He communicated that State regulations align with the US Senate 1977 McCain-Feingold Bill, which expanded the definition of express advocacy to include issue advocacy commercials broadcast within "30 days of a primary or 60 days before a general election, as those broadcasts could be recognized as "trying to impact the outcome of the election." Senator Therriault furthered that this bill would "place some restrictions on the source of funding that is coming into and backing that expression." He noted that Section 8, subsection 14 on page 4, line 18 of this legislation further defines components within a commercial or communication that would be recognized as express advocacy by the State. Senator Therriault explained that Sections 7 and 8 primarily address issue advertising while Sections 1, 2, 3, 4, 5, 6, and 10 address modifications to the Alaska Public Offices Commission (APOC) report requirements for campaign donations and expenditures, specifically the requirements of the "15/5 filing report," which requires anyone who contributes $500 or more to a candidate to notify APOC of the contribution within 30 days of its being contributed. He stated that APOC has determined that the 15/5 ruling is "meaningless" as more recent law limits the maximum amount a person could contribute to a candidate at $500. Co-Chair Kelly asked the penalty for failing to file or for filing late, under the 15/5 regulation. JOE BALASH, Staff to Gene Therriault, responded that the penalty for late filing is $50 a day once APOC notification has been issued. Co-Chair Kelly asked whether the notification is sent to the candidate receiving the contribution or to the contributor. Mr. Balash surmised that both the candidate and the contributor receive notice. TAMMY KEMPTON, Regulation of Lobbying, Alaska Public Offices Commission, Department of Administration, concurred that both the candidate and the contributor receive notification. Co-Chair Kelly stated that the 15/5 filing "was somewhat problematic and a lot of citizens did not understand" their obligation to report contributions. He asked whether the elimination of the 15/5 penalty should be retroactive since the 15/5 regulation is recognized as not being a "a good idea in the first place," and some citizens could be prosecuted or fined "under the old law". Ms. Kempton stated she is "fairly confident" that no one is currently being fined or prosecuted because of a violation of the 15/5 regulation. Senator Green asked how the funding sources of political advertising "published" within 60 days of an election are reported. Senator Therriault responded that current regulations require "source" reports to be filed with APOC for advertising expenditure contributions coordinated with a candidate's campaign, and that independent expenditure reports include "where the money comes from" and whether the funding is from "out-of-State" sources or a wealthy individual expending thousands of dollars. Senator Green commented that APOC reporting restrictions focus on the funding sources, not necessarily what the funds are used for. She shared that candidates are often "surprised by something that happens out there that you know nothing about either pro or con, where you think… do I have to take the hit for this contribution." Co-Chair Kelly asked for clarification as to whether a person who neglects to file the 15/5 report would be fined $500 a day beginning on the thirty-first day after the contribution is made or beginning the day the APOC notification is received. Ms. Kempton clarified that current law specifies that anyone contributing $500 to a campaign must report that contribution to APOC within 30 days. She continued that if APOC finds that a $500 contribution has not been reported, APOC would notify the contributor, and from that date on, the contributor would be fined $50 a day until the filing is completed. Co-Chair Kelly stated that Section 6 in this bill specifies the non-filing penalty amount to be $500 a day. Senator Therriault interjected that the $500 fine referred to in line 14, Section 6 applies to a candidate or group. Co-Chair Kelly asked if State statute specifies when a penalty would begin to accrue. Ms. Kempton stated that APOC has the authorization to levy lower fines than those specified in regulation, with $500 being the maximum per day fine. She reiterated that a fine would begin to accrue after APOC notification is given. Co-Chair Kelly stressed that statute should clearly define at which point the levying of fines would begin to accrue. He asked the sponsor if the addition of this language would be problematic. Senator Therriault asserted the need to continue allowing APOC to have the flexibility to adjust the level of fines according to the circumstances. Co-Chair Kelly assured that APOC's flexibility in determining the amount of fines would not be affected by the addition of language such as "delinquency continues after notification by APOC." Ms. Kempton spoke to the need to clarify current regulations. Senator Therriault suggested that the Senate Rules Committee might need to address the addition of this language; however, there is sufficient time to do that before the Legislative session adjourns. Co-Chair Kelly recommended that penalty clarification be included in this legislation. Senator Leman asked whether anyone has ever been convicted of campaign misconduct in the second degree, which is specified by State statute as a class B misdemeanor. Ms. Kempton stated she is not aware of any such conviction. Senator Leman asked the penalty amount levied to someone convicted of this offense. Ms. Kempton responded that a $1,000 fine could be levied along with jail sentencing of up to one year. Senator Leman clarified this might be the penalty for neglecting to include the language "paid for by" in an advertising message. Ms. Kempton concurred. Senator Leman asked if APOC has ever pursued this course of action for this violation. Ms. Kempton replied that APOC has not. Co-Chair Kelly stated that although APOC has recommended against this course of action, there have been instances in which the Department of Law pursued people according to these statutes. He opined that the penalty for not including "paid for by" in an advertising message is "silly." He complimented APOC for its discretion in invoking penalties on various APOC violations as some of the laws "are absurd." CHIP WAGONER informed the Committee that APOC had charged a pro- life organization he represented of express advocacy violations for distributing a postcard mailing during a local election. He stated that the postcard had "merely presented information" stating that a certain candidate "had as his campaign manager, the head of the Juneau Pro-Choice Coalition." He stated the message did not recommend nor encourage people "to vote for, vote against or support or oppose" the candidate. He stated that even though the organization was not fined; APOC held them to be in violation. He stated that he "is not sure this bill is a vast improvement" as "a bright line test" to further define express advocacy. Mr. Wagoner suggested that Section 8, subsection 16 be expanded to include language regarding "imparting of information, so that what happened to his client does not happen to anyone else." Senator Therriault stated APOC has acknowledged that the proposed language in this legislation would assist in establishing some definite "bright lines" in determining whether express advocacy or the influencing of an election is occurring. He stated that both APOC and the Alaska Court System support the establishment of "a definite line." Senator Wilken moved "to report Senate Bill 363 from Committee with individual recommendations and attached fiscal notes." There being no objections, CS SB 363 (STA) reported from Committee with a new fiscal note dated May 6, 2002 in the amount of $5,000 from the Department of Administration, and a previous zero fiscal note dated April 22, 2002 from the Division of Elections, Office of the Lieutenant Governor.