Legislature(2001 - 2002)
04/09/2001 01:39 PM House FIN
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* first hearing in first committee of referral
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HOUSE BILL NO. 177
An Act placing certain special interest organizations
within the definition of 'group' for purposes of
Alaska's campaign finance statutes; providing a
contingent amendment to take effect in case subjecting
these organizations to all of the statutory
requirements pertaining to groups is held by a court to
be unconstitutional; requiring certain organizations to
disclose contributions made to them and expenditures
made by them; requiring disclosure of the true source
of campaign contributions; and providing for an
effective date.
REPRESENTATIVE PETE KOTT pointed out that in 1999, the
Alaska Supreme Court in American Civil Liberties Union
(ACLU) versus State upheld Alaska's ban on political
contributions and independent expenditures by corporations
and labor unions. The Court also held that entities must be
allowed to make independent expenditures if:
· They could not participate in business activities;
· They have no shareholders who have a claim on
corporate earnings; and
· They are independent from the influence of
business corporations.
The Court suggested that entities, which meet those
criteria, must be permitted to make political contributions.
Representative Kott stated that CS HB 177 (STA) clarifies
that non-group entitities that meet that criteria may make
contributions and independent expenditures. The legislation
would subject those groups to the same rules, including
contribution limits and reporting requirements as other
groups that participate in political campaigns.
Representative Whitaker inquired who would be excluded.
Representative Kott replied that it would only exclude non-
group entities that fall into the categories listed in
Subsection 2.
TAPE HFC 01 - 77, Side B
Representative Kott noted that the only group that the
legislation excludes now would be the Alaska Conservation
Voters (ACV).
Representative Whitaker asked the intent of the bill.
Representative Kott replied that it was specifically to
preclude ACV from making the contributions they made in the
past and to preclude any other non-group entities from
"falling into" that category. Representative Whitaker
understood that the bill would create a "level playing
field" and close an existing loophole.
Representative Davies asked if Subsection 5 would be amended
to AS 15.13.400. He asked the operational sentence that
precedes that reference.
KATHRYN KURTZ, ATTORNEY, LEGISLATIVE LEGAL AND RESEARCH
SERVICES, LEGISLATIVE AFFAIRS AGENCY, explained that the
first sentence of paragraph 5 would be the definition that
currently exists for "group". That section provides all the
definitions of that area of the campaign finance law. Every
time "group" is used, it would mean what it used to mean,
plus the language added in the legislation. The language
would add that group entity to met the criteria.
Representative J. Davies understood that language would not
exclude the Alaska Oil and Gas Association (AOGA) as a
special interest organization.
Ms. Kurtz responded that the bill would include those
entities. She noted that the case driving the legislation
is the case of the Massachusetts Citizens for Life.
Entities that fit into that category would be included. The
definition appears elsewhere in interpreting judicial
decisions. She stated that the language was very
restrictive about the types of groups that would fit within
it.
Representative Davies asked how "C" was different than "B".
Representative Kott replied that "C" had been derived from
case law and clearly identifies those groups that can be
included as long as they do not meet the categories.
Outside of that, he did not know the difference.
Representative J. Davies asked the types of groups that
would not be "swept in" by the language of Section C.
BROOKE MILES, (TESTIFIED VIA TELECONFERENCE), ALASKA PUBLIC
OFFICIERS CCOMMISSION (APOC), ANCHORAGE, advised that the
Campaign Disclosure Law prohibits contributions from
corporations and business education partnerships. In the
ACLU case, the Alaska Supreme Court declined to prohibit
non-group entities that met the three-part arrangement.
Last summer, APOC delegated regulations permitting certain
non-profit corporations to qualify for activities in
election campaigns. To date, only one group has qualified,
and that is the Alaska Conservation Voters (ACV).
Ms. Miles continued, the legislation would change and
override APOC's current regulation in a couple of
significant ways. The first way concerns disclosure. The
legislation would require groups that participate to
disclose their contribution activity differently than
current regulations require. They could still transfer to a
political account; it would have to meet all the filters in
Alaska State law. The contributions coming into the non-
group entity would have to be from individuals in the amount
of $500 dollars or less or from another political group
giving $1,000 dollars. She continued that the disclosure
reports would require that they show what money had been
transferred.
Ms. Miles advised that it is APOC's expectation that the
legislation would result in a proliferation of entities.
She stated that they would not be limited to non-profit
corporations.
Representative Davies questioned what other groups would be
affected. Ms. Miles replied that there have been inquiries
from other groups such as "Common Sense Alaska". She stated
that the bill would result in more disclosure to the public.
Vice-Chair Bunde understood that the bill would limit
current participants to the same limitations that other
political people have to abide by and would allow for more
expansion. Ms. Miles replied that was correct.
Vice-Chair Bunde pointed out that his constituents wanted
more campaign exposure, rather than less. He noted his
support of the bill.
Representative Harris voiced concern with the fiscal notes.
Representative Kott believed that only a minimal amount of
applications would be submitted. He suggested that the note
might be a little high.
Ms. Miles explained that the fiscal note provides for the
first year funding for a Regulation Specialist to get on
line. Groups cannot walk in to the office without the
changes in place. She pointed out that current regulations
"go out the door" as soon as the legislation becomes law.
APOC believes that there will be a lot of these groups.
Representative Harris recommended zeroing the fiscal note
out.
Vice-Chair Bunde referenced the travel aspect of the fiscal
note to be used to educate staff. He asked why individual
areas should come to Anchorage to be educated. Ms. Miles
replied that the common practice is for APOC to go to the
communities to educate people regarding the campaign
changes. She predicted that there will be substantial
impact and it would be difficult for APOC to stay on top of
the legislation.
Representative Croft spoke about those groups that fit into
Subsection "B". He asked about "groups, individuals and
special interest organizations". Ms. Kurtz advised that
"person" could be used to describe a labor union or
partnership and that the primary difference between "B" and
"C" is the phrase "principle purpose". In "C", there could
exist an entity whose purpose is educational.
Representative Croft believed that it was appropriate to use
"person" rather than individual. Person is a "broader"
usage of the concept. Previously, groups were asked to
register whose major purpose was to influence an election.
He asked how would those persons, whose major concern was
not to influence elections, register. Ms. Kurtz
acknowledged that was correct if that person was going to be
making expenditures regulated under statute.
Representative Croft asked where "special interest
organization" would be defined. Ms. Kurtz advised that the
bill does not include that definition. All the references
to that are included in "C".
Representative Croft asked how it could be characterized.
Ms. Kurtz noted that the Court did not want to define that
either. A negative definition exists. The prohibition is
concerned that it would exclude some groups that should not
be excluded based on the three criteria. She noted that
there are a few different types of tax-exempt organizations
under federal code. Ms. Kurtz understood that a 501C-4
organization could engage in some sort of political activity
without jeopardizing their tax-exempt status. The Court has
stated that the statutes have to be read to allow entities
that fit the definition.
Representative Croft stated that by definition, it would be
a group of people that are grouped together to do other
things and that end up "grouping" together to engage in
political activity. He asked if that was the source of
ACLU's discretion opinion. Ms. Kurtz agreed that was an
accurate summary of where the ACLU case went.
Vice-Chair Bunde noted that under "B", groups organized for
the principle purpose of influencing the outcome of
elections. He asked what the percentage of their activity
would be and when the principle purpose would be cut off.
Ms. Kurtz explained that the Courts had not precisely
defined percentage. She added that there was a prohibition
elsewhere driving the statutes, which prohibits corporations
and unions from contributing. There could be a corporation
under "C", that met the criteria, which would not be able to
otherwise contribute because it was a corporation. Vice-
Chair Bunde stated that the State needs "C" to address
activity in political campaigning. The public would be
better served by knowing know who is active.
Representative Davies asked for a description of the ACLU
case. Ms. Kurtz advised that the ACLU case was a
comprehensive challenge to the Alaska Campaign Finance
statutes as they were recorded in 1996. The Court upheld
virtually all the activities so that these organizations
could be included. That definition was used in couple of
cases. There are federal cases indicating the federal
election and the direct prohibition of corporations. That
law was challenged.
Ms. Kurtz stated that the statutes have to be read to allow
the particular class of entities to contribute. The
prohibition on corporate giving has been justified in the
positive. There is a concern of corruption that justifies
the restrictions on free speech in campaign financing.
There is a concern about the ability to accumulate large
quantities of funds that go with corporations that the
Courts did not appeal. It applies to groups like those in
the federal challenge.
Representative Whitaker questioned if the bill would "level
the playing field". Representative Kott replied it would.
STEVEN CONN, (TESTIFIED VIA TELECONFERENCE), EXECUTIVE
DIRECTOR, ALASKA PUBLIC INTEREST RESERARCH GROUP, ANCHORAGE,
spoke in opposition to the proposed legislation. He
submitted that to have a level playing field, it would be
important to address campaign finance reform, which would be
to protect the political process from an overwhelming
influence by corporations. He spoke to the potential of
corrupting the process by exacting from politicians,
political debts. The Court sought to protect those entities
that were explicitly not engaged in "business" activity and
with no shareholders. Mr. Conn stated that it would be
those entities whose singular purpose and ideas are not
connected to business. Those entities would deserve a
special exemption if there was a level playing field. He
believed that there would be many groups seeking the
exclusion. He submitted that there is no question that the
Court thought long and hard about the exemption recognizing
the powerful impact of business on that process. The Court
did define it in the negative.
Mr. Conn added, that a concern exists that those who chose
to participate in the non-business entity might be subject
to retaliation with sanctions leveled. There are certain
reasons why the Court awarded immunities. He encouraged the
Committee to contemplate those concerns. The Court's
decisions should not be modified. The exclusion is focused
on one specific group.
ROD ARNO, ALASKA OUTDOOR COUNCIL, PALMER, voiced support for
the proposed legislation. He noted that there are groups
who advocate against the Alaska Outdoor Council. One of
those groups is the Alaska Conservation Foundation and its
umbrella groups, the Alaska Conservation Alliance and the
Alaska Conservation Voters. He pointed out that APOC has
indicated that there is no regulations making the ACV
register disclosures. He stated that the Alaska Outdoor
Council would like a "level playing field".
TAPE HFC 01 - 77, Side A
PAM LABOLLE, PRESIDENT, ALASKA STATE CHAMBER OF COMMERCE,
spoke in support of the legislation. She maintained that it
would require certain special interest organizations to
disclose contributions received and expenditures made for
campaigns, and to disclose the true source of the
campaigning contributions.
Ms. LaBolle stated that Alaska voters deserve to know who
the contributors are and in which states those individuals
reside who are trying to persuade Alaskans to support their
cause. She maintained that there is no reason that
promoters should hide behind their funding sources.
Vice-Chair Bunde MOVED to report CSHB 177 (STA) out of
Committee with individual recommendations and with the
accompanying fiscal notes.
There being NO OBJECTION, it was so ordered.
CS HB 177 (STA) was reported out of Committee with
"individual recommendations" and with a fiscal note by
Department of Administration dated 3/22/01.
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