Legislature(2001 - 2002)
04/09/2001 01:39 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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.