Legislature(2001 - 2002)

04/09/2001 01:39 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                                                                   
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                                                                   
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                                                                   
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                                                                   
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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