Legislature(2001 - 2002)
04/10/2001 02:00 PM House FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 103(FIN) "An Act relating to election campaigns and legislative ethics." JOE BALASH, STAFF, SENATE STATE AFFAIRS COMMITTEE testified in support of the legislation. He observed that Senate Bill 103 is largely a clean-up bill to address conflicts and concerns that have arisen in the campaign finance and legislative ethics statutes. It also incorporates administrative rulings made by the Alaska Public Offices Commission (APOC) and informal advice given by the Legislative Ethics Committee. He noted that the legislation includes provisions to: Require a single form for public disclosures. Treat multiple groups controlled by a single candidate as a single group for purposes of the contribution limit. Eliminate the public office expense term accounts (POET) reserve mechanism, so that there is a single POET account for legislators and successful candidates. Expand the amount of personal property that can be carried forward after an election and to include photographs and seasonal greeting cards. Define contributions to exclude certain services such as attorney and accounting services, mass mailings by parties and newsletters to constituents. Mr. Balash added that changes were made to the use of public assets and resources for non-legislative purposes, such as: preparing seasonal greeting cards, transporting personnel computers, photographs, solicitation and acceptance of donations for non political charities, writing newsletters, use of offices before and after session. The legislation also clarifies the prohibition on the use of public assets and resources by legislators and legislative employees for nonlegislative purposes and certain previously prohibited public political uses. The legislation allows legislators to give and receive the gift of transportation from one another. Co-Chair Mulder observed that there is a focus on advocacy for constitutional amendments. He maintained that the people who are the most knowledgeable [legislators] could dissemble information but would not be able to use their office to solicit funds. Mr. Balash clarified that they would not be able to use their office to solicit or accept campaign contributions, use their phones to call up potential donors, or use staff to send out [campaign or election] mailings. They could prepare speeches and ask groups to support the amendment along with them. Co-Chair Mulder clarified that legislators could ask support for constitutional amendments. The legislation only limits the use of their staff and office [to elicit support for a constitutional amendment]. Representative John Davies referred to the POET Reserve Account. Mr. Balash noted that the POET Reserve Account was created in response to concerns regarding tax implications. He noted that with the limitations [contained in the legislation] the POET Account is considered a business expense, just like any other business expense, for tax purposes. If the full amount in the POET Account were carried forward it would not count against the legislator on their personal income tax. The POET Reserve Account was removed since there is no threat of taxation. Representative John Davies questioned if tax status changes are being made. Mr. Balash explained that there was never a tax liability on the money. Representative John Davies noted that the APOC had advised legislators that there were tax implications. Mr. Balash noted that changes to the existing POET Account limitations were made on page 4, lines 24 - 27. The POET Reserve Account was appealed on page 12, line 24. Representative Davies referred to page 7 line 10: communication in form of a newsletter. He observed that he does not send newsletters in an election year later than early July. He expressed concern with the allowance of newsletters in an election year and felt that it would allow abuse. He recommended limiting the time that newsletters are allowed when a legislator is up for election and questioned if the sponsor would support a July 15th deadline. Mr. Balash observed that many state issues come to the forefront of voters' minds in the months preceding an election, which are not present at other times. Co-Chair Mulder summarized that a newsletter from a legislator to their constituents would not be a contribution. Representative John Davies felt that it would be inappropriate to use office accounts to send newsletters close to an election. He maintained that any time a picture is sent it is a campaign device. He acknowledged that the legislation might not be the appropriate place to address his concerns. He suggested that July 15, would be the appropriate cutoff date. Co-Chair Mulder stated that he did not disagree with the point made by Representative Davies. Representative Davies suggested that there could be confusion relating to a newsletter as a contribution to the campaign. He added that there would be ethics questions regarding campaign related use of the office account. He felt that the issue should be clarified. Co-Chair Mulder suggested that Representative Davies work on an amendment. Representative John Davies provided members with Amendment 1 (copy on file). Amendment 1 would address campaign contribution reports and allow the campaign to file reports on behalf of the contributor. The contributor would retain responsibility to assure that the report has been filed. The filing would follow the same time lines. Co-Chair Mulder did not object to the amendment. Representative Hudson agreed and pointed out that the intent is disclosure. Co-Chair Mulder agreed and noted that contributors could be informed that the report was filed on their behalf when legislators send their thank you notes. BROOK MILES, EXECUTIVE DIRECTOR, ALASKA PUBLIC OFFICERS COMMISSION testified via teleconference. She noted that while many of the provisions of SB 103 can fairly be considered, "clean-up" other sections do not fall within that description, but rather constitute a significant change to the campaign disclosure law. Ms. Miles identified areas that will result in administrative costs, loss of public information, and confusion to both filers and members of the public. Section 1 contains a legislative mandate that the Commission develop only one form to be used for financial disclosure filing. Ms. Miles noted that AS 24.60 requires Legislative Financial Disclosure statements from all 60 legislators, the 5 public members of the legislative ethics committee and three legislative directors; AS 39.50 requires Public Official Financial Disclosure reports from over 2000 executive branch and municipal officials, and candidates for state and municipal office. Ms. Miles observed that these statutes are not exactly alike. They differ in three significant ways. Legislators are required to disclose dollar amounts for sources of income and loans that have a substantial interest in legislative, administrative, or political action. No such requirement exists under AS 39.50. State officials are not permitted to have outside employment of that nature. Under AS 39.50, filers must report all gifts of more than $250 except gifts from family. Legislators, legislative directors, and the legislative ethics committee members file gift disclosure under AS 24.60. This section mandates the Commission to mix apples and oranges to provide one form to cover filing under two separate laws. The result of this mandate is likely to cause substantial confusion to the over 2000 filers under AS 39.50. In Section 5 (page 6, line 6) the bill amends the campaign disclosure law to conform with an amendment to legislative ethics in section 7 (p. 10, line 31). Ms. Miles concluded that the effect of this amendment to the campaign disclosure law will permit legislators and legislative employees to use public resources in campaign activities to support of or oppose ballot questions concerning constitutional amendments. Under current law, public officials are currently permitted to communicate on ballot questions when the communications are made in the usual and customary performance of the official's duties. Ms. Miles explained that this means that a legislator has the right to advocate for a ballot question, particularly one concerning a constitutional amendment. Legislators could appear before the chamber of commerce, state their position in mailings to their constituents. Ms. Miles maintained that legislative use of public resources to conduct constitutional amendment ballot questions campaigns is likely to attract public inquiries and complaints. Persons on the opposing side of constitutional amendment ballot questions will probably have concerns regarding this issue and may even pursue public funds for equal treatment. Ms. Miles stated that if this language [were removed] from the campaign disclosure law, but retained under the legislative ethics law, then "it is our opinion that we would all be on the same page". Ms. Miles noted that section 6 (page 7, line 6) removes polls that are limited to issues and do not name a candidate unless the poll was designed primarily to benefit or was requested by a candidate. Campaigns pay for polls that they issue. If someone else issues a poll and provides it to the candidate in order to influence the outcome of that candidate it would be considered a contribution. This provision will permit currently prohibited entities (other than lobbyists) to provide polls to individual candidates. Administrative costs will result as the Commission will be put in the position of determining the source and the "intent" of polls when members of the public or opposing candidates make inquiries or file complaints. Ms. Miles discussed section 7 (page 8, line 1), which provides an exemption from the definition of expenditures for "communications with a value of $500 or less a year on any subject made by a corporation." She observed that the Commission is confused regarding current administrative regulation [AAC 50.25], which provides that a business, corporation, trade association, labor union or other organization that are not organized primarily to influence elections may communicate directly with its members, employees or their families, on any subject, if the communication is of the same format used by the organization when communicating on non-political subject. She observed that telephone trees, newsletters and email may be used. As long as the communication does not solicit contribution or any action other than voting for or against a candidate or ballot question it would not considered to be regulated by the campaign disclosure law. The language on page 8 changes this provision. These communications would now be an expenditure and would be limited to $500 dollars a year. She questioned if the intent is to override the regulation. SUZI BARNETT, ADMINISTRATOR, SELECT COMMITTEE ON LEGISLATIVE ETHICS, ANCHORAGE testified via teleconference. She pointed out that language regarding the issuance of newsletters appears on page 7 and 9. There are provisions in the Ethic Code that reference campaign periods. One is a campaign period of 45 days prior to an election. The other provides a 90-day period for mass mailings from other than office accounts. She explained that the use of a specific day, such as July 15 could be problematic when there are special elections. The Ethic Code references the number of days prior to an election. Mass mailings that talk about a candidate and use funds other than office allowances, such as leadership, council, finance funds are restricted to 90 days prior to an election. Representative John Davies explained that he wanted to restrict the use of office accounts for newsletters prior to an election that a person running for office would be standing in without restricting the use of newsletters prior to a special election or a ballot issue. He felt that the use of a newsletter prior to special elections on issues would be appropriate as long as it is in the same format normally used to communicate with constitutions and one outcome was not advocated over another. Ms. Barnett agreed that there would not be a concern if the legislator was not a candidate in the election. SB 103 was heard and HELD in Committee for further consideration.