Legislature(2001 - 2002)

04/10/2001 02:00 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 103(FIN)                                                                                               
     "An Act  relating to election campaigns  and legislative                                                                   
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                                                                   
     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                                                                   
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                                                                   
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                                                                   
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                                                                   
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                                                                   
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                                                                   
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                                                                   

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