Legislature(1999 - 2000)

04/22/1999 08:00 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 179-APOC REPEAL: CAMPAIGN/DISCLOSURE/LOBBYIST                                                                                
Number 208                                                                                                                      
CHAIR JAMES announced that the next order of business before the                                                                
committee is SSHB 179, "An Act eliminating the Alaska Public                                                                    
Offices Commission and all campaign contribution and expenditure                                                                
limits; transferring the administration of lobbying, conflict of                                                                
interest, and financial disclosure statutes from the Alaska Public                                                              
Offices Commission to the division of elections; relating to                                                                    
reporting of campaign contributions and expenditures; defining                                                                  
'full disclosure,' 'purposely,' 'recklessly,' and 'resident';                                                                   
amending the definition of 'contribution,' 'group,' and 'political                                                              
party'; changing the residency requirements for candidates for                                                                  
public offices; and providing for criminal penalties for violation                                                              
of these provisions."                                                                                                           
REPRESENTATIVE COGHILL, sponsor of SSHB 179, said that this                                                                     
legislation is a necessary move to ensure voters a quick and                                                                    
judicious disclosure regarding how candidates collect and spend                                                                 
funds.  The legislation will eliminate the Alaska Public Offices                                                                
Commission (APOC) and place the reporting division under the                                                                    
Division of Elections.  He informed the committee that under this                                                               
legislation each candidate would be required to sign a residency                                                                
affidavit, contributions would be opened up by eliminating                                                                      
contribution limits, full disclosure would occur, and speedy court                                                              
action would be ensured.                                                                                                        
REPRESENTATIVE COGHILL utilized an overhead to discuss his plan.                                                                
The process begins with the candidate filing which includes a                                                                   
conflict of interest statement, a financial disclosure which begins                                                             
the accounting procedure, and an affidavit of residency.  From that                                                             
point on, the candidate provides the Division of Elections with a                                                               
semi-monthly campaign report due the 5th and 20th of each month.                                                                
He explained that the reasoning for this is to have immediate                                                                   
access to the movement of money available to a campaigner.  This                                                                
information would be placed on the Internet and there would be an                                                               
open file copy at the Division of Elections.  The candidate would                                                               
file within the region of that candidate's district.  He pointed                                                                
out that there would be a continuous reporting process through the                                                              
general election after which there is a final disclosure report.                                                                
Number 338                                                                                                                      
REPRESENTATIVE COGHILL pointed out that the Division of Elections                                                               
will give a notice if there is a failure to file and there will be                                                              
a notice posted on the candidate's Internet disclosure page and in                                                              
the hard file.  If there are violations, there are the following                                                                
criteria:  failure to disclose, recklessly fail to disclose, and                                                                
purposefully fail to disclose.  The legislation specifies the                                                                   
definitions and penalties of those.  He noted that the Division of                                                              
Elections as well as an Alaskan voter can file a complaint with a                                                               
district attorney which he explained would provide a degree of                                                                  
accountability in the court system.  In order to avoid frivolous                                                                
actions, the time period of 31 days before an election to file                                                                  
action was specified.  The district attorney has 72 hours to file                                                               
a charge.  If there is an action, an investigation occurs within a                                                              
short-time period and the district attorney files formal charges in                                                             
superior court.  He emphasized that this legislation requests                                                                   
specific and judicious action within a certain time.  He believed                                                               
the action must occur within 10 working days.  If a superior court                                                              
with an open calendar cannot be found within 10 days, rule 23 can                                                               
be utilized to take a judge out of retirement.  If the verdict is                                                               
guilty, then there could be charges and sentencing which could                                                                  
result in the candidate being removed from the ballot or                                                                        
disqualification from holding office.  Representative Coghill                                                                   
emphasized that the legislation has a heavy penalty, a high degree                                                              
of accountability, and the public sees it all.                                                                                  
REPRESENTATIVE OGAN asked if there are ramifications for an Alaskan                                                             
voter who files an unfounded complaint in an attempt to harass or                                                               
discredit the reputation of a candidate.                                                                                        
REPRESENTATIVE COGHILL explained that the criteria was based on                                                                 
whether a candidate filed or did not file his/her disclosure.  He                                                               
stated that the proof that the candidate did not disclose would                                                                 
have to be proven.  If information is found that a candidate has                                                                
not disclosed, that person should be within his/her right to make                                                               
such a charge.  However, that would not disqualify the candidate,                                                               
unless it was proven in a court of law that the candidate failed to                                                             
disclose.  Therefore, there is a protection for the candidate as                                                                
well as the public.                                                                                                             
Number 430                                                                                                                      
REPRESENTATIVE OGAN stated that he would be more comfortable if a                                                               
person could complain to the agency who would determine if there is                                                             
"a culpable mental state to defraud the public."  He believed there                                                             
would be charges filed that may not be justified.                                                                               
CHAIR JAMES commented that this legislation is a huge change                                                                    
because it merely says that the law is only violated if a candidate                                                             
does not file.  She posed a situation in which a person was given                                                               
$500 and was requested not to report receipt of that money.  The                                                                
candidate would have to place the money in an account besides the                                                               
campaign account which must be reported.  The candidate could then                                                              
report that he/she received 50 contributions under $100.                                                                        
Therefore, there are ways that the system can be misused.  She                                                                  
pointed out that currently, there is a requirement that those                                                                   
giving donations over $250 must file separately with the APOC                                                                   
regarding that contribution.                                                                                                    
REPRESENTATIVE COGHILL said that the aim of this legislation was to                                                             
provide the public with immediate information.  The scenario                                                                    
described by Chair James could happen under the current system and                                                              
there could still be no recourse.  The goal is to reach a higher                                                                
degree of integrity, to hold people publicly accountable, and to                                                                
have a simple process.  He noted that he did not want to go against                                                             
APOC who he believed has done a good job with the laws it has been                                                              
given.  The process has become very complicated and the public has                                                              
become frustrated.  Representative Coghill commented that as a                                                                  
candidate he did not always understand the laws.  This legislation                                                              
would place the burden of proof on the candidate regarding if the                                                               
candidate did or did not disclose.  The intent is to help the voter                                                             
understand what is occurring.  He said that the flow of money                                                                   
probably does not bother the public as much, if there is knowledge                                                              
regarding where the money comes from and where it is going.  This                                                               
legislation simply allows the Division of Elections to provide that                                                             
information  regarding contributions of over $100.  Representative                                                              
Coghill believed the legislation would create a better system.  He                                                              
noted that he had some amendments to offer.                                                                                     
CHAIR JAMES inquired as to what would be the charge in the scenario                                                             
she posed earlier.  What are the penalties for not reporting?                                                                   
Number 546                                                                                                                      
REPRESENTATIVE COGHILL directed the committee to page 4, line 7                                                                 
which provides for a class A misdemeanor.  He informed the                                                                      
committee that the fines specified in the bill for the class A                                                                  
misdemeanor are incorrect and would require an amendment.  He                                                                   
explained that the following changes should be made on page 4, line                                                             
10, after "report", insert "or an affidavit required under AS                                                                   
15.13.015" and on line 11 delete "$500" insert "$5,000" and delete                                                              
"$1,000" and insert "$10,000."  In response to Chair James,                                                                     
Representative Coghill indicated those charges relate to the intent                                                             
to fraud.  Representative Coghill continued by directing the                                                                    
committee to page 4, subsection (b) which addresses the removal of                                                              
a candidate's name from the ballot when a candidate is "convicted                                                               
of purposely failing to disclose a contribution or expenditure as                                                               
required in AS 15.13.025."                                                                                                      
REPRESENTATIVE COGHILL noted that he also has an amendment                                                                      
regarding subsection (c) on page 4.  The amendment would delete the                                                             
current subsection (c) and insert entirely new language which is                                                                
more reflective of his intent.  The new subsection (c) would read                                                               
as follows:  "A candidate, group, political party, municipality, or                                                             
individual who recklessly fails to disclose a contribution or                                                                   
expenditure as required in AS 15.13.025 or who provides a false                                                                 
information on a full disclosure report is guilty of a class B                                                                  
misdemeanor and upon conviction is punishable by a fine of not less                                                             
than $1,000 and not more than $5,000, or by imprisonment for not                                                                
more than one year, or by both."  Therefore, there are different                                                                
standards for purposely and recklessly failing to disclose.  He                                                                 
commented that a judge has some discretion with regard to                                                                       
individual circumstances.  However, the high degree of                                                                          
accountability remains and is based solely on whether the candidate                                                             
failed to report or not.                                                                                                        
Number 616                                                                                                                      
REPRESENTATIVE SMALLEY commented that he liked the notion of                                                                    
disclosure filings and would support that.  He asked if                                                                         
Representative Coghill had devised a method of "shoring up" the                                                                 
Division of Elections to assume these responsibilities.                                                                         
REPRESENTATIVE COGHILL stated that in SSHB 179 the primary focus is                                                             
shifting the need.  When the legislation moves to the House Finance                                                             
Committee, that committee will have to determine if new personnel                                                               
are necessary.  Currently, there are 11 people in APOC and this                                                                 
legislation is structured such that the regions in the Division of                                                              
Elections would do the reporting which should require one more                                                                  
employee per region.  Representative Coghill reiterated that SSHB
179 does not address that and would therefore, have to be                                                                       
REPRESENTATIVE SMALLEY asked if the 72-hour response time for the                                                               
courts is realistic.                                                                                                            
REPRESENTATIVE COGHILL stated that he was open to discussion on                                                                 
that.  Perhaps, three working days would be more appropriate.  He                                                               
stressed that his intention is to have expedient action.  The                                                                   
public is served if there is a charge and that charge is known                                                                  
immediately and action is taken immediately.                                                                                    
CHAIR JAMES clarified that the 72-hour response time was for the                                                                
courts to make a determination as to whether a candidate recklessly                                                             
or purposely did not disclose.  She noted that after the court's                                                                
response, there is a 10-day time limit for the decision which is                                                                
arrived at by an expedited hearing.  Chair James indicated that the                                                             
language is such that if this was determined to be fraud, the case                                                              
would move forward and the person may be entitled to a jury trial.                                                              
REPRESENTATIVE COGHILL pointed out that the legislation allows for                                                              
the judge-sitting to refer the case to jury trial.  He did not                                                                  
believe that right could be taken away.  He noted that this also                                                                
provides the judge with the ability to levy the fine and there is                                                               
an appeal process.                                                                                                              
Number 688                                                                                                                      
REPRESENTATIVE KERTTULA commented that she liked the intent, but                                                                
she noted that she had two concerns.  Firstly, this process would                                                               
be criminalized and the time constraints are faster than those for                                                              
felonies.  She suggested that the process should be kept as an                                                                  
administrative review.  Secondly, she expressed concern with                                                                    
placing the reporting requirements in the Division of Elections.                                                                
That may appear to have conflicts.  She asked if other states had                                                               
been reviewed on this matter.                                                                                                   
REPRESENTATIVE COGHILL said that he had not reviewed other states                                                               
in that regard.  He emphasized that this is merely a reporting                                                                  
mechanism and if there is a charge, that is out of the division's                                                               
hands.  He indicated agreement that a charge would go straight to                                                               
the district attorney.  He pointed out that this was under the                                                                  
Division of Elections before APOC took it over around 1971.                                                                     
CHAIR JAMES asked if there are any provisions in this legislation                                                               
that would penalize those making false claims.                                                                                  
REPRESENTATIVE COGHILL replied no.                                                                                              
CHAIR JAMES indicated that may be appropriate to include.                                                                       
REPRESENTATIVE HUDSON commented that, as a former candidate, the                                                                
current system is difficult and confusing.  Disclosure is a good                                                                
target.  He reiterated Representative Kerttula's concerns regarding                                                             
whether the Division of Elections is the appropriate agency to have                                                             
the responsibility of disclosure.  Representative Hudson believed                                                               
that the public is currently served by the following:  contribution                                                             
limits and the disposition of excess contributions.  He requested                                                               
that Representative Coghill discuss the differences between failure                                                             
to report, failure to report recklessly, and failure to report                                                                  
REPRESENTATIVE COGHILL explained that after a campaign there would                                                              
be an annual disclosure of what is in the account.  He said that                                                                
originally, that information was going to be between the candidate                                                              
and the Internal Revenue Service (IRS), however, he noted that he                                                               
would be open to discussion on that issue.  With regard to                                                                      
contribution limits, Representative Coghill felt that exceptions                                                                
regarding who can give would probably result in the current                                                                     
situation.  He indicated that to be best left up to the general                                                                 
population.  Personally, Representative Coghill believed that open                                                              
disclosure would result in self-discipline because knowledge of                                                                 
where contributions are received is telling about the candidate.                                                                
REPRESENTATIVE HUDSON asked if this would also apply to initiatives                                                             
such as the wolf snaring initiative.                                                                                            
REPRESENTATIVE COGHILL replied yes.  In further response to                                                                     
Representative Hudson, Representative Coghill stated that there are                                                             
no contribution limitations, but there would be the need for full                                                               
disclosure.  Currently, there would not be knowledge of                                                                         
contributions until an investigation whereas with this legislation,                                                             
there would be open disclosure.  Under this legislation, if someone                                                             
outside the state was fueling an initiative, it would be known                                                                  
REPRESENTATIVE HUDSON inquired as to who would be culpable in an                                                                
initiative situation.                                                                                                           
REPRESENTATIVE COGHILL stated that those organizing the initiative                                                              
would be held accountable.                                                                                                      
CHAIR JAMES interjected that if there is no contribution limit,                                                                 
then there would be no problem with large out-of-state                                                                          
REPRESENTATIVE HUDSON clarified that his question was in regards to                                                             
the failure to disclose.                                                                                                        
Number 814                                                                                                                      
REPRESENTATIVE COGHILL noted that the treasurer of any group,                                                                   
political party, or candidacy has to register and would be held                                                                 
accountable as well as the candidate.                                                                                           
REPRESENTATIVE HUDSON said, "The penalty is the same penalty                                                                    
as--it's really failure to disclose, purposely fails to disclose,                                                               
or recklessly fails to disclose and the penalty for all three of                                                                
those would be the same for the larger problem I just indicated as                                                              
opposed to a candidate...."                                                                                                     
REPRESENTATIVE COGHILL agreed with that assessment relating to                                                                  
REPRESENTATIVE WHITAKER expressed concern that there was no                                                                     
reporting from October 20th to election day during which much money                                                             
could be placed in a campaign with no disclosure until after the                                                                
election.  He indicated the need to address that.                                                                               
CHAIR JAMES agreed that was of concern and should be addressed.                                                                 
REPRESENTATIVE COGHILL offered the option of having a weekly                                                                    
disclosure before the election.                                                                                                 
CHAIR JAMES interjected that perhaps, a daily disclosure of the                                                                 
amount of money received over $250, as is the current practice with                                                             
the 24-hour rule, would be appropriate.                                                                                         
REPRESENTATIVE COGHILL said that the aim is to have immediate and                                                               
full disclosure.  The 30-day limit was based on the 15-day filing                                                               
period, 5-day grace period and the 10-day shift.  However, he                                                                   
agreed with Chair James' suggestion.                                                                                            
REPRESENTATIVE OGAN inquired as to what is being repealed of the                                                                
numerous repealors listed in Section 61.                                                                                        
REPRESENTATIVE COGHILL pointed out that the committee packet should                                                             
contain a sectional analysis.                                                                                                   
REPRESENTATIVE OGAN commented that there are no limits with regard                                                              
to the amount of a contribution.                                                                                                
TAPE 99-28, SIDE B                                                                                                              
REPRESENTATIVE OGAN expressed concern with not having contribution                                                              
limits.  There is potential for mischief.  He asked if this                                                                     
legislation addresses activities during session.  He found the                                                                  
latest court ruling  ridiculous.  That ruling would allow a                                                                     
legislator to have a fund raiser down the street before voting on                                                               
an important bill during session.                                                                                               
Number 051                                                                                                                      
REPRESENTATIVE COGHILL said that he believed the public would be a                                                              
better judge of a legislator doing fund-raising during session, if                                                              
the legislator had to report that fund-raising.  With regard to                                                                 
bribery, he commented that almost any campaign contribution could                                                               
be thought of as bribery in some way.  Representative Coghill                                                                   
viewed campaign contributions as a way for those agreeing with a                                                                
candidate's ideas to help put them forward.  After hearing the                                                                  
comments on the personal use of funds, he believed that should be                                                               
addressed.  The personal use of funds was not addressed because he                                                              
felt that the IRS would hold the candidate to a higher standard                                                                 
than the state could.  If there is an impropriety, Representative                                                               
Coghill interpreted that as a criminal activity.  If this                                                                       
legislation does address personal use of funds, then there is                                                                   
concern because the state becomes the discerner of what is personal                                                             
use and personal income.  For example, during Representative                                                                    
Coghill's campaign he went on half-time pay in order to be                                                                      
available for election activities.  He said that some of the things                                                             
such as gas funds, could have been discerned as personal use.  In                                                               
discerning what is personal use or personal income would result in                                                              
the judgement of intent which he suggested would be problematic.                                                                
Perhaps, addressing it as a prohibition of taking the funds as                                                                  
personal income could be added.                                                                                                 
REPRESENTATIVE OGAN noted that before campaign reform, anyone could                                                             
contribute up to $1,000.  He commented that he did not know of any                                                              
legislator who could be bought for $1,000.  With that amount, the                                                               
contributions seemed to be spread out and no one person could                                                                   
achieve "a leg up" over others.  Without contributions limits,                                                                  
individuals could have lots of influence.                                                                                       
REPRESENTATIVE COGHILL stated that if the public knows immediately                                                              
that a candidate received $20,000, that could influence the                                                                     
electorate's perception of that candidate.  He explained that the                                                               
principle by which this legislation is based, was that the                                                                      
candidate is not primarily a criminal and if held to a high degree                                                              
of accountability there would be appropriate action.  If there is                                                               
inappropriate activity, the electorate would make the judgement                                                                 
call.  He did not believe it good policy to make law based on the                                                               
assumption that one is a criminal.                                                                                              
REPRESENTATIVE OGAN clarified that he did not assume people to be                                                               
criminals, but greed is a motivator for even honorable people.                                                                  
Number 179                                                                                                                      
CHAIR JAMES agreed with Representative Ogan's concerns, that if a                                                               
candidate receives a large sum of money, the perception will be                                                                 
that the candidate is dishonest.  She expressed concern that there                                                              
is no way to limit how much a candidate can spend of their own                                                                  
money.  There should be a level playing field in order to avoid                                                                 
people being able to buy an office.  Chair James said that she                                                                  
would like to see no limits, except on corporations which are                                                                   
treated  as people, although that is not really the case.  There is                                                             
some rationale behind limiting the contributions to only                                                                        
individuals.  Furthermore, she did not have a problem with a                                                                    
candidate's grandmother providing the candidate with money to run                                                               
for office as long as that contribution is fully disclosed.  She                                                                
emphasized that once there is a law, it is difficult to return to                                                               
a freer situation.                                                                                                              
REPRESENTATIVE OGAN discussed the apathy of voters with regard to                                                               
CHAIR JAMES stressed then if that is the case, all the laws                                                                     
restricting campaigns have not worked.  Perhaps, that should be                                                                 
changed and the people should be the decision-makers.                                                                           
REPRESENTATIVE HUDSON stated that if disclosure is going to be                                                                  
utilized as a principal element of change in this legislation,                                                                  
perhaps, some of the elements of disclosure should be published in                                                              
order for the public to read it in the newspaper.  He compared this                                                             
to the bids, boundary changes, and such currently printed in the                                                                
newspaper.  He agreed with Chair James that this would be published                                                             
anyway, but pointed out that often information is published                                                                     
erroneously due to media interpretation.  Therefore, disclosure                                                                 
should be available to everyone not just the electronically                                                                     
Number 324                                                                                                                      
REPRESENTATIVE KERTTULA returned to the idea of controlling money                                                               
in campaigns.  She said that she would like to see public funding                                                               
of campaigns in order to level the playing field.  For instance, 30                                                             
minutes of free television time could be given to each candidate.                                                               
Such an environment would open up the process and encourage the                                                                 
public debate.  Representative Kerttula liked the idea of                                                                       
disclosure and access, but had some concerns.  The legislation does                                                             
not address contributions through another person.  She commented                                                                
that she did not believe individuals could be stopped from giving                                                               
themselves funds due to the First Amendment.                                                                                    
CHAIR JAMES asked if there were any further questions or comments                                                               
from the committee.  Hearing none, the public testimony began.                                                                  
Number 365                                                                                                                      
BROOKE MILES, Regulation of Lobbying, Alaska Public Offices                                                                     
Commission, Department of Administration, informed the committee                                                                
that the commission has not met to formally develop a position on                                                               
this legislation.  However, several questions have been identified.                                                             
Since this legislation would not specify any beginning or end date                                                              
for a campaign, how would the reporting work.  For example, if a                                                                
candidate began accepting contributions in 1999 for the 2002                                                                    
election, would that candidate be required to file the 15-day                                                                   
report for the entire three years.                                                                                              
MS. MILES referred to the definition of full disclosure in Section                                                              
4 of SSHB 179.  This requires only that the candidate file the                                                                  
amount of the contribution and the name of the contributor, not the                                                             
occupation, employer or address of the contributor nor the date or                                                              
form of the contribution is required under this bill.  The same                                                                 
type of information for expenditures is also not required under                                                                 
this legislation.  Furthermore, the cumulative amount that the                                                                  
candidate raises is not required to be disclosed nor are the debts                                                              
of the campaign.  Ms. Miles inquired as to how under this                                                                       
legislation, would the public ascertain the amount of money that a                                                              
candidate receives from those residing outside of Alaska or whether                                                             
the candidate had a surplus or debt in the candidate's campaign                                                                 
account.  She also asked how would the Division of Elections                                                                    
evaluate whether a report is complete and accurate.  She pointed                                                                
out that current law includes exemptions for campaigns that raise                                                               
and spend less than $2,500 and for the $100 or less contributor.                                                                
That is not included in the legislation, so is the intent to                                                                    
require full disclosure in those cases.                                                                                         
MS. MILES noted that reporting due dates are not contingent on the                                                              
date of election which could result in a substantial lapse in time                                                              
between the filing of the last report and the election.  Currently,                                                             
the law requires a seven-day report which is followed by the                                                                    
24-hour reporting requirement for contributions greater than $250.                                                              
She commented that timely information would be of importance to the                                                             
public.  With regards to enforcement, the legislation places the                                                                
responsibility with the Director of the Division of Elections who                                                               
is appointed by the Lieutenant Governor.  During a gubernatorial                                                                
election year, the director must ensure that all candidates,                                                                    
including the governor and lieutenant governor, have complied with                                                              
reporting requirements.  She pointed out that conceivably the                                                                   
director would be required to refer the lieutenant governor or                                                                  
competing candidate to the district attorney for criminal                                                                       
prosecution.  That would be a difficult situation.                                                                              
Number 446                                                                                                                      
MS. MILES noted that under the current campaign disclosure law,                                                                 
removal from the ballot has never been a penalty for any violation                                                              
of the campaign disclosure law.  Current law only utilizes the                                                                  
removal penalty for the conflict of interest and the financial                                                                  
disclosure statements filed at the time of the declaration of                                                                   
candidacy.  She asked if the sponsor intended to expand the                                                                     
enforcement mechanism to include removal from the ballot as a                                                                   
penalty.  Currently, candidates who file late campaign disclosure                                                               
reports are subject to civil penalties.  There do not appear to be                                                              
any consequences for late reports under this legislation other than                                                             
notice being sent and published on the Internet.                                                                                
MS. MILES emphasized that SSHB 179 appears to repeal all the                                                                    
reforms enacted in 1996.  She asked if the sponsor intended for                                                                 
candidates, groups, and parties to be allowed to receive unlimited                                                              
amounts of money from any source at any time.  Is it the sponsor's                                                              
intent to allow candidates to be free to use campaign contributions                                                             
for any purpose, including taking the contributions as personal                                                                 
income.  She pointed out that the current campaign disclosure law                                                               
prohibits the state, the university, and municipal money to be                                                                  
utilized to influence elections except in limited circumstances.                                                                
Does the sponsor intend to allow those entities to contribute money                                                             
to candidate campaigns and issue campaigns?  The legislation                                                                    
repeals a provision which identifies who receives campaign                                                                      
contributions on behalf of a candidate.  Therefore, if anyone can                                                               
accept a campaign contribution on behalf of a candidate, how would                                                              
a candidate know that the contribution has been received within the                                                             
reporting period.  Currently, the following contributions are                                                                   
prohibited:  anonymous contributions, contributions made in a                                                                   
fictitious name, and contributions made in another person's name.                                                               
This legislation would repeal those prohibitions.  Is it the intent                                                             
of the sponsor to permit such contributions?  If so, how would the                                                              
division or the district attorney determine whether a filer has                                                                 
provided false information on a campaign disclosure report.  She                                                                
noted that this legislation also repeals the $100 cash contribution                                                             
limit.  Therefore, an individual could not only contribute $20,000,                                                             
but could make that contribution in cash which could create                                                                     
problems for the public that is reviewing the Internet.                                                                         
MS. MILES commented that the passage of the Legislative Ethics Law                                                              
in 1993 established a higher standard for the legislature with                                                                  
regard to the disclosure of income and loans over $1,000.  That law                                                             
required that if the income was given by a source that had a                                                                    
substantial interest in legislative administrative or political                                                                 
action, the amount was included along with the name of the source.                                                              
Is there a reason why that information would no longer be pertinent                                                             
under this legislation?                                                                                                         
CHAIR JAMES commented that in her seven years in the legislature                                                                
there have been many new requirements regarding reporting to the                                                                
Legislative Select Committee on Ethics and APOC.  She said that to                                                              
continue to move in that direction would not be appropriate.  She                                                               
surmised that Ms. Miles, as an APOC employee, would find these                                                                  
overwhelming with respect to keeping people informed.  She asked if                                                             
Ms. Miles would be willing to work on this legislation.                                                                         
MS. MILES replied yes.                                                                                                          
REPRESENTATIVE SMALLEY said that although he liked some of the                                                                  
elements of SSHB 179, it flies in the face of what the campaign                                                                 
reform of 1996 was about.                                                                                                       
CHAIR JAMES pointed out that there was never a vote of the people                                                               
on this issue, although there was an initiative.  There was                                                                     
legislation passed similar to the initiative.  She suggested that                                                               
it should be determined how to make this process less cumbersome.                                                               
If more people could come to the polls, pay attention, and run for                                                              
office, the political spectrum would be much improved.                                                                          
Number 569                                                                                                                      
GAIL FENUMIAI, Election Program Specialist, Division of Elections,                                                              
Office of the Lieutenant Governor, clarified that she is not a                                                                  
campaign finance expert.  The division has determined some                                                                      
questions as did Ms. Miles and some of the division's questions                                                                 
were already presented by Ms. Miles.  Therefore, Ms. Fenumiai                                                                   
informed the committee that she would address only those questions                                                              
not already mentioned.  She pointed out that currently, a candidate                                                             
who files the declaration of candidacy late in the year is allowed                                                              
to file letters of intent and begin fund-raising.  She was not sure                                                             
how that would be handled under this legislation.  Without a                                                                    
declaration of candidacy or nominating petition, the division would                                                             
not really know if a candidate is campaigning and raising funds.                                                                
Therefore, the question of when the campaign actually begins is of                                                              
importance to the division.                                                                                                     
MS. FENUMIAI expressed concern with regard to the amount of reports                                                             
expected to be filed.  Furthermore, if the reports are not filed                                                                
electronically, the division would have to take time to rekey that                                                              
information.  She was not sure of the definition of "immediate                                                                  
posting on the Internet."  Ms. Fenumiai informed the committee that                                                             
if this happens, the division would like there to be a mandate that                                                             
the reports be filed electronically.  She eluded to the possibility                                                             
of electronic filing software.  There are estimates that the number                                                             
of reports in a calendar year would increase from 2,400 to 10,000.                                                              
Currently, the division does not have the staff or resources to                                                                 
monitor, audit, host, and review all those reports.  Ms. Fenumiai                                                               
posed the question of how would the division know when there is the                                                             
need to challenge a report, if a report is incomplete.                                                                          
MS. FENUMIAI noted that the legislation does not appear to mention                                                              
municipal candidates.  Would it be left up to the municipality to                                                               
have its own campaign finance sections?  She also commented that                                                                
the procedures the director would utilize to take someone off the                                                               
ballot appears unclear at this time.  Ms. Fenumiai said that she                                                                
would echo the concerns discussed by Ms. Miles.                                                                                 
REPRESENTATIVE HUDSON asked if the legislation would alter the                                                                  
filing deadline date for candidacy.                                                                                             
REPRESENTATIVE COGHILL informed Representative Hudson that would                                                                
not change.                                                                                                                     
REPRESENTATIVE COGHILL noted that electronic filing is already in                                                               
motion to some degree with APOC, but since many are not the                                                                     
legislation includes provisions for hard copies.  He also pointed                                                               
out that the legislation includes a provision that a candidate                                                                  
cannot raise funds until the candidate files and the financial                                                                  
disclosure begins, therefore that would begin the campaign process.                                                             
Representative Coghill agreed with Ms. Fenumiai that a candidate                                                                
could not raise funds until the declaration of candidacy or                                                                     
nominating petition is filed.                                                                                                   
CHAIR JAMES interjected that would also include the conflict of                                                                 
interest statement.                                                                                                             
Number 650                                                                                                                      
MIKE FRANK, Chair, Campaign Finance Reform Now, testified via                                                                   
teleconference from Anchorage.  He informed the committee that                                                                  
Campaign Finance Reform Now is the association of over 400                                                                      
volunteers which gathered over 30,000 signatures on the ballot in                                                               
1994 to reform Alaska's campaign finance laws.  In response to that                                                             
petition, the 1995 campaign finance law was passed with only two                                                                
descending votes.  Last Friday, the Alaska Supreme Court                                                                        
unanimously upheld nearly all aspects of the new law, except a                                                                  
one-year fund-raising limitation and a portion of the 1993 Ethics                                                               
Act.  The Ethics Act was not a part of the 1995 campaign finance                                                                
law or part of the initiative.  He thanked those who supported the                                                              
1995 campaign finance law, especially Chair James who introduced                                                                
the legislation which moved through the 1995 Legislature to become                                                              
law.  He commented that the hearings on the 1995 legislation                                                                    
resulted in clarification of parts of the initiative and a                                                                      
moderation of portions of the initiative.  The new law is                                                                       
comprehensive, but has substantive provisions which are moderate                                                                
and within the bounds of the First Amendment jurisprudence.  The                                                                
strength of the new law is found in its moderate nature.                                                                        
MR. FRANK stated that HB 179 would completely undo the 1995 reforms                                                             
and return Alaska to the days before Watergate.  The Watergate era                                                              
had no contribution limits, no APOC, and the potential for                                                                      
political corruption of the political process was severe.  He                                                                   
emphasized that is not what Alaskans want.  In fact, during the                                                                 
1995 session Senator Kelly commissioned a statewide poll which                                                                  
resulted in 80 percent support for the reforms the initiative                                                                   
sought which was overwhelmingly supported by the legislature.                                                                   
There were concerns that the new law would prevent candidates from                                                              
raising enough money to run effective campaigns.  However, the                                                                  
Department of Law submitted statistics in the recent court                                                                      
proceedings which illustrated that both municipal and state                                                                     
candidates raised as much and in many cases more money than under                                                               
the old law.  That was achieved without candidates collecting money                                                             
from lobbyists, corporations, and union sources.  Furthermore,                                                                  
there did not seem to be any change in the visibility of                                                                        
candidates.  He noted that many had feared that the new law would                                                               
favor one party over another and dissuade third party candidates.                                                               
However, the last statewide legislative races produced almost no                                                                
change in the distribution of power in the legislature or in the                                                                
relative power of the two major parties.  In fact the Green Party                                                               
and the Republican Moderate Party were added as potential third                                                                 
party forces in the future.  The new law leveled the playing field                                                              
to produce some closer election races which was good for the                                                                    
development of issues in front of the voters.                                                                                   
MR. FRANK recognized that there were questions of interpretation                                                                
about the new campaign finance reform law.  However, the APOC was                                                               
able to exercise its advisory opinion power quickly and                                                                         
effectively.  This legislation, HB 179, presents a laissez faire                                                                
approach to election financing which was rejected by the                                                                        
legislature in response to reform initiatives in the early 1970s                                                                
and 1995 in Alaska.  He said that Alaska is beyond the days of only                                                             
disclosure to ensure free and fair elections.  Mr. Frank urged the                                                              
committee to allow the new reform law to continue.  Now is the time                                                             
to provide APOC with the financial support necessary to make the                                                                
new law work even better, make automatic electronic filing                                                                      
available for candidates, enable APOC to increase activity to new                                                               
candidates in order that mistakes are avoided, and provide APOC the                                                             
ability to confront and investigate those dishonest candidates.                                                                 
Mr. Frank reiterated the need to let the new law continue and let                                                               
HB 179 die in committee.                                                                                                        
Number 753                                                                                                                      
STEVE CONN testified via teleconference from Anchorage.  He said                                                                
that he would like to speak through the Chair directly to                                                                       
Representative Coghill.  He hoped that everyone realized that when                                                              
the Coghill family speaks Alaskans listen.  Representative                                                                      
Coghill's father was a founding father of Alaska and a member of                                                                
the state constitutional convention.  Representative Coghill's                                                                  
father led the way in Alaska's constitutional drafting in the areas                                                             
of administration, education, suffrage, elections, and                                                                          
apportionment.  Therefore, any legislation written by a Coghill                                                                 
would peak interest.                                                                                                            
MR. CONN commented that in this case, this is one of the greatest                                                               
challenges since statehood.  The challenge is the British Petroleum                                                             
merger which could transform the state into a company state.  He                                                                
emphasized that never before has it been more important that                                                                    
Alaska's campaign finance reform laws act as a guard and defense                                                                
against a major corporate entity which may or may not seek to                                                                   
compromise Alaska's political process.  Mr. Conn said that he was                                                               
in agreement with Mr. Frank.  Mr. Conn requested that                                                                           
Representative Coghill search his heart and think about what his                                                                
father would have done at this point in Alaska's history.  Mr. Conn                                                             
urged Representative Coghill to withdraw this legislation and                                                                   
rethink the matter for another session.                                                                                         
Number 787                                                                                                                      
JOYCE MICHAELSON, Volunteer Member, Alaska Public Offices                                                                       
Commission, testified via teleconference from Anchorage.  She                                                                   
informed the committee that in every U.S. state and Canadian                                                                    
provence there is an agency similar to APOC.  There is a                                                                        
professional organization for the agencies which is the Council on                                                              
Governmental Ethics.  Alaska was recently voted number three in the                                                             
nation as having the best campaign disclosure laws under the 1996                                                               
laws.  She believed that with HB 179, Alaska would have the weakest                                                             
and worst campaign disclosure laws.  Although the 1996 law created                                                              
much change, confusion and frustration, that is settling down and                                                               
getting better.  The commission made the effort to educate and                                                                  
create compliance rather than criminalize and penalize.  Under HB
179, there are no provisions for "slaps on the wrists" or fines.                                                                
Either people are a criminal or not which she felt was a big                                                                    
MS. MICHAELSON noted that the commission is structured to minimize                                                              
partisan decision-making.  The commission is comprised of two                                                                   
republicans, two democrats, and a public member at large.  The                                                                  
partisan members are selected through the parties to the governor                                                               
for appointment.  Therefore, the commission is a bipartisan                                                                     
decision-making body which holds all of its meetings in public with                                                             
a public administrative process.  The only time the commission has                                                              
Executive Session is for personnel matters or a lawsuit scenario.                                                               
Ms. Michaelson stressed that it is good public policy to have a                                                                 
public process.  She asked if the true desire is to eliminate a                                                                 
bipartisan public body and replace it with an appointed position.                                                               
That is the main issue that should be considered.  She noted that                                                               
the 1974 campaign disclosure law placed the position in the                                                                     
Lieutenant Governor's office, but in 1979 the legislature                                                                       
recognized that was not an appropriate structure.  Therefore, the                                                               
position was made independent under the Department of                                                                           
Administration.  The department does not exercise any authority                                                                 
over the commissioners.  She stressed the need to review whether                                                                
the desire is to provide all that power to a person in an appointed                                                             
NANCY GORDON, Chief, Assistant Attorney General, Civil Division,                                                                
Department of Law, testified via teleconference from Anchorage.                                                                 
She pointed out that Section 5 of the legislation provides that the                                                             
Director of the Division of Elections can refer suspected criminal                                                              
violations to the District Attorney's Office for criminal                                                                       
prosecution.  However, the legislation does not establish any                                                                   
criteria for the director to make such a determination.                                                                         
Furthermore, the legislation specifically prohibits the director                                                                
from developing any regulations to clarify how that provision would                                                             
be implemented.  Currently, a filer has the ability to amend                                                                    
his/her reports.  This legislation does not allow amendments to a                                                               
report and eliminates the administrative due process that permits                                                               
a filer to explain an omission, mistake, or amendment to the                                                                    
administrative body.  Without such an administrative process or the                                                             
ability to amend, the filer is open to criminal sanctions or                                                                    
forfeiture from the ballot.                                                                                                     
TAPE 99-29, SIDE A                                                                                                              
MS. GORDON pointed out that the public contacts APOC who serves as                                                              
an intermediary which protects the candidate from unfounded                                                                     
allegations and also encourages the candidate to file amendments                                                                
when necessary.  If there is a substantial problem, that would be                                                               
heard by the commissioners in a public proceeding.  Under SSHB 179,                                                             
a member appears to have no recourse to question a candidate's                                                                  
report.  With regards to the previous concerns regarding reporting                                                              
in municipal races, she noted that Section 11 of SSHB 179 amends                                                                
the definition of a candidate to exclude municipal candidates.                                                                  
Under the legislation, a municipal candidate does not appear to be                                                              
required to provide campaign finance disclosure reports.  "However,                                                             
sections of the bill allow groups, parties, municipalities, and                                                                 
individuals acting or participating in municipal campaigns to still                                                             
be required to file a campaign disclosure reports."  She asked if                                                               
this was the sponsor's intent.                                                                                                  
Number 043                                                                                                                      
MS. GORDON expressed concern with the procedure set out in Section                                                              
5 which permits a qualified Alaskan voter to bring criminal charges                                                             
under the chapter.  The language seems to give a qualified Alaskan                                                              
voter the same authority to bring a criminal charge as the attorney                                                             
general.  Ms. Gordon said that the Department of Law is unaware of                                                              
any Alaska statute that permits a citizen to directly bring forth                                                               
a criminal charge against another citizen.  Without an                                                                          
administrative process, Ms. Gordon felt such would be problematic.                                                              
The current administrative process provides a screening mechanism                                                               
and a place for people to voice their complaints.  She said, "The                                                               
question ... is what's going to stop people for their political                                                                 
advantage from commencing a criminal complaint against a candidate?                                                             
And what is the procedures by how those cases are going to be                                                                   
MS. GORDON commented that there is a lack of clarity in SSHB 179.                                                               
She read the language from the second sentence of AS 15.13.035(g)                                                               
which states, "the charges will be dealt with in the same manner as                                                             
AS 15.13.035(d)."  That language raises the question regarding                                                                  
whether it is the sponsor's intent to have the charges limited to                                                               
violations of the affidavit reporting requirement.                                                                              
MS. GORDON pointed out that the legislation prohibits the Division                                                              
of Elections from promulgating regulations to implement any of the                                                              
disclosure laws.  Is the intention then that the commission's                                                                   
existing regulations are no longer valid?  If that is the case, how                                                             
will the division implement the conflict of interest and                                                                        
legislative financial disclosure laws without the process currently                                                             
established in regulations.  Currently, there are regulations which                                                             
speak to exemptions, amendments, grace periods, notices, advisory                                                               
opinion requests and appeals.  If there is a prohibition on                                                                     
regulations, it is unclear as to how the filer or public would                                                                  
determine the process for those.                                                                                                
Number 125                                                                                                                      
DEAN GUANELI, Chief Assistant Attorney General, Legal Services                                                                  
Section - Juneau, Criminal Division, Department of Law, informed                                                                
the committee that he wanted to address his comments to the                                                                     
provisions in SSHB 179 which relate to the responsibilities of the                                                              
district attorney and the criminal penalties.  Certainly, it is a                                                               
laudable goal to make the process quicker, especially during the                                                                
election season.  However, the criminal justice process is not                                                                  
quick.  He said that it is unrealistic to think that a prosecutor                                                               
would be able to make a reasoned, sound, ethical decision within 72                                                             
hours.  Therefore, the criminal justice process is not an effective                                                             
manner in which to get these issues litigated.                                                                                  
MR. GUANELI explained that when documents are filed, the questions                                                              
that arise often cannot be answered by simply reviewing the                                                                     
document.  In such cases, there must be an investigation.  He                                                                   
pointed out that the department does not have investigators on                                                                  
staff, but rather the police or the state troopers are relied upon                                                              
to conduct the investigations.  Furthermore, there are limits with                                                              
a criminal investigation.  People are not required to speak with a                                                              
police officer.  Therefore, Mr. Guaneli did not see an incentive                                                                
for candidates or campaign managers to take several hours to talk                                                               
to someone when the result may be the filing of criminal charges.                                                               
He acknowledged that a search warrant can be obtained to gather                                                                 
more documents, but the individual still cannot be forced to talk.                                                              
He supposed that a grand jury could convene and people could be                                                                 
subpoenaed and forced to talk; however, if the individual is the                                                                
potential target of a grand jury investigation, that individual has                                                             
the Fifth Amendment right not to testify.  Mr. Guaneli stated that                                                              
the criminal justice system is not designed to deal with things                                                                 
quickly.  Perhaps, there are better ways to achieve quicker                                                                     
decisions without going through the criminal justice process.                                                                   
CHAIR JAMES noted that the recent court decision says it is                                                                     
admissible for a legislator to raise funds during session.  She did                                                             
not believe that any legislator agreed with that ruling.  She                                                                   
inquired as to the status of that issue and how that could be                                                                   
MR. GUANELI deferred to Ms. Gordon.                                                                                             
MS. GORDON deferred to Ms. DeYoung.                                                                                             
Number 247                                                                                                                      
JAN DeYOUNG, Assistant Attorney General, Governmental Affairs                                                                   
Section, Civil Division, Department of Law, testified via                                                                       
teleconference from Anchorage.  She understood the question to be                                                               
regarding legislators' ability to give during the legislative                                                                   
session.  She explained that the law which was considered by the                                                                
court was the extension of that to legislative challengers.  In                                                                 
striking that bill, the court found that there was no sound reason                                                              
to prohibit a challenger from accepting a contribution during the                                                               
legislative session.  The appearance of a bias or corruption would                                                              
not be true for a challenger.  The court determined that the intent                                                             
of the legislature seemed to be to have a balanced prohibition.                                                                 
"Since they wanted to prohibit their own contributions, they                                                                    
extended that to challengers."  Since that intent seemed so                                                                     
important, the court found that the legislative ban should also                                                                 
follow.  However, that was not challenged by the plaintiff in that                                                              
CHAIR JAMES posed the situation in which a Juneau legislator was                                                                
challenged during session and the challenger was rasing money                                                                   
during session while the legislator cannot.  That does not seem                                                                 
MS. DeYOUNG understood that the 1996 reform was to level the                                                                    
playing field in order to include challengers for legislative                                                                   
offices.  However, the prohibition for legislators accepting                                                                    
contributions is found in the Legislative Ethics Act.  She deferred                                                             
to Ms. Barnett.                                                                                                                 
Number 312                                                                                                                      
SUSIE BARNETT, Professional Assistant, Select Committee on                                                                      
Legislative Ethics, testified via teleconference from Anchorage.                                                                
She informed the committee that a legal opinion has been requested                                                              
from Legislative Legal Services to analyze the difference between                                                               
the court opinion on contributors' ability to give and the                                                                      
legislature's own rules.  She noted that she would provide that                                                                 
analysis as soon as she receives it.                                                                                            
CHAIR JAMES asked if there was anyone else who wished to testify on                                                             
SSHB 179.  She announced that she would not close public testimony                                                              
on SSHB 179 because there may be a point when more public testimony                                                             
would be appropriate.                                                                                                           

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