Legislature(1999 - 2000)
04/22/1999 08:00 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE April 22, 1999 8:00 a.m. MEMBERS PRESENT Representative Jeannette James, Chair Representative John Coghill Representative Scott Ogan Representative Jim Whitaker Representative Bill Hudson Representative Beth Kerttula Representative Harold Smalley MEMBERS ABSENT All members present COMMITTEE CALENDAR HOUSE BILL 199 "An Act relating to compensation for certain state employees; and providing for an effective date." - MOVED CSHB 199 (STA) OUT OF COMMITTEE * HOUSE BILL 179 "An Act eliminating the Alaska Public Offices Commission and all campaign contribution and expenditure limits; repealing lobbying and conflict of interest statutes administered by the Alaska Public Offices Commission; relating to the definition of 'lobby,' 'lobbying,' and 'lobbyist'; repealing the required annual financial disclosures program administered by the Alaska Public Offices Commission; repealing the conflict of interest statutes administered by the Alaska Public Offices Commission; relating to reporting of campaign contributions and expenditures; 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." - HEARD AND HELD CS FOR SENATE BILL 33(FIN) "An Act relating to contracts for the performance of certain state functions previously performed by state employees and to the Commission on Privatization and Delivery of Government Services; and providing for an effective date." - SCHEDULED BUT NOT HEARD HOUSE BILL 132 "An Act relating to allowable absences from the state for purposes of eligibility for permanent fund dividends; and providing for an effective date." - SCHEDULED BUT NOT HEARD HOUSE BILL 159 "An Act granting certain employees in correctional facilities status as peace officers under the public employees' retirement system." - SCHEDULED BUT NOT HEARD HOUSE BILL 16 "An Act transferring to the Department of Health and Social Services the authority to license all assisted living facilities; eliminating the authority of the Department of Administration to license assisted living facilities; and providing for an effective date." - SCHEDULED BUT NOT HEARD * HOUSE BILL 192 "An Act relating to reciting the pledge of allegiance by public school students." - SCHEDULED BUT NOT HEARD (* First public hearing) PREVIOUS ACTION BILL: HB 199 SHORT TITLE: STATE EMPLOYEE COMPENSATION SPONSOR(S): FINANCE Jrn-Date Jrn-Page Action 4/15/99 824 (H) READ THE FIRST TIME - REFERRAL(S) 4/15/99 824 (H) STA, FIN 4/20/99 (H) STA AT 8:00 AM CAPITOL 102 4/20/99 (H) HEARD AND HELD 4/20/99 (H) MINUTE(STA) 4/21/99 (H) FIN AT 8:30 AM HOUSE FINANCE 519 4/21/99 (H) <BILL POSTPONED TO 4/23 1:30 PM MTG> 4/22/99 (H) STA AT 8:00 AM CAPITOL 102 BILL: HB 179 SHORT TITLE: APOC REPEAL: CAMPAIGN/DISCLOSURE/LOBBYIST SPONSOR(S): REPRESENTATIVES(S) COGHILL, Sanders Jrn-Date Jrn-Page Action 4/07/99 671 (H) READ THE FIRST TIME - REFERRAL(S) 4/07/99 671 (H) STA, JUD, FIN 4/15/99 (H) STA AT 8:00 AM CAPITOL 102 4/15/99 (H) <BILL CANCELED> 4/19/99 866 (H) SPONSOR SUBSTITUTE INTRODUCED 4/19/99 866 (H) READ THE FIRST TIME - REFERRAL(S) 4/19/99 866 (H) STA, JUD, FIN 4/22/99 (H) STA AT 8:00 AM CAPITOL 102 4/22/99 (H) HEARD AND HELD WITNESS REGISTER BROOKE MILES, Regulation of Lobbying Alaska Public Offices Commission Department of Administration PO Box 110222 Juneau, Alaska 99811-0222 Telephone: (907) 465-4864 POSITION STATEMENT: Presented concerns with SSHB 179. GAIL FENUMIAI, Election Program Specialist Division of Elections Office of the Lieutenant Governor PO Box 11017 Juneau, Alaska 99811-0017 Telephone: (907) 465-4611 POSITION STATEMENT: Presented concerns with SSHB 179. MIKE FRANK, Chair Campaign Finance Reform Now 2224 Turnagain Parkway Anchorage, Alaska 99517 Telephone: (907) 248-5078 POSITION STATEMENT: Recommended the current law continue. STEVE CONN Alaska Public Interest Research Group 603 West 18th Anchorage, Alaska 99503 Telephone: (907) 278-3661 POSITION STATEMENT: Recommended that Representative Coghill withdraw SSHB 179. JOYCE MICHAELSON, Volunteer Member Alaska Public Offices Commission Box 245014 Anchorage, Alaska 99524 Telephone: (907) 338-0469 POSITION STATEMENT: Discussed concerns with SSHB 179. NANCY GORDON, Chief, Assistant Attorney General Civil Division Department of Law 1031 West 4th Avenue, Suite 200 Anchorage, Alaska 99501 Telephone: (907) 269-5135 POSITION STATEMENT: Discussed concerns with SSHB 179. DEAN GUANELI, Chief Assistant Attorney General Legal Services Section - Juneau Criminal Division Department of Law PO Box 110300 Juneau, Alaska 99811-0300 Telephone: (907) 465-3428 POSITION STATEMENT: Discussed concerns with the criminal proceedings in SSHB 179. JAN DeYOUNG, Assistant Attorney General Governmental Affairs Section Civil Division Department of Law 1031 West 4th Avenue, Suite 200 Anchorage, Alaska 99501 Telephone: (907) 269-5073 POSITION STATEMENT: Discussed recent court opinion regarding fund-raising during legislative session. SUSIE BARNETT, Professional Assistant Select Committee on Legislative Ethics PO Box 101468 Anchorage, Alaska 99510-1468 Telephone: (907) 269-0150 POSITION STATEMENT: Provided information. ACTION NARRATIVE TAPE 99-28, SIDE A Number 0001 CHAIR JEANNETTE JAMES called the House State Affairs Standing Committee meeting to order at 8:00 a.m. Members present at the call to order were Representatives James, Coghill, Ogan, Whitaker, Kerttula and Smalley. Representative Hudson arrived at 8:06 a.m. HB 199-STATE EMPLOYEE COMPENSATION CHAIR JAMES announced the first order of business before the committee is HB 199, "An Act relating to compensation for certain state employees; and providing for an effective date." She reminded that members that public testimony was closed at the previous hearing. Number 016 CHAIR JAMES noted that a copy of the proposed committee substitute (CS) had been distributed. She pointed out that the CS deletes Section 15 and puts the Supplemental Benefits System (SBS) participation back into its current status. The proposed CS also deletes "until July 1, 2001," thus grandfathering in all existing geographic differentials. In response to Representative Smalley, Representative James noted that the cover sheet with the proposed CS should cite the deletion of "until July 1, 2001" as occurring on line 19, page 7 not page 20. CHAIR JAMES asked for a motion to put the CS before the committee. Number 066 REPRESENTATIVE COGHILL made a motion to adopt the proposed CS for HB 199, version H, Cramer, 4/19/99, as a working document. There being no objection, it was so ordered. Number 082 CHAIR JAMES called a brief at-ease at 8:05 a.m. to give the members a few moments to review the CS and for copies of the fiscal note to be made. [Members introduced guests that were present for "Take your daughter to work day."] Number 123 REPRESENTATIVE WHITAKER asked if there was a fiscal note attached to the original version of HB 199. CHAIR JAMES replied that she didn't believe there was. Number 139 REPRESENTATIVE COGHILL moved to report CSHB 199, version H, Cramer, 4/19/99, out of committee with individual recommendations and attached fiscal notes. Number 145 REPRESENTATIVE HUDSON objected. He emphasized that the elements within HB 199 fall under the purview of collective bargaining and not the legislative process. Therefore, Representative Hudson objected to the intentions of the legislation. REPRESENTATIVE OGAN remarked, if this is subjected to collective bargaining, the reductions will never be seen. Therefore, Representative Ogan said that he would recommend reporting the legislation from committee. REPRESENTATIVE KERTTULA stated that she appreciated the effort to return SBS participation back to its current status. However, the bill still sets up various tiers of employees which she indicated to be a demoralizing factor that really undermines the service of people. She surmised from the letters and testimony on this issue that people felt they weren't valued as employees. She emphasized that it's sending the wrong message, especially at this time. Therefore, Representative Kerttula said she would not be supporting the legislation. Number 204 Upon a roll call vote, Representatives Ogan, Coghill, Whitaker and James voted in favor of moving CSHB 199(STA), version H, Cramer, 4/19/99, from committee and Representatives Hudson, Smalley, and Kerttula voted against it. Therefore CSHB 199(STA) passed out of committee. 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 forthcoming. 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 purposely. 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 immediately. 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 contributions. 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 initiatives. 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 campaigns. 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 adapted. 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 extreme. 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 position. 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 prosecuted?" 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 fixed. 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 case. 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 ethical. 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. ADJOURNMENT There being no further business before the committee, the House State Affairs Standing Committee meeting was adjourned at 9:55.