Legislature(2001 - 2002)

04/19/2001 03:45 PM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
           HB 177-CAMPAIGN FINANCE: GROUPS & DISCLOSURE                                                                     
REPRESENTATIVE  KOTT, bill co-sponsor, said that members  had a copy                                                            
of the  sponsor statement  for  this campaign  finance reform  bill.                                                            
This legislation  closes a loophole  created when the last  campaign                                                            
finance measure was passed.                                                                                                     
REPRESENTATIVE  KOTT informed members  of two changes, both  on page                                                            
2.  First, "contributor"  is  defined  as "the  true  source of  the                                                            
funds, property, or services  being contributed;" rather than simply                                                            
the name of the person  in which the money is given. Second, special                                                            
interest  organizations  are  dealt  with  in Section  3,  lines  11                                                            
through  15.  The  term  "special  interest  organizations"  is  now                                                            
included in the terminology  of group as it is currently in statute.                                                            
"That is to  meet the conditions that  are set apart and  these were                                                            
extracted from the [American  Civil Liberties Union] ACLU case years                                                            
ago when that  was challenged and they were reluctant  to define the                                                            
terminology 'group'."                                                                                                           
This legislation  closes a  loophole, levels  the playing field  and                                                            
places the same  restrictions and limitations on non-group  entities                                                            
that fall into this category.                                                                                                   
CHAIRMAN THERRIAULT asked  whether there were arguments in the House                                                            
over language that was modified to deal with legal challenges.                                                                  
REPRESENTATIVE  KOTT  said they  have  dealt with  legal  challenges                                                            
indirectly.  Both counsel and the  sponsors are of the opinion  that                                                            
they are on firm legal  ground in spite of arguments to the contrary                                                            
because they have extracted  components from state and federal legal                                                            
cases to make the two changes.  Ultimately, the courts will make the                                                            
BROOKE MILES,  Assistant Director for the Public Offices  Commission                                                            
of  the   Department   of  Administration,   explained   that   this                                                            
legislation  addresses non-group  entities  that were identified  by                                                            
the Alaska  Supreme Court  in the Alaska  v. Alaska Civil  Liberties                                                            
Union decision.  The court  held that there  were certain  non-group                                                            
entities such  as non-profits that should be allowed  to participate                                                            
in the  election  campaign process  even though  there  is a ban  on                                                            
corporation business entities and trust participation.                                                                          
It is  her understanding  that this  bill addresses  that by  making                                                            
these organizations  subject to the same disclosure  requirements as                                                            
other Alaskan groups.                                                                                                           
She  has  received   comments  expressing  concern  about   "special                                                            
interest  organization" found  on page 2,  line 11. The complainant                                                             
was concerned that all  special interest organizations, whether they                                                            
were participating in election  campaign activities or not, were now                                                            
going  to  be  subject  to  regulations  under  the  public  offices                                                            
commission.  Although  it is  not the  intent  of the  bill and  the                                                            
commission  does  not  interpret  it  that  way,  she  thought  some                                                            
clarifying language was in order.                                                                                               
The commission  has identified  some costs  in the first year  where                                                            
some regulations would  need to be promulgated and where the special                                                            
interest organizations  could qualify to participate by showing they                                                            
meet the  three part test  described by the  court and contained  in                                                            
this legislation.                                                                                                               
CHAIRMAN THERRIAULT  said he did not  have the statutes in  front of                                                            
him and  wondered  whether subsection  (5) AS  15.13.400 deals  with                                                            
groups participating in the political process.                                                                                  
MS. MILES said it does.                                                                                                         
STEVE  CLEARY,  representative   for  the  Alaska  Public   Interest                                                            
Research  Group (AkPIRG) spoke  in opposition  to HB 177 because  it                                                            
unfairly  subjects groups to  the disclosure  law. In the spring  of                                                            
1999,  the  Alaska  Supreme  Court  ruled  ideological,   non-profit                                                            
corporations  have a right to participate  in the political  process                                                            
and  it interpreted  parts  of the  campaign  finance  law to  allow                                                            
participation  by non-profit organizations.  This legislation  would                                                            
unfairly constrict that right.                                                                                                  
The  court ruled  in  this  way to  keep the  corporate  voice  from                                                            
overruling  the voice of individuals  and for that reason  AkPIRG is                                                            
standing in opposition.                                                                                                         
He  mentioned  amendments  that  were  also  on the  table  and  was                                                            
informed that they were for different legislation in the House.                                                                 
CHAIRMAN  THERRIAULT  said  since  the courts  decided  that  groups                                                            
should be  required to disclose  their source  of funding and  since                                                            
they said  groups could participate  and express  an opinion  in the                                                            
public process, he did not see where there was a problem.                                                                       
MR. CLEARY  said the  disclosure  might provide  the opportunity  to                                                            
retaliate.  In  other court  cases,  disclosure  may not  always  be                                                            
required "whenever  identification and fear of reprisal  would deter                                                            
speech. The  First Amendment protects  anonymity." For instance,  an                                                            
employer might  retaliate against an employee who  chooses to donate                                                            
to  non-profit corporations  and  that  would unfairly  limit  their                                                            
CHAIRMAN THERRIAULT  asked how that is different from  an individual                                                            
who  works  for an  environmental  organization  giving  a  campaign                                                            
contribution   to  a  candidate  who  traditionally   supported  oil                                                            
MR. CLEARY  said if an individual  chooses to donate to a  political                                                            
candidate then  they are subject to  those disclosure laws  and that                                                            
is of benefit  to the state.  However, if  the individual elects  to                                                            
donate  to a  non-profit  organization,  that should  be  considered                                                            
separately. With  HB 177 individuals would be forced  to disclose in                                                            
a political  arena although  they may not  have been donating  for a                                                            
political reason.                                                                                                               
SENATOR  PHILLIPS commented  public disclosure  should apply  to all                                                            
CHAIRMAN  THERRIAULT asked  for other teleconferenced  or  in-person                                                            
He asked  Kathryn Kurtz  to address  some of the  comments that  had                                                            
been expressed.                                                                                                                 
KATHRYN KURTZ, bill drafter,  said there is case law in Alaska where                                                            
the Alaska  Supreme Court  has talked about  the public interest  in                                                            
knowing where the money  that funds politics comes from. Those cases                                                            
are the Messerly and Veco decisions.                                                                                            
She thought Mr.  Cleary was distinguishing between  contributions to                                                            
candidates  directly  and contributions  to  groups  that then  make                                                            
contributions  to candidates. That  is a different context  than the                                                            
Messerly or Veco cases.                                                                                                         
CHAIRMAN  THERRIAULT said  if the entities  were considered  groups,                                                            
disclosure would  be required. He asked what limits  would be placed                                                            
on money flowing through the groups to individual candidates?                                                                   
MS.  KURTZ  said  this  bill  would  put  these  entities  into  the                                                            
definition of group, and  all restrictions in AS 15.13 that apply to                                                            
groups would apply equally to these entities.                                                                                   
CHAIRMAN  THERRIAULT   asked  for   a  listing  of  some   of  those                                                            
restrictions for the record.                                                                                                    
MS.  KURTZ responded  there  is  a dollar  limit  on the  amount  of                                                            
contributions that groups may make to particular entities.                                                                      
CHAIRMAN THERRIAULT  asked if that  meant individual candidates  and                                                            
whether the limit is $1,000.                                                                                                    
MS. KURTZ  thought it was  $1,000 but she  did not have her  statute                                                            
book  available.   It  also subjects  them  to the  same  disclosure                                                            
requirements.  Groups  are  now required  to  report the  source  of                                                            
contributions  that exceed $100. There are also some  organizational                                                            
requirements.  This  type of  entity would  be treated  the same  as                                                            
other groups as defined in statute.                                                                                             
CHAIRMAN  THERRIAULT  asked  about outside  funds  coming  in to  go                                                            
directly  into an  individual political  campaign  or into  campaign                                                            
efforts in general.                                                                                                             
MS. KURTZ responded  there are restrictions on how  much a candidate                                                            
may accept  from out-of-state sources.  There are dollar  limits for                                                            
candidates  that  are  scaled  according  to  office  and  it  is  a                                                            
percentage of total contributions for a calendar year.                                                                          
CHAIRMAN  THERRIAULT asked  how that  would compare  if the bill  is                                                            
written so that these entities are treated as individuals.                                                                      
MS.  KURTZ said  the disclosure  requirement  is  different  because                                                            
groups must  disclose the  source of contributions  over $100  while                                                            
individuals  do  not. The  individual  contribution  limits  for  an                                                            
individual  is lower than  for groups.  She thought  it was  $500 as                                                            
compared to $1,000.                                                                                                             
CHAIRMAN THERRIAULT asked  whether there would have been any problem                                                            
with defining them as individuals as opposed to groups.                                                                         
MS. KURTZ said what the  court was calling non-group entities seemed                                                            
to  be things  that  involved  more than  one  person  and the  term                                                            
individual generally is thought of as one person.                                                                               
CHAIRMAN THERRIAULT asked  for confirmation that the corporation was                                                            
treated as  an individual in the days  when corporate contributions                                                             
were allowed.                                                                                                                   
MS. KURTZ said  there is some history there with regulations  and it                                                            
may be prior to the 1996 campaign finance reform.                                                                               
CHAIRMAN THERRIAULT asked  whether she saw any problem with defining                                                            
them as individuals.                                                                                                            
MS. KURTZ replied, "That's a good question."                                                                                    
CHAIRMAN  THERRIAULT then  asked whether  there would  be a  problem                                                            
with giving  them the option of being  a group and disclosing  or an                                                            
individual  and not disclosing the  source and having separate  caps                                                            
on what you could do with the money.                                                                                            
MS. KURTZ did  not know of any case law that specifically  addresses                                                            
that scenario.                                                                                                                  
CHAIRMAN  THERRIAULT  asked  for  questions   from  other  committee                                                            
members. There were none.                                                                                                       
He asked for any other testimony. There was none.                                                                               
He asked Susan  Schrader whether she would be willing  to answer any                                                            
questions. She said she was not prepared to do so.                                                                              
He then closed  the hearings on HB 177 and held it  in committee. He                                                            
announced his intent to  move to final action on the bill during the                                                            
following week.                                                                                                                 

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