Legislature(2001 - 2002)
04/19/2001 03:45 PM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 determination. 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 speech. 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 development. 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 groups. CHAIRMAN THERRIAULT asked for other teleconferenced or in-person testimony. 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.