Legislature(1995 - 1996)
03/22/1996 01:12 PM House JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE March 22, 1996 1:12 p.m. MEMBERS PRESENT Representative Brian Porter, Chairman Representative Joe Green, Vice Chairman Representative Con Bunde Representative Bettye Davis Representative Al Vezey Representative Cynthia Toohey Representative David Finkelstein MEMBERS ABSENT All members were present. COMMITTEE CALENDAR HOUSE BILL NO. 368 "An Act relating to election campaigns, election campaign financing, the oversight and regulation of election campaigns by the Alaska Public Offices Commission, the activities of lobbyists that relate to election campaigns, and the definitions of offenses of campaign misconduct; and providing for an effective date." - HEARD AND HELD HOUSE BILL NO. 443 "An Act relating to the tax on transfers or consumption of motor fuel, and repealing the exemption from that tax for motor fuel which is at least 10 percent alcohol by volume; and providing for an effective date." - SCHEDULED BUT NOT HEARD HOUSE BILL NO. 474 "An Act relating to violations of municipal ordinances and regulations; and amending the definition of the jurisdiction of the superior court and the Department of Health and Social Services over delinquent minors to add a further exclusion from that jurisdiction for a minor's violation of a municipal ordinance or regulation that is punishable as an infraction or violation, and making a related technical amendment to that jurisdictional definition." - SCHEDULED BUT NOT HEARD HOUSE BILL NO. 414 "An Act requiring conciliation panel review in a civil action against an architect, engineer, or land surveyor; and providing for an effective date." - SCHEDULED BUT NOT HEARD PREVIOUS ACTION BILL: HB 368 SHORT TITLE: ELECTION CAMPAIGN FINANCE REFORM SPONSOR(S): REPRESENTATIVE(S) JAMES JRN-DATE JRN-DATE ACTION 12/29/95 2362 (H) PREFILE RELEASED 01/08/96 2362 (H) READ THE FIRST TIME - REFERRAL(S) 01/08/96 2362 (H) STA, JUDICIARY, FINANCE 01/25/96 (H) STA AT 8:00 AM CAPITOL 102 01/25/96 (H) MINUTE(STA) 01/30/96 (H) STA AT 8:00 AM CAPITOL 102 01/30/96 (H) MINUTE(STA) 02/01/96 (H) STA AT 8:00 AM CAPITOL 102 02/01/96 (H) MINUTE(STA) 02/29/96 (H) STA AT 8:00 AM CAPITOL 102 02/29/96 (H) MINUTE(STA) 03/05/96 (H) STA AT 8:00 AM CAPITOL 102 03/05/96 (H) MINUTE(STA) 03/09/96 (H) STA AT 10:00 AM CAPITOL 102 03/09/96 (H) MINUTE(STA) 03/12/96 3087 (H) STA RPT CS(STA) NT 2DP 3NR 03/12/96 3088 (H) DP: JAMES, PORTER 03/12/96 3088 (H) NR: GREEN, IVAN, ROBINSON 03/12/96 3088 (H) FISCAL NOTE (ADM) 03/12/96 3088 (H) REFERRED TO JUDICIARY 03/20/96 (H) JUD AT 1:00 PM CAPITOL 120 03/20/96 (H) MINUTE(JUD) 03/22/96 (H) JUD AT 1:00 PM CAPITOL 120 WITNESS REGISTER JEANNETTE JAMES, Representative Alaska State Legislature State Capitol Building, Room 102 Juneau, Alaska 99801 Telephone: (907) 465-3743 POSITION STATEMENT: Presented sponsor statement for HB 368. BROOKE MILES, Juneau Branch Administrator Alaska Public Offices Commission (APOC) P.O. Box 110222 Juneau, Alaska 99811-0222 Telephone: (907) 465-4865 POSITION STATEMENT: Provided commission's position and answered questions regarding HB 368. C.S. "CHRIS" CHRISTENSEN III, Staff Counsel Alaska Court System 303 K Street Anchorage, Alaska 99501 Telephone: (907) 264-8228 (Anchorage) (907) 463-4771 (Juneau) POSITION STATEMENT: Testified on HB 368. GLEN SCHRADER P.O. Box 1264 Kenai, Alaska 99611 Telephone: (907) 283-4359 POSITION STATEMENT: Testified on HB 368. KATHY ASHBY Alaska Public Interest Research Group (AKPIRG) 1835 West 15th Anchorage, Alaska 99501 Telephone: (907) 278-3661 POSITION STATEMENT: Testified on HB 368. ANNE CARPENETI, Assistant Attorney General Criminal Division Department of Law P.O. Box 110300 Juneau, Alaska 99811-0300 Telephone: (907) 465-3428 POSITION STATEMENT: Answered questions on HB 368. ACTION NARRATIVE TAPE 96-40, SIDE A Number 0001 CHAIRMAN BRIAN PORTER called the House Judiciary Committee meeting to order at 1:12 p.m. Members present at the call to order were Representatives Porter, Green, Bunde, B. Davis, Toohey and Finkelstein; Representative Vezey joined the meeting at 1:21 p.m. HB 368 - ELECTION CAMPAIGN FINANCE REFORM Number 0060 CHAIRMAN PORTER noted that Representative James, sponsor of HB 368, would present the bill. REPRESENTATIVE JEANNETTE JAMES explained she introduced HB368 because of the related initiative that had been filed. The original bill was as close to the initiative as possible. Despite good intentions, she said, people voting on the initiative would not have had the benefit of a close look at what they were voting on. Neither would they have known what unintended consequences might have arisen from the initiative. Therefore, she had felt the public was entitled to have the bill go through a public process. Number 0200 REPRESENTATIVE JAMES said Representative Finkelstein had also had a bill. After discovering needed changes, he and Representative Jame had begun to work together to get a bill through the legislature that was substantially similar to the initiative and that addressed concerns that might arise if the initiative went forward. In addition, they both wanted to provide the opportunity for public input. Changes to HB 368 had been made in the State Affairs Committee and Representative James expected there would be more. She thanked Representative Finkelstein for his work and voiced that the bill ought to have bi-partisan support. Number 0344 CHAIRMAN PORTER stated his intention of taking amendments that would improve the bill in terms of addressing questions, anomalies and gaps in the initiative, but that would maintain a substantially similar posture to the initiative, especially in terms of its intent. Number 0404 BROOKE MILES, Juneau Branch Administrator, Alaska Public Offices Commission (APOC), testified that the commission had met via teleconference and reviewed CSHB 368(STA). They had a couple of technical and substantive concerns, which were addressed by amendments drafted by Representative Finkelstein. MS. MILES referred to page 4, line 16. She said CSHB 368(STA) changed an existing policy of the commission, which was to exempt municipal candidates who spent $1,000 or less from campaign disclosure reporting. Under CSHB 368(STA), that threshold was raised to $2,500, which the commission viewed as too high. The commission feared that would eliminate virtually all of the municipal reports in most communities. Therefore, APOC was requesting that the amount be reinstated at $1,000. Number 0526 MS. MILES said the other area of substantive concern was the complaint process. She referred to page 16, line 29, which followed through in Section 21 on page 17, line 15, and said she understood Representative Finkelstein had proposed an amendment that addressed most of the commission's concerns. MS. MILES indicated two issues remained. Both were of a question nature. First, there was reference to `publicly funded entity' in a few sections of the bill. She stated, "There is a definition in there of what a publicly funded entity is, but because this bill addresses the activities of individuals, of persons - and `person' under the statute includes associations, corporations, organizations, companies, labor unions, natural persons - and there are also provisions in this statute that include what is required of the state and its political subdivisions, the commission just would like to know what a publicly funded entity is. If that language is going to remain in the bill and we'll be responsible for administering it, we would need to know that." Number 0629 MS. MILES said the other question concerned the section addressing honoraria, page 20, line 29. Although they had discussed it and understood the idea behind having it in the statute, the commission believed there could be no enforcement. She noted that the legislature had a section about honoraria very similar, if not word-for-word, in the ethics code. "And a way that that can be double-checked for a legislator is that these high-profile earned- income employers would have a dollar figure, so if you were receiving a salary that was not commensurate with the work that was required, a member of the public could look at that and say, `wait, how does an administrative assistant make a million dollars?' and a complaint could be filed," she said. On the other hand, in this statute, it would be difficult, and perhaps impossible, to enforce. Number 0759 MS. MILES mentioned the commission's fiscal note, which provided APOC's fair finding of what the law would cost to enforce and administer. CHAIRMAN PORTER asked why honoraria would not be on one of the reports that the candidate or a legislator would submit. Number 0802 MS. MILES said if a candidate was running for office and prohibited from taking this honoraria, because their financial disclosure statement would provide APOC their financial picture from the previous calendar year, it would not be on the document held by the commission at that point. Although a person could file a complaint with APOC, resulting in investigation and possible enforcement, there would be no way to look at the prima facia material on publicly filed reports and cross-reference it. CHAIRMAN PORTER indicated the information would come in the next year. MS. MILES replied, "It would come in the next year if the person attained office. If the person ran for office and did not attain office, the next year they would probably not be required to file a conflict of interest statement unless they were appointed to a board or commission or a position that required the filing." REPRESENTATIVE CYNTHIA TOOHEY asked if it would be in the year-end report. MS. MILES replied that usually honoraria would not be shown on a campaign disclosure report. "It would be shown on a financial disclosure report," she said, "because it wouldn't be considered a contribution to a campaign." She understood the intent was that that a person could not travel around, taking large honoraria, and then use that as personal contributions to her or his own campaign. Number 0890 CHAIRMAN PORTER said, "I don't think it's necessarily that. It's the idea of receiving money in any shape or form that influences the legislator, whether it's campaign or whether it's legislation." MS. MILES replied, "Right. And it already applies to legislators. This is to get it to apply to candidates." Number 0925 C.S. "CHRIS" CHRISTENSEN III, Staff Counsel, Alaska Court System, indicated he was general counsel to the judicial branch. He referred to Section19, page 16, of CSHB 368(STA), which he said affected the court system. He said there were two issues. For one, he would propose a solution; for the other, he would just bring the problem to the committee's attention, as he was not sure a solution was possible. Number 0956 MR. CHRISTENSEN stated, "The original bill, as it was introduced, gave a person the choice of either going to APOC to file a complaint or going straight to court. And if you went straight to court, the court was required to impose treble damages and the complainant got to keep half. So, essentially, the original bill created a bounty hunter system. And, as you can expect, the small number of complaints that APOC gets right now is going to skyrocket if people out there know that all they have to do is find something wrong and they get half of the treble damages that a court imposes." Mr. Christensen suggested most of those people would be pro se litigants and that the cases would take longer than normal. MR. CHRISTENSEN noted that the State Affairs Committee had attempted to correct the problem. "And, of course, you're bound by the problem of doing something that's substantially similar," he said. "They said that you have to go to APOC first and you can go to court only if APOC hasn't issued a preliminary investigation within 60 days of your filing the complaint with APOC." He thought the problem would remain to some extent, because APOC did not have the resources to deal with most complaints within 60 days. "So, you're still going to see, I think, a lot more complaints filed, as long as people have the right to go to court and get half of the treble damages that are awarded," Mr. Christensen concluded. Number 1036 REPRESENTATIVE AL VEZEY referred to the clause about going straight to court, treble damages and half going to the plaintiff. He asked if that came from the initial referendum. MR. CHRISTENSEN replied yes. REPRESENTATIVE VEZEY asked if there was any indication about how a federal or state court would look upon a bounty hunter system. He was unaware of any retribution, punishment or fine system ever structured like that and thought the whole thing might be thrown out as unconstitutional. MR. CHRISTENSEN said some states actually allowed private prosecution of criminal matters, although Alaska did not. "But I don't know that private prosecution is necessarily prohibited by the constitution," he said. "I think if the legislature passes a statute or the voters enact a statute through the initiative process that says people can bring something to the attention of the court, I'm not sure what the answer would be. I'm sure it would be challenged, but I can't tell you, `yes, it would be thrown out.'" Number 1145 REPRESENTATIVE VEZEY voiced his belief that a bounty system would strike at fundamental judicial issues. MS. CHRISTENSEN indicated he could not shed too much light on the subject. "This is unique," he said. "I haven't seen this sort of thing elsewhere in our law and I don't know whether other states do it. It is a can of worms and that's why I wanted to bring it to the committee's attention." He emphasized the potential for tremendous cost, as it was more expensive to go through the courts than through an administrative agency. Number 1207 REPRESENTATIVE DAVID FINKELSTEIN explained he would later propose an amendment to the relevant sections, Sections 19 and 20. He indicated there had been "huge debates" on the disposition of the penalties in the court system, relating to how much would go to the plaintiff and how much to the state. CHAIRMAN PORTER said he was looking at version F and pointed out that the provision was on page 18, Section 22. MR. CHRISTENSEN concurred and said it referred back to Section 19, the section he was referring to which provided a complainant had to wait 60 days before going to court. He specified that the two sections worked with each other. Number 1282 REPRESENTATIVE FINKELSTEIN did not believe there was any evidence, even with the original provisions in the initiative, that there would be a stampede to the courtroom. Whoever filed the complaint could lose and end up paying court costs. He referred to page 18, which said that if the superior court found the violation was not a repeat violation or part of a series or pattern of violations, or was inadvertent, that imposition of the penalty may be suspended or set aside. "You're going to get part of nothing," he said. "There's every provision in here to allow justice to be served, and you're not going to be much of a bounty hunter when the judge has the ability to bring it down to zero." MR. CHRISTENSEN responded that because there would be many pro se litigants, there might be potential for mischief. He said, "I realize that to an extent, the legislature's hands are tied by the substantial similarity problem. I just wanted to draw this to your attention." REPRESENTATIVE FINKELSTEIN pointed out that an upcoming amendment addressed these concerns. Number 1375 MR. CHRISTENSEN referred to Section 19, which allowed imposition of civil penalties. He said he had asked two attorneys in the court system and two from the Department of Law whether a person sued in court for civil penalties would have the right to a jury. "And these four attorneys couldn't really agree," he said. If a person got a decision from APOC and then appealed it to court, the law was clear there was no right to a civil jury. If the complainant merely asked for an injunction, the law was also clear that there was no right to a civil jury, he said. "But it's not entirely clear that if you're asking for civil penalties you don't have the right to a civil jury." Number 1419 MR. CHRISTENSEN pointed out there was a subsidiary issue. "We have the whole problem of when does a person get a jury for a criminal charge," he said. "And typically the courts have held that they will accept the legislature's characterization of something as civil and not criminal, particularly when it's a regulatory matter such as this. But still, I think it would be better, and certainly less expensive for the state, if it were clear that this did give no right to a jury trial if someone were to sue for civil penalties." MR. CHRISTENSEN referred to HB 474 and said the committee substitute for that bill contained language that would be fairly suitable. He indicated that the last few lines of page 2 of HB474 said, "an action for civil penalty under this section does not give rise to the right to a trial by jury or counsel at public expense". Mr. Christensen stated, "I think if that were simply inserted at the end of Section 19, it would clarify it." Number 1482 REPRESENTATIVE CON BUNDE asked what would happen if a candidate was indigent. MR. CHRISTENSEN replied, "If you're charged with something and the state characterizes it as criminal, and you're facing a fine that is so great as to denote criminality in the eyes of the public, then you'd be entitled to a public defender if you were indigent. Typically, as I indicated, the courts will accept the legislature's characterization of something as a civil penalty rather than a criminal penalty, although not always. They generally will do it if you're dealing with a regulatory area like this." He indicated that was true even if there was a huge fine. Number 1565 GLEN SCHRADER testified via teleconference from Kenai. Because of the numerous amendments, he had not had adequate time to research them. He expressed concern about the time and effort put into the bill, suggesting the initiative should simply go to the voters in the fall. If they passed it, fine; if they did not, the next legislature could work on it, he said. He believed it was unconstitutional but felt there should be some limit on the amount a candidate could spend on any particular office, whether it be from contributions or his or her own money. CHAIRMAN PORTER responded, "During the discussions on the bill and the initiative, I think it's pretty well been concluded in this body that you're correct, that trying to limit the amount of money that an individual can him[self] or herself put into his own or her own campaign is unconstitutional." He explained there was some inability of the legislature to respond to an initiative for two years after it passed. "So, the problems with the wording of the initiative that are now known and admitted by even the drafters of the initiative would be in effect for another election, at least, and create, probably, more problems than the initiative would solve," Chairman Porter said, emphasizing they were not trying to create something in any way dissimilar from the initiative. Number 1738 REPRESENTATIVE BUNDE said the initiative limited the ability of people to raise money. "What is unconstitutional is limiting the ability of someone to take their own money and put [it] into a campaign," he said. CHAIRMAN PORTER said, as Representative Finkelstein had pointed out in the previous committee, the only step not being taken here was public financing of campaigns. He suggested that was the only way that someone's personal contributions could be limited. MR. SCHRADER asked if there was any way to limit contributions from the district or the state. CHAIRMAN PORTER replied he thought there was case law on that. "We're probably passing something that is going to be constitutionally questionable anyway in limiting outside contributions," he said, explaining that the initiative totally prohibited contributions from outside the state. However, HB 368 made slight exceptions to that regarding relatives. "Probably, if it were challenged, we'd lose that, too," he added. Number 1911 KATHY ASHBY, Alaska Public Interest Research Group (AKPIRG), testified via teleconference from Anchorage. She prefaced her remarks by saying the amendments before her were not current versions. She shared concerns about campaign financing and the use of funds. She believed the initiative, signed by 33,000 Alaskan voters, was being diluted. Even today, APOC was evidently unable to do adequate enforcement because of lack of funds, staff and technology, she said. "It seems to me that many of these stabs are going to be futile and the electorate is going to be back, worse off than we were with the hope of an initiative. ... I would like very much to see the initiative go to the ballot with all of its blemishes," she concluded. REPRESENTATIVE BUNDE said he shared Ms. Ashby's goal and would much prefer that the initiative, "warts and all," go to the public. Number 2048 ANNE CARPENETI, Assistant Attorney General, Criminal Division, Department of Law, explained she was raising concerns of the Criminal Division regarding criminal offenses contained in the bill. She had spoken with Representative Finkelstein and had prepared rough-draft conceptual amendments. MS. CARPENETI referred to page 25, lines 29-31, which defined the terms of intentionally, knowingly, recklessly and with criminal negligence, the mental states for criminal law, as defined in Title11 criminal law. "But the problem is, their use in the criminal statutes in the bill don't work in relation to their definitions," she stated. She referred to page 24, line 12, relating to campaign misconduct in the first degree. "The way these mental states are defined in Title 11, you act intentionally as to a result, not as to what you do, what you act," she explained. "The way they're defined, you really can't intentionally violate a statute. You can intentionally do an act and intentionally cause a death, but you don't intentionally violate the murder statute," she said, emphasizing that "intentionally" was defined in relation to the result, not what statute they were intending to violate. Number 2125 MS. CARPENETI said the three levels of crimes in the bill all suffered from similar problems in terms of "knowingly and with criminal negligence". She offered to work with the committee on it. CHAIRMAN PORTER voiced his preference to have Ms. Carpeneti draft that language and run it by him and Representatives Finkelstein and James. He asked if there was further testimony. Hearing none, he closed the public hearing. Number 2211 REPRESENTATIVE FINKELSTEIN expressed appreciation to Representative James and the House State Affairs Committee for their work on the bill. He noted that only the last amendment, not yet handed out, was major and substantive. Most others were relatively minor conforming provisions. The stack of amendments he provided, dated March 20, 1996, had a cover page entitled, "R. Finkelstein's proposed amendments to HB 368 in House Judiciary (13 amendments)." Number 2298 REPRESENTATIVE FINKELSTEIN offered Amendment 1 to CSHB 368(STA), which read: Page 23, Line 8 Delete: "33 1/3" Insert: "50" Page 23, Line 16 Delete: "33 1/3" Insert: "50" REPRESENTATIVE FINKELSTEIN indicated Amendment 1 was a correcting amendment in response to APOC's request for a change in the percentage as it applied to when the name of a candidate had to be included in the name of a group. "So, that was changed but we also mistakenly changed it in another place that is unrelated," he said. "This just corrects that." CHAIRMAN PORTER noted there was a motion to move Amendment 1, addressing page 23, line 8, and page 23, line 16. REPRESENTATIVE BUNDE asked if the 50 percent was reflected in existing law. REPRESENTATIVE FINKELSTEIN replied that was correct. "This 50 percent we're changing back here ... has to do with when a group is controlled by a candidate, which is a different subject that when the name has to be included in the name of the group." Number 2340 REPRESENTATIVE VEZEY said the definition of "group" was the most complex aspect of public campaign disclosure law. The section was fraught with things he considered unconstitutional. He suggested that what was on page 23 should probably be consistent with what was on page 5. He thought the 33-1/3 was an absurd standard and said, "I think the standard of more than 50 percent is a clearer line." CHAIRMAN PORTER referred to the section on page 5 and said that in the previous rendition, if a group spent more than 50 percent of its money on the activities of one issue or one candidate, they were required to have that issue or candidate in their name. REPRESENTATIVE VEZEY clarified that was only for a candidate. CHAIRMAN PORTER said, "What we're saying is we want to move that to 33-1/3 percent, considering ... that somebody could kind of defeat the purpose by spending 40 percent of their money on one issue." Number 2462 MS. MILES explained that the section on page 5 was a naming convention for a group spending 50 percent, under the existing language, or 33-1/3 percent, under the new language, on one candidate. TAPE 96-40, SIDE B Number 0001 MS. MILES expressed that it was not the commission's intention to alter the language found on page 23, which constituted what a "controlled group" was. "A controlled group should remain at least ... at 50 percent or more," she said, "because a contribution to a controlled group is just the same as a contribution to the candidate." She cited an example in the legislature, saying, "A person who gives a maximum contribution to Republicans to Dave Donley could not also give a contribution to the Citizens for Dave Donley. So, we wouldn't want that to be any less than 50 percent." She concluded, "If it's too confusing to have a different level for the naming convention and for the controlled group, then it would be the commission's preference that they both remain at 50 percent." Number 0056 REPRESENTATIVE VEZEY referred to paragraph (B), line 1-19, page 23, and asked whether Ms. Miles was saying that was basically in existing law. MS. MILES replied, "Basically, under existing law, a group that spends more than 50 percent of its money on behalf of one candidate is a controlled group. It's a group that's considered to be controlled by that candidate and then is joined together, for purposes of the contribution limit, as one and the same." REPRESENTATIVE VEZEY responded, "But I'm not aware of any wording like this in statute or regulation." MS. MILES said although it was in current statute, she did not have that statute with her. REPRESENTATIVE VEZEY referred to page 21 and suggested this was creating new definitions. MS. MILES responded, "Right. This is defining `group,' which is currently defined under regulation and statute." Number 0108 REPRESENTATIVE VEZEY expressed that, according to his interpretation of current supreme court rulings relating to campaign expenditures, this definition would not stand up to supreme court scrutiny as far as what independent expenditure groups could do. MS. MILES clarified that independent expenditures were a different issue. REPRESENTATIVE VEZEY said, "But you are trying to take an independent group and create a statutory definition for a controlled group." He clarified that by "you" he did not mean Ms. Miles. He was not familiar with current statutory wording that defined when a group became a controlled group, he said. That had been defined through court cases but not clearly in statute. MS. MILES replied, "Right. Under current statute, I think, it's any combination of two or more individuals acting jointly to bring money into the group is a group." REPRESENTATIVE VEZEY said he was not aware of any statutory definition of controlled group. Number 0163 REPRESENTATIVE FINKELSTEIN indicated they were discussing a different subject, on page 5, which might be appropriate for another amendment. However, Amendment 1 corrected something changed inadvertently and was purely technical, he said. CHAIRMAN PORTER referred to page 5 and asked: "Why don't we want to say that if you spend more than a third, then that is the purpose of your group?" Number 0216 MS. MILES responded, "I believe that it's the commission's position that that's really at too low of a level and again, keeping in mind that this is now changing the contribution limit to $500 from an individual, so a person who gave $500 to a group that spent one- third of its money on one candidate could then not make a contribution to the candidate." She suggested it might be better to change both the naming convention and the controlled group definition back to 50 percent, if that was clearer. CHAIRMAN PORTER suggested they should do one or the other. REPRESENTATIVE FINKELSTEIN said, "I don't disagree with you, Mr. Chairman, at all about this. I was just trying to follow the commission's recommendation here. But I don't think there's any real reason that a controlled group shouldn't be at 33-1/3 percent." He acknowledged that the argument could be made the other way, as well. He explained that he had tried not to get into controversial areas not covered by the initiative. "It just says that existing law prevails," he added. CHAIRMAN PORTER asked if that was what the amendment did. REPRESENTATIVE FINKELSTEIN affirmed that. Number 0280 CHAIRMAN PORTER pointed out that it was changed to 33-1/3 percent in Section 5. With this amendment, he thought it would still be inconsistent. REPRESENTATIVE FINKELSTEIN responded with an example, saying that a group that gave 51 percent to one candidate would be counted as part of that candidate's campaign and the candidate could be considered controlled by that group. However, if the group gave 50 percent to two different candidates, there would be a question as to whose campaign they would be counted as part of. CHAIRMAN PORTER said they would have to make up their minds, because under Section 5, if they spent 33-1/3 percent on one person, they had to put that name in the title of their group. REPRESENTATIVE FINKELSTEIN indicated there could be a circumstance where two names would be in the title. He said the issue was whether they were really independent groups or controlled by somebody. Number 0360 CHAIRMAN PORTER commented that he understood, after hearing the debate, the rationale for passing the amendment and having inconsistency in the numbers. However, someone could read the bill and be confused by the different standards. He asked if there was further discussion or an objection to Amendment 1. There being no objection, Amendment 1 passed. Number 0405 REPRESENTATIVE FINKELSTEIN offered Amendment 2 in response to a memo from Jack Chenoweth requesting for the change because of an internal inconsistency in the bill. The House State Affairs Committee had decided to allow limited contributions from groups to other groups. However, separate provisions said campaign money would not be given to groups. Amendment 2 corrected that and made it internally consistent. Amendment 2 to CSHB 368(STA) read: Page 13, Line 23, after "(a)" Delete: "Campaign" Insert: "Except as otherwise provided, campaign" Page 14, Line 1, after "fine" Insert: "or" Page 14, Lines 10-11 Delete: ";or" (7) used to make contributions to another candidate or to a group." Insert a new subsection to read: "(c) Campaign contributions held by a candidate may not be contributed to another candidate or to a group" CHAIRMAN PORTER asked if Amendment 2 left it unequivocal that a group could not give money to another group. Number 0432 REPRESENTATIVE FINKELSTEIN replied, "No. It actually goes with the State Affairs Committee approach which says groups can give to other groups, up to a $1,000 limit in the case of groups and unlimited within parties." REPRESENTATIVE BUNDE indicated he would have an amendment regarding that section. CHAIRMAN PORTER pointed out that Representative Bunde's amendment did not deal with campaign money from group to group. REPRESENTATIVE BUNDE agreed it was from one campaign to another. However, it applied when a person was no longer a candidate, he said. Number 0538 CHAIRMAN PORTER referred to page 13, line 27, and said, "The lead- in statement is, `Campaign contributions held by a candidate or group may not be' and we're adding `(7) used to make contributions to another candidate or to a group.'" REPRESENTATIVE FINKELSTEIN clarified, "That's meant to say delete there. It says "delete `or [(7)] used to make contributions to another candidate or to a group.' and then insert. So, it's deleting (7) with this amendment." Number 0583 CHAIRMAN PORTER asked, if the amendment passed, what the monetary limit would be for a group giving money to a group. REPRESENTATIVE FINKELSTEIN replied "$1,000." Party to party, the amount was unlimited. CHAIRMAN PORTER asked what the bill now provided for party to party. REPRESENTATIVE FINKELSTEIN said, "Zero." He added that it depended on how it was defined. Number 0614 REPRESENTATIVE BUNDE referred to page 14, line 11, and said he understood that groups could contribute group to group. CHAIRMAN PORTER added, "Because we've eliminated number (7) above there, which precluded it. So groups can give to groups to the limit of $1,000." He asked how it affected what a party could do. REPRESENTATIVE VEZEY responded, "A party, as defined in APOC statutes, is a group." He noted there were two contributors in Alaska statutes, individuals and groups. "You fall into one or the other category," he said. Number 0657 CHAIRMAN PORTER suggested the bill changed that to three categories. REPRESENTATIVE FINKELSTEIN clarified that intra-party activity was allowed. Amendment 2 was a technical amendment to fix an inconsistency that could have been interpreted to disallow that kind of group transfer. CHAIRMAN PORTER specified it was group transfers, not party transfers. REPRESENTATIVE FINKELSTEIN referred to (7), which said, "used to make contributions to another candidate or to a group". He explained, "If that wasn't fixed, it ... might have precluded those group transfers or party transfers." REPRESENTATIVE TOOHEY stated, "What he's saying is a party and a group are two different things." REPRESENTATIVE FINKELSTEIN indicated Representative Vezey was right. Although all parties were groups, not all groups were parties. Number 0716 CHAIRMAN PORTER asked, if the bill passed, whether the statute would remain the same, with just groups and parties. MS. MILES replied, "Essentially, yes. A party is always a group. But a party is a group with special dispensation for greater contributions and also greater ... unlimited interaction between a statewide party and its subdivisions." REPRESENTATIVE BUNDE asked, if this amendment was accepted, whether a legislator would be prohibited from contributing to another legislator out of campaign funds. REPRESENTATIVE FINKELSTEIN responded that was already precluded by (7). CHAIRMAN PORTER said, "Basically, without the amendment, that would be precluded. We're taking out language that precludes both party to party and campaign to campaign, and leaving campaign to campaign or candidate to candidate," he said. Number 0778 REPRESENTATIVE BUNDE opposed Amendment 2. CHAIRMAN PORTER asked whether Representative Bunde thought groups should not be able to give money to each other. REPRESENTATIVE FINKELSTEIN referred to a letter dated March 12, 1996, from Jack Chenoweth to Chairman Porter, which said Mr. Chenoweth had made a minor error in two provisions that now conflicted and needed correction. Representative Finkelstein stated, "If the person objecting wants to propose a substantive amendment, that's fine, we can discuss it. But I'm doing nothing more here than trying to fix a minor drafting matter." Number 0814 REPRESENTATIVE VEZEY moved to amend Amendment 2 by deleting the last five lines and inserting a new subsection. "Just delete from `insert a new subsection' down," he said. CHAIRMAN PORTER objected for the purpose of discussion. REPRESENTATIVE VEZEY expressed that he had serious concerns and suggested someone be brought in to consult with the committee on the bill. He questioned its constitutionality as to campaign expenditures and believed it had philosophical flaws. CHAIRMAN PORTER emphasized the goal of crafting legislation that did not vary from the nature of the initiative, as opposed to crafting legislation that he liked. He asked if candidate-to- candidate contribution from campaign funds was precluded in the initiative. REPRESENTATIVE FINKELSTEIN said that was correct. He emphasized the technical nature of the amendment and indicated that amending the amendment would create a new conflict. Number 0960 REPRESENTATIVE VEZEY withdrew his amendment to Amendment 2. CHAIRMAN PORTER asked members with substantive concerns to draft amendments with Mr. Chenoweth for presentation at the next meeting. REPRESENTATIVE FINKELSTEIN requested that he and Representative James receive a copy of any proposed amendments. CHAIRMAN PORTER asked if there was further discussion or an objection to Amendment2. There being none, Amendment2 passed. Number 1023 REPRESENTATIVE FINKELSTEIN offered Amendment 3 to CSHB 368(STA), which read: Page 5, Lines 10-11 Delete: An individual may make a contribution to a group or to a political party." Insert: "Only an individual may make a contribution to a group or political party. Only individuals, groups or political parties may make contributions to a candidate." Page 6, Line 20: Delete: "an individual or group" Insert: "a person" REPRESENTATIVE FINKELSTEIN explained Amendment 3 conformed to the initiative and the Senate bill. The initiative said individuals made contributions to groups or parties; individuals, groups and parties made the contributions to a candidate. "What we're trying to do is make something that's easily understood without having to read every provision together," he said. CHAIRMAN PORTER noted that as a motion to move Amendment 3. Number 1064 REPRESENTATIVE VEZEY objected and asked for an explanation. REPRESENTATIVE FINKELSTEIN responded, "Right now, it says an individual may make a contribution to a group or to a political party, on page 5, lines ... 10-11. [At] later points, we limit what can be given to a candidate ... but there's never one place set in clear language what that limit is." He said the bottom change was technical. "There are entities other than individuals or groups," he said, indicating there was an amendment coming up that fixed all the "persons" and "individuals" throughout the bill. Number 1141 REPRESENTATIVE VEZEY maintained his objection. Regardless of the wording being directly out of the initiative, the legislature was obliged to write statutes that conformed to established law and would stand up to constitutional scrutiny, he said. He believed the initiative was so fraught with constitutional problems that Alaska's law would be in flux for 10-20 years if it passed. "I do think that we have an obligation to go through this and try to bring the statute in conformity to the state of the law as it exists today," he said. Number 1202 CHAIRMAN PORTER said the amendment made it purely clear that a business could not give money. Although he did not personally agree with that, it was the provision of the initiative. "Again, if we wanted to debate that issue, let's get an amendment that specifically does all of that," he suggested. REPRESENTATIVE VEZEY viewed the amendment as being broader than that. "[I]t also says `only an individual' excludes groups," he said. Number 1290 CHAIRMAN PORTER agreed an individual and a group were distinct entities. REPRESENTATIVE JAMES asked: "Didn't we just say that groups could give money to groups, and now we're saying only individuals can give money to groups?" REPRESENTATIVE VEZEY said, "And this does not say that a business cannot give a contribution, because a business can be defined as a group." REPRESENTATIVE JAMES concurred. REPRESENTATIVE VEZEY stated that only individual groups or political parties may make contributions to a candidate. CHAIRMAN PORTER agreed. "We just said that a group could give money to a group and now we're just specifically saying they can't," he added. Number 1327 REPRESENTATIVE FINKELSTEIN explained the language came from the Senate bill before another change was made. He offered to try again on the amendment and said the intention was only to correct the language in that particular place. CHAIRMAN PORTER noted they were withdrawing Amendment 3 and would work on it next time. He suggested also thinking about why a group would want to give money to a group in the first place. REPRESENTATIVE VEZEY commented that he wanted to bring in an expert to advise the committee. He suggested the issue had been around ever since Watergate and that there were thousands of court cases defining what was allowed or prohibited in those areas. Number 1439 REPRESENTATIVE FINKELSTEIN said at least four opinions had been offered in writing to the legislature. "If you read them all, the conclusion you come to is that, in general, this initiative has avoided the areas that are explicitly unconstitutional," he said. "But there's also many of them that are not explicitly constitutional." He noted that the one being discussed was least likely to have a problem because the federal government, as well as the majority of states, banned contributions except from individuals. Number 1514 REPRESENTATIVE VEZEY referred to the 1936 federal election campaign reform which outlawed contributions from corporations, labor unions and other entities. In so doing, he said, they created the "PAC" or political action committee, a group formed to contribute for other entities. Businesses and labor unions still contributed, but in the name of a PAC. REPRESENTATIVE FINKELSTEIN thought that was incorrect and said, "Only individual contributions are allowed to those groups." Number 1575 REPRESENTATIVE VEZEY replied there were limitations on the money that could go into PACs. But the federal government, when it created the ban on contributions by labor unions and corporations, created the PACs. CHAIRMAN PORTER pointed out that the source of funds contributed by the PAC was totally different from that contributed by a business. "A business can contribute from business funds," he said. "There's a total prohibition in this initiative, and in the federal law, from that happening. The PACs must have their contributions from individuals." REPRESENTATIVE VEZEY interjected, "All of whom can be employees of the business." Number 1625 CHAIRMAN PORTER agreed. "And this is, of course, a proof problem, but if it is determined that the business is giving money to employees with the expectation that that money is to be given to a certain candidate, that is a violation of federal law," he said. REPRESENTATIVE FINKELSTEIN added, "And in existing state law." He mentioned there had been prosecutions over that provision. REPRESENTATIVE VEZEY indicated that federal law clearly provided for payroll deductions for PACs. CHAIRMAN PORTER replied, "But the PAC cannot be a PAC for a candidate. It is just a PAC for the organization. Then they get together and decide how it is they want to distribute their funds. But that is a total violation of the law if it is determined that all of those funds, 33-1/3 percent or 50 percent or however they've got their statute written, [are] going to one place." Number 1679 REPRESENTATIVE FINKELSTEIN commented that while it seemed new, because it had not been seen in Alaska, it was not unusual. However, there were unusual provisions in the bill, such as the lobbyist provision, which were the ones most likely to be subject to constitutional challenge, he said. Number 1736 REPRESENTATIVE FINKELSTEIN moved Amendment 4 to CSHB 368(STA), which read: Page 15, Lines 10-12 Delete "(6) repay contributions to contributors, but only if repayment of the contribution is made to all contributors pro rata in approximate proportion to the contributions made;" Insert "(6) repay contributions to contributors, but only if repayment of the contribution is made pro rata in approximate proportion to the contributions made using one of the following, as the candidate determines: (A) to all contributors; (B) to contributors who have made contributions most recently; or (C) to contributors who have made larger contributions;" REPRESENTATIVE FINKELSTEIN explained Amendment 4 expanded what could be done with excess campaign funds. The previous bill said money could be given to contributors in a pro rata manner. "There was an expression that would be too hard, because maybe it would make more sense just to give to the most recent contributors or only to people who have given larger contributions. So, this allows all those options." He expressed it was a minor provision because it seldom happened. CHAIRMAN PORTER noted the motion to move Amendment 4 and asked if there was an objection. Number 1789 REPRESENTATIVE VEZEY objected for purposes of discussion and asked for a rationale. REPRESENTATIVE FINKELSTEIN said the concern expressed in previous committees was that it precluded, for example, just giving the money back to the most recent contributors. Not giving it to the smallest contributors, to avoid accounting and distribution hassles, might not have been allowed, either. The amendment clarified that money could be returned in any of those ways. CHAIRMAN PORTER indicated there was a whole list of other things that could be done with the money, including giving it to charities or repaying loans. This expanded methods for giving it back to contributors, however. REPRESENTATIVE VEZEY withdrew his objection. CHAIRMAN PORTER asked if there was any further objection to Amendment 4. There being none, Amendment 4 passed. Number 1889 REPRESENTATIVE FINKELSTEIN offered Amendment 5 to CSHB 368(STA), which read: Page 16, Line 9: Delete: "The total value of the property retained may not exceed $2,500." Insert: "The current fair market value of the property retained may not exceed a total of $2,500." REPRESENTATIVE FINKELSTEIN explained a concern had been expressed that the value was not purchase price. He said the initiative always had intended that. CHAIRMAN PORTER asked if there was discussion or an objection to Amendment 5. There being none, Amendment 5 passed. Number 1935 REPRESENTATIVE FINKELSTEIN offered Amendment 6 to CSHB 368(STA), which read: Page 25, Line 25: Delete: "AS 15.56.014(a)" Insert: "AS 15.56.012" REPRESENTATIVE FINKELSTEIN noted that Amendment 6 just fixed a mistake in drafting. In the provisions of the initiative, a person found guilty of the highest level of penalty, the first degree, would lose his or her business license. As written in the bill, a person would no longer lose a business license for a first-degree offense but would lose it for a second-degree offense. The amendment moved it back to the first degree, so that only the highest level of penalty, for the actual intentional violation, could result in losing a business license for a year. Number 1980 CHAIRMAN PORTER asked if there was discussion or an objection to Amendment 6. REPRESENTATIVE VEZEY objected and asked for time to review it. REPRESENTATIVE FINKELSTEIN clarified the question was whether losing a business license should be for the highest-level violation, as in the initiative, or for a lower-level violation. He said for the highest level of violation, a person had to intentionally break the law. CHAIRMAN PORTER asked what AS 15.56.012 was. REPRESENTATIVE FINKELSTEIN replied that was the first degree. Number 2080 CHAIRMAN PORTER said it was in the bill on page 24, line 9. He asked why, if a campaign prohibition was violated, a person would lose a business license. REPRESENTATIVE BUNDE speculated that if a business was violating it, this would be an attempt to impose an additional penalty. Number 2128 REPRESENTATIVE FINKELSTEIN agreed it was an interesting subject but pointed out the amendment was purely technical. "Even if you didn't believe in it, you'd certainly want it to apply only to the highest level penalty," he said. CHAIRMAN PORTER suggested the committee write that down for future consideration. He asked if there was further discussion or an objection to Amendment 6. There being none, Amendment 6 passed. Number 2212 REPRESENTATIVE FINKELSTEIN offered Amendment 7 to CSHB 368(STA), which read: Page 7, Line 6 after "representative" Insert: ", or municipal or other office" REPRESENTATIVE FINKELSTEIN said that while in the initiative prohibited money from out of state, the bill allowed minor amounts. The intention was to allow family members to contribute. However, there was no provision for municipal or other offices. The question was whether someone running for a municipal office should be allowed a minor amount of out-of-state money. CHAIRMAN PORTER asked if there was discussion or an objection. Number 2267 REPRESENTATIVE VEZEY asked if, as currently written, there was a limit on the contribution to a municipal or other office. CHAIRMAN PORTER replied there was an absolute prohibition from out of state. REPRESENTATIVE VEZEY noted Amendment 7 was trying to add "municipal or other office" to the $2,000 contribution from a party, from out of state. CHAIRMAN PORTER commented that without this, people running for municipal or other office would not be able to receive a limited contribution from out of state, as people running for state office were allowed to do. REPRESENTATIVE VEZEY asked if this was a substantive amendment. REPRESENTATIVE FINKELSTEIN replied, "Absolutely." REPRESENTATIVE VEZEY asked Chairman Porter if he preferred to discuss the concept later. CHAIRMAN PORTER said yes and indicated he was writing down topics for consideration. Recognizing that the committee was voting on the amendment, not the issue, he asked if there was any objection to Amendment 7. There being none, Amendment 7 passed. Number 2450 REPRESENTATIVE FINKELSTEIN offered Amendment 8 to CSHB 368(STA), which read: Page 24, Line 21 after "(2)" Insert: "except as provided in AS 15.13.090(b)," REPRESENTATIVE FINKELSTEIN referred to a court decision called the McIntyre case, to which Amendment 8 attempted to conform Alaska law by not requiring filing or paid-for-by statements from an individual who tried to affect a campaign with signs or other means. TAPE 96-41, SIDE A Number 0001 CHAIRMAN PORTER asked if there was discussion or any objection to Amendment 8. There being none, Amendment 8 passed. Number 0059 REPRESENTATIVE FINKELSTEIN offered Amendment 9 to CSHB 368(STA), which read: Page 13, line 6: Delete "expenditures from" Insert "all amounts expended from" Page 16, line 1: Delete "the expenditures made" Insert "all amounts expended" REPRESENTATIVE FINKELSTEIN explained that unlike the initiative, the bill allowed a limited amount of money to go into a legislative office account, with caps. In doing so, it required that any expenditures from that account be reported publicly. In using the word "expenditures", they had discovered that the commission had a specific definition for "expenditures". The English word was intended, not that definition. The amendment was purely technical, he added. Number 0120 REPRESENTATIVE VEZEY objected, saying, "I'm not sure that we want to address all amounts expended." REPRESENTATIVE FINKELSTEIN indicated if that approach was accepted, there would be no reporting because no campaign expenditures occurred out of the office account. The concept was that if campaign funds were converted to an office account, which was essentially a category of personal funds, a person should disclose what happened to that money, so it could not be interpreted that personal use was made of those funds, he said. Number 0199 REPRESENTATIVE VEZEY pointed out that expenses from legislative office accounts were public records. CHAIRMAN PORTER disagreed and said his were not. REPRESENTATIVE VEZEY indicated there were two ways of operating and said apparently Chairman Porter had used the method where Legislative Affairs wrote a single check to him. "That is a public record," he said. CHAIRMAN PORTER stated that how he spent those funds was not a public record and briefly discussed office accounts. He referred to page 13, line 6, the language "including, if applicable, expenditures". He suggested that meant that if he took money from his campaign and put it into his account, he would have to report how he spent it, not that he put it in there. "But it still doesn't change the rules on the rest of the money that I got from the state," he added. Number 0389 REPRESENTATIVE JAMES said, "If you put money into an account and you already had money in there, or you put some other money in there, there's absolutely no way to identify how much of that money you spent in that account. You're going to have to report the account and where the money came from." REPRESENTATIVE VEZEY stated, "We're saying the same thing, except that I submit that the fact that you have taken moneys in your legislative office account as personal income is a reportable item. ... That is a public record. If we leave the wording as it is, I would interpret that as being, 1) illegal and 2) if it was legal, that you would then be required to report expenditures, as opposed to all funds expended, which is a difference. However, if a person decides to ... put $10,000 into their legislative office account, they could take out the $6,000 that the state put in there, ... leave $10,000 in there and report the expenses of that. They could take all $16,000 out as personal income and report it to the IRS, but I think under the statute, they'd be breaking the law to do that. But if they did, if it was legal under the statute, you would then be required to report the expenditures, as defined under the APOC statutes." He added that was his interpretation of the existing wording. REPRESENTATIVE VEZEY referred to the proposed wording and said, "You would then be required, if you put any campaign money into your office account and took any amount as personal income, you would then have to ... account for every dollar of both the personal income and the office account moneys." Number 0536 CHAIRMAN PORTER indicated Representative James's understanding was not quite right. "If it's in there, the report that I would have to make would be a report on how I spent that amount of money. Whether it was `the money' or other money wouldn't make any difference." He added, "I would have to explain expenditures up to the amount of the money that I drew from campaign." REPRESENTATIVE FINKELSTEIN concurred. "And if people felt there was a problem, they always have the option of setting up a separate account," he said. He emphasized it was a technical amendment and reiterated, "We meant its English version, not its definitional version." REPRESENTATIVE BUNDE understood that if a person were challenged by someone else or by APOC, an accounting of how checks had been written would be required. He asked Ms. Miles if that was correct. Number 0634 MS. MILES clarified, "Under current law, if you took money out of your campaign as income, you report that; that's that. That's all you have to report to APOC." REPRESENTATIVE VEZEY commented, "This statute clearly says that we're talking about the legislative office account established under current law. There can only be one of those." REPRESENTATIVE FINKELSTEIN replied, "This doesn't say that." REPRESENTATIVE VEZEY asked about AS 15.13.(indisc.). REPRESENTATIVE FINKELSTEIN said, "That's just the one in the bill. That's the new one that's the opportunity to transfer money. And this is only the part that's not the other office account. This is just excess campaign funds." Number 0683 REPRESENTATIVE VEZEY asked if Representative Finkelstein was saying that, under this statute, a person could have more than one legislative office account. CHAIRMAN PORTER indicated that was right. REPRESENTATIVE FINKELSTEIN said, "Well, you could have a hundred if you want." REPRESENTATIVE VEZEY thought that still strengthened the fact that reporting should be limited to expenditures. "Only the funds that would reported as an expenditure, as defined by APOC, really are applicable," he said, adding that if the bill became statute, he thought it would be imprudent of a person to mix the accounts. REPRESENTATIVE FINKELSTEIN said, "The expenditures definition is unrelated to what you'd use an office account for. It's about campaign expenses. Using that definition for expenditures from an office account would be illogical." He explained, "It's just a word-play thing that happened. This is supposed to say money that comes from this account, you're going to report what happens to it." He added that although policies could be debated, the amendment was not about those policies but merely fixed a technical error. Number 0772 MS. MILES agreed it was only a word problem. "Expenditures is defined in this chapter on page 22 at line 15," she said. "And under ... these new ideas for campaign finance, expenditures are going to have to ... be reasonably connected to a campaign to be considered. And that's why that's the wrong word for moneys that are transferred to an office account and then are spent for your official legislative ... activities." CHAIRMAN PORTER asked if there was further discussion and whether the objection was maintained. REPRESENTATIVE VEZEY maintained his objection. Number 0811 CHAIRMAN PORTER asked for a roll call vote on Amendment 9. Voting against the amendment were Representatives Toohey and Vezey. Voting for the amendment were Representatives B. Davis, Finkelstein, Bunde and Porter. Representative Green was absent. Chairman Porter noted that Amendment 9 passed. REPRESENTATIVE FINKELSTEIN offered Amendment 10 to CSHB 368(STA), which made the following changes: Page 6, line 17: Delete "a person" and insert "an individual" Page 6, line 18: Delete "the person" and insert "that individual" Page 6, line 28: Delete "a person" and insert "an individual" Page 6, line 29: Delete "the person" and insert "that individual" Page 7, line 1: Delete "person" and insert "individual" Page 7, line 3: Delete "person" and insert "individual" Page 7, line 5: Delete "person" and insert "individual" Page 7, line 7: Delete "a person" and insert "an individual" Page 7, line 8: Delete "the person" and insert "that individual" Page 7, line 10: Delete all material and insert: "(d) An individual, or one acting directly or indirectly on behalf of that individual," Page 7, line 16: Delete "a person" and insert "an individual" Page 7, line 17: Delete "the person" and insert "that individual" Page 7, line 19: Delete "person" and insert "individual" Page 7, line 22, after "person": Insert "or group" Page 7, line 24, after "person": Insert "or group" Page 7, line 26, after "person": Insert "or group" Page 7, line 27: Delete "a person" and insert "an individual" Page 7, line 28: Delete "the person" and insert "that individual" Page 7, line 32: Delete "person" and insert "individual" Page 8, line 3: Delete "person" and insert "individual" Page 8, line 6: Delete "a person" and insert "an individual" Page 8, line 7: Delete "the person" and insert "that individual" Page 8, line 10: Delete "person" and insert "individual" Page 8, line 13: Delete "person" and insert "individual" Page 8, line 16: Delete "a person" and insert "an individual" Page 8, line 17: Delete "the person" and insert "that individual" Page 8, line 20: Delete "person" and insert "individual" Page 8, line 23: Delete "person" and insert "individual" Page 8, line 27: Delete "person" and insert "candidate or individual" Page 8, line 29: Delete "person" and insert "candidate" Page 9, line 1: Delete "person" and insert "candidate" Page 9, line 4: Delete "person" and insert "candidate" Page 9, line 6, after "person": Insert "or group" Page 9, line 8, after "person": Insert "or group" Number 0898 REPRESENTATIVE FINKELSTEIN noted that the commission had alerted him to issues on the use of the word "person". "When you say `person' meaning an individual, it fouls things up because `persons' are a category that includes individuals, groups, other entities," he said. "`Persons' is everybody." Amendment 10 made it clear when it was an individual, he added. MS. MILES indicated the commission and its staff had spent a lot of time on this issue. Because the bill established actions allowed for individuals, who were allowed to contribute, and those prohibited for persons, meaning corporations, labor unions and entities of that nature, APOC had identified places where the wording was wrong. Number 0964 CHAIRMAN PORTER asked if there was further discussion or any objection to Amendment 10. REPRESENTATIVE VEZEY said he understood the difference between a person and an individual but asked what the problem was. He referred to page 6, line 17, and said only individuals could file with the commission. CHAIRMAN PORTER replied that a group also had to file with the commission. REPRESENTATIVE VEZEY concurred. REPRESENTATIVE FINKELSTEIN clarified they were not discussing groups there, just candidates. "We have to use person there because candidate doesn't cover everyone," he said, adding that there were individuals who filed like candidates. "By using person, we pull someone [in] that we don't mean to pull in there, which is groups." Number 1036 REPRESENTATIVE VEZEY withdrew his objection. CHAIRMAN PORTER asked if there was any other objection. There being none, Amendment 10 passed. Number 1066 REPRESENTATIVE FINKELSTEIN offered Amendment 11 to CSHB 368(STA), which read: Page 17, line 18: Delete "AS 15.13.040(f)" Insert "AS 15.13.040(d) - (f), 15.13.050, 15.13.060(b) - (d), 15.13.080(c) [AS 15.13.040(f)]" Delete "or 15.13.110(f)" Insert ", (e), or (f) [OR AS 15.13.110(f)]" Page 17, line 24, after "court.": Insert "A person who violates a provision of this chapter, except a provision requiring filing of a report within a time required as otherwise specified in this subsection, is subject to a civil penalty of not more than $500 as determined by the commission, subject to right of appeal to the superior court." REPRESENTATIVE FINKELSTEIN explained that the initiative had a high level of standards for determinants of when civil penalties should be provided, plus a set of standards for aggravating and mitigating factors. "The House State Affairs Committee took all those out [and] instead, just raised the maximum and left in the existing approach," he said. Whereas the initiative covered per-day items, with a $50-per-day maximum, this allowed civil penalties for items that were not per-day violations, with a $500 maximum. Number 1158 CHAIRMAN PORTER asked if there was any discussion or objection. There being none, Amendment 11 passed. REPRESENTATIVE FINKELSTEIN offered Amendment 12 to CSHB 368(STA), which read: Page 19, line 30: Delete "a state, municipal, municipal runoff, or federal office" Insert "a state or municipal office" Number 1166 REPRESENTATIVE FINKELSTEIN said Amendment 12 was a point made by the commission in a letter. "We preclude in here use of state and local funds for trying to affect candidates in a state, municipal or federal race," he explained. Because the commission had thought federal law might preempt it, the amendment removed "federal office". "I doubt that under federal law you'd be able to spend state or municipal money to try to affect the outcome at that election, anyway," he said. CHAIRMAN PORTER asked if municipal runoff was removed because of being redundant with a municipal office race. REPRESENTATIVE FINKELSTEIN affirmed that. CHAIRMAN PORTER asked if there was any discussion or objection. There being none, Amendment 12 passed. Number 1228 REPRESENTATIVE FINKELSTEIN noted that the next amendment in the packet was identical to Amendment 1. Therefore, it was not offered. He offered Amendment 13 to CSHB 368(STA): Page 23, Line 28, after "union": Insert "and political group" Number 1285 REPRESENTATIVE FINKELSTEIN explained that page 23, line 28, contained an odd, antiquated definition of "person". It cross- referenced the definition in 01.10.060, which included everyone. He said the amendment just made it easier to write the bill. REPRESENTATIVE VEZEY voiced that "labor union" was redundant. "There's no reason for having a statutory definition of `person' if we're going to have to go through and think of everybody that we might have left off," he said. He opposed the amendment for that reason. Number 1348 REPRESENTATIVE FINKELSTEIN said he would agree with respect to labor union. CHAIRMAN PORTER asked if it was language from the initiative. REPRESENTATIVE FINKELSTEIN indicated it was a drafting matter. He said the commission's executive director had believed that `group' was not included in `person'. CHAIRMAN PORTER asked if there was further discussion or any further objection. REPRESENTATIVE VEZEY maintained his objection. CHAIRMAN PORTER stated the desire to include `political group' under `person'. "And if the director has a concern about whether that's in there or not, I don't feel put out to make it explicit," he said. He asked for a roll call vote on Amendment 13. Voting against the amendment was Representative Vezey. Voting for the amendment were Representatives B. Davis, Finkelstein, Bunde and Porter. Absent were Representatives Green and Toohey. Chairman Porter noted that Amendment 13 passed. Number 1510 REPRESENTATIVE FINKELSTEIN offered Amendment 14 to CSHB 368(STA): Page 4, Line 19: Delete "election;" Page 4, Line 19, after "in seeking": Insert "statewide or legislative office or $1,000 in seeking municipal or other office;" Page 4, Line 21: Delete "election;" Page 4, Line 20, after "in seeking": Insert "statewide or legislative office or $1,000 in seeking municipal or other office;" Page 4, Line 23: Delete "election." Page 4, Line 22, after "in seeking": Insert "statewide or legislative office or $1,000 in seeking municipal or other office." REPRESENTATIVE FINKELSTEIN explained that in existing law, only for expenditures under $1,000 for municipal races would a person receive an exemption from reporting. The initiative added state races to that. The House State Affairs Committee increased that amount to $2,500. The commission responded that for municipal races, that was too high. Therefore, the amendment left the amount at $2,500 for state races but kept it at the original $1,000 for municipal races. CHAIRMAN PORTER noted that the amendment had been discussed by Ms. Miles. REPRESENTATIVE FINKELSTEIN said, "It still is going to lead to a lot more people who don't have to file." Number 1565 REPRESENTATIVE VEZEY said he could not see that $2,500 in campaign expenditures was excessive, even for municipal elections. He reminded members of inflation that had occurred since the APOC statutes were written in 1974. He felt people who limited expenses to $2,500 should be relieved of as many reporting burdens as possible. REPRESENTATIVE FINKELSTEIN indicated he did not disagree. MS. MILES said the commission's position was that $2,500 was too high for municipal races. Outside of the larger communities, there would be no reports available in communities, she said, explaining that although reports were filed with APOC, copies of reports were retained at the city clerk's office for public use. REPRESENTATIVE VEZEY expressed that $2,500 was minuscule by anybody's standards. He wanted to see a balance between the public right to know and the value of the information being received. Number 1714 MS. MILES pointed out that municipalities under 1,000 in population were not required to report. "Communities would have the ability to vote themselves out of this law, and haven't done it, which makes the commission believe that the information's useful to them," she explained. REPRESENTATIVE B. DAVIS asked what the average amount of money spent was for those kinds of races. Number 1795 MS. MILES referred to municipal races and said that excluding amounts below $1,000, the amounts between $1,000 and $2,500 included most of the assembly and school board races in smaller communities. REPRESENTATIVE B. DAVIS stated her understanding that many people running for office did not come up even to the $1,000 level. MS. MILES indicated that was correct. She estimated that in smaller communities, an average of 70 percent spent less than $1,000. "So, what's left, a lot of times, is between $1,000 and $2,500," she said. Number 1848 CHAIRMAN PORTER noted that the objection was maintained. He asked for a roll call vote on Amendment 14. Voting for the amendment were Representatives B. Davis and Finkelstein. Voting against the amendment were Representatives Bunde, Vezey and Porter. Representatives Green and Toohey were absent. So, Amendment 14 failed. Number 1915 REPRESENTATIVE FINKELSTEIN offered Amendment 15 to CSHB 368(STA), which read: Page 16, Lines 17-28 -Delete all material -Insert: "(d) A member of the commission, the commission's executive director, a person or group who believes a violation of this chapter or a regulation adopted under it has occurred or is occurring may file an administrative complaint with the commission within four years of the date of the alleged violation. If a member of the commission has filed the complaint, that member may not participate as a commissioner in any proceeding of the commission with respect to the complaint. If the commission accepts the complaint and opens a preliminary investigation, it shall do so within 90 days of the filing date of the complaint and shall investigate the complaint. After affording the respondent notice and an opportunity to be heard, if the commission finds that the respondent has engaged in or is about to engage in an act or practice that constitutes or will constitute a violation of this chapter or a regulation adopted under it, the commission shall enter an order requiring the violation to be ceased or to be remedied, and shall assess civil penalties under AS 15.13.125. A commission order may be appealed to the superior court by either the complainant or respondent within 30 days. The commission or its executive director shall promptly report to the attorney general concerning any acts or practices that may constitute violations of this chapter or regulations adopted under this chapter, or concerning the violation of any order of the commission." Page 16, Line 30 - Page 17, Line 14 -Delete all material -Insert: "(e) If the commission does not open a preliminary investigation within 90 days of the filing date of the complaint or complete action on the complaint within 120 days of the filing, the complaint is rejected. A complainant whose complaint is rejected may file a complaint in superior court alleging a violation of this chapter by a person charged in the administrative complaint. The superior court summons and complaint shall be served on the commission and the attorney general. The state shall have the right to intervene in a timely manner. A complaint may not be filed in superior court under this subsection if more than four years have elapsed from the date of the alleged violation. Nothing in this subsection creates a private cause of action against the commission." REPRESENTATIVE FINKELSTEIN explained that the complaint registered in the House State Affairs Committee and elsewhere was that the ability to go to court would be used as a tool to harass candidates in circumstances where no significant violation had occurred. With the amendment, before a person went to court, he or she had to file a complaint with the commission. After filing, APOC had 90 days to begin and action and 120 days to complete it; a person could not go to court until after that. "I've never completely agreed with that argument myself," he said, "because already ... complaints to the commission can be used to harass a candidate." However, many commission members had felt otherwise, he said. Number 1982 MS. MILES affirmed that Amendment 15 addressed the commission's concern over the current language in CSHB 368(STA), which gave the commission 60 days to open the investigation, conduct it and adjudicate it. She suggested it was a fair and workable compromise. She mentioned that the fiscal note contained a new investigator position. CHAIRMAN PORTER asked if there was an objection to Amendment 15. Number 2029 REPRESENTATIVE VEZEY objected and asked for clarification. He noted that the new language provided four years from the date of the alleged violation to file a complaint. CHAIRMAN PORTER asked why it had been extended from two years to four years. REPRESENTATIVE FINKELSTEIN responded that the four-year limit on complaints to the commission was in the initiative. He referred to the new section (e), the second-to-last sentence in the amendment, which applied to when a person could go to court. He believed that change to four years had come from the commission's recommendation rather than from the initiative. Number 2200 REPRESENTATIVE BUNDE referred to the second-to-last sentence of (e) in Amendment 15. He moved to amend "four" years to "two" years. CHAIRMAN PORTER noted the motion and asked if there was an objection. There being none, the amendment to Amendment 15 passed. REPRESENTATIVE VEZEY moved to amend the first sentence of (d) in Amendment 15 by changing "four" years to "two" years. MS. MILES commented that current law had a statute of limitations of four years. "So, if you want to reduce that, that's a policy call of the legislature," she said. CHAIRMAN PORTER asked if it would affect the initiative. MS. MILES said the initiative had a four-year statute of limitations for the commission. Number 2259 CHAIRMAN PORTER suggested including it with issues for the next meeting and noted they were holding the second amendment to Amendment 15. He affirmed that Amendment 15, as amended, was the initiative approach. CHAIRMAN PORTER asked if there was an objection to Amendment 15, as amended. There being none, Amendment 15 passed. Number 2312 REPRESENTATIVE FINKELSTEIN offered Amendment 16 to CSHB 368(STA), which read: Page 10, Line 18, after "(c)" Insert: "On and after the date determined under AS 15.13.110 as the last day of the period ending three days before the due date of the report required to be filed under AS 15.13.110(a)(1) and until the date of the election for which the report is filed, a candidate may not give or loan, or both, to the candidate's campaign the candidate's money or other thing of value of the candidate in an amount that exceeds $5,000." Page 10, Line 18 Delete: "(c)" Insert: "(d)" REPRESENTATIVE FINKELSTEIN explained that Amendment 16 recognized that candidates could give unlimited money to give their own campaign. However, they could not give more than $5,000 within 30 days of the election. It was an approach recently adopted by the state of Washington to avoid stealthy campaigns, he indicated. Although it had nothing to do with the initiative, there were already portions of the bill that were not part of the initiative but which clarified or strengthened it, he said. He expressed that he thought it reasonable. "It's fine to use your own money," he said. "You just have to say you're using your own money." CHAIRMAN PORTER asked if there was any discussion or objection to Amendment 16. REPRESENTATIVE VEZEY objected. CHAIRMAN PORTER asked for a roll call vote. Voting for the amendment were Representatives Finkelstein, B. Davis and Porter. Voting against the amendment were Representatives Bunde and Vezey. Representatives Green and Toohey were absent. Chairman Porter noted that Amendment 16 passed. Number 2387 REPRESENTATIVE FINKELSTEIN indicated that he had a conceptual amendment and explained he wanted to ask the bill drafter to prepare an amendment precluding jury trial. REPRESENTATIVE VEZEY said, "There are some clauses in here which are borderline criminal penalties." REPRESENTATIVE FINKELSTEIN indicated he would withdraw it since there was an objection. REPRESENTATIVE BUNDE said he had an amendment that he would not offer currently but would rework for the next meeting. Number 2441 CHAIRMAN PORTER said the bill would be heard again the following Monday. He asked members who had issues to write them down for that meeting. ADJOURNMENT There being no further business to conduct, CHAIRMAN PORTER adjourned the House Judiciary Committee meeting at 3:35 p.m.