HB 16-CAMPAIGN FINANCE, CONTRIBUTION LIMITS  4:32:17 PM CHAIR CARRICK announced that the final order of business would be HOUSE BILL NO. 16, "An Act amending campaign contribution limits for state and local office; directing the Alaska Public Offices Commission to adjust campaign contribution limits for state and local office once each decade beginning in 2031; and relating to campaign contribution reporting requirements." 4:32:49 PM REPRESENTATIVE CALVIN SCHRAGE, Alaska State Legislature, as prime sponsor, presented HB 16. He said that this was an act to amend campaign contribution limits for state and local offices. Pertaining to the Alaska Public Offices Commission (APOC), the bill would adjust campaign contribution limits once every decade beginning in 2031 as well as contribution reporting requirements. REPRESENTATIVE SCHRAGE explained that in 2024, a ballot petition was certified after a grassroots effort gathered nearly 30,000 signatures from Alaska voters and met the 7 percent threshold in 32 of Alaska's 40 House districts; this puts the ballot measure in front of voters in 2026 if the Alaska Legislature did not pass similar legislation. He explained that HB 16 matches the ballot initiative. REPRESENTATIVE SCHRAGE remarked that Alaska has historically had some of the strongest and most effective campaign finance laws in the nation, which serve to promote better accountability and trust in elections and elected officials. He said that in the past, Alaskans have shown their support for fair and reasonable limits, including a 2006 initiative that passed with 73 percent support. He said that unfortunately, in 2021 the Ninth Circuit Court of Appeals struck down Alaska's statutory campaign contribution limits, opening state and local elections to the threat of unlimited political contributions, from anywhere in the country. REPRESENTATIVE SCHRAGE stated that HB 16 reinstates fair, reasonable, and constitutional campaign contribution limits, adjusted to Alaska's consumer price index moving forward, ensuring that these limits remain constitutional. He remarked that HB 16 would move Alaska's campaign contribution limits to a per-election basis as opposed to a per-year basis and would increase individual statutory limit from $500 per year to $2,000 per election cycle. Furthermore, it would change group limits from $1,000 per year to $4,000 per election cycle. Lastly, it would direct APOC to adjust contribution limits related to inflation. REPRESENTATIVE SCHRAGE stated that these changes follow guidance laid out by the Ninth Circuit Court of Appeals and United States Supreme Court precedent while upholding the desire of Alaska voters for fair and reasonable contribution limits. 4:35:40 PM AMANDA NDEMO, Staff, Representative Calvin Schrage, Alaska State Legislature, on behalf of Representative Schrage, prime sponsor, gave a PowerPoint presentation of HB 16 [hard copy included in the committee file]. She began by providing an overview of the history of political contributions in Alaska, highlighting key legislative actions, legal challenges, and reforms from 1974 to today. She remarked that Alaska has a long history of regulating political contributions, balancing the need to prevent corruption with the constitutional right to free speech. However, recent court decisions have significantly altered the campaign finance landscape. She explained that starting in 1974, Alaska adopted its first significant campaign finance regulations in response to national concerns over political corruption. Alaska's statutory individual contribution limits began at $1,000. Adjusted for inflation, this amount would be $5,303 today. This limit was in effect until 1995. These limits were changed in 1996 to $500 following a citizens' initiative after the legislature's reaction to a citizens' initiative aimed at reducing these limits. Adjusted for inflation, this amount would be $933 today. In 2003, the legislature passed Senate Bill 119, which raised the individual contribution limit back to $1,000, approximately $1,638 today. In response to concerns about political corruption, Alaska voters reaffirmed a $500 limit in 2006 through Ballot Measure 1. This measure passed overwhelmingly with 74 percent support. This limit remained in effect for over a decade but was never adjusted for inflation, making it one of the strictest in the country. This limit was later overturned in 2021 with the decision in Thompson v. Hebdon. MS. NDEMO said that this case was initially brought forward in 2015 in federal district court. David Thompson and others filed a lawsuit challenging the $500 individual contribution limit as a violation of the First Amendment. The lower court upheld the contribution limits, ruling that they were narrowly tailored to prevent corruption. The plaintiffs appealed to the Ninth Circuit Court in 2018. The Ninth Circuit Court upheld the district court's ruling, maintaining that Alaska's strict limits were sufficiently justified and closely drawn to a state interest, with preventing corruption as sufficient justification. The case was then petitioned and heard by the U.S. Supreme Court. The Ninth Circuit's decision was vacated for reconsideration, with the U.S. Supreme Court citing Randall v. Sorrell, a 2006 decision on Vermont's $400 contribution limit that was determined to be unconstitutional. MS. NDEMO explained that the importance of this case is the five-factor test, which provides guidance on whether states' contribution limits violate the First Amendment rights of individuals and political organizations. More specifically, the five-factor test asks: whether the limits are so low that they risk disadvantaging challengers compared to incumbents; whether the limits are unduly restrictive on the ability of political parties to support their candidates; whether volunteer services or expenses are considered contributions that would count toward the limit; whether the limits are adjusted for inflation; and whether there is a special justification warranting a contribution limit so low or so restrictive that it is based on a valid government interest. Of these five factors, Alaska failed to meet this threshold because contribution limits were too low and had not been adjusted for inflation since being initially implemented. MS. NDEMO said that in 2021, APOC issued an advisory opinion following the court's decision. They set an annual limit of $1,500 for contributions from an individual to a candidate and a $3,000 limit for a group-to-candidate contribution. These numbers were based on the limits that were established by the Alaska legislature in 2003, which was a $1,000 contribution limit for an individual to a candidate but increased for inflation. She said APOC's five commissioners voted on whether to accept the staff's advisory opinion. Three out of five voted in support; however, the staff advisory opinion was not accepted because they failed to get the required four votes. Alaska currently has no individual-to-candidate limits, out-of-state contribution limits, or individual-to-group limits. This has left Alaska and local elections open to unlimited and outside funding. MS. NDEMO explained HB 16 aims to offer a balanced approach to the reinstatement of campaign contribution limits in Alaska. Furthermore, HB 16 seeks to modify the existing limits on campaign contributions for state and local offices by establishing the contribution limits. It also establishes contribution limits based on an election cycle, ensuring consistent limits regardless of election timing or candidate entry date. Additionally, it directs APOC to adjust these limits every decade starting in 2031 to account for inflation. Shown in the slide is a summary of the proposed contribution limits. Individual contribution limits were previously set to $500; adjusted for inflation, this is $751 today. The new limits would be $2,000. An individual's contribution limit to a political party and a non-political party's contribution to a group, non-group entity, or political party would be set at $5,000. This has not changed and was not an issue with the court. A non-political party to an individual is set at $4,000. A non-group entity to a non-group entity was set at $1,000 in 2006, which is $1,501 today. The new limit would be $4,000. A group to join a joint campaign for governor and lieutenant governor is $2,000, which is $3,003 today. The new limit would be $8,000. This is just a simple infographic of those changes. This slide provides a visual of the five-factor test from Randall v. Sorrell and how HB 16 implements those specific questions that were asked by the court. Overall, this initiative brings Alaska's individual-to-candidate and individual-to-group political contribution limits in compliance with the Thompson v. Hebdon court decision. It re-establishes limits that Alaska voters' support. 4:44:14 PM CHAIR CARRICK said that review of the sectional analysis wasn't necessary and asked committee if they had questions. 4:44:35 PM REPRESENTATIVE HOLLAND asked whether these limits apply to all races including the local assembly, school board, and both state and federal elections. He was unsure whether the bill covered all elections that are managed by the state. REPRESENTATIVE SCHRAGE responded that federal elections are governed through federal law and the proposed legislation was focused on state elections including the governor's race, the House, Senate, and municipal races. REPRESENTATIVE HOLLAND asked for clarification whether the proposed bill would comply with the citizens' initiative. REPRESENTATIVE SCHRAGE responded that the proposed bill mirrors exactly what is certified to appear on the 2026 ballot. CHAIR CARRICK said the committee would hear invited testimony. 4:46:39 PM SHARMAN HALEY began her invited testimony by giving her background as a now retired policy analyst and researcher, including time spent with Legislative Legal and Research Services and the Institute of Social and Economic Research. She stated that she has been working on this issue for about 10 years. She said that currently she was involved in work with Alaska Move to Amend, Citizens Against Money in Politics, American Promise, as well as with ordinary citizens and politicians who care about this issue. MS. HALEY said that the proposed bill should not be controversial and that it had solid support amongst Alaska constituents across the political spectrum. She explained that the bill contained the same language as the citizens' initiative that would be on the 2026 ballot, but there is hope that the legislature would pass the legislation this session and save the effort necessary to put forth a ballot measure. She remarked that the bill was carefully crafted to conform to the five criteria dictated by the Ninth Circuit Court that struck down previous law; any "gray areas" that might be grounds for legal challenge have been removed from the bill. She noted that it is a politically solid bill because Alaskans have demonstrated their support for strong campaign finance laws. MS. HALEY explained that the old campaign finance also began as a citizen initiative and was enacted by the legislature in 1996. It was one of the strictest in the country, with contribution limits of $500. She said that the legislature felt that this was inadequate because some candidates were required to do a lot of fundraising. She said that in 2003 limits were increased to $1,000, but voters stepped up in 2006 and passed another initiative bringing campaign limits back to $500. This 2006 initiative passed with a 73 percent approval rating. She said that the initiative passed with a solid majority in every single district of the state. MS. HALEY explained that Alaskans want strong campaign finance limits to protect the balance of power and limit the disproportionate influence and corrupting power of big money in elections. She said that in 2020, there was a poll that illustrated that 71 percent of Alaskans would support a U.S. constitutional amendment restoring full authority to set reasonable limits on political spending in elections, including independent expenditures. The court in Citizens United said that it could not be limited. As a result of that poll, support for a constitutional amendment restoring authority to limit independent expenditures was strong across both political parties and independents. MS. HALEY said she probably did not need to restate the limits in the bill because the committee already had that. She said she would have chosen a lower limit than $2,000 and that she had run the numbers a couple of years earlier, but there had been a lot of inflation since then, and she accepted the political judgment of the sponsors that $2,000 was a safer number politically. She stated that the two big improvements in the bill over the old law were that the limit would be per election cycle and not per year - because savvy people used to double dip in December and January - and that it would automatically adjust the limits for inflation every 10 years, which was one of the requirements from the Ninth Circuit Court. She concluded by saying that she and her fellow Alaskans supported HB 16 and called on the committee to support it as well. 4:52:47 PM REPRESENTATIVE MCCABE said that he was interested in definitions and whether there was a difference between a group and a non- group. REPRESENTATIVE SCHRAGE responded that he would have to follow up with an answer. MS. NDEMO responded that definitions for this could be found in Alaska Statute (AS) 15.13.400. 4:53:59 PM REPRESENTATIVE MOORE asked Representative Schrage why he did not take this opportunity to make APOC more accountable and it seemed like the commission needed more transparent direction through statute. She said that most legislators she knew would like this to come from the commission and asked whether this additional step would make the proposed bill more convoluted. REPRESENTATIVE SCHRAGE asked for additional clarification regarding the question. REPRESENTATIVE MOORE clarified that the question is whether there was a reason not to take the opportunity to overhaul APOC protocols when drafting the legislation. REPRESENTATIVE SCHRAGE provided clarification of the history of why the bill was proposed. He said that efforts began after the court struck down previous limits and the initial approach was to fix the hole created in Alaska's campaign finance structure following the court ruling. He said that the intent was to take the "lightest touch, most straightforward approach" to restoring campaign contribution limits, which is what the proposed bill would accomplish. He said that he was happy to discuss the mechanics associated with this process. REPRESENTATIVE SCHRAGE said that while he has not been involved in politics for a substantial amount of time, he frequently hears various concerns about APOC. These concerns regard funding and staffing limitations to why they cannot proactively enforce campaign finance laws. He said that the funding aspect is a policy decision for the state. He reiterated that his approach was just to address the lack of limits and enforceability of the mechanics that APOC currently has. He said that in his experience talking with legislators and those involved in campaigns, there is not a consistent view of how APOC should be structured. He said that there was concern with some people giving APOC enforcement mechanisms due to its potential weaponization as an agency. REPRESENTATIVE SCHRAGE commented that people are comfortable with what they know today, which is a complaint-based system, where if someone notices something odd, they file a complaint; this is what triggers enforcement and investigation. He said that the legislature could consider whether they wanted APOC to have enforcement capability, but it was something that he was reluctant to do because the primary goal is to take care of the shortcomings in campaign finance. He suggested APOC reform is something that could be done in the future. 4:58:03 PM REPRESENTATIVE STORY asked whether Representative Schrage knew what the proportional support was for campaign contribution regarding the citizens' initiative. REPRESENTATIVE SCHRAGE responded that with the ballot initiative it is not possible to ascertain what percentage of people support the initiative since the objective is to simply collect the minimum number of signatures, both as an aggregate and a minimum across several districts in the state. He said that while the signatures required to initiate a ballot measure were met, it does not necessarily speak to the level of support that exists in Alaska. REPRESENTATIVE SCHRAGE said that given recent polling in the past couple weeks, it is deduced that support is upwards of 65 percent. He said looking at other polls and some of the ballot initiatives that his staff walked through, support has remained well over 60 if not even above 75 percent support. He said there was a "strong appetite" for this change to occur in Alaska. REPRESENTATIVE SCHRAGE said that with regard to limits, he wanted to provide a background to campaign contribution limits. He said that as the presentation indicated, the individual campaign limits have gone from $500 to $2,000, and while this seems like a considerable jump, it pertains to each election cycle as opposed to an annual limit. He said that in the old system, one could collect $500 twice for a total of $1,000 per individual contribution, now it would be $2,000 - double the limit. He said that the old limits did not account for inflation, and with this consideration, the limit would be about $1,500 per election cycle. He said that $2,000 was selected because previous limits were struck down in part for being too low; the $2,000 limit is intended to reduce the limits being tossed out by courts again. 5:00:55 PM REPRESENTATIVE MCCABE said that APOC needs a "haircut." He said that if he had it his way, he would get rid of APOC entirely and adopt the Federal Exchange Commission (FEC) limits. He recognized that once "Pandora's box" gets opened, things get complicated fast. He highlighted the enormous problem Alaska has with outside money. He understood Citizens United but said the reality is that Alaska "is a cheap date." He said that the state has roughly 530,000 voters and, for only a few million dollars, outside interests can reach voters multiple times. He said this money overwhelmingly targets ballot measures, such as this ballot measure. REPRESENTATIVE MCCABE said that it is frustrating that Alaska is constrained by the courts. The citizens said $500, then the legislature said $1,000, then the citizens reinstated the said $500, then the court said no to everything. He said that it may be wise to start listening to the citizens. He said that Alaska voters he spoke with were extremely upset about "dark money" coming into Alaska to experiment with state affairs such as the election system. He said whether someone supported ranked choice voting or not, Alaska is the "guinea pig." REPRESENTATIVE SCHRAGE responded that he shares the same frustration. He said that as an Alaskan who strongly believes in campaign contribution limits, he was deeply frustrated by the Citizens United ruling. He opined that it was a mistake or at the very least, a problematic decision that limits Alaska's right to self-determination. As previously noted, the decision places strict limits on what states are allowed to do. He said that Citizens United established several principles, but one of the most consequential is that contribution limits can only be justified for a very narrow set of reasons. Today, the only legally valid justification is preventing the actuality or appearance of corruption. He said that previously states could rely on other rationale such as self-determination, but these arguments were no longer available. He said that since corruption is now the sole permissible justification, out-of- state donations cannot be banned. He said that as a policymaker he could not claim that an out-of-state contribution poses any greater risk of corrupting an elected official than an in-state donor. As a result, Citizens United effectively prohibits states from limiting out-of-state donations to local elections. REPRESENTATIVE SCHRAGE said that he has worked with legislators to explore creative new approaches to this problem, but so far, he has not believed that a solution has been identified that would survive legal scrutiny. He shared Representative McCabe's concerns regarding outside money. He said that he was interested in pursuing a resolution urging Congress to address this issue directly; this is the only path to restoring meaningful limits on out-of-state donors. REPRESENTATIVE SCHRAGE said that while out-of-state spending is a serious problem, there were at least a few mitigating factors worth consideration. He noted that when one outside group pours money into Alaska, an opposing group is able, though not always, to rally resources and provide a counterweight in the same media market. An independent expenditure group faces a disadvantage that candidates do not: dramatically higher advertising rates. He said that it may cost $100 for campaign to run a mailer or advertisement ("ad"), whereas independent expenditure groups might pay $700 to $1,000 for the same placement. He said that it does not solve the problem but blunts some of the impact of outside spending. REPRESENTATIVE MCCABE said that he was trying to understand how outside money would function under this HB 16. As he read it, outside contributions would be limited for candidates, which would mean that someone from outside the state could not contribute directly to a candidates' campaign, even though independent expenditures would still be allowed. He asked whether ballot measures could be treated the same as candidates and said that campaign contribution limits apply to state and local offices. It would not stop independent expenditure groups from advertising, but it would prevent contributing directly to the ballot measure committees themselves. He said that he was unsure how this would play out legally, but looking at the same problem, it feels unconscionable that certain groups can pour $20 million from outside the state trying to oppose people that might have $100,000 or less. He said the imbalance is staggering. REPRESENTATIVE SCHRAGE said that he is happy to explore this issue but would want to ensure that solutions would pass legal scrutiny. 5:07:52 PM REPRESENTATIVE HIMSCHOOT said that like Representative McCabe, she was appalled by the amount of outside money flowing into Alaska. She asked Representative Schrage, if the bill passed, whether these rules would be enforced for the 2026 election cycle. She said that she agreed with the inflation-proofing associated with the proposed bill. REPRESENTATIVE SCHRAGE responded that if the bill were passed and signed into law, then it would be in effect for the next campaign cycle. He said that this was something that would need to be monitored as the bill progresses. He noted that if the bill did not pass until the upcoming legislature [2026], then the effective dates may require adjustment. REPRESENTATIVE HIMSCHOOT said that the $2,000 individual contribution per cycle seems high, but in her district, five of the communities are only reachable by vehicle after she gets there, which requires a $700 round-trip ticket from her home. She said that she has a lot of low-income areas that can't contribute, even if they wanted to. She said that despite the contribution limit seeming high, only a few members of her district could realistically contribute that much. REPRESENTATIVE SCHRAGE said that it had been hard work to come up with a contribution limit that is legally defensible but reasonably low. He reiterated that the goal is to match the intent of Alaskans who have made it clear that they want a low contribution limit. He said that Alaskans are sensitive to issues surrounding corruption and distrust of election officials. He raised concern about contributions' abilities to influence a legislator's role and the issue of "indebtedness." 5:11:08 PM REPRESENTATIVE HOLLAND asked whether the committee still planned on public testimony for the proposed bill on the upcoming Saturday since he had interested testifiers. CHAIR CARRICK affirmed that the proposed bill would be brought back for the upcoming Saturday committee meeting. [HB 16 was held over.]