SB 116-CAMPAIGN FINANCE, CONTRIBUTION LIMITS  3:48:31 PM CHAIR KAWASAKI announced the consideration of SENATE BILL NO. 116 "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." 3:48:55 PM JOE HAYES, Staff, Senator Scott Kawasaki, Alaska State Legislature, Juneau, Alaska, presented an overview of SB 116 and moved to slide 2: [Original punctuation provided.] Why is this bill necessary? BACKGROUND In 2021, a federal court ruled that Alaska's lower than average campaign contribution limits unconstitutionally restricted free speech. Governor Dunleavy declined to have the matter reconsidered and the legislature took no action. This leaves Alaska's elections vulnerable to unlimited contributions on state elections by wealthy donors and having no limit magnifies the influence that these wealthy individuals have over elected officials. When money is speech, the average citizen's voice can be easily drowned out. It's time for Alaska to set reasonable limits on campaign finance. 3:49:51 PM MR. HAYES moved to slide 3 and discussed the diagram showing Alaska's campaign contributions began with a $1,000 limit in 1974 and now have no limits. 3:50:07 PM MR. HAYES moved to slide 4 and explained the chart displaying the history of campaign contribution limits in Alaska dated back to 1974, with legislation enacted through the 2021 Advisory Opinion, followed by the commission's 2022 rejection of the administrative opinion. 3:50:29 PM MR. HAYES moved to slide 5 and discussed the role, the District Court and the Ninth Circuit Court of Appeals (Ninth Circuit), played in the Thompson v. Hebdon case. [Original punctuation provided.] Thompson v. Hebdon  • Plaintiffs sued challenging Alaska's political contribution limits and aggregate out-of-state limits. • The District Court and Ninth Circuit Court of Appeals initially upheld the individual limits as a "sufficiently important state interest" and "closely drawn" to that end, but ruled the out- of-state contribution limits were unconstitutional. • The U.S. Supreme Court remanded this decision back to the Ninth Circuit to reconsider their decision. They urged the Ninth Circuit to apply the "five factor test" in the Randall v. Sorrell (2006) decision, which ruled Vermont's $400 contribution limit unconstitutional. • In 2021, the Ninth Circuit struck down Alaska's statutory political contribution limits on the basis that they were too low and had not been adjusted for inflation since initially implemented. 3:51:30 PM MR. HAYES moved to slide 6 and read the following: [Original punctuation provided.] Where are we now?  • In 2021, the Alaska Public Offices Commission (APOC) issued an advisory opinion under AS 15.13.374 that they would enforce annual $1,500 individual-to-candidate and $3,000 group-to- candidate contribution limits. • APOC's staff based the advisory opinion on the limits established by the Alaska Legislature in 2003 ($1,000 per year for individual-to-candidate donations) adjusted for inflation. • On March 3rd, 2022, APOC's five commissioners voted on whether or not to accept the staff's advisory opinion. Three out of the five commissioners voted in support of the advisory opinion. Four votes were required and so the staff's advisory opinion was not accepted. • APOC, in their decision, "implored" the Legislature to swiftly revisit the state's campaign finance laws in order to balance the federal court's order "with the desire of Alaska voters." So far, despite efforts from proponents of contribution limits, the Legislature has failed to reestablish new limits. • Now, without action by Alaska voters or the state legislature, Alaska has no individual-to- candidate limits, out-of-state contribution limits, or individual-to-group limits, opening our state and local elections to unlimited funding from anyone, anywhere in the nation. 3:53:04 PM MR. HAYES moved to slide 7 and read the following: [Original punctuation provided.] Contribution Limits Legislation Overview  • Reinstates Fair, Reasonable, and Constitutional  Contribution Limits - Reinstates campaign contribution limits enacted by Alaskan voters. These limits based on the 2006 limits adjusted for inflation and the new two-year campaign period. • Establishes Per Campaign Period Limits - Limits to a "per campaign" period, ensuring consistent limits regardless of election timing or candidate entry date.   • Are the limits indexed for inflation? - Requires the Alaska Public Offices Commission (APOC) to index political contribution limits every ten years based on inflation, beginning in 2031. 3:53:58 PM MR. HAYES moved to slide 8 and read the chart showing the proposed contribution limits. He said the old limits were $500 per year, increasing to $2,000 per campaign under new legislation. Group-to-group or non-group contributions rose from $1,000 per year to $4,000 per campaign, and individual contributions to a joint governorlieutenant governor campaign increased from $1,000 to $4,000 per campaign. 3:54:31 PM MR. HAYES moved to slide 9 and showed a diagram distinguishing the difference between individual and group donation limits, and non-group donation limits. 3:54:42 PM MR. HAYES moved to slide 10 and read the contents of the chart showing the constitutionality of new limits after applying the "five factor test" from the Randall v. Sorrell decision. 3:55:41 PM MR. HAYES moved to slide 11 and read the following: [Original punctuation provided.] What this legislation achieves  • Makes Alaska's Limits Constitutional - This initiative brings Alaska's individual-to- candidate and individual-to-group political contribution limits in compliance with the Thompson v Hebdon court decision. • Reestablishes Limits Alaska's voters support - This initiative reestablishes the contribution limits previously enacted by voters in 2006, adjusted for inflation.1996 initiative garnered 73 percent voter approval, and 85 percent of those polled supported campaign finance reform. • Immediate and Narrow - This initiative is an immediate and narrow solution to the court's striking down of our voter approved campaign contribution limits. 3:56:50 PM SENATOR YUNDT asked if SB 116 would limit campaign donations to political action committees and independent expenditures, or only to individuals. MR. HAYES directed the question to the executive director of the Alaska Public Office Commission. 3:57:56 PM HEATHER HEBDON, Executive Director, Alaska Public Office Commission (APOC), Anchorage, Alaska answered questions regarding SB 116 and replied that her understanding is the bill would limit Political Action Committee (PAC) contributions under [AS 15.13.070(c)] as it falls under the definition of a group. She said under [AS 15.13.070] the bill would not apply to independent expenditure groups. 3:58:52 PM SENATOR YUNDT asked whether SB 116 limits what PAC can give to a candidate, and does it limit what an individual can give to PAC, or could someone still make a large donation. 3:59:20 PM MS. HEBDON replied that SB 116 limits what an individual can give to PAC, it does not restrict contributions to independent expenditure groups. 3:59:43 PM SENATOR YUNDT requested clarification on whether an individual could still contribute an unlimited amount to an independent expenditure.  3:59:51 PM MS. HEBDON replied yes. 4:00:25 PM CHAIR KAWASAKI opened public testimony on SB 116 4:00:38 PM KEVIN MORFORD, President, Alaska Move to Amend, Chugiak, Alaska, testified in support of SB 116 and stated that the bill aligns with a 2026 ballot initiative his organization helped advance. Passing SB 116 this year would ensure limits are in place before the 2026 election. Alaskans have historically supported strong contribution caps, and prior limits were only removed due to a Ninth Circuit Court decision. SB 116 has been carefully drafted to address those legal issues and is expected to withstand constitutional challenges. While it does not regulate independent expenditures, SB 116 is an important step in reducing the influence of money in Alaska's elections. 4:03:32 PM CHAIR KAWASAKI asked for elaboration on issues with super PAC's, noting concerns that large sums of money can flow to them, and that individual contributions might help counterbalance their influence. 4:04:09 PM MR. MORFORD replied that SB 116 does not regulate independent expenditure because the Supreme Court protects them under the First Amendment. The bill focuses on contributions to campaigns and ballot initiatives, where the state has an interest in preventing corruption or its appearance. 4:05:31 PM SENATOR YUNDT stated that the Supreme Court has deemed limits on contributions to independent expenditure unconstitutional, while the question of limits on individual contributions is still pending in the Ninth Circuit. 4:06:19 PM BRUCE BOTELHO, Co-Chair, Citizens Against Money in Politics, Douglas, Alaska, testified in support of SB 116 and stated that Alaskans have consistently supported campaign finance limits since the first limits were passed in 1974. Challenges like the Thompson v. Hebdon case highlighted that past limits were unconstitutionally low and lacked inflation adjustments, issues addressed in SB 116. He said public support remains strong, with polls showing 65 percent overall approval and higher support in regions like the Kenai Peninsula and Matsu. Independent expenditures, protected under Citizens United, have had limited impact in Alaska, mainly appearing in statewide or local races rather than legislative contests. 4:11:15 PM CHAIR KAWASAKI asked whether there was any consideration of including a cap on out-of-state contributions. 4:11:44 PM MR. BOTELHO replied that the Ninth Circuit struck down the out- of-state contribution cap, and the Supreme Court did not take up the issue. Now, both Alaska residents and out-of-state donors are subject to the same limits, $2,000, or $4,000 for gubernatorial and lieutenant gubernatorial races. 4:12:39 PM SENATOR YUNDT asked if the Ninth Circuit established a specific limit, or set a number, when they sent the ruling back to the legislature. 4:12:49 PM MR. BOTELHO answered the Ninth Circuit did not set a number. He said instead the court left it to the legislature to act on the guidance, yet the legislature chose not to take action. 4:13:07 PM SENATOR YUNDT stated his concerned that since no exact number was given, any limit set could be challenged and potentially struck down by the Supreme Court, like independent expenditures. He opined that SB 116 is only a short-term solution and expressed frustration that candidate donations carry limits while independents expenditures do not. 4:13:54 PM MR. BOTELHO replied that the initiative and SB 116 were crafted with Supreme Court and Ninth Circuit guidance in mind. Supporters are confident the $2,000 limit is reasonable compared to other states and will hold up if challenged, with periodic adjustments starting in the 2030 election cycle. 4:15:03 PM SENATOR BJORKMAN referred to SB 116, page 2, line 5 and said the language sets a $5,000 annual limit on individual contributions to a political party or other group. He asked whether independent expenditure groups or PACs are considered "other groups" under that wording. 4:15:44 PM MR. BOTELHO replied that this legislation does not attempt to regulate independent expenditure groups, as they are governed by federal rather than state law. 4:15:58 PM SENATOR BJORKMAN asked who represents the "other groups" found in the legislation. 4:16:08 PM MR. BOTELHO replied that organizations like the Homeowner's Associations. 4:16:33 PM SENATOR GRAY-JACKSON asked if the "other groups" means organizations like Planned Parenthood. 4:16:43 PM MR. BOTELHO answered yes. 4:17:06 PM HEATHER KOPONEN, representing self, Fairbanks, Alaska, testified in support of SB 116 and stated her belief that it should be one person one vote. 4:18:08 PM MERCEDES ARCINIEGA, Outreach and Good Government Lead, Alaska Public Interest Research Group (APIRG), Anchorage, Alaska, testified in support of SB 116. She said Alaska currently has no limits on individual, out-of-state, or group contributions, leaving elections vulnerable to corruption and outside influence. Alaskans have historically supported strong limits, and APOC has urged the legislature to act. She stated that SB 116 reflects voter priorities by reinstating limits with a provision for inflation adjustments every 10 years, ensuring they remain fair, effective, and sustainable over time. 4:20:07 PM HEATHER ARNETT, Board Member, League of Women Voters of Alaska, Anchorage, Alaska, testified in support of SB 116. She said the League of Women Voters of Alaska supports reasonable campaign contribution limits to ensure fair competition for public office and appreciates that SB 116 includes periodic adjustments for inflation. 4:21:18 PM MIKE COONS, representing self, Wasilla, Alaska, testified in opposition to SB 116. He argued it infringes on personal rights to freely support candidates financially. He contended it won't reduce outside or independent expenditure funding, and believes it violates Supreme Court rulings by restricting individuals' ability to donate as they choose. He emphasized that donations reflect genuine support for candidates, not vote-buying, and view the bill as politically motivated rather than protecting voter interests. 4:23:29 PM FRANK BOX, Alaska Move to Amend, Anchorage, Alaska, testified in support of SB 116 and shared his recollection of when and why the limit was dropped from $1000 to $500. [CHAIR KAWASAKI closed public testimony on SB 116.] 4:26:41 PM CHAIR KAWASAKI solicited the will of the committee. 4:26:43 PM CHAIR BJORKMAN moved to report SB 116, work order 34-LS0699\A, from committee with individual recommendations and attached fiscal note(s). 4:27:00 PM CHAIR KAWASAKI found no objection and SB 116 was reported from the Senate State Affairs Standing Committee.