CS FOR SENATE BILL NO. 284(FIN) "An Act relating to state election campaigns, the duties of the Alaska Public Offices Commission, the reporting and disclosure of expenditures and independent expenditures, the filing of reports, and the identification of certain communications in state election campaigns; prohibiting expenditures and contributions by foreign nationals in state elections; and providing for an effective date." 8:00:56 PM Co-Chair Hawker MOVED to ADOPT HCS CSSB 284(FIN) (26- LS1448\W, Kurtz/Bullard, 4/17/10) as a working document before the committee. Co-Chair Stoltze OBJECTED for discussion. BEN MULLIGAN, STAFF, CO-CHAIR BILL STOLTZE, explained the difference between the previous version (Judiciary Committee, Version T) and the proposed CS. On page 8, lines 5 and 6, "and in a communication that includes an audio component" is eliminated in the proposed CS. In addition, the word "solely" is inserted after the words "communication transmitted." Mr. Mulligan detailed that the intention of the change is to make sure that only the visual report is required for television advertisements, not the audio. Representative Gara clarified that the intention of the CS is that the viewer would not hear the names of the top contributors in a television ad. Mr. Mulligan replied that the names would just be on the screen visually. Representative Gara queried the word "solely." Mr. Mulligan replied that the language was suggested by the bill's drafter and would clarify that it applied to just radio or other audio media. Co-Chair Stoltze WITHDREW his OBJECTION. There being NO further OBJECTION, the work draft was ADOPTED. 8:04:12 PM SENATOR HOLLIS FRENCH, SPONSOR, discussed a U.S. Supreme Court decision earlier in the year that for the first time in Alaskan history allows unlimited corporate and union expenditures to be made for or against candidates or ballot propositions. He emphasized that Alaska has never had such a law and both Legislative Legal Services and the state attorney general believed state statutes needed to be updated because of the decision. Senator French continued that the bill is broken down into two major sections: disclosure and disclaimer. He detailed that by "disclosure" he meant reporting to the Alaska Public Offices Commission (APOC) the money raised from contributors in order to make independent expenditures for and against candidates and ballot initiatives. The disclaimer provisions are intended to tell Alaskan voters who is speaking to them in advertising. The sponsors wanted to have as protective and firm a measure as possible to protect Alaskan voters from new entities such as unions, corporations, and other groups. Senator French directed attention to Section 1 and deletions that collapse lengthy definitions, such as for "persons" (which in Alaskan statutes means everyone). Senator French noted that the first significant section is Section 4, which relates to disclosure requirements for the reports that entities make to APOC. He emphasized that the section referred to independent expenditures by advocacy groups, not candidates, as clarified on page 3, line 10. Every expenditure would have to be recorded so that voters would know who was spending money either supporting or opposing an issue. The measure sets a limit at $50 for reporting the address, principal occupation, and employer of the contributor, the same limit set for candidates. Senator French relayed that the next significant provision was in Section 8 on page 4, which would set up a separate "political activities" account so that APOC can better monitor the funds spent. Section 10 directs who can speak to voters; the bill says the state would adopt the same ideas as in federal law. For example, a foreign corporation or individual cannot speak to Alaskan voters without a local subsidiary. He noted the section was debated extensively in the House Judiciary Committee. 8:09:43 PM Senator French anticipated that the disclaimer provisions in Sections 13 and 14 would cause debate. The disclaimer provisions would let Alaskans know who funds communications about issues. Section 13 says that the three largest contributors have to be identified. Section 14 lays out the mechanics of each medium, whether print, radio, or television. He noted that there had been questions about what to do when there are ten contributors who have given the same amount (page 8, lines 11 through 16); the section leaves it up to the entity making the ad. Senator French turned to Section 18, which would keep current law in place related to campaign misconduct. Representative Gara queried independent expenditures. Senator French responded that when candidates run campaigns, they collect contributions from individuals or political action committees (PACs) at a maximum of $500 per calendar year. The money is collected into a campaign account out of which expenditures are paid. The contributions in the bill are separate, independent contributions. Because they are independent of a candidate, there is no limit on the amount of money that can be contributed. Senator French underlined the lack of a limit; an entity or person could contribute $1 million or $10 million, whereas the average House race might cost a candidate $100,000 and the average Senate race might cost $200,000. With the new legislation, much more money could be spent on candidates. 8:14:14 PM Representative Gara emphasized that the U.S. Supreme Court has determined that there is no longer a cap on independent expenditures. He asked whether the legislation was intended to regulate outside corporations and environmental groups. Senator French responded in the affirmative. Because of the newness of the landscape, no one knew who would contribute; it could be ExxonMobile, Greenpeace, or Bill Gates, for example. Representative Gara questioned what the legislation would do in a case such as an initiative related to aerial wolf hunting. Senator French replied that due to the disclaimer provisions, a television ad against aerial wolf hunting would list the top three contributors to the organization running the campaign. Representative Gara queried the difference the CS would make in the example. Senator French replied that in a television advertisement, under the CS there would be no spoken disclaimer whatsoever; it would be written only. Vice-Chair Thomas asked whether the legislation addressed "truth in advertising." Senator French indicated that language had been put in mirroring current law on page 8, lines 17 through 26. He noted that the difficulty is that in elections, the U.S. Supreme Court long ago ruled that a person can say and do almost anything. He pointed to line 23, "A person who makes a communication under the subsection may not with actual malice include…a false statement of material fact." Someone would have to be extreme to break the rule. 8:17:34 PM Vice-Chair Thomas asked whether, related to the wolf- hunting example, an entity could buy an image of a hunter skinning a wolf that they did not film. Senator Hollis believed that could be allowed. Representative Fairclough referred to page 7, line 19 and 20, disclosure related to influencing the outcome of a ballot. She wondered whether the legislation spoke to ballot measures. Senator French explained that the section was a remnant of an old provision allowing small expenditures (less than $500) made independent of any other person and made only to influence the outcome of a ballot proposition (page 3, lines 7) and is made for a billboard, sign, or printed material only. He directed attention to page 3, lines 10 through 13; every report must contain the name of the candidate, the title of the ballot proposition, or requests in support or opposition, all of which had to be reported to APOC (if over the limit of $250 or $500 total expenditures). 8:19:32 PM Representative Foster asked whether the top three contributors had to be listed on a television ad. Senator French replied that both the CS and the version of the bill that had entered the committee stipulate that the information must be listed in print at the bottom of the ad. The CS further stipulates that the information does not have to be audibly read out. Representative Foster stated concerns about the ability of elders to read the information because it was too small. Senator French referred to page 7, lines 28 and 29, stipulating that the information has to be "easily discernable." He spoke to the issue of elders, or people who might listen to the television rather than watch it, or people who cannot see or read English well. Representative Gara noted a previous concern about printing zip codes and area codes. Senator French explained the compromise found on the top of page 8: A print ad must include the name as well as city and state of residence or principal place of business of the top three contributors; an audio disclaimer only needs the names. 8:22:28 PM Co-Chair Hawker opened and closed public testimony. Representative Doogan MOVED to ADOPT Conceptual Amendment 1: DELETE: at page 8, line 5: after "communication transmitted" delete "solely" INSERT: at page 8 line 5, after "or other audio media," insert: "and in a communication that includes an audio component," Co-Chair Stoltze OBJECTED. Representative Doogan explained that the amendment would reinstate language requiring audio as well as visual disclaimer information on television ads. He used himself as an example of someone who does not see small print on television well. He believed that information about who is trying to influence his vote was important. The amendment would address people who do not read words on the screen because they are distracted by other activities. He stressed that viewers depend on audio as well as visual cues. He believed the intent of the legislation was full disclosure that included both. Co-Chair Stoltze queried the sponsor's opinion of the amendment. 8:27:30 PM Representative Fairclough discussed vocalization in television campaigns. Senator French acknowledged discussion about the issue. Representative Fairclough asked Representative Doogan for more clarification about the amendment related to disclosure. Representative Doogan believed that the advertiser would lose the piece of time used to state who paid for the ad. The point was letting people know who was trying to influence them. Representative Fairclough spoke in favor of the vocalization but wanted to discern the advantages and disadvantages to both the persons making the ads and those hearing them. She asked whether addresses would be required as well as the names. Senator French replied that only the names would be required. She thought 15 seconds was a long time for audio. 8:31:13 PM Representative Gara directed attention to page 8. He read examples of disclosures to demonstrate that the time needed was short. He stressed the importance of disclosing the top three contributors especially in ads that attack a candidate or an issue. He argued that the core issue was truth in disclosure and that the public has the right to know exactly who is paying for the ad, not a "fake" name such as "People for Jobs." He spoke in support of the compromise version of the bill. Co-Chair Stoltze acknowledged his lack of experience using ads, particularly for television. He maintained that he was in favor of full disclosure. He was opposed to an aspect of the bill that he feared would make it too expensive for some individuals or entities to buy ads. 8:37:48 PM Representative Doogan thought the issue was a judgment call. He stated his intent to get the information to citizens about who is trying to influence them. Representative Gara pointed out that no one could determine how much money went into campaigns and issues because of the U.S. Supreme Court ruling; however, hidden advertisers could be prevented from hiding. He argued that without the amendment, the information would only flash on the television screen, which would aid those who were hiding. He listed the people who would not catch the disclaimer. He stressed the importance of full disclosure. Representative Gara reviewed that adopting the CS would result in the names being printed on the screen; adopting the amendment would result in hearing who paid for the ads. Co-Chair Stoltze asked how the disclaimer would be displayed. Representative Gara answered that the disclaimer would include the group's name and the names of the contributors. Co-Chair Stoltze asked whether the names would appear without the amendment. Representative Gara answered that the names would appear. 8:42:05 PM Co-Chair Stoltze MAINTAINED his OBJECTION. A roll call vote was taken on the motion. IN FAVOR: Salmon, Doogan, Foster, Gara, Joule OPPOSED: Thomas, Austerman, Fairclough, Stoltze, Hawker, Kelly The MOTION to adopt Conceptual Amendment 1 FAILED (6/5). Representative Gara MOVED to ADOPT Conceptual Amendment 2: DELETE: at page 8, line 5: after "communication transmitted" delete "solely" INSERT: at page 8, line 5: after "or other audio media," insert: "and in a communication that includes an audio component," INSERT: at page 8, line 7: after "no contributors" insert "or, for any of the three largest contributors who have contributed less than $2,000:" Co-Chair Stoltze OBJECTED. Representative Gara explained that the amendment was a compromise; it was the same as Amendment 1 except that it would only apply when there are very big contributors. The amendment would require audible reading of the names of the three biggest contributors to the extent that any of them donated more than $2,000. 8:44:49 PM Vice-Chair Thomas queried the amount. Senator French responded that the contributions are not candidate contributions but independent expenditures, for which there is no limit. Vice-Chair Thomas assumed only corporations would be listed and not individuals. Senator French responded in the affirmative. Representative Gara clarified that the corporation's name would be read if the donor is a corporation, person, or group; the amendment would apply to any entity that donated more than $2,000. Co-Chair Stoltze requested further information. Representative Gara directed attention to page 8, line 6 of the bill, which says that the second statement is not required if the person paying for the communications has no contributors, or for any of the three largest contributors who have contributed less than $2,000. The audio would have to be included if any of the three largest contributors contributed more than $2,000. Co-Chair Stoltze reiterated earlier concerns regarding the message. There was a discussion about an example. Co-Chair Stoltze MAINTAINED his OBJECTION. A roll call vote was taken on the motion. IN FAVOR: Salmon, Doogan, Foster, Gara, Joule OPPOSED: Thomas, Austerman, Fairclough, Kelly, Hawker, Stoltze The MOTION to adopt Conceptual Amendment 2 FAILED (6/5). 8:50:33 PM AT EASE 8:51:15 PM RECONVENED Co-Chair Hawker referred to two fiscal notes. The Division of Elections anticipated no fiscal consequences and the Offices Commission expected an additional position to administrate the requirements of the statute and contractual services costing $131,000 the first year and $79,000 per year after that. Representative Gara maintained that the provision not adopted by the committee was the most important part of the bill. He believed the rejected provision was about truth in advertising and that the public deserves to know who is trying to buy an election. He asserted that the public is not going to know who contributed the money for the most effective and negative ads and would be misled by group names designed to change voting behavior. Co-Chair Stoltze thought there were important provisions in the bill. Vice-Chair Thomas MOVED to report SB 284 out of Committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HCS CSSB 284(FIN) was REPORTED out of Committee with "no recommendation" and attached previously published fiscal notes: FN1 (GOV), FN2 (ADM). 8:55:27 PM AT EASE 9:16:28 PM RECONVENED