HB 241 - NO PERSONAL USE OF CAMPAIGN ACCOUNT CHAIR JAMES announced the next meeting would be held at the call of the Chair, if she could arrange a time to get the committee together. She stated the next bill on the agenda was HB 241. Number 656 REPRESENTATIVE CON BUNDE mentioned he had prepared a proposed committee substitute to address some of the concerns raised by the committee at a previous meeting. These concerns dealt with defining what was meant by a charity and personal income. He directed their attention to Section F of the committee substitute, which clarified that this bill was intended for state offices only and that charitable organizations were defined by the Internal Revenue Service definition. Number 670 CHAIR JAMES stated that in the past, there were items which could be considered campaign expenses that were really personal in nature. Should these be audited by the IRS, they may be required to count those as personal expenses. She cited examples as car repairs and baby-sitting. These could be considered personal income, but they are allowed to fund these out of their campaign accounts by simply reporting it. She asked if this situation would change under this bill. REPRESENTATIVE BUNDE replied it did not, adding this was between the legislator, their constituents, and the IRS. CHAIR JAMES asked if this applied to individuals that were no longer candidates for public office, or if it applied to all candidates. REPRESENTATIVE BUNDE answered a candidate could still take money from their campaign account and put it into their personal account, as long as they report it as under existing Alaska Public Offices Commission (APOC) regulations. Having heard the concerns expressed, he felt that any payment made from the campaign account, as long as it was reported, would be left to the discretion of the legislator. Number 693 REPRESENTATIVE GREEN asked if a legislator bought an item, such as a printer and computer to handle constituent mail and which may not depreciate rapidly, it could be argued that at the time of leaving office this item was worth less than $1,000, but at the time of acquisition it was worth more than $1,000. He asked how this bill would affect this situation. TAPE 95-55, SIDE A Number 000 REPRESENTATIVE BUNDE replied that at the year-end report for the year it was acquired, this would be required to be reported. When that individual is no longer a candidate, they are no longer required to make these year-end reports. REPRESENTATIVE GREEN asked if this could be a loophole. REPRESENTATIVE BUNDE said he did not think so, because if that individual disposes of an item, then this is required to be reported. He reiterated that this bill was just trying to bring the sunshine in on the process. He thought the public would be the best judge of how a legislator handles their affairs. Number 032 REPRESENTATIVE PORTER stated he was reading Section E of the bill. Currently, a legislator has the option of taking their office money as income and pay taxes on it or not. Should they take campaign money and transfer it to their office account, as he said most legislators have to do to print two constituent newsletters, then they can currently take this as personal income and either pay taxes on it or not. He asked if this bill would require a legislator to report on expenses out of that account. REPRESENTATIVE BUNDE stated that this bill would require that campaign money that went into the office account would have to be reported with an APOC report as campaign spending. REPRESENTATIVE PORTER verified that the existing process would remain intact without any additional reports being necessary. He stated that being honest, he chose this option, because as a former and current public official, whose life has been under public view, he liked to take any option available to make any aspect of his life private. Thus, he would prefer to keep his own records of his office account. Number 069 CHAIR JAMES said the statement included in AS 15.13.105, dealing with the use of the balance of a state candidates campaign account disposition of assets, indicates that this occurs at some point of finality. However, it continues to say that a candidate for state office, may not take money from the surplus balance of the candidates campaign account as personal income. She could foresee a situation where an individual may have to quit their job to run for public office. They may need to take money out of their campaign account for personal use during the campaign. She asked if this could be done under this bill. REPRESENTATIVE BUNDE replied it could be done, as long as it was reported to the APOC. CHAIR JAMES said this statement did not say that. It stated that a candidate for state office may not take money from the surplus balance of a candidates campaign account, as personal income, and every time an APOC report is made, the balance of your campaign account is considered surplus balance. REPRESENTATIVE BUNDE responded that Brooke Miles from the APOC was available to testify and he would defer that question for her to answer. He reminded the committee that this bill only dealt with candidates who were no longer running for office. He commented that a candidate still planning to run for office, by definition does not have a surplus of money in their campaign account. CHAIR JAMES disagreed. She pointed out that any money left in the account at the time of filing an APOC report is considered surplus funds. REPRESENTATIVE BUNDE clarified that it was not a surplus for the purposes of campaigning. Those funds would not be there if they were not intended to be used for a campaign. CHAIR JAMES thought this wording needed to be clarified, because the current APOC reports refer to this money as a surplus. REPRESENTATIVE BUNDE asked to have Brooke Miles comment, because the intent was to have this apply when a person was no longer a candidate. Number 124 BROOKE MILES, Juneau Branch Administrator, Alaska Public Offices Commission, suggested that the APOC would consider it a surplus balance only when the candidate was closing their campaign account. This could happen when they were closing one account to open another for a new campaign, or if they were no longer running for public office. She thought maybe this could be solved by an amendment to Section A, which says a candidate who is closing a campaign account may not take income from their campaign account as personal income. CHAIR JAMES stated it would be hard to fix this bill to her satisfaction, as she was opposed to the bill. Should it pass over her objections, she would at least like it to be as least objectionable as possible. REPRESENTATIVE GREEN asked if this would supersede those statutes dealing with the filing process on a surplus balance. MS. MILES responded that this would provide guidelines, but added that the current process was in commission regulations, not statute. It is interpreted to mean the surplus monies when a candidate is closing a campaign account. REPRESENTATIVE PORTER asked Ms. Miles if she had heard his example of transferring monies from a campaign account to an office account for purposes of printing a newsletter. If this bill were law, would this be a violation of APOC code? MS. MILES answered it would not be a violation, but the legislator would be required to report how this money was used. REPRESENTATIVE PORTER stated that was his concern. ADJOURNMENT CHAIR JAMES said they would have to adjourn this meeting, because the Speaker was requesting their presence on the House chambers floor. She adjourned the meeting at 10:28 a.m. She stated this meeting would be continued at the call of the Chair.