HB 347-USE OF MUNICIPAL FUNDS FOR INITIATIVES  8:41:20 AM CHAIR LYNN announced that the last order of business was HOUSE BILL NO. 347, "An Act prohibiting the use of municipal funds to support or oppose an initiative proposal to circulate a petition for a ballot initiative, or to influence the outcome of an election concerning a ballot initiative, without approval by municipal voters at an election." 8:41:43 AM REPRESENTATIVE KURT OLSON, Alaska State Legislature, as sponsor, presented HB 347. He said the bill would provide checks and balances to the "expenditure of the money." He said he had hoped the quarterly report from the Alaska Public Offices Commission (APOC) was available, but said he believes someone in the room may have a better understanding of "what the total will be." He surmised, "It's probably going to come in at about $250,000, possibly more." He offered his understanding that "the actual dollars spent on gathering these signatures will be somewhere between 80 and 100 thousand dollars." REPRESENTATIVE OLSON noted that included in the committee packet is information regarding related laws in 20 other states. He said other states' laws are stricter. He said if he had had that information in the beginning, he might have changed HB 347; however, he indicated that he was satisfied with the balance the proposed legislation would provide. 8:44:16 AM CHAIR LYNN commented that quite often those trying to get an initiative passed don't have the same funds available as the city. 8:45:19 AM REPRESENTATIVE OLSON offered an example of petition gathering where no public money was spent and an example where the petition signature gatherers were paid. He said often the money spent by municipalities has come from the state. He said his issue is with public money being used. 8:48:17 AM REPRESENTATIVE JOHANSEN listed the amounts spent by various municipal entities on initiative petition gathering, as follows: the Alaska Municipal League, $5,000; the Alaska Conference of Mayors, $10,000; North Slope Borough, $25,000; Bristol Bay Borough, $4,000; the community of Pribilof Island, $10,000; and the City of Valdez, $5,000. REPRESENTATIVE OLSON pointed out that "those are only the numbers that have been reported." CHAIR LYNN said the money spent came from taxes of the people who may or may not agree with the issue. 8:49:42 AM REPRESENTATIVE JOHANSEN offered his understanding that municipal revenue sharing is based on the price of oil and, thus, some of the money comes from the state's operating budget. He said during a recent signature gathering there was no paid opposition to the gathering of the signatures, which he said is fine. CHAIR LYNN said ultimately the money comes from the citizens of the state. REPRESENTATIVE OLSON said that is why he wants to compare this with the legislative Capital Project Submission & Information System (CAPSIS) project. 8:51:06 AM ANNA LATHAM, Staff, Representative Kurt Olson, Alaska State Legislature, presented HB 347 on behalf of Representative Olson, sponsor. She stated: Currently municipalities can spend thousands of dollars on consultants and paid signature collectors to influence the outcome of a ballot initiative. Although voters may be in support of a ballot initiative, they may be not be in favor of municipal funds being allocated to special interest groups to finance that initiative, as Alaska law currently allows. This bill creates awareness about where municipal funds are actually going and it empowers voters. If the voters' priorities are the same as the municipalities, voters would approve of funds to influence a ballot initiative. And if the voters' priorities differed from the municipal agenda, the process would stop before additional funds were spent. So, in a sense, HB 347 could be a cost-saving measure as the state shifts to become more fiscally conservative. MS. LATHAM said 14 of the 20 states reviewed by Legislative Legal and Research Services prohibited the use of public funds to support or oppose an initiative altogether. Those states, she said, are: Arizona, California, Georgia, Florida, Idaho, Massachusetts, Montana, Nevada, New Mexico, North Dakota, Oregon, Utah, Washington, and Wyoming. She said those states do allow municipalities to extend funds to provide information or educational materials regarding an initiative. She said HB 347 is not nearly as restrictive as the current legislation in the states she just listed; it would allow municipalities to use funds with voter approval. She said the intent of HB 347 is to keep the ballot initiative process fair and to ensure that the priorities of the municipalities are the same as the priorities of its citizens. 8:53:35 AM REPRESENTATIVE SEATON asked what the cost to the boroughs would be for authorizing expenditures of funds for special elections and how those costs would relate to the cost that "municipalities have put in to the recent initiative." MS. LATHAM answered that that would depend on the size of the municipality. REPRESENTATIVE SEATON asked if Ms. Latham could answer the question for any specific borough. MS. LATHAM said she could find out that information. REPRESENTATIVE SEATON opined that it is important to find out that information on behalf of those people who have elected their municipal leaders. He said, "If the effect of this is to dramatically increase the cost of participation, then we need to know that." He offered his understanding that a special election held in the Kenai Peninsula Borough costs approximately $300,000. 8:55:54 AM REPRESENTATIVE KELLER directed attention to language on page 1, line 7, which read, "When expenditure of money is authorized by (b) or (c) of this section", and he said he is not familiar with subsections (b) and (c). 8:56:20 AM REPRESENTATIVE OLSON responded as follows: It was quite contentious when it was brought up to the Council of Mayors. I believe that the small mayors outnumbered the large mayors in this one person/one vote. ... The three or four mayors that were adamantly against expending monies on the initiative represented probably 60-65 percent of the state. 8:57:07 AM REPRESENTATIVE P. WILSON said the cost varies depending on factors such as whether an initiative is going to be added to an already planned special election or a special election is being called just for the initiative. She stated her preference to not have municipalities paying [for initiative processes] with money the state has given for other purposes. 8:58:19 AM REPRESENTATIVE JOHANSEN stated, "This is not about voicing an opinion; this about writing a check." He said any municipality can voice an opinion through a resolution or through letters to the mayor. He said of the $100,000 raised by municipalities, $50,000 was sent to a signature gatherer in Anchorage. REPRESENTATIVE OLSON said Representative Johansen's statement is accurate. He related that he has not heard any negative feedback on this proposed bill. 9:00:35 AM REPRESENTATIVE GRUENBERG asked Ms. Latham if she inquired of Legislative Legal and Research Services whether any courts have construed the constitutionality, particularly in regard to the possible infringement of the municipalities' right to free speech. MS. LATHAM answered no, but said she received a court opinion that said "initiative petition circulation is poor political speech." She said, "So, that cannot be prohibited. What we could prohibit, as other states have already done, is to prohibit municipalities from receiving." 9:02:09 AM REPRESENTATIVE GRUENBERG asked for a copy of that case and any other related legal matter. He said it seems that an initiative is one method of expressing an opposition to a government policy or program, usually utilized by people who cannot gain redress through the normal form of representative government. He said, "It would seem to me that the application of a ... law like this would be to allow the initiative sponsors to present their side of the case yet to prohibit the municipality from presenting its side of the case." He ventured that if there is going to be an election to determine whether municipal money can be spent, it will change only the timing of the debate. 9:04:41 AM REPRESENTATIVE OLSON responded that [under HB 347], at least [the municipality] would know whether the people supported the direction in which it was going. REPRESENTATIVE GRUENBERG concurred. He said the debate would take place around the time of the election that would be held to decide whether to spend money on the initiative. 9:05:14 AM REPRESENTATIVE JOHANSEN argued that the debate may not be limited to the issue. To Representative Gruenberg's first question, he pointed to [the first sentence of] the third footnote in the aforementioned Legislative Legal and Research Services memorandum, which read as follows [original punctuation provided]: In Idaho, Massachusetts and New Mexico, the prohibition is not codified in law but rather, pursuant to court rulings. REPRESENTATIVE GRUENBERG said this issue is interesting because it deals not only with policy, but also with legal issues. He named two issues: free speech and a question regarding what right a municipality has under the articles in the state constitution dealing with municipality government. He offered his understanding that under HB 347 there is no issue with the latter, but said he "did not see anything on the free speech issue." 9:07:05 AM REPRESENTATIVE OLSON stated, "That was my overriding concern, and it was expressed that way to the [bill] drafter." 9:07:11 AM REPRESENTATIVE SEATON referred to a paragraph in the Legislative Legal and Research Services memorandum [regarding Ballot Measure 1], which read as follows [original punctuation provided]: The initiative would have banned the use of public funds for political campaigns and lobbying by state and local government agencies and school districts to support or oppose ballot measures, lobby to pass a law, or request public funding. The measure failed as nearly 61 percent of voters cast their ballots against it. REPRESENTATIVE SEATON asked how [Ballot Measure 1] and HB 347 differ. 9:08:02 AM REPRESENTATIVE OLSON answered that HB 347 is less restrictive and does not include school districts, for example. He said he would distribute a copy of Ballot Measure 1 [included in the committee packet]. 9:08:39 AM REPRESENTATIVE SEATON explained he is trying to figure out if the issue is the same, because if it is he questioned why a different result from the voters would be anticipated. REPRESENTATIVE OLSON said reading the language of Ballot Measure 1 would answer Representative Seaton's query. 9:09:17 AM REPRESENTATIVE PETERSEN said as a result of a Supreme Court ruling in the Citizens United case, it is unlawful to limit the political speech of corporations and unions. He questioned whether trying to limit the free speech of municipalities would result in another court battle. CHAIR LYNN said the committee needs to get input from the Department of Law. 9:10:30 AM KATHIE WASSERMAN, Executive Director, Alaska Municipal League, testified in opposition to HB 347. She directed attention to language in the sponsor statement [included in the committee packet], which indicates HB 347 would prohibit municipalities from spending "copious amounts of money" to advance their own agenda. She questioned the meaning of copious in this context. She explained that any amount of money spent on an initiative must go through a hearing process in the municipality. That hearing process must be legally posted and advertised. She said there are two hearings, and public input is allowed. She posited that it is false to say people do not have the ability to be part of the process. Ms. Wasserman expressed concern with the statement that municipalities follow their own agenda. She said elected officials never have 100 percent of their constituency backing them; however, they are elected, they have fiduciary responsibilities, and some of them do have agenda. She said agenda is not always a bad word. 9:13:28 AM MS. WASSERMAN disagreed with the sponsor's statement that the mayors who were against spending money [on the aforementioned initiative] represented 65 percent of the state. She said they were from the same area and represented a large population, but not 65 percent. She emphasized that a vote was taken. She said the 2010 initiative referred to by Representative Seaton was one that the municipalities, through AML, ran the campaign against. She said, "We did that with many organizations across the state, and we were able to defeat that initiative, but it also protected the state legislators from spending any money on anything that they voted on." Ms. Wasserman said she received thanks from many legislators for taking the stand against that initiative. She said, "And now we have an initiative that is against some of the legislators, and suddenly it shouldn't be done. And I just have a very difficult time understanding why it's dependent on which viewpoint we take." 9:15:01 AM CHAIR LYNN noted that one of the co-sponsors of HB 347 is Representative Anna Fairclough, who was a prominent member of the Anchorage Assembly, and he stated his assumption that she has intimate knowledge of municipal politics in that community. 9:15:30 AM REPRESENTATIVE GRUENBERG referred to the information in the Legislative Legal and Research Services memorandum and said the document shows only how many states prohibit the use of public funds to support or oppose an initiative. He said those laws could take various forms. He offered the following hypothetical examples: public funds may not be used to oppose or support a ballot measure or an initiative; and the only prohibition is to use public funds to speak out on an initiative proposed by the voters. He said this brings up a fundamental question of whether it is constitutional and good policy only to oppose public funds vis-à-vis an initiative. He concluded: "Why should it make a difference whether something's proposed by the voters as opposed [to] ... the municipality? In both cases, the voters are asked to approve it." 9:18:29 AM MS. WASSERMAN said municipalities have donated money, but none have sponsored "the current initiative"; it was sponsored by a group formed separately. She said with the way some national laws have changed, under HB 347 municipalities would be "the only ones that can't say anything." She relayed that the lesson learned from "the last initiative that we fought against a group that carried the gag law to the voters" was that expenditure of money means "while you're on the clock, you can't say anything ... unless you are at home, on your own phone." She said that calls into question whether a mayor, who is not paid, is on the clock 24 hours a day. She said initiatives may involve municipalities, and she opined that municipalities need to be able to represent themselves in a timely manner. In response to Representative Gruenberg, she said she would seek out legal research on this issue. 9:20:26 AM REPRESENTATIVE SEATON directed attention to language in the bill title, starting on line 2, which read, "or to influence the  outcome of an election concerning a ballot initiative". He asked Ms. Wasserman if her interpretation from "the previous bill initiative" is that a municipal official who traveled to Juneau when hearings were taking place would be prohibited from taking part in those hearings. MS. WASSERMAN answered yes. She said, "We were told that they would be prohibited from taking part in anything." She added, "It's a lot more far reaching than just handing a check over." REPRESENTATIVE SEATON said he thinks it would be an interesting situation if initiatives are brought up that would directly affect municipalities, but the representatives of those municipalities were prohibited from sending people to Juneau to talk to the legislature. 9:22:33 AM CHAIR LYNN suggested adding a provision stating that the proposed legislation would not prohibit municipal employees who are on the clock from communicating with or testifying before the legislature. REPRESENTATIVE SEATON said that would help, and it would further help if those municipal employees were allowed to have hearings in their own municipality. 9:24:07 AM REPRESENTATIVE JOHANSEN said "this" is not "a flat-out prohibition from taking part in the process." He then said a borough could set up a structure that could "run through the ballot one time and create a pot of money" that could be used to deal with initiatives. He said that would keep "the big money" out, but would allow for staff to testify. MS. WASSERMAN, in response to series of questions from Representative Johansen, confirmed that the Conference of Mayors is part of the structure of AML, but the two entities have separate bank accounts. The executive boards of each organization, through votes, decide how the money is spent. She said AML's money comes from membership dues from municipalities, business sponsors, and associates throughout the state that join AML, nonprofit organizations, and associations. Additionally, AML charges fees for training in, for example, grant writing, parliamentary procedure, and how to run a good meeting. She relayed that the information pertaining to AML's money sources is posted on its web site and available to the public. In regard to her previous statement that two hearings are given, she confirmed that that applies to every municipality in the state. REPRESENTATIVE JOHANSEN offered his understanding that some municipalities utilize consent calendars, on which all topics are listed, and if someone must make a motion to bring the topic forward. He said he has seen some large appropriations go through the Ketchikan Borough Assembly on a consent calendar without any reading or discussion. MS. WASSERMAN, in response to Chair Lynn, estimated that 60 percent of AML's funding comes from municipalities. She offered further information regarding benefits of membership. 9:31:04 AM REPRESENTATIVE JOHANSEN said there is state law that prohibits people from using legislatively appropriated money to lobby the legislature. He said AML could say that it does not use the municipal revenue sharing money, but uses "the money we get from the 40 or 50 people or the other money." He questioned whether at some point that other money would run out and AML would be left with only municipal money. He said there is a comingling of funds. CHAIR LYNN asked if the funds are comingled. MS. WASSERMAN answered yes. In response to a follow-up question, she said the board decides how to use the funds. 9:32:51 AM MS. WASSERMAN, in response to Representative Johansen, said she has only four employees, so if smaller communities need help with balance sheets and budgets, she defers them to a source of help. 9:34:21 AM REPRESENTATIVE SEATON said, "It seems like we're saying, 'Since you're a member of an organization, then any organization that you're a member of is prohibited from using any funds from that organization to support or oppose an initiative.'" He said he thinks the committee should qualify that with the sponsor. 9:36:18 AM MAKO HAGGERTY specified that although he sits on the Kenai Peninsula Borough Assembly, he is testifying on behalf of himself. He relayed that he is one of the co-sponsors of the Coastal Management Program Initiative. He said his first reaction to reading HB 347 is that it is a gag order to silence those who are making an effort to represent themselves. He said one thing that is done at the municipal level is the allocation of money. He said the top ordinances introduced at the last assembly meeting were for: $29,000, $200,000, $569,000, and $4.7 million. He said those are large sums of money that the public trusts the assembly to allocate. He said the municipalities felt it was important to spend $5,000-$28,000 on the initiative, which he said is minor compared to the amount of money it would take to run an election to see if municipalities could even speak to the issue. MR. HAGGERTY stated his opposed to HB 347, which he described as "nothing less than an unfunded mandate." He warned that if passed, municipalities would be forced to spend a lot of money that they would not have spent in the first place. He said there have been several local initiatives that have had an adverse effect on the way the Kenai Peninsula Borough does business, and under HB 347, the assembly would not be allowed to explain why an initiative would harm the municipality. He concluded, "No matter which direction you come at this bill, it just ... seems kind of knee jerk and shortsighted." 9:40:14 AM REPRESENTATIVE GRUENBERG, regarding Mr. Haggerty's comment that under HB 347 the assembly would not be allowed to explain a ballot measure, said that is not the way he interprets the proposed legislation. MR. HAGGERTY said he does not agree because of the way information is interpreted. He said someone will decide the explanation is in support or opposition to an initiative. REPRESENTATIVE GRUENBERG said he thinks that would depend on how the message was crafted. 9:42:03 AM REPRESENTATIVE KELLER, regarding previous comments about restrictions on holding hearings, said when the legislature holds hearings, the intent is to listen to the community, not to steer the community. He said he cannot see where a restriction on spending money can possibly be construed to be a restriction on freedom of speech. 9:44:32 AM REPRESENTATIVE PETERSEN asked Mr. Haggerty if he believes that voters give the assembly members the power to manage the community's money, and that if they don't like the way the money is managed, they can choose to not re-elect any of those members. MR. HAGGERTY answered yes. He said those who elected him expect him to listen and make good choices based on differing opinions of the public. He said another reason he thinks HB 347 is not necessary is because if a municipality is going to spend money to support or oppose an initiative, it will still have to notify the community and base its decisions off of the public's response. He indicated that in his community, that response is great. 9:46:44 AM REPRESENTATIVE JOHANSEN told Mr. Haggerty he does not appreciate "assigning the motive of introducing the bill because of a specific initiative." He said, "Language such as this that was compared to the ... anti-corruption initiative, that language was introduced in 2007, so this issue ... is not a reaction to a specific initiative." Regarding Mr. Haggerty's remark about being responsive to the local constituency, Representative Johansen said [the legislature] needs to be responsive to the state, and "this" is about state money. 9:47:54 AM SCOTT RUBY, Director, Division of Community and Regional Affairs, Department of Commerce, Community, and Regional Development, testified that the division provides advice and assistance to municipalities "on these types of issues." In regard to the previous question about subsections (b) and (c), he said those subsections address how a municipality may use money to explain initiatives and expressly authorizes municipalities to do so. He said there is a zero fiscal note because the division already has staff that provides assistance to communities and works with AML in providing training and assistance to the municipalities. 9:49:42 AM REPRESENTATIVE OLSON expressed appreciation of Mr. Haggerty's petition signature gathering efforts, for which Mr. Haggerty used no municipal funds. Regarding intent language, he said he thinks there are some qualified people who could address some of the issues raised today. 9:51:00 AM REPRESENTATIVE OLSON, in response to Representative Seaton, said the intent of the bill is not to disallow elected community leaders from coming to testify before the legislature in Juneau. He clarified that the only intent of HB 347 is to prevent state monies from being used for signature gathering. 9:52:12 AM REPRESENTATIVE KELLER said he would like to move the bill, and he emphasized that he thinks the issues raised today could be addressed by the next committee of referral. 9:52:45 AM REPRESENTATIVE SEATON said he would object to a motion, because he thinks "we all represent communities." He said he checked with one of his municipalities who object to the proposed legislation, and he has not yet checked with the rest of his constituent communities, an obligation he said he must fulfill. CHAIR LYNN remarked that the bill was noticed. 9:54:35 AM REPRESENTATIVE KELLER moved to report HB 347 out of committee with individual recommendations and the accompanying zero fiscal note. 9:54:49 AM REPRESENTATIVE SEATON objected. 9:54:56 AM REPRESENTATIVE JOHANSEN, regarding the remark by Chair Lynn, noted that HB 347 was noticed 6 days and 18 hours ago, which he opined is ample time in which to canvas a district for opinions. He reiterated that HB 347 does not speak to any specific initiative, but speaks for itself. He opined that it is ironic that the sponsor of the aforementioned Ballot Measure 1 is the same person who received $50,000 to put the Alaska Sea Party's initiative [Ballot Measure 2 in support of Coastal Zone Management] on the ballot. He stated his support for HB 347. 9:56:07 AM REPRESENTATIVE PETERSEN objected to the motion to move HB 347 out of committee. He reiterated his concern that it would open the state up to legal entanglement. CHAIR LYNN said as a member of the next committee of referral, the House Judiciary Standing Committee, he will ensure that someone is present from the Department of Law to speak to that issue. 9:56:51 AM A roll call vote was taken. Representatives Johansen, P. Wilson, Keller, and Lynn voted in favor of the motion to move HB 347 out of committee with individual recommendations and the accompanying fiscal notes. Representatives Petersen and Seaton voted against it. Therefore, HB 347 was reported out of the House State Affairs Standing Committee by a vote of 4-2.