HB 309-APOC; CAMPAIGN CONTRIBUTIONS/REPORTING  5:13:24 PM CHAIR KREISS-TOMKINS announced that the final order of business would be HOUSE BILL NO. 309, "An Act exempting candidates for municipal office and municipal office holders in municipalities with a population of 15,000 or less from financial or business interest reporting requirements; relating to campaign finance reporting by certain groups; and providing for an effective date." [Before the committee was CSHB 309(CRA).]  5:13:41 PM The committee took a brief at-ease. 5:14:15 PM CLAIRE GROSS, Staff, Representative Jonathan Kreiss-Tomkins, Alaska State Legislature, on behalf of Representative Kreiss- Tomkins, prime sponsor, presented the sponsor statement for CSHB 309(CRA), which read as follows [original punctuation provided]: HB 309 seeks to remedy two issues that will make the Alaska Public Offices Commission more effective. HB 309 provides a campaign disclosure reporting exemption for smaller groups who don't intend to raise or spend more than $2,500 in a calendar year ($5,000 during an 18-month election cycle). The bill also exempts these groups from the electronic filing requirement for these reports. This is beneficial as smaller groups generally require much more APOC staff time and interaction because they are usually novices who are only interested in a single topic on a ballot, unlike ongoing groups that participate every year. A similar exemption already exists for judicial retention candidates and municipal candidates. HB 309 would also exempt smaller communities (population of 15,000 or less), from Public Official Financial Disclosure (POFD) reporting requirements. There is already a minimum population exemption for campaign disclosures, but none for a POFD filing. Many of the smaller communities who struggle with clerk turnover, connectivity, and regular mail service often find themselves at a disadvantage when it comes to timely notifications and filing. This results in disproportionate civil penalties for these rural areas where most, if not all, of their municipal officers are serving in a volunteer capacity. 5:16:22 PM MS. GROSS noted that the bill was 10 sections long; however, only three - Section 1, Section 2, and Section 5 - were substantive. She directed attention to the PowerPoint presentation on HB 309 [hard copy included in the committee packet], beginning on slide 1, which read as follows [original punctuation provided]: HB 309 There already exists an exemption from POFD filing requirements for candidatesrunning for municipal office in municipalities with populations of 1000 or less. There is NOT currently any population threshold exemption for POFD filing requirements for elected or  appointed municipal officers. This is the change we are making in Section 5 of HB 309 by adding a POFD reporting threshold for candidates and elected/appointed municipal officers in municipalities with populations of 15,000 or less. 5:18:38 PM MS. GROSS provided a comparative analysis of current law and HB 309 on slide 2, which read as follows [original punctuation provided]: HB 309 BEFORE AND AFTER Current Law • All municipal candidates in municipalities with populations of 1,000 and above subject to POFD filing requirements. • All municipal officials in communities of any size, who have not opted out, are subject to POFD filing requirements (currently 30 municipalities). Under HB 309 • All candidates and municipal officials I municipalities with populations of 15,000 or less are EXEMPT from POFD filing requirements. • 25 municipalities formerly subject to POFD filing requirements, now exempt. • 5 municipalities still subject to POFD filing requirements for both municipal candidates and officials: • Anchorage, Matanuska-Susitna Borough, Fairbanks North Star Borough, Kenai Peninsula Borough, and Juneau City and Borough still 5:20:04 PM MS. GROSS turned to slide 3, which provided a list of municipalities that had opted out of the public official financial disclosure (POFD) filing requirements for municipal candidates and officers (136 total). She concluded on slide 4, which listed the municipalities currently subject to POFD filing requirements (30 total). The 25 municipalities (shown in red) would be exempt from POFD filing requirements for candidates and elected officials if HB 309 were to pass. It would leave 5 municipalities (shown in black) still subject to POFD filing requirements. CHAIR KREISS-TOMKINS welcomed questions from committee members. 5:21:21 PM REPRESENTATIVE CLAMAN, referring to slide 4, asked whether the 25 municipalities weren't allowed to opt out or whether they chose not to opt out. MS. GROSS shared her understanding that they chose not to opt out. 5:21:52 PM REPRESENTATIVE CLAMAN surmised that if the 25 municipalities decided to file the opt-out provisions, the 5 larger municipalities could choose not to opt out without passing the legislation. MS. GROSS confirmed, adding that theoretically, all 30 communities on slide 4 could choose to file the opt-out provisions. 5:22:21 PM REPRESENTATIVE EASTMAN asked whether Fairbanks was excluded from the list because the city had chosen to opt out. MS. GROSS confirmed that Fairbanks had already opted out of the requirements. REPRESENTATIVE EASTMAN asked whether the 25 municipalities could opt back in if the bill were to pass. MS. GROSS believe that the answer was yes. She deferred to Ms. Hebdon for further explanation. 5:23:19 PM HEATHER HEBDON, Executive Director, Alaska Public Offices Commission (APOC), said there was nothing in statute that would preclude the 25 communities, which were exempted under HB 309 from the POFD filing requirements, from self-directing their own financial disclosure reporting. REPRESENTATIVE EASTMAN asked whether they could opt in using the state's website. MS. HEBDON said in theory, yes. 5:25:09 PM REPRESENTATIVE STORY said she was confused. She asked why the legislature would take action on this if the communities could already choose to opt out. CHAIR KREISS-TOMKINS said that question was a good segway into invited testimony. He welcomed Clay Walker, the mayor of the Denali Borough. 5:26:00 PM CLAY WALKER, Mayor, Denali Borough, argued that transparency was important to ensure public trust; further that policy should encourage public service. He explained that the current financial disclosure process was onerous and invasive for small municipalities. He recalled that many communities, including the Denali Borough, opted out when the state changed its financial disclosure laws making them more burdensome. He reported that the Denali Borough created its own financial disclosure form, which was based on the state's prior financial disclosure form from 1999. He explained that the form included associations and sources of revenue but excluded details such as loan amounts and children's revenue. He recommended exempting municipalities, thus allowing them the ability to self-govern. 5:29:57 PM JOHN HANDELAND, Mayor, Nome, expressed his support for HB 309 and urged its passage from committee. Additionally, he aligned his comments with Mayor Walker's testimony, noting that Nome was one of few communities that chose not to opt out because the municipality didn't realize it was an option. He opined that the reporting requirements had an adverse effect on people's involvement in government service. He believed that Alaskan's value their right to privacy. He anecdotally reported that only one or two citizens had ever requested a physical copy of the disclosure report in Nome, surmising that people make their decisions based on other factors. He suggested amending the effective date to July 1, 2022. 5:34:24 PM REPRESENTATIVE CLAMAN asked whether Nome would choose to opt out since realizing it was an option, as permitted under current statute. MAYOR HANDELAND said it would be something to consider. 5:35:29 PM REPRESENTATIVE TARR said she tended to favor transparency and believed that citizens had the right to know who their public officials were and what their financial interest were. She asked how the process could be fixed to better accommodate individuals seeking public office. MAYOR HANDELAND recommended setting up a local process for financial disclosure. REPRESENTATIVE TARR asked whether part of the issue was that the reports were public and questioned whether keeping them private would be a solution. MAYOR HANDELAND agreed that keeping the financial disclosures private would help. Further, he argued that some of the categories on the form weren't necessary, pointing out that in congress, income was reported by range. 5:45:02 PM REPRESENTATIVE VANCE asked whether the City of Nome practiced recusal from votes if there was a conflict of interest. MAYOR HANDELAND answered yes, members must declare a conflict of interest. 5:48:39 PM CHAIR KREISS-TOMKINS inquired about the civil penalties for a late filer. MS. HEBDON answered that the maximum civil penalty daily rate was $10 for a public official's financial disclosure. CHAIR KREISS-TOMKINS asked how many civil penalties had been assessed for municipal filers in years passed. MS. HEBDON was unsure. She offered to follow up with the requested information. CHAIR KREISS-TOMKINS asked how the POFD process differed for municipal candidates versus elected officials. MS. HEBDON stated that APOC published a POFD for the following people on its website: the governor, lieutenant governor, state legislators, and candidates for state municipal offices. She noted that for anyone excluded from those categories, the POFD would not be published on APOC's website; however, it was a public document and could be obtained upon request. CHAIR KREISS-TOMKINS asked for the commission's rational for excluding certain people's POFD from the website MS. HEBDON said the rationale was the potential for a chilling effect on volunteer boards and commissions; difficulty in recruiting appointed members of the executive branch; and matters of security for judicial officers. CHAIR KREISS-TOMKINS asked how many annual public requests were received for the POFDs not published on the website. MS. HEBDON answered less than 10, noting that the majority of public POFD requests were for executive and judicial branch officials. CHAIR KREISS-TOMKINS asked whether there was a single instance of a municipal POFD request in Ms. Hebdon's tenure at APOC. MS. HEBDON answered no, she could not recall any requests for municipal POFDs. 5:53:45 PM REPRESENTATIVE VANCE asked why CSHB 309(CRA) would exempt groups that raised or expended no more than $2,500 in a calendar year. 5:54:07 PM MS. GROSS deferred to Ms. Hebdon. MS. HEBDON shared her understanding that the purpose was to exempt and unburden smaller groups that formed around a local grassroots ballot proposition, which didn't typically continue after one specified election but required a significant amount of staff time and intricate reporting. She said it was similar to an existing exemption for local candidates who didn't intend on having a lot of financial activity. REPRESENTATIVE VANCE asked whether $2,500 was sufficient for these types of groups. MS. HEBDON said $2,500 was reached based on the current exemption that existed for candidates, as previously mentioned. 5:56:55 PM REPRESENTATIVE CLAMAN commented on small grassroots groups and expressed his support for excluding them so as to avoid burdening them with financial disclosure requirements. CHAIR KREISS-TOMKINS shared a personal anecdote on his experience participating in small group efforts in Sitka, noting that the APOC requirements were a significant dissuasion. 5:59:30 PM REPRESENTATIVE STORY recalled that the Denali Borough had created its own financial disclosure form. She asked whether other municipalities had done the same. CHAIR KREISS-TOMKINS recalled that the North Slope Borough had determined that they wanted POFD disclosure requirements. He offered to follow up with more information. MAYOR WALKER did not know the answer. REPRESENTATIVE TARR requested a copy of the form used by the Denali Borough. 6:02:14 PM REPRESENTATIVE VANCE recalled that the Homer City Council required a more thorough financial disclosure than the state. She argued that local municipalities would be fully capable of self-governance on this issue if the state were to remove its requirements. CHAIR KREISS-TOMKINS said it was clear that current POFD requirements were not working, as more than 80 communities had opted out. He questioned the purpose of a POFD that sits unused in a city office building. He pointed out that if the legislature decided to make them publicly available, so that the goal of transparency was fulfilled, there would also have to be an awareness that a chilling effect may follow. 6:05:18 PM CHAIR KREISS-TOMKINS announced that CSHB 309(CRA) was held over.