HB 234-POLITICAL CONTRIBUTION LIMITS  4:51:01 PM CHAIR SHOWER announced the consideration of CS FOR HOUSE BILL NO. 234(STA) am(efd fld) "An Act relating to political contributions; relating to the location of offices for the Alaska Public Offices Commission and the locations at which certain statements and reports filed with the commission are made available." He noted that the intention is to take public testimony after Representative Schrage gives the committee a high level summary of HB 234. 4:51:27 PM REPRESENTATIVE CALVIN SCHRAGE, Alaska State Legislature, Juneau Alaska, sponsor of HB 234, stated that this legislation fixes the gaping hole in Alaska's campaign finance law that resulted from the federal court decision to strike a number of contribution limits and the Alaska Public Offices Commission's (APOC) decision to not accept the APOC staff recommendation to set temporary limits, absent the legislature's action. Should HB 234 pass, it would reestablish campaign finance limits in Alaska. Most importantly it would set contribution limits from individuals to candidates. Right now there is no limit so unlimited funds from outside interests may flow into the state, which potentially could harm Alaska's elections and undermine public confidence in the integrity of its elected officials. CHAIR SHOWER noted who was available to answer questions. 4:53:05 PM SENATOR COSTELLO asked if independent expenditure (IE) groups currently were allowed to receive outside funding. 4:53:16 PM ERIK GUNDERSON, Staff, Representative Calvin Schrage, Alaska State Legislature, Juneau Alaska, confirmed that independent expenditure groups were able to accept donations from nonresidents. SENATOR COSTELLO asked if there were any limits on outside contributions. MR. GUNDERSON offered his understanding that there were no contribution limits for IE groups. He deferred to Heather Hebdon for further explanation and clarification. REPRESENTATIVE SCHRAGE confirmed that due to a U.S. Supreme Court ruling, there currently were no limits on contributions to IE groups from either outside or inside Alaska. The court's reasoning was that the risk of a donation having a corrupting influence was mitigated because IE groups don't coordinate with campaigns. He said it's no longer a matter of business person A giving money to a candidate, which directly influences that candidate. Now the contributions go to an independent expenditure group so the money can be spent on multiple campaigns and the candidate may not even be aware of the source. REPRESENTATIVE SCHRAGE said his personal belief is that having no limits on individual contributions increases the potential for corruption and jeopardizes good governance and self- determination. He urged the committee and legislature to mitigate the potentially corrupting influence of unlimited contributions to individuals by passing HB 234. 4:55:40 PM SENATOR COSTELLO said she appreciated the example and pointed out for the listening public that the limit on individual contributions to candidates was $500 prior to the court ruling and without HB 234. She said she sees it as a potential freedom of speech issue and that the legislature should look at the matter if an Alaskan is able to get to an IE and that IE is influencing campaigns. CHAIR SHOWER asked if she was saying that if IE contributions are unlimited, the legislature should look at unlimited contributions for an individual. SENATOR COSTELLO clarified she was saying the committee should consider that freedom of speech is giving to a campaign and that on one hand there is no limit for an IE whereas there currently is a limit on [individual contributions] and a limit is contemplated in this bill. CHAIR SHOWER offered his understanding that the top three donors in an IE have to be reported. REPRESENTATIVE SCHRAGE said he'd like to address the freedom of speech concern, which is valid, after the committee hears from Ms. Hebdon. CHAIR SHOWER asked Ms. Hebdon if she heard the questions and whether she had anything to add. 4:57:58 PM HEATHER HEBDON, Executive Director, Alaska Public Offices Commission, Department of Administration (DOA), Anchorage, Alaska, confirmed that an IE group's political communications on television, radio, and fliers must disclose information about the top three contributors. IE groups are also required to disclose all the money coming in and going out just like any other political action committee. But as Representative Schrage pointed out, based on the U.S. Supreme Court decision and the court precedent there are no limitations other than that the donations may not come from a foreign national. REPRESENTATIVE SCHRAGE asked her to verify that an IE group is required to report all its individual donors. He also asked her to remind him of the timing for the disclosure. He recalled that the timeline was fairly short, but he didn't recall the specifics. MS. HEBDON clarified that she was talking about independent expenditures that are intended to influence a candidate election. In that circumstance, and as a result of Ballot Measure 2, contributors to an IE group are required to file a statement of contribution within 24 hours of making that contribution. The IE group is also required to disclose receipt of the contribution within 24 hours. Ballot Measure 2 required true source reporting and it has eliminated a majority of Dark Money in these elections. 5:00:40 PM CHAIR SHOWER asked what dark money hasn't been eliminated. MS. HEBDON explained that the definition of Dark Money refers to contributions in excess of $2,000 in the aggregate, so anything less than that wouldn't necessarily require true source reporting. 5:01:27 PM CHAIR SHOWER opened public testimony on HB 234. 5:01:40 PM KEVIN MORFORD, President, Alaska Move to Amend, Anchorage, Alaska, stated that AMA is a nonprofit that works to strengthen the voice of ordinary voters in the political process. He said HB 234 isn't perfect, but he was testifying in strong support as it was the only bill that had a reasonable chance of making it through the process this year. MR. MORFORD emphasized that an overwhelming majority of Alaskans from all political parties support reasonable limits on donations to Alaska political campaigns. He highlighted that 73 percent of Alaska voters in 2006 voted to reenact strict limits on campaign donations and polling indicates that strong support continues today. He urged establishing an even playing field where the preferences of ordinary Alaska voters have the largest influence. He stressed that candidates should compete for the support of ordinary voters in their districts and not be corrupted by the siren call of big money from powerful economic interests. MR. MORFORD urged passage of HB 234 this session. 5:03:55 PM CHAIR SHOWER closed public testimony on HB 234. REPRESENTATIVE SCHRAGE said Senator Costello raised a legitimate concern about freedom of speech. The U.S. Supreme Court has articulated that political contributions are a form of free speech and that there must be high justification to limit that speech. This does not mean there is no reason to restrict speech, and the court has accepted fighting corruption as a valid reason. REPRESENTATIVE SCHRAGE said there is ample evidence from state history, testimony from prior elected officials, and court records that attest to the risk of donations having undue influence on candidates. There is also the public perception that a $10,000 donation to Candidate A would have undue influence. He said it's of the utmost importance that the citizens of Alaska are able to continue to have faith in the legislative body as an institution. In response to the notion that Alaska isn't seeing $2,000, $3,000, and $5,000 donations, he said we don't know that because the reporting requirements in Alaska for candidates isn't within 24 hours like it is for IE groups. Candidate financial disclosure reports won't be available for several more months. There may be candidates who already have received very large donations. REPRESENTATIVE SCHRAGE acknowledged that speech is restricted when campaign contributions are limited, but pointed out that there was still an opportunity for somebody to advocate for their candidate of preference and influence the election through an IE group, but in a way that reduces the risk of either the actuality or the appearance of corruption. REPRESENTATIVE SCHRAGE restated that the concern is genuine and something to keep in mind. Establishing contribution limits does restrict free speech but it's done for the valid reason of preventing corruption in the legislative body. He said that is of the utmost importance, particularly in times like today. He said Alaska is at great risk because the media market is relatively cheap and the amount of money spent on political campaigns has exploded, as witnessed by the most recent municipal election in Anchorage. Absent passage of HB 234, he predicted that Alaskans would see candidates receiving $10,000 - $30,000 donations. This is already happening in IE group contributions and there is no reason to believe this won't extend to individual candidates, he said. The difference is that giving to the individual candidate introduces the large potential for corruption into that election environment. CHAIR SHOWER asked if there were questions or comments. 5:08:32 PM SENATOR KAWASAKI asked what happens in other states that have contribution limits. REPRESENTATIVE SCHRAGE relayed that most states have contribution limits that look similar to those proposed in HB 234, including the significantly increased limits the bill proposes. Basically, when the court looks at whether a limit is constitutional, it looks at what it had previously upheld as constitutional. Before the Randall test (Randall v. Sorrell), the Supreme Court spoke about Alaska's limit being lower than the limit the court previously upheld, calling it a warning sign. He said that would be about $1,000 per year when adjusted for inflation. CHAIR SHOWER said he'd like the committee to hear about the data from other states. REPRESENTATIVE SCHRAGE offered to read a short paragraph from NCSL to provide context on national limits. CHAIR SHOWER said he'd hold that until the next hearing. 5:11:43 PM SENATOR COSTELLO expressed interest in the NCSL data and information about limits on independent expenditure groups. She said she appreciated what was said about not unduly influencing a candidate and that there's not an appearance of corruption if the donation goes to an IE group. However, the IE group can amass a lot of money and then a candidate has to defend him or herself against what that group is saying about him or herself as a candidate. She sees IE groups as having a lot of influence in campaigns and she'd like to know what other states do about that and if there are any limits. CHAIR SHOWER commented on the concern about ensuring a level playing field. 5:13:25 PM CHAIR SHOWER held HB 234 in committee for future consideration.