Legislature(1995 - 1996)

04/19/1996 01:30 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
            SB 191 ELECTION CAMPAIGN FINANCE REFORM                           
 SENATOR MILLER moved to adopt CSSB 191(JUD) (version R), in lieu of           
 the original bill.  There being no objection, version R was                   
 SENATOR ADAMS arrived at 1:38 p.m.                                            
 SUSAN BURKE, an attorney with the law firm of Gross and Burke,                
 explained her original involvement with SB 191 began when Senator             
 Kelly, on behalf of the Legislative Council, asked her to review              
 the campaign finance initiative and advise the Council about any              
 provisions in the initiative that might violate the Constitution.             
 She prepared an opinion for the Council, dated February 12, in                
 which she identified a number of sections which raise significant             
 issues.  She believes some of the issues, if challenged, would be             
 found violative by the court, others are not as clear.                        
 CHAIRMAN TAYLOR questioned whether the issues are questionable only           
 on constitutional grounds.  MS. BURKE believed most of the                    
 provisions might violate the First Amendment.                                 
 MS. BURKE informed committee members she identified the sections of           
 the Senate State Affairs committee substitute that are virtually              
 certain to be found invalid if challenged in court at Senator                 
 Taylor's request.  In her personal view, when dealing with First              
 Amendment rights, it is not good public policy to enact statutes              
 that violate those rights, and then require citizens to go to the             
 expense and trouble of filing a lawsuit in order to vindicate those           
 rights.  When conducting the review of the bill, she also kept in             
 mind that the legislature was required to enact a substantially               
 similar measure to the initiative.  The Alaska Supreme Court has              
 decided only one case interpreting the substantially similar                  
 provision of the Constitution.  In that decision, the Supreme Court           
 determined if the legislature enacts a measure that is                        
 substantially similar to an initiative that is scheduled to go on             
 the ballot, the initiative would be removed from the ballot and the           
 law would take effect.  In that case, the Supreme Court gave the              
 legislature a lot of discretion, particularly in legislation of               
 this nature, to make changes and fine tune the provisions.  In her            
 opinion the bill in its current form is still substantially similar           
 to the initiative.                                                            
 MS. BURKE discussed the provisions most vulnerable to                         
 constitutional attack, and as a result no longer appear in version            
 R.  The initiative contained different amounts of contribution                
 limitations for individuals and groups.  The individual limit was             
 $500; the group limit was $250.  The only basis the courts have               
 ever found for upholding limits on the amounts that can be                    
 contributed to a candidate is to avoid corruption or the appearance           
 of corruption which allows the federal and state governments to               
 place limits on contribution amounts.  In her opinion, it is no               
 more corrupt for a group to contribute to a candidate than for an             
 individual to contribute to a candidate, therefore there is no                
 justification for a difference in the amounts.  Rather than reduce            
 the individual contributions to $250 to keep them equal, version R            
 raises the group limit to $500.  Additionally, cases from other               
 jurisdictions suggest that at some point, campaign contributions              
 can be set so low that the limits have no rational relationship               
 between preventing corruption or the appearance of corruption and             
 very low limits have been thrown out on that basis.                           
 MS. BURKE explained a second provision which prohibited certain               
 business entities, other than corporations and labor unions, from             
 making contributions.  The U.S. Supreme Court has upheld                      
 prohibitions against corporate contributions and labor union                  
 contributions, but there is no case that has upheld limitations on            
 other forms of business entities.  Version R clarifies that other             
 kinds of business entities, other than corporations or labor                  
 unions, can contribute to candidates.                                         
 CHAIRMAN TAYLOR asked how much those entities can contribute.  MS.            
 BURKE replied the same amount as individuals.  CHAIRMAN TAYLOR                
 asked if all entities, including individuals, groups, and                     
 businesses, would have the same limitation, and whether the only              
 exception would be political parties.                                         
 MS. BURKE clarified that she was previously referring to the amount           
 that can be contributed to a group is $250 but the same idea                  
 applies.  If an individual contributes to a group, that individual            
 is one step removed from contributing directly to a candidate.                
 MS. BURKE explained the initiative had a provision which banned               
 non-resident contributions.  The State Affairs Committee placed               
 limits on the dollar amounts that candidates could accept from non-           
 residents.  That provision raises two constitutional questions: the           
 first being the First Amendment rights of non-residents to engage             
 in political activity.  There are non-residents who have every bit            
 as much interest in political activity in Alaska as residents.  The           
 fact that someone is a non-resident raises the privileges and                 
 immunities clause.  The fact that non-residents do not have the               
 right to vote is insufficient reason to limit the amount they can             
 contribute, other than to hold them to the same limitation as                 
 residents.  A federal district court case in Oregon held people               
 cannot be prohibited from making contributions to people in                   
 election districts outside of the district in which they reside.              
 CHAIRMAN TAYLOR noted as the committee substitute existed, if a               
 person lived within a given House District in Anchorage, under the            
 initiative, he/she would have been precluded from contributing to             
 a candidate who lived across the street but was in a different                
 SENATOR ADAMS commented that a person who could not contribute to             
 another candidate could contribute to the candidate's political               
 party, who could then contribute to the candidate.  MS. BURKE                 
 agreed, but noted the group would have been limited to contributing           
 MS. BURKE stated the Senate State Affairs Committee raised the                
 limit that groups could contribute to candidates from $500 to                 
 $1000.  She believed the amount individuals can contribute to                 
 groups should be the same as the amount groups can contribute,                
 based on her previous argument. She asked the committee to review             
 that issue.  In response to Senator Adams' comment, she stated did            
 not think it is possible to close every loophole, but the bill can            
 set reasonable limits that are enforceable, and contain reporting             
 Number 278                                                                    
 SENATOR ADAMS commented that many legislators have to travel around           
 their districts via airplane, which is expensive.  He said he would           
 prefer to have a geographical difference provision contained in the           
 bill for those legislators.                                                   
 MS. BURKE responded that one solution is to raise the contribution            
 limit from $500 to $750.  If that is the legislature's considered             
 judgment, the court might well give the legislature the benefit of            
 the doubt in terms of substantial similarity.                                 
 CHAIRMAN TAYLOR emphasized that is has been his concern throughout            
 the deliberations on this bill, to maintain as much of the original           
 integrity of the initiative as possible, even though he may                   
 personally disagree with the purpose, thrust and overall intent of            
 the initiative.  If the legislature is going to create a vehicle              
 which is substantially similar to the initiative, it must truly be            
 very similar.  His primary concern is that by adhering to the                 
 intent of the initiative, the legislature not defraud the public as           
 it would be fraudulent to take an unconstitutional issue, place it            
 before the voters, knowing full well it is patently                           
 unconstitutional, and then through bumper sticker politics to                 
 convince people this is a saving grace called "campaign finance               
 reform."  The legislature's role in this process is not to make               
 substantive changes from the initiative, but to ensure that the               
 legislation is not patently unconstitutional.                                 
 MS. BURKE felt the legislature has broader discretion according to            
 the Alaska Supreme Court decision on the phrase "substantially                
 similar."  CHAIRMAN TAYLOR stated he appreciates the fact the                 
 legislature could go further than that, but to do so would do a               
 disservice to what the petitioners were requesting.  They have the            
 right to have the policy matters heard in a public forum, not the             
 legislative forum.  He repeated the legislature should be doing the           
 cleanup that is ethically required, not take positions on matters             
 of policy.  In his opinion, there are many disagreeable things                
 within the initiative, yet it was foisted on the public as an all-            
 encompassing solution to a perceived problem that does not exist.             
 MS. BURKE commented that in performing the exercise she was hired             
 to do she did only what was requested which was to address the                
 constitutional issues.  The substantial similarity issue is for the           
 legislature to decide.                                                        
 MS. BURKE discussed the prohibition against lobbyists making cross-           
 district contributions which was deleted from version R.  There are           
 cases out of California that suggest that restrictions on                     
 lobbyists' contributions cannot be any greater than on anyone else.           
 Although there are restrictions that can be placed on lobbyists               
 activities, the contribution prohibition crosses the line.  Also,             
 the initiative contains a prohibition on the use of campaign funds            
 to make contributions to other candidates.  A Ninth Circuit Court             
 of Appeals case ruled candidates cannot be prohibited from using              
 campaign funds to make contributions to other candidates, subject             
 to the same dollar limits as everyone else.                                   
 CHAIRMAN TAYLOR clarified if he wished to contribute funds from his           
 campaign to another candidate, he could do so, but would be limited           
 to the same amount as anyone else.  MS. BURKE replied yes, and                
 added he could write a personal check or write a check from his               
 campaign funds, but could not do both.  The State Affairs committee           
 substitute, contained a time limitation on contributions by                   
 candidates for governor or lieutenant governor.  It effectively               
 prohibits a candidate for governor or lieutenant governor from                
 contributing to any other candidate.  Based on the same Ninth                 
 Circuit case, it would most likely be found to be unconstitutional.           
 CHAIRMAN TAYLOR asked if the same amount limitation would apply to            
 the governor and lieutenant governor.  MS. BURKE replied                      
 MS. BURKE explained the final section that should be deleted                  
 relates to the remedy provision in the initiative.  That provision            
 provides that campaign violations dealt with purely                           
 administratively (by the APOC) would have one set of penalties                
 imposed.  If, however, the complainant takes the candidate to                 
 Superior Court, the penalties and fines are tripled.  That                    
 provision would not withstand equal protection scrutiny as there is           
 no rational basis for it.  There is also a provision that deals               
 with reasonable attorneys' fees.  That provision may involve a                
 court rule change which cannot be done by initiative.                         
 CHAIRMAN TAYLOR asked if that provision was deleted from version R.           
 MS. BURKE replied that is correct.                                            
 CHAIRMAN TAYLOR commented if the proponents of this initiative                
 wished to be fair at all, along with their headhunter provision,              
 the least they could have done was to have provided that if a                 
 specious complaint was brought, the person bringing the complaint             
 could have been subjected to three times the defendant's costs and            
 to give the defendant the opportunity to file suit against the                
 complainant personally.  MS. BURKE noted that would have been                 
 MS. BURKE informed the committee the initiative contains a                    
 provision that allows a private person who goes to Superior Court             
 to be fined one-half.  She and Mr. Chenoweth agreed that would                
 dedicate the prohibition against either dedicated funds or the                
 requirement that state funds must be appropriated by the                      
 legislature before they can be spent by anyone therefore it was               
 removed from version R.                                                       
 MS. BURKE concluded by saying in her review of the State Affairs              
 committee substitute, she deleted provisions that were clearly                
 unconstitutional.  If the question was a close one, the provision             
 was left in the bill.                                                         
 Number 435                                                                    
 JACK CHENOWETH, Division of Legal Services, emphasized the starting           
 point of this project was an effort to take the State Affairs                 
 committee substitute and move it back toward the last version on              
 the House side.  The changes made were based on the removal of any            
 provisions in which a serious constitutional violation could be               
 asserted.  Conforming changes were also made.  The initiative, and            
 other versions of the bill, make use of the terms "proposition" and           
 "question" as those terms are defined in the election code already.           
 In the context of the last U.S. Supreme Court decision in this area           
 covering the anonymous contributions in the "paid for by"                     
 requirement, "proposition" was confined to things that were in the            
 nature of submissions to the electorate that some would regard as             
 issue-related rather than candidate-related.  Candidate-related               
 issues, such as retention of judges, were not included.  Because              
 that change implicated how municipalities might adapt their laws,             
 that approach was taken toward the changes that affect                        
 SENATOR ADAMS asked if Sections 1 - 29 fit right under the subject            
 of election campaign laws.  MR. CHENOWETH replied the decision as             
 to whether the bill is substantially similar to the initiative will           
 be decided by the Lieutenant Governor.                                        
 SENATOR ADAMS asked if it would be to the legislature's advantage             
 to make the legislation substantially similar to the initiative so            
 that the initiative is not put on the ballot.  MR. CHENOWETH                  
 replied that is a policy call on the part of the legislature.  To             
 this point, previous committees have added material to the                    
 CHAIRMAN TAYLOR indicated the it is his intention to make the                 
 legislation as close to the initiative as possible.  If the odds of           
 a provision being found constitutional were 60:40, it was retained            
 in the legislation, but if the odds were close to zero, that                  
 provision was removed.  The initiative was rather vague on given              
 subjects and did not address specific instances.  To that extent,             
 the bill only includes cleanup language sufficient to define what             
 needs to be reported.                                                         
 MS. BURKE believed one good example to be the provisions in version           
 R that limit the window of campaigning. That provision goes well              
 beyond the reform specified in the initiative.                                
 CHAIRMAN TAYLOR asked what amount a candidate can carry forward               
 from one campaign to the next.  MS. BURKE replied this is another             
 area that is unclear constitutionally.  There is a Ninth Circuit              
 case and an Eighth Circuit case that say a candidate cannot be                
 prohibited from using money collected in one campaign on another              
 campaign.  This provision does not prohibit the use of those funds,           
 but contains a limitation on the dollar amount.                               
 CHAIRMAN TAYLOR asked what the initiative contained.  MS. BURKE               
 recalled the initiative had an outright prohibition which is                  
 unconstitutional.  CHAIRMAN TAYLOR indicated the language in                  
 version R remains as similar as possible to the initiative on this            
 issue by removing the prohibition but limiting the dollar amount.             
 MS. BURKE felt that although that section raises constitutional               
 issues, it is not clearly unconstitutional so she recommended it be           
 left in.                                                                      
 CHAIRMAN TAYLOR believed the actual amounts would be less than 10             
 percent of an average campaign race.                                          
 Number 556                                                                    
 SENATOR GREEN found it to be ironic that the findings and purpose             
 section of the bill states that highly qualified citizens are                 
 dissuaded from running for public office due to the high cost of              
 election campaigns, yet the remainder of the bill reduces access to           
 SENATOR MILLER moved CSSB 191(JUD) out of committee with individual           
 recommendations.  SENATOR ADAMS objected, but removed his                     
 objection, therefore the motion carried.                                      

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