Legislature(1995 - 1996)
04/19/1996 01:30 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 adopted. 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 district. 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 $1,000. 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 requirements. 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 affirmatively. 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 symmetrical. 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 municipalities. 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 initiative. 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 funds. SENATOR MILLER moved CSSB 191(JUD) out of committee with individual recommendations. SENATOR ADAMS objected, but removed his objection, therefore the motion carried.