Brief Summary of Engrossed Substitute Bill

Changes the threshold for identifying and disclosing the top five contributors to a political advertisement sponsored by a political committee from $700 to the amount necessary to qualify as an independent expenditure, which is either $500 or $1,000 depending on the office.
Provides that when political advertisements must disclose the sponsor's top five contributors, if any of those five contributors are political committees, the sponsor must also disclose the top three non-political committee donors to those and other committee contributors, alongside the statement "Top Three Donors to PAC Contributors."
Adds specificity to certain display requirements for all required disclosures in political advertisements, including disclosure of the top five contributors.

Background:

The Fair Campaign Practices Act requires political advertisements to include certain disclosures. Advertisements are considered political if they are used for the purpose of appealing for votes, donations, or other support or opposition in an election campaign for a candidate or ballot proposition.

Political advertisements on the radio or television must include the sponsor's name, and written ads must include the sponsor's name and address. It is illegal for the sponsor to use an assumed name.

Additional disclosure requirements apply when the advertisement is an independent expenditure or an electioneering communication sponsored by a person or entity other than a political party. When applied to advertisements, an independent expenditure is, generally speaking, an advertisement supporting or opposing a candidate that is sponsored by a person who does not have the candidate's approval to make the advertisement and is worth at least $500 or $1000 (depending on the office). An electioneering communication is, generally speaking, an advertisement run within 60 days of an election that clearly identifies a candidate for office and is worth at least $1000. These advertisements must include the statement "No candidate authorized this advertisement. It is paid for by [the sponsor's name and address]."

If the sponsor is a political committee—that is, a person or entity other than a candidate who receives contributions to spend money in support of, or in opposition to, any candidate or ballot proposition—the advertisement must include a statement disclosing the committee's top five contributors. The top five contributors are the five persons or entities that made the largest contributions to the committee totaling over $700 during the 12 months before the date of the advertisement. In addition, a political committee that was established or controlled by an individual or entity must disclose the full name of that individual or entity in the advertisement.

Political advertising by a political committee that supports or opposes ballot measures must also include information about the top five contributors if the advertisement costs $1000 or more.

In a written political advertisement, all required disclosures must:

appear on the first page or fold;
be in at least 10-point size type, or be at least 10 percent of the largest type used in the advertisement, whichever is larger;
use continuous tone rather than half tone printing; and
be set apart from any other printed matter.

In a television or other video advertisement, all required disclosures must:

be clearly spoken; or

appear in large print for at least four seconds in letters greater than 4 percent of the visual screen height, with a reasonable color contrast with the background.

Summary of Engrossed Substitute Bill:

Political committees that sponsor a political advertisement must identify and disclose the top five contributors that donate the amount necessary to qualify as an independent expenditure ($500 or $1,000 depending on the office), rather than $700, during the 12 months before the date that the advertisement is initially to be presented to the public.

If any of those five contributors is a political committee, the sponsor must also identify the top three contributors that gave more than the threshold amount to any of those committees during the same period. If any of those contributors are political committees, the sponsor must identify their top three contributors, and so on, until the sponsor has identified the top three contributors that are not political committees. The political advertisement must display the name of those top three non-political committee contributors alongside the statement "Top Three Donors to PAC Contributors."

The Public Disclosure Commission (PDC) is authorized to adopt rules to prevent circumvention of the top five contributors and top three donors disclosure requirements. A sponsor is not liable for miscalculating the top five contributors because the contributions were not reported to the PDC.

Certain visual display requirements for all necessary disclosures are also made more specific. In a written advertisement, no text may be before, after, or immediately adjacent to any required disclosures. In a television or other video advertisement, all required disclosures must appear on a solid black background that takes up the entire bottom one-third of the screen—or if listing the top five contributors is not required, the bottom one-fourth of the screen.

Staff Summary of Public Testimony:

(In support) Last year the state worked to get "dark money" out of politics by requiring more disclosure of donors by political action committees (PACs). But most voters will not go to the Public Disclosure Commission's website to look at PAC disclosures—people look at the advertisements. When voters see an advertisement that says "Brought to you by [name] PAC," the top contributor to that PAC may be another PAC about which voters cannot find much information. Some PACs intentionally move money around to other PACs to conceal their donors. Friendly named PACs manipulate the system to hide who is behind the donation. The goal of this bill is to close a loophole and better identify who is contributing to an advertisement so voters can base their votes on who is contributing. The public has a right to know who is putting money into elections.

(Opposed) There are concerns with the mechanisms of how the top five calculation would work under this bill. There are unintended consequences to listing donors "downstream" of an advertisement. When a person gives to an entity, the donor's intent is to give to that entity only. When a donor gives money to PAC #1, and PAC #1 gives money to a candidate, it is inaccurate to say that the donor gave money to the candidate. A donor may end up being listed in an advertisement as a contributor to a candidate the donor actually opposes. This bill could potentially lead to more manipulation of the system.