AN ACT Relating to campaign financing; amending RCW 42.17.370; adding new sections to chapter 42.17 RCW; and prescribing penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that limitations on contributions to state legislative campaigns are necessary to prevent the appearance of large contributors obtaining disproportionate influence over the decisions of elected representatives.

NEW SECTION. Sec. 2. As used in sections 1 through 7 of this act, the following terms have the meanings indicated unless the context clearly requires otherwise.

(1) "Authorized political committee" means a political committee authorized in any manner by a candidate, or by a legislator against whom recall charges have been filed, to receive contributions or make expenditures on the candidate's or legislator's behalf.

(2) "Bona fide political party" means a major political party as defined in RCW 29.01.090 or an organization which, in the preceding five years, has filed a valid certificate of nomination with the secretary of state under the provisions of chapter 29.24 RCW. For the purposes of this subsection, a major political party includes:

(a) The governing body of the state organization which shall be the body authorized by the charter or bylaws of the party to exercise authority on behalf of the state party;

(b) Each county central committee of the party as provided in RCW 29.42.030;

(d) The caucus of the members of the political party in the state house of representatives; and

(e) The caucus of the members of the political party in the state senate.

(3) "Campaign for state legislative office" means:

(a) With respect to election to a regular term in the state house of representatives, that two-year period of time ending on the first day of December immediately following the general election for the term the candidate is seeking;

(b) With respect to election to a regular term in the state senate, that four-year period of time ending on the first day of December immediately following the general election for the term of office the candidate is seeking; and

(c) With respect to a special election to fill an unexpired term to state legislative office, that period of time beginning when the filing obligation in RCW 42.17.040 or 42.17.050 is incurred and ending thirty days after the special election is held.

(4) "Contribution" includes any loan, gift, deposit, subscription, forgiveness of indebtedness, donation, advance, pledge, payment, or transfer of anything of value, including personal and professional services for less than full consideration, made for the purpose of influencing any election for state legislative office. "Contribution" does not include:

(a) Interest on moneys deposited in a political committee's account;

(b) Ordinary home hospitality;

(c) The rendering of "part-time" personal services of the sort commonly performed by volunteer campaign workers, or incidental expenses personally incurred by volunteer campaign workers not in excess of twenty-five dollars personally paid for by the worker. "Part-time" services, for these purposes, means services in addition to regular full-time employment, or, in the case of an unemployed person, services not in excess of twenty hours per week, excluding weekends; or

(d) A loan, payment, pledge, or transfer of anything of value owned by the candidate to the candidate's authorized political committee.

Contributions other than money or its equivalents shall be deemed to have a money value equivalent to the fair market value of the contribution. Sums paid for tickets to fund-raising events such as dinners and parties are contributions; however, the amount of any such contribution may be reduced for the purpose of complying with the requirements of section 3 of this act, by the actual cost of consumables furnished in connection with the purchase of the tickets, and only the excess over the actual cost of the consumables shall be deemed a contribution.

(5) "Recall campaign" means that period of time beginning on the date of the filing of recall charges pursuant to RCW 29.82.015 and ending thirty days after the recall election.

The definitions in RCW 42.17.020 apply to the terms used in sections 1 through 7 of this act to the extent that they are consistent with the definitions in this section.

NEW SECTION. Sec. 3. (1) No person, other than a bona fide political party, may make contributions to any candidate for the state legislature which, in the aggregate, exceed one thousand five hundred dollars for any campaign for state legislative office.

(2) No person, other than a bona fide political party, may make contributions for the purpose of influencing a recall election to any legislator against whom recall charges have been filed or to any political committee having the expectation of making expenditures in support of the recall of any legislator which, in the aggregate, exceed one thousand five hundred dollars for the recall campaign.

(3) No bona fide political party may make contributions to any candidate for the state legislature which, in the aggregate, exceed three thousand dollars for any campaign for state legislative office. This limitation shall apply separately to each of the entities listed in section 1(2) (a) through (e) of this act.

(4) No bona fide political party may make contributions for the purpose of influencing a recall election to any legislator against whom recall charges have been filed or to any political committee having the expectation of making expenditures in support of the recall of any legislator which, in the aggregate, exceed three thousand dollars for the recall campaign. This limitation shall apply separately to each of the entities listed in section 1(2) (a) through (e) of this act.

(5) For the purposes of sections 1 through 7 of this act, a contribution to an authorized political committee of a candidate or a legislator against whom recall charges have been filed shall be considered to be a contribution to the candidate or legislator.

(6) Any contribution received within the twelve-month period following a general, special, or recall election concerning legislative office shall be considered to be a contribution for the campaign for such election to the extent the contribution is used to pay any debt or obligation incurred to influence the outcome of that election.

(7) The contributions allowed by subsection (2) of this section are in addition to those allowed by subsection (1) of this section, and the contributions allowed by subsection (4) of this section are in addition to those allowed by subsection (3) of this section.

NEW SECTION. Sec. 4. Children under eighteen years of age may make contributions to the extent authorized in section 3 of this act only if:

(1) The decision to contribute is made knowingly and voluntarily by the child;

(2) The funds, goods, or services contributed are owned or controlled exclusively by the child, such as income earned by the child, the proceeds of a trust for which the child is the beneficiary, or a savings account opened and maintained exclusively in the child's name; and

(3) The contribution is not made from the proceeds of a gift, the purpose of which was to provide funds to be contributed, or is not in any other way controlled by another individual.

NEW SECTION. Sec. 5. (1) For purposes of the contribution limitations in section 3 of this act: All contributions by any person which is established, financed, maintained, or controlled by any other person shall be considered to have been made by such other person. For purposes of this section, however, "person" shall not include a natural person.

(2) Without in any manner limiting its scope and effect, the general rule under subsection (1) of this section means that:

(a) Any contribution by a subsidiary, branch, division, department, or local unit of any corporation, union or association shall be considered to have been made by the corporation, union or association; and

(b) Any contribution by a political committee established, financed, maintained, or controlled by any person shall be considered to be a contribution by that person.

(3) In determining whether a person is established, financed, maintained, or controlled by any other person for the purposes of subsection (1) of this section, the following shall, if applicable, be considered:

(a) Ownership of a controlling interest in voting shares or securities;

(b) Provisions of bylaws, articles of incorporation, charters, constitutions, or other documents by which one person has the authority, power, or ability to direct another;

(c) The authority, power, or ability to hire, appoint, discipline, discharge, demote, or remove or influence the decision of the officers or members of an entity;

(d) Similar patterns of contributions; and

(e) The extent of the transfer of funds between the persons.

NEW SECTION. Sec. 6. All contributions made by a person, either directly or indirectly, to a candidate, or to a legislator against whom recall charges have been filed, including contributions which are in any way earmarked or otherwise directed through an intermediary or conduit to the candidate or legislator, shall be considered to be contributions from such person to the candidate or legislator. For purposes of this section, "earmarked" means a designation, instruction, or encumbrance, including those which are direct or indirect, express or implied, or oral or written, which is intended to result in or which does result in all or any part of a contribution being made to a certain candidate. If a conduit or intermediary exercises any direction or control over the choice of the recipient candidate, the contribution shall be considered to be by both the original contributor and the conduit or intermediary.

NEW SECTION. Sec. 7. (1) No person may knowingly accept any contribution in violation of sections 1 through 6 of this act.

(2) Any contribution received in excess of the limits prescribed in section 3 of this act shall escheat to the state of Washington unless, within ten days of its receipt, the recipient of such contribution returns it to the contributor.

Sec. 8. Section 37, chapter 1, Laws of 1973 as last amended by section 7, chapter 34, Laws of 1984 and RCW 42.17.370 are each amended to read as follows:

The commission is empowered to:

(1) Adopt, promulgate, amend, and rescind suitable administrative rules to carry out the policies and purposes of this chapter, which rules shall be adopted under chapter 34.04 RCW;

(2) Prepare and publish such reports and technical studies as in its judgment will tend to promote the purposes of this chapter, including reports and statistics concerning campaign financing, lobbying, financial interests of elected officials, and enforcement of this chapter;

(3) Make from time to time, on its own motion, audits and field investigations;

(4) Make public the time and date of any formal hearing set to determine whether a violation has occurred, the question or questions to be considered, and the results thereof;

(5) Administer oaths and affirmations, issue subpoenas, and compel attendance, take evidence and require the production of any books, papers, correspondence, memorandums, or other records that the commission deems relevant or material for the purpose of any investigation authorized under this chapter, or any other proceeding under this chapter;

(6) Adopt and promulgate a code of fair campaign practices;

(7) Relieve, by rule, candidates or political committees of obligations to comply with the provisions of this chapter relating to election campaigns, if they have not received contributions nor made expenditures in connection with any election campaign of more than one thousand dollars; ((~~and~~))

(8) Adopt rules prescribing reasonable requirements for keeping accounts of and reporting on a quarterly basis costs incurred by state agencies, counties, cities, and other municipalities and political subdivisions in preparing, publishing, and distributing legislative information. The term "legislative information," for the purposes of this subsection, means books, pamphlets, reports, and other materials prepared, published, or distributed at substantial cost, a substantial purpose of which is to influence the passage or defeat of any legislation. The state auditor in his regular examination of each agency under chapter 43.09 RCW shall review the rules, accounts, and reports and make appropriate findings, comments, and recommendations in his examination reports concerning those agencies((.));

(9) After hearing, by order approved and ratified by a majority of the membership of the commission, suspend or modify any of the reporting requirements of this chapter in a particular case if it finds that literal application of this chapter works a manifestly unreasonable hardship and if it also finds that the suspension or modification will not frustrate the purposes of the chapter. The commission shall find that a manifestly unreasonable hardship exists if reporting the name of an entity required to be reported under RCW 42.17.241(1)(g)(ii) would be likely to adversely affect the competitive position of any entity in which the person filing the report or any member of his immediate family holds any office, directorship, general partnership interest, or an ownership interest of ten percent or more. Any suspension or modification shall be only to the extent necessary to substantially relieve the hardship. The commission shall act to suspend or modify any reporting requirements only if it determines that facts exist that are clear and convincing proof of the findings required under this section. Any citizen has standing to bring an action in Thurston county superior court to contest the propriety of any order entered under this section within one year from the date of the entry of the order; and

(10) Revise, at least once every five years but no more often than every two years, the campaign contribution limitations under section 3 of this 1985 act. The revisions shall be only for the purpose of recognizing economic changes as reflected by an inflationary index recommended by the office of financial management. The revised limitations shall be rounded to the nearest one hundred dollars and shall be adopted as rules under chapter 34.04 RCW.

NEW SECTION. Sec. 9. Sections 1 through 7 of this act are each added to chapter 42.17 RCW and codified with the subchapter heading of "CAMPAIGN CONTRIBUTION LIMITATION."