SENATE BILL REPORT

SB 6137

BYSenators Talmadge, Moore, Fleming, Gaspard, Conner, Vognild and McMullen

Revising provisions governing campaign financing.

Senate Committee on Law & Justice

Senate Hearing Date(s):February 4, 1988

Senate Staff:Jon Carlson (786-7459)

AS OF FEBRUARY 2, 1988

BACKGROUND:

In 1972 the voters approved Initiative Measure No. 276 regarding public disclosure.  One section of the initiative established mandatory expenditure limits on campaigns for elective office.  In 1974 the state's Supreme Court found that section to be unconstitutional.

A series of federal court cases has identified a number of constitutional limitations on the regulation of campaign financing.  Certain constitutionally permissible restrictions on such financing have also been identified in those decisions.  In those cases, the courts found the following to be permissible:  (1) limitations on contributions by individuals or organizations to candidates for federal office; (2) limitations on contributions by individuals or organizations to political action committees; (3) limitations on contributions by political action committees to candidates for federal office; (4) limitations on total contributions by individuals in a calendar year to candidates for federal office; (5) public financing for presidential elections; and (6) federal public disclosure requirements.

Found to be impermissible were ceilings on candidate expenditures or on "independent expenditures" (that is, campaign expenditures not subject to the control of a candidate).  Upheld, however, were ceilings on candidate expenditures which become effective only as part of a public financing agreement under which a candidate agrees to abide by the limits in exchange for public financing. Also found to be impermissible were any ceilings on contributions or expenditures in ballot proposition campaigns.

SUMMARY:

A system is established for providing public matching funds for the election campaigns of candidates for state executive and legislative offices.  The matching monies are available to candidates who agree to abide by specified campaign expenditure limits and other restrictions in exchange for the public matching funds.

Restrictions are established on the size of the contributions that may be given to a candidate for state executive or legislative office.  The portion of the contributions received by a candidate that may come from political committees, corporations, or labor organizations is also regulated.

I.  CAMPAIGN EXPENDITURE LIMITS AND MATCHING FUNDS

Expenditure Limits.  The expenditure limits are expressed as base amounts for each office and increases to the base amounts which may apply to a candidate as the result of certain specified circumstances.  The base amounts of the expenditure limits are:

!tm8,8,1,8 !tlCandidates for!tj2!trBase Amount

!tlGovernor!tj1!tr=!tr$1,000,000

!tlOther State Executive Office!tj1!tr=!tr$  300,000

!tlState Senator!tj1!tr=!tr$   40,000

!tlState Representative!tj1!tr=!tr$   25,000

Without the application of any of the increases which may apply to a given candidate, these are the expenditure limits for the primary campaign of a candidate.  Once the primary is over, they are also the expenditure limits for the general election campaign of a candidate.  Public matching funds are available only for the general election campaign; adhering to the limits for the primary is one of the conditions a candidate must agree to if the candidate is to qualify for matching funds for the general election.

Increases Over Base Amounts.  If, during the 12 months preceding the election, certain independent expenditures are made in opposition to a candidate or for another candidate for the office sought by the candidate, the expenditure limit for the candidate (not the other candidate) is increased by an amount equal to the amount of the independent expenditures.  This increase applies only if the independent expenditures, in the aggregate, total more than 10 percent of the base amount for the office.

The expenditure limit for a candidate is also increased by doubling the base amount for the office for that candidate if any of the following apply: (1) during the election cycle, any other candidate for the office receives contributions totaling more than the sum of the expenditure limits applicable to that other candidate for the primary and the general election; (2) during the primary period, any other candidate for the office makes expenditures which exceed the expenditure limit applicable to that other candidate; or (3) the candidate agrees to accept the expenditure limits in exchange for public matching funds by a specified deadline but an opposing candidate, with certain exceptions, does not so agree.  For the latter case to apply, the candidate must be either a minor party (or independent) candidate who received more than 15 percent of the votes cast for the office at the preceding primary or a major party candidate.  The opposing candidate must also satisfy this requirement.

Matching Monies.  A State Election Campaign Fund is established which is funded primarily by monies appropriated by the Legislature.  The Commission is authorized to make payments of matching monies from the Fund to eligible candidates.  Generally, the maximum amount that a candidate may receive from the Fund is:

!tm8,8,1,8 !tlCandidates for!tj2!tcMatching Monies

!tlGovernor!tj1!tr=!tr$300,000

!tlOther State Executive Office!tj1!tr=!tr$100,000

!tlState Senator!tj1!tr=!tr$ 15,000

!tlState Representative!tj1!tr=!tr$ 10,000

This maximum amount is doubled for a candidate if the expenditure limit base amount is doubled for the candidate.  This amount is also increased in an amount equal to the independent expenditures made against the candidate or for an opponent in the 12 months before the election (if these expenditures exceed 10 percent of the base amount for the office).

Subject to these maximum amounts, an eligible candidate is entitled to payments from the Fund equal to: one dollar for each dollar in "qualifying" contributions received by candidate for the election campaign; or two dollars for each such dollar raised by candidate if the expenditure limit base amount is doubled for the candidate.  An eligible candidate is also entitled to one dollar from the Fund for each dollar in independent expenditures that is made against the candidate or for an opponent during the 12 months before the election (if these expenditures exceed 10 percent of the base amount for the office).

To be eligible to receive payments from the Fund, a candidate must satisfy certain requirements and agree to certain limitations within 7 days of qualifying for the general election ballot.  Among these is the requirement that the candidate does not make expenditures that exceed the limitations applicable to the candidate for the primary and agrees in writing not to make expenditures for the general election which exceed the limitations applicable to the candidate.

A candidate must have received "qualifying" contributions in a threshold amount of at least:

!tm8,8,1,8 !tlCandidates for!tj2!tcQualifying Dollars

!tlGovernor!tj1!tr=!tr$100,000

!tlOther State Executive Office!tj1!tr=!tr$ 20,000

!tlState Senator!tj1!tr=!tr$ 10,000

!tlState Representative!tj1!tr=!tr$  5,000

"Qualifying" Contribution Restrictions.  For a contribution received by a candidate to qualify as being one which satisfies the requirement for raising this threshold amount or to qualify to be matched by public monies from the Fund, the contribution:  must be a gift of money made by a written instrument identifying the person making the contribution; must be contributed directly to the candidate or the candidate's authorized committees and not through any other person (certain joint fund-raising activities are exempted from this); must be raised during the period beginning January 1 of the year preceding the election year (or the date a vacancy occurs) and ending the date of the general election; and must be from individuals or entities residing in the state. Not more than $200 in monies from one individual or entity may be matched or may be counted toward the minimum threshold amount.  Contributions by a person controlled by another person are credited to the controlling person (this provision does not apply to the relationship between spouses or between certain units of a political party).

Other Restrictions.  A candidate who receives a payment from the Fund may not, during the primary period, spend or receive as loans for his or her own campaign personal funds or the funds of a member of the candidate's immediate family which in the aggregate are more than 3 percent of expenditure limit for the office.  This restriction applies, separately, for the general election period as well.  The candidate may not accept contributions from political committees, corporations, or labor organizations which in the aggregate exceed 40 percent of:  the expenditure limits applicable to the candidate minus the public monies that may be distributed to the candidate from the Fund.  This restriction does not apply to contributions from a political party, legislative caucus, or candidate's authorized committee.

No matching monies are available from the Fund for a campaign for an office unless at least the following qualify for the general election ballot for that office:  two major party candidates; or one major party candidate and one independent or minor party candidate who received more than 15 percent of primary vote.

Administration and Penalties.  The matching fund program is administered by the Public Disclosure Commission. The Commission must conduct such audits of the campaign accounts of the candidates who received matching monies from the Fund as are sufficient to determine whether expenditure limits and other requirements are followed.  The Commission may require the repayment of monies from the Fund in certain instances and may require the payment of certain penalties.  Decisions of the Commission are subject to appeal to superior court in accordance with the Administrative Procedure Act.  Violations of certain of the provisions governing the matching fund program are punishable as class C felonies.

II.  CAMPAIGN CONTRIBUTION LIMITATIONS

Limitations are established on the aggregate size of the campaign contributions that may be made by a person or entity to a candidate for state executive or legislative office.  The limits are:

!tm6,9,9,1    To Candidate For!tj1!tlFrom!tj1!trLimit

   Governor!tj1!tlState Political Party or

!tj1!tl   Caucus of Legislature!tj1!tr= $10,000

!tj1!tlAny Other Entity!tj1!tr= $ 5,000

   Other State!tj1!tlState Political Party or

   Exec. Office!tj1!tl   Caucus of Legislature!tj1!tr= $ 5,000

!tj1!tlAny Other Entity!tj1!tr= $ 2,500

   State Legislator!tj1!tlState Political Party or

!tj1!tl   Caucus of Legislature!tj1!tr= $ 2,000

!tj1!tlAny Other Entity!tj1!tr= $ 1,000

These limits also apply to contributions to an official holding such an office who is the object of a recall campaign and to contributions to a political committee expecting to make expenditures supporting the recall of such an elected official.

For an election campaign, the limits apply during the period beginning on December 1st following the date of the last previous general election for the office sought by the candidate and ending on November 30th following the next election for the office.  For a recall campaign, the limits apply during the period beginning on the date of the filing of recall charges and ending 30 days after the recall election.

Contributions Over the Limits.  Contributions received which exceed these limits revert to the state unless they are returned to the contributors within 10 days.  A special civil penalty of up to twice the amount of a contribution which exceeds the limits is provided.

40 Percent Limitation.  No candidate for state executive or legislative office, no official holding such an office who is the object of a recall campaign, and no recall committee may accept contributions from political committees, corporations, or labor organizations which in the aggregate exceed 40 percent of the total of all contributions received by the candidate, official, or recall committee for the election or recall campaign.  This restriction does not apply to contributions from political parties, legislative caucuses, or candidates' authorized committees.

Earmarked Contributions and Conduits.  Contributions which are earmarked or otherwise directed toward an intermediary or conduit to a candidate count toward the maximum that the candidate may receive from the original contributor.  If the conduit exercises direction or control over the choice of recipient, the contribution counts toward the maximum that the candidate may receive from both the original contributor and the conduit.

Entities Controlled By Others.  Contributions by an entity which is controlled by another person are considered to have been made by the other person.  This provision does not apply to the relationship between spouses or between certain units of political parties.  Special rules apply to contributions made by minors.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested January 29, 1988

Effective Date:January 1, 1989