SENATE BILL REPORT

SSB 6451

BYSenate Committee on Law & Justice (originally sponsored by Senators Pullen and Talmadge; by request of Public Disclosure Commission)

Modifying provisions relating to lobbying, political advertising, and public office funds.

Senate Committee on Law & Justice

Senate Hearing Date(s):January 27, 1988; February 5, 1988

Majority Report:  That Substitute Senate Bill No. 6451 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Pullen, Chairman; Halsan, Madsen, Niemi, Talmadge.

Senate Staff:Jon Carlson (786-7459)

                  February 15, 1988

AS PASSED SENATE, FEBRUARY 13, 1988

BACKGROUND:

The Public Disclosure Act provides for the registration and reporting by lobbyists and lobbyist employers.  The Public Disclosure Commission (PDC) suggests revisions to the disclosure laws that address the evolution of lobbying over the past decade.  The PDC cites several reasons for the suggested changes:  1) law does not recognize the changes in lobbying techniques in recent years, particularly with respect to contract lobbying;  2) law does not hold the employer responsible until long after lobbying is completed;  3) the scope of activities to be reported is not clearly defined;  and 4) there is a need to examine which lobbying activities and expenditures should be itemized.

The statute regulating political advertising imposes civil liability upon a person who sponsors advertising containing information that the person "knows, or should reasonably know, to be false."  Since this standard would allow for penalties to be imposed for negligent sponsorship of false information, it may well violate freedom of speech guarantees established in case law.  Negligent misstatements in political campaigns have been held to be constitutionally protected under the First Amendment to the United States Constitution.  However, statements made with knowledge of their truth or falsity are not constitutionally protected.

The Public Disclosure Act requires elected and appointed officials to file a yearly report detailing contributions received for nonreimbursed public office-related expenses.  Concern has been expressed to the PDC that the reporting requirements which pertain to public office fund contributions and expenditures are inadequate and infrequent.

SUMMARY:

The Public Disclosure Act is amended to update and clarify the registration and reporting requirements with respect to lobbyists and contract lobbyists.  The political advertising statute is amended to address Constitutional concerns pertaining to free speech.  A separate account for public office fund expenditures is required, as are quarterly reports of contributions to and expenditures from such funds.

I.  LOBBYING

Registration:  Separate registration documents are required of both the lobbyist employer and the lobbyist.  A lobbyist employer is required to register, provide identifying data, and name people or firms authorized to lobby.  The two types of lobbyist registration forms are one for the individual who is on the payroll of the employer and the other for the person who is retained by contract.  Both the lobbyist and the contract lobbyist must provide his or her name, address, employer, expected or agreed to compensation, how much is to be paid for expenses, and what expenses are to be reimbursed.  The time period within which registration is required is changed from thirty days to two weeks.

Persons who are reimbursed for travel expenses are exempt from the registration requirements provided they spend no more than $50 for lobbying activities. Also exempt are persons who only monitor legislative and agency activities or provide in- house advice, bill drafting and analysis.  The amount that the casual lobbyist may spend on lobbying activities while remaining exempt from registration is increased from $25 to $50 .

Monthly Lobbyist Report:  A lobbyist must report to the PDC the total compensation and reimbursements paid to the lobbyist by the employer for lobbying services performed during the report period.  This includes amounts for direct and indirect contacts with legislators, legislative staff, state elected officials, and state officers and employees for lobbying.

Itemization is required on the report for expenditures on entertainment that are $50 or more in value and for gifts over $25 in value.  The amount paid to other lobbyists, expert witnesses and subcontractors must also be itemized.

The reporting of campaign contributions is clarified, and the requirement of reporting local or federal contributions is deleted.  The amount spent for advertising, mailings, public relations campaigns, and special lobbying activities is also reportable.  In addition, it is clarified that in-kind contributions are reportable.

A monthly expense report is established for a contract lobbyist.  This requires reporting of the total amount received from the employer and expenditure details similar to those of a lobbyist.

Lobbyist Employer Report:  The lobbyist employer report is changed from annual to semi-annual.  The report recognizes the employment of contract lobbyists, and requires the employer to report the total expenditures made for lobbying purposes through or on behalf of a contract lobbyist.  Any person paid $500 or more for lobbying or professional assistance for lobbying must be included in the report; however, this does not apply to lobbying or professional assistance which is the result of an appointment or other written request of the Legislature to participate in a study or provide particular expertise.

Special Lobbying Activities:  A separate report is established for lobbying activities such as rallies, receptions, parades, and mass mailings which may or may not be coordinated or arranged by a registered lobbyist.  The report must list who organized and who paid for the costs of the activity, together with an itemization of expenditures.  Any activity costing $2,500 or more is reportable within two weeks.

Gifts:  "Gift" is defined, and the statement of financial affairs is amended to require every official and officer to file a statement describing any gifts received during the preceding calendar year.  Intrafamily gifts and gifts not in excess of $50 in value may be excluded from the statement.

II.  POLITICAL ADVERTISING

The statute regulating political advertising and imposing civil liability is revised to meet constitutional guarantees of free speech.

Persons may not sponsor, prepare, or cause to be prepared, with actual malice, political advertising that contains a false statement of material fact, a false representation that a candidate is an incumbent, or a false claim stating or implying the endorsement of any person or organization.  Any violation must be proved by clear and convincing evidence.

"Actual malice" means to act with knowledge of falsity or reckless disregard as to truth or falsity.

III.  PUBLIC OFFICE FUNDS

A separate account is established from which all public office fund expenditures are made.  Registration with the PDC is required within two weeks of the day the public office fund is created.  The public office fund report is changed from an annual to a quarterly report.

Surplus funds of a candidate may be transferred to a public office fund if the candidate becomes an elected official.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested

Senate Committee - Testified: Graham Johnson, PDC (for)