AN ACT Relating to campaign financing; limiting campaign contributions; adding to the duties of the public disclosure commission; amending RCW 42.17.010, 42.17.030, and 42.17.105; adding new sections to chapter 42.17 RCW; creating a new section; repealing RCW 42.17.175; and declaring an emergency.

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

Sec. 1. Section 1, chapter 1, Laws of 1973 as amended by section 1, chapter 294, Laws of 1975 1st ex. sess. and RCW 42.17.010 are each amended to read as follows:

DECLARATION OF POLICY. It is hereby declared by the sovereign people to be the public policy of the state of Washington:

(1) That government serve the needs and respond to the wishes of all citizens, without regard to their wealth or position.

(2) That political campaign and lobbying contributions and expenditures be fully disclosed to the public and that secrecy is to be avoided.

((~~(2)~~)) (3) That the people have the right to expect from their elected representatives at all levels of government the utmost of integrity, honesty, and fairness in their dealings free from bias caused by the campaign contributions of individuals or organizations.

((~~(3)~~)) (4) That the people shall be assured that the private financial dealings of their public officials, and of candidates for ((~~those~~)) elective offices, present no conflict of interest between the public trust and private interest.

((~~(4)~~)) (5) That our representative form of government is founded on a belief that those entrusted with the offices of government have nothing to fear from full public disclosure of their financial and business holdings, provided those officials deal honestly and fairly with the people.

((~~(5)~~)) (6) That public confidence in government at all levels is essential and must be promoted by all possible means.

((~~(6)~~)) (7) That public confidence in government at all levels can best be sustained by assuring the people of the impartiality and honesty of the officials in all public transactions and decisions.

((~~(7)~~)) (8) That limitations on contributions to state election campaigns are necessary to reduce the ability of individuals and organizations to obtain disproportionate influence over the actions and decisions of public officials without limiting freedom of speech.

(9) That the concept of attempting to increase financial participation of individual contributors in political campaigns is encouraged by the passage of the Revenue Act of 1971 by the Congress of the United States, and in consequence thereof, it is desirable to have implementing legislation at the state level.

((~~(8)~~)) (10) That the concepts of disclosure and limitation of election campaign financing are established by the passage of the Federal Election Campaign Act of 1971 by the Congress of the United States, and in consequence thereof it is desirable to have implementing legislation at the state level.

((~~(9)~~)) (11) That small contributions by individual contributors are to be encouraged, and that not requiring the reporting of small contributions may tend to encourage such contributions.

((~~(10)~~)) (12) That the public's right to know of the financing of political campaigns and lobbying and the financial affairs of elected officials and candidates far outweighs any right that these matters remain secret and private.

((~~(11)~~)) (13) That, mindful of the right of individuals to privacy and of the desirability of the efficient administration of government, full access to information concerning the conduct of government on every level must be assured as a fundamental and necessary precondition to the sound governance of a free society.

The provisions of this chapter shall be liberally construed to promote complete disclosure of all information respecting the financing of political campaigns and lobbying, and the financial affairs of elected officials and candidates, and full access to public records so as to assure continuing public confidence of fairness of elections and governmental processes, and so as to assure that the public interest will be fully protected. In promoting such complete disclosure, however, this chapter shall be enforced so as to insure that the information disclosed will not be misused for arbitrary and capricious purposes and to insure that all persons reporting under this chapter will be protected from harassment and unfounded allegations based on information they have freely disclosed.

Sec. 2. Section 3, chapter 1, Laws of 1973 as last amended by section 1, chapter 12, Laws of 1986 and RCW 42.17.030 are each amended to read as follows:

(1) The campaign contribution limitation provisions of this chapter apply only to the financing of election campaigns in primary, general, recall, or special elections for state executive office and state legislative office.

(2) Other provisions of this chapter relating to the financing of election campaigns shall apply in all election campaigns other than ((~~(1)~~)) (a) for precinct committeeman; ((~~(2)~~)) (b) for a federal elective office; and ((~~(3)~~)) (c) for an office of a political subdivision of the state that does not encompass a whole county and that contains fewer than five thousand registered voters as of the date of the most recent general election in the subdivision, unless required by RCW 42.17.405(2) through (5).

(3) This chapter is not intended to prohibit any county, town, or other local agency from regulating campaign contributions and expenditures related to local elections or from regulating conflicts of interest.

(4) The contribution limitations in section 4 of this act do not apply to any political committee established for the exclusive purpose of receiving contributions and making expenditures in support of, or in opposition to, a ballot proposition campaign.

NEW SECTION. Sec. 3. DEFINITIONS. The definitions set forth in this section apply throughout RCW 42.17.010, 42.17.030, and sections 3 through 9 of this act.

(1) "Campaign period" means:

(a) For a regular or special election to state office, the time period beginning on the day an individual becomes a candidate, pursuant to RCW 42.17.020, and ending when the final report is filed pursuant to RCW 42.17.080;

(b) For a recall election, the time period beginning on the date of the superior court certification made under RCW 29.82.023 and ending when the final report is filed pursuant to RCW 42.17.080.

(2) "Person" includes an individual, partnership, committee, association, public or private corporation, labor organization, political party, political committee, or any other organization or group of persons, however organized.

(3) "Political committee" means any committee, club, association, organization, or other group of persons, including the caucus of a political party in the state house of representatives and in the state senate, that receives contributions or makes expenditures in support of, or in opposition to, any candidate.

(4) "Candidate committee" means a committee that is controlled directly or indirectly by a candidate or that acts jointly with a candidate, in connection with the making of campaign expenditures and the solicitation of campaign contributions. A candidate controls a committee if he, his agent, or any other committee he controls has a significant influence on the actions or decisions of the committee.

(5) "State executive" refers to an office for which all electors in the state are eligible to vote, including governor, lieutenant governor, attorney general, state auditor, state treasurer, secretary of state, commissioner of public lands, insurance commissioner, and superintendent of public instruction.

(6) "State legislative" refers to the office in the state senate or the state house of representatives.

(7) "Political party" means a major political party as defined in RCW 29.01.090 or a minor political party as defined in RCW 29.01.100. For the purposes of this subsection, a major political party includes:

(a) The governing body of the state organization that is 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;

(8) "Earmarked" means a designation, instruction, or encumbrance, including those that are direct or indirect, express or implied, or oral or written, that is intended to result in or that does result in all or any part of a contribution being made to a certain candidate.

(9) "Fund-raising event" means an event held for the benefit of an individual who is a candidate to raise funds for such candidate's campaign or for a public office fund as defined by RCW 42.17.243.

(10) "Contribution" means any loan, gift, deposit, subscription, forgiveness of indebtedness, donation, advance, payment, pledge, or promise of money, or anything of value, whether or not conditional or legally enforceable.

(a) Contribution includes the transfer of funds between political committees, the provision of personal and professional services for less than full consideration, the granting of discounts or rebates not available to the general public, the granting of discounts or rebates by broadcast or print media not extended on an equal basis to all candidates for the same office, and the purchase of tickets or payment of an attendance fee for fund-raising events such as dinners and parties.

(b) Contribution does not include:

(i) Services provided without compensation by individuals volunteering a portion or all of their own time on behalf of a candidate;

(ii) Incidental expenses personally incurred by volunteer campaign workers during the campaign period not in excess of fifty dollars personally paid for by the worker;

(iii) Ordinary hospitality in a home;

(iv) The cost of any bona fide news story, commentary, or editorial distributed through the facilities of any broadcasting station, newspaper, magazine, or other periodical publication of general circulation, unless the facilities are owned or controlled by any political party, political committee, or candidate;

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

(vi) The cost of any mailings done by the state organization of a state political party pursuant to that party's special federal nonprofit mailing permit, nor does it include any difference in the cost of mailing attributable to the use of the special mailing permit rather than a regular permit;

(vii) Nonpartisan activity designed to encourage individuals to vote or register to vote;

(viii) Any communication by any membership organization to its members or stockholders, if such membership organization or corporation is not organized primarily for the purpose of influencing the nomination for election of any candidate.

(c) For the purposes of this chapter, contributions other than money or its equivalents are deemed to have a money value equivalent to the fair market value of the contribution.

The definitions in RCW 42.17.020 apply to the terms used in RCW 42.17.010, 42.17.030, and sections 3 through 9 of this act to the extent that they are consistent with the definitions in this section.

NEW SECTION. Sec. 4. CONTRIBUTION LIMITATIONS. (1) A state executive candidate shall not receive contributions that, in the aggregate, exceed:

(a) One thousand dollars per campaign period from any person other than a political party;

(b) Three thousand dollars per campaign period from a legislative district organization of a political party;

(d) Fifty thousand dollars per campaign period from the state organization of a political party.

(2) A state legislative candidate shall not receive contributions that, in the aggregate, exceed:

(a) Five hundred dollars per campaign period from any person other than a political party; and

(b) Three thousand dollars per campaign period from a political party. This limitation shall apply separately to each of the entities listed in section 3 (7) (a) through (c) of this act.

(3) For the purposes of sections 3 through 8 of this act, a contribution to a candidate committee or other agent for the candidate is a contribution to the candidate.

(4) A loan shall be considered a contribution from the maker or guarantor of the loan and shall be subject to the contribution limitations of this section. Every loan to a candidate or the candidate committee shall be by written agreement and shall be filed with the candidate's or committee's campaign statement on which the loan is first reported.

(a) The proceeds of a loan made to a candidate by a commercial lending institution in the regular course of business on the same terms available to members of the public are not subject to the contribution limits of this section.

(b) Extensions of credit for a period of more than thirty days are subject to the contribution limitations of this section.

(5) Contributions by a husband and wife shall be treated as separate contributions and shall not be aggregated.

(6) Contributions by children under eighteen years of age shall be treated as contributions by their parents and attributed to both parents.

(7) The limitations of this section do not apply to a candidate's expenditure of his own funds in the pursuit of his campaign.

(8) An incumbent state legislator shall not receive from any person contributions to his public office fund that, in the aggregate, exceed five hundred dollars per calendar year.

(9) Any contribution received by a candidate on the day of an election or less than five days before the day of that election shall be returned by him to the person contributing it and shall not be used or expended by the candidate.

NEW SECTION. Sec. 5. PROHIBITIONS. (1) A candidate committee shall not transfer funds to another candidate committee.

(2) A legislative district organization, as defined in section 2(7)(c) of this act, shall contribute only to those state legislative candidates seeking election within the boundaries of that legislative district.

(3) A county central committee, as defined in section 2(7)(b) of this act, shall contribute only to those state legislative candidates seeking election in legislative districts within the boundaries of that county.

(4) A contribution that is controlled by, or made at the direction of another person, including a parent organization, subsidiary, division, committee, department, branch, or local unit of a person, shall be reported by the person making the contribution, and shall be regarded as a contribution attributable to both persons for purposes of contribution limits.

(5) The public disclosure commission, in determining whether a person is controlled by any other person for the purposes of subsection (4) of this section, shall consider the following factors:

(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 decisions of the officers or members of an entity;

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

(6) If a political committee that is not subject to the limitations of this section becomes a political committee under the direction or control of a candidate, the limitations imposed on contributions to candidates by section 4 of this act shall thereafter apply. Contributions made to that political committee during the twelve months before the change count toward the applicable limits. Any portion of a contribution exceeding the applicable limits shall not be expended but shall be returned to the contributor within two weeks of becoming a committee subject to limits of this section, or they shall escheat to the state. A candidate committee may retain a campaign surplus after a campaign period, and such surplus may be used in the candidate's subsequent campaigns without limitation.

(7) A contribution to a political party or a candidate committee may not be earmarked for a particular candidate or political committee, nor may any committee solicit or accept any such contributions.

(8) Fund-raising events for state legislative candidates may not be conducted by any person during the regular session, special session, and committee weekends of the legislature, and for a period of fifteen days before the first day of a legislative session and thirty days after adjournment sine die, unless the event is physically held in the candidate's legislative district.

(9) Fund-raising events for state executive candidates may not be conducted by any person during the regular session, special session, and committee weekends of the legislature, and for a period of fifteen days before the first day of a legislative session and thirty days after adjournment sine die.

NEW SECTION. Sec. 6. PENALTIES. (1) Any contribution received that is in excess of the limits prescribed in section 4 of this act shall escheat to the state of Washington.

(2) The commission, pursuant to RCW 42.17.395, shall impose sanctions against any person who violates section 4 or 5 of this act.

NEW SECTION. Sec. 7. APPROPRIATIONS. The legislature shall make available such sums as are needed by the public disclosure commission to implement sections 3 through 9 of this act.

NEW SECTION. Sec. 8. CONSTRUCTION. Sections 3 through 9 of this act are intended to be remedial and shall be liberally construed to affect the purposes described in RCW 42.17.010.

NEW SECTION. Sec. 9. LEGISLATIVE VACANCIES. (1) RCW 42.17.010, 42.17.030, and sections 3 through 8 of this act apply to recall campaigns and portions of recall campaigns beginning after the effective date of this act.

(2) RCW 42.17.010, 42.17.030, and sections 3 through 8 of this act apply to campaigns for state legislative office to fill unexpired terms and portions of such campaigns beginning after the effective date of this act.

(3) RCW 42.17.010, 42.17.030, and sections 3 through 8 of this act apply to campaigns for state legislative office to fill regular terms in the house of representatives or senate if the campaign ends on or after December 1, 1986. However, for any campaign ending on December 1, 1986, RCW 42.17.010, 42.17.030, and sections 3 through 8 of this act apply only to that portion of such campaign occurring after the effective date of this act.

Sec. 10. Section 1, chapter 176, Laws of 1983 as last amended by section 2, chapter 228, Laws of 1986 and RCW 42.17.105 are each amended to read as follows:

(1) Campaign treasurers shall prepare and deliver to the commission a special report regarding any contribution which:

(a) Exceeds five hundred dollars;

(b) Is from a single person or entity;

(d) Is received((~~: (i)~~)) after the period covered by the last report required by RCW 42.17.080 and 42.17.090 to be filed before that ((~~primary; or (ii) within twenty-one days preceding that general~~)) election.

(2) Any political committee making a contribution which exceeds five hundred dollars shall also prepare and deliver to the commission the special report if the contribution is made before ((~~a primary or general~~)) an election and((~~: (a)~~)) after the period covered by the last report required by RCW 42.17.080 and 42.17.090 to be filed before that ((~~primary; or (b) within twenty-one days preceding that general~~)) election.

(3) Except as provided in subsection (4), the special report required by this section shall be delivered in written form, including but not limited to mailgram, telegram, or nightletter. The special report required by subsection (1) shall be delivered to the commission within ((~~forty-eight~~)) twenty-four hours of the time, or on the first working day after, the contribution is received by the candidate or campaign treasurer. The special report required by subsection (2) of this section ((~~and RCW 42.17.175~~)) shall be delivered to the commission((~~, and the candidate or political committee to whom the contribution is made,~~)) within twenty-four hours of the time, or on the first working day after, the contribution is made.

(4) The special report may be transmitted orally by telephone to the commission to satisfy the delivery period required by subsection (3) if the written form of the report is also mailed to the commission and postmarked within the delivery period established in subsection (3).

(5) The special report shall include at least:

(a) The amount of the contribution;

(b) The date of receipt;

(d) The name and address of the recipient; and

(e) Any other information the commission may by rule require.

(6) Contributions reported under this section shall also be reported as required by other provisions of this chapter.

((~~(7) The commission shall publish daily a summary of the special reports made under this section and RCW 42.17.175.~~

(8) It is a violation of this chapter for any person to make, or for any candidate or political committee to accept from any one person, contributions reportable under RCW 42.17.090 in the aggregate exceeding fifty thousand dollars for any campaign for state-wide office or exceeding five thousand dollars for any other campaign subject to the provisions of this chapter within twenty-one days of a general election. This subsection does not apply to contributions made by, or accepted from, a major political party as defined in RCW 29.01.090.))

NEW SECTION. Sec. 11. Section 2, chapter 359, Laws of 1985 and RCW 42.17.175 are each repealed.

NEW SECTION. Sec. 12. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 13. Sections 3 through 9 of this act are added to chapter 42.17 RCW.

NEW SECTION. Sec. 14. Section captions used in this act do not constitute any part of the law.

NEW SECTION. Sec. 15. This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect immediately.