Public Financing Pilot Program

Establishes a pilot program for the city and county of Honolulu
council elections of 2002 providing for public funding for
candidates who voluntarily abide by specified contribution and
expenditure limits. (HB1879 HD2)

HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 2
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            

                     A BILL FOR AN ACT



 1      SECTION 1.  The purpose of this Act is to establish a
 2 public-funded elections pilot program for the city and county of
 3 Honolulu council elections of 2002 to be known as the public
 4 financing elections pilot program. 
 5      SECTION 2.  Public financing elections pilot program.  There
 6 is established the public financing elections pilot program for
 7 the city and county of Honolulu council elections of 2002 to be
 8 placed with the campaign spending commission for administrative
 9 purposes.  The commission shall have such duties and powers, as
10 provided under section 11-193, Hawaii Revised Statutes, as are
11 necessary to administer and enforce all requirements under this
12 Act.
13      SECTION 3.  Requirements for participating candidates; first
14 special election; second special election.(a)  A candidate
15 shall qualify as a public financed candidate for the first
16 special election campaign period if the candidate:
17      (1)  Files a declaration with the commission that the
18           candidate has complied and will comply with all of the
19           requirements of this Act, as applicable;

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 1      (2)  Before the close of the public financing elections
 2           qualifying period, collects public financing elections
 3           qualifying contributions from at least one per cent of
 4           the total number of voters who registered to vote
 5           during the preceding general election in the district
 6           out of which the candidate is running; and
 7      (3)  Accepts only the following private contributions
 8           between February 1, 2002, and the date that the
 9           candidate qualifies as a public financed candidate:
10           (A)  Seed money contributions; and
11           (B)  Public financing elections qualifying
12                contributions.
13      (b) A candidate shall qualify as a public financed candidate
14 for the second special election campaign period if the candidate:
15      (1)  Qualified as a public financed candidate during the
16           first special election campaign period; and
17      (2)  Received a sufficient number of votes to appear on the
18           ballot in the second special election.
19      SECTION 4.  Seed money contributions.(a)  Seed money
20 contributions from any single individual contributor shall not
21 exceed $100.  The aggregate amount of seed money that may be
22 retained and expended for seed money purposes by a candidate
23 seeking to become eligible for public funding shall not exceed
24 $2,000.

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 1      (b)  Seed money shall be spent only during the public
 2 financing elections qualifying period.  Seed money expenditures
 3 shall be limited to those necessary for campaign start-up
 4 purposes, and may be used to purchase office supplies, rent
 5 equipment, and finance public rallies.  Seed money shall not be
 6 spent to pay for the solicitation or collection of public
 7 financing elections qualifying contributions, or for broadcast
 8 advertising or mass mailings.
 9      (c)  Candidates shall provide seed money contributors with a
10 receipt and shall not accept contributions unless information
11 that shall be included on the receipt under this subsection is
12 disclosed by the contributor.  A receipt for a seed money
13 contribution shall include the contributor's signature, printed
14 name, street address and zip code, and telephone number.
15      (d)  Within forty-eight hours after the close of the public
16 financing elections qualifying period, candidates seeking to
17 become eligible for public funding shall:
18      (1)  Fully disclose all seed money contributions and
19           expenditures to the commission; and
20      (2)  Return to the commission for deposit in the Hawaii
21           elections campaign fund established under section 11-
22           217, Hawaii Revised Statutes, any seed money the person
23           has raised during the designated seed money period that
24           exceeds the aggregate seed money limit.

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 1      (e)  No public financed candidate shall knowingly accept a
 2 seed money contribution made by a contributor in the name of
 3 another, who is not the person identified on the seed money
 4 receipt.  Candidates violating this subsection shall be fined
 5 five times the amount of the contribution in addition to any
 6 other penalties that may be assessed by the commission under this
 7 Act.  All penalties collected under this subsection shall be
 8 deposited in the Hawaii election campaign fund established under
 9 section 11-217, Hawaii Revised Statutes.
10      SECTION 5.  Qualifying contributions.(a)  Each public
11 financing elections qualifying contribution shall meet the
12 requirements of this section.  To be counted as a public
13 financing elections qualifying contribution:
14      (1)  Contributors shall be registered voters who reside
15           within the candidate's district;
16      (2)  Contributions shall be:
17           (A)  In the amount of $10;
18           (B)  Made in cash, or by check or money order;
19           (C)  Acknowledged by a receipt meeting the requirements
20                in subsection (b); and
21           (D)  Gathered by candidates themselves, or by
22                volunteers who receive no compensation.

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 1      (b)  Receipts for contributions shall indicate, by the
 2 contributor's signature, that the contributor understands that
 3 the purpose of the contribution is to help the candidate qualify
 4 for public campaign funding.  The receipt shall include:
 5      (1)  The contributor's signature, printed name, home
 6           address, and telephone number; and
 7      (2)  The name of the candidate on whose behalf the
 8           contribution is made.
 9      The original receipt shall be given to the contributor.  A
10 copy shall be retained by the candidate and a copy shall be
11 submitted to the commission according to a schedule and procedure
12 to be determined by the commission.  A contribution submitted as
13 a public financing elections qualifying contribution that does
14 not include a signed and completed receipt shall not be counted
15 as a public financing elections qualifying contribution.
16      (c)  Each contribution shall be deposited in an escrow
17 account until the commission determines that the candidate has
18 fulfilled the requirements for public funding and may be
19 certified as a public financed candidate.
20      SECTION 6.  Use of personal funds.  Personal funds of the
21 candidate seeking to become eligible as a public financed
22 candidate may be used as seed money.  Personal funds may not be
23 used to meet the public financing elections qualifying

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 1 contribution requirement; provided that the candidate and any
 2 member of the candidate's immediate family who is a registered
 3 voter in the state of Hawaii may each make a $10 public financing
 4 elections qualifying contribution.
 5      SECTION 7.   Certification of qualification for public
 6 funds.(a)  The commission shall determine whether a candidate
 7 is qualified for public campaign funding for the first special
 8 and second special elections.  Candidates that qualify shall be
 9 certified by the commission as public financed candidates.
10      (b)  The number of candidates certified by the commission
11 shall be limited to three persons in each district, on a first-
12 come, first-served basis.  A candidate's application for
13 certification shall be made on forms to be prescribed by the
14 commission.  The application shall be signed by the candidate and
15 the candidate's campaign treasurer under penalty of perjury.  The
16 commission shall issue its decision to certify or deny
17 certification within ten business days of receipt of a
18 candidate's complete, initial application for certification for
19 the first special election, and, within five business days of
20 receipt of a candidate's complete application for certification
21 for the second special election.
22      (c)  Certification may be revoked if a public financed
23 candidate violates the applicable requirements of this Act.  Upon

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 1 revocation of certification, the candidate shall repay all public
 2 campaign funds.
 3      SECTION 8.  Public financed candidates; contributions and
 4 expenditures.  A candidate who has been certified as a public
 5 financed candidate and thereby found eligible for public
 6 financing elections campaign funding, shall comply with the
 7 following restrictions on contributions and expenditures:
 8      (1)  During the first special and second special election
 9           campaign periods, a public financed candidate shall not
10           accept:
11           (A)  Private contributions from any source other than
12                nonmonetary contributions of less than $100; and
13           (B)  Loans from any source;
14      (2)  During the first special and second special election
15           campaign periods, a public financed candidate shall not
16           expend:
17           (A)  Seed money contributions;
18           (B)  Public funds for purposes other than those
19                specified in this Act;
20           (C)  Public funds outside of the particular campaign
21                period for which the funding is allocated; and
22           (D)  Public funds in excess of the public funds
23                allocated to the candidate, or incur an obligation

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 1                or obligations to spend public funds in excess of
 2                this amount;
 3      (3)  Public financed candidates may not accept any monetary
 4           or nonmonetary contributions from political parties;
 5      (4)  Public financed candidates, once elected, may not
 6           accept private contributions or contributions from
 7           political parties for three years after the election.
 8      SECTION 9.  Public financed candidates; reporting.(a)
 9 Public financed candidates shall furnish complete campaign
10 records, including all records of nonmonetary contributions, seed
11 money contributions, and public financing elections qualifying
12 contributions to the commission at regular filing times set by
13 part XII, subpart B of chapter 11, Hawaii Revised Statutes, or as
14 requested by the commission.  Public financed candidates shall
15 fully cooperate with any audit or examination by the commission.
16      (b)  In addition to any other reports required by law,
17 public financed candidates shall maintain records of the
18 following expenditures, which shall be reported to the commission
19 as required by the commission:
20      (1)  Expenditures such as those for utility bills, involving
21           a debt incurred, but not paid immediately, which shall
22           be reported at the time that the debt is incurred; and
23      (2)  All petty cash expenditures.

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 1      SECTION 10.  Public financed candidates; continuing
 2 obligation.  A public financed candidate who accepts any public
 3 funds during the first special election campaign period shall
 4 comply with all requirements applicable to a public financed
 5 candidate under this Act.  This obligation shall continue through
 6 the second special election campaign period regardless of whether
 7 that person continues to accept, or maintains eligibility for
 8 public funds. 
 9      SECTION 11.  Public funding; disbursement.(a)  Candidates
10 certified as a qualified public financed candidate for the first
11 special election shall on the date that certification is issued
12 by the commission, receive authorization to expend public funding
13 for the first special election.  Candidates certified as a
14 qualified public financed candidate for the second special
15 election shall on the date that certification is issued by the
16 commission, receive authorization to expend public funding for
17 the second special election.
18      (b)  Public financed candidates in contested elections shall
19 be authorized to expend $30,000 in public funds for the first
20 special election, and $15,000 in public funds for the second
21 special election.  Public financed candidates shall be authorized
22 to expend equalizing funds in the amount of an additional $5,000
23 in public funds for the first special election, if a non-

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                                     H.B. NO.           H.D. 2

 1 participating candidate spends more than $40,000 in that first
 2 special election, and in the amount of $5,000 in public funds for
 3 the second special election, if a non-participating candidate
 4 spends more than $25,000 in that second special election.
 5      (c)  A public financed candidate may request that the
 6 commission certify excess expenditures and release equalizing
 7 funds if a non-participating candidate opposing the public
 8 financed candidate discloses in any report required under chapter
 9 11 of the Hawaii Revised Statutes, total expenditures in excess
10 of $40,000 in the first special election, or $25,000 in the
11 second special election.  Upon certification of excess
12 expenditures under this section, the commission shall release
13 equalizing public financing elections funding to opposing public
14 financed candidates to the extent authorized by law.
15      SECTION 12.  Public funding.  The commission is authorized
16 to expend up to $     in funds from the Hawaii election campaign
17 fund for the purpose of this act to distribute to candidates who
18 qualify under this act.
19      SECTION 13.  Public funding; expenditure limits.  A public
20 financed candidate shall not spend or incur an obligation to
21 spend more than one hundred per cent of the public funds that
22 have been allocated to the candidate.  If a public financed
23 candidate spends or incurs an obligation to spend more than one

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 1 hundred per cent of the public funds allocated, the candidate
 2 shall repay to the Hawaii elections campaign fund an amount equal
 3 to ten times the total excess expenditure.
 4      SECTION 14.  Public funding; permitted uses.  The public
 5 funds received by a public financed candidate shall be used only
 6 for the purpose of defraying that candidate's direct campaign-
 7 related expenses, including but not limited to, the purchase or
 8 development of campaign literature, campaign signs, development
 9 and purchase of media space or time, mailings, general office
10 supplies, telephones, rental of campaign equipment and
11 headquarters, and utility costs associated with the campaign
12 headquarters during the election campaign period for which the
13 public funds were allotted.  Expenditures shall not be made:
14      (1)  In violation of the law;
15      (2)  To pay any personal, family, or business expenses,
16           loans, or debts; or 
17      (3)  For any noncampaign-related expenses, or for indirect
18           campaign-related expenses.
19      SECTION 15.  Deposit of public funds.(a)  All public funds
20 received by public financed candidates shall be deposited
21 directly into a financial depository as provided under section
22 11-199, Hawaii Revised Statutes.

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 1      (b)  All reports required by chapter 11, Hawaii Revised
 2 Statutes, for financial disclosure shall include the most recent
 3 bank statement from the financial depository.
 4      SECTION 16.  Deposit of moneys into the Hawaii election
 5 campaign fund.  The following moneys shall be deposited into the
 6 Hawaii election campaign fund established under section 11-217,
 7 Hawaii Revised Statutes:
 8      (1)  Excess seed money contributions as provided in this
 9           Act;
10      (2)  Public financing elections qualifying contributions,
11           including any excess public financing elections
12           qualifying contributions;
13      (3)  Unspent public funds distributed to any public financed
14           candidate who does not remain a candidate until the
15           special election for which they were distributed, or
16           such funds that remain unspent by a public financed
17           candidate following the date of the special election
18           for which they were distributed;
19      (4)  Fines levied by the commission against candidates for
20           violation of election laws; and
21      (5)  Voluntary donations made directly to the public
22           financing elections pilot program.

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 1      SECTION 17.  Suspension of partial public funding program.
 2 For the purposes of the public financing elections pilot program,
 3 the partial public funding program provided under chapter 11,
 4 Hawaii Revised Statutes, shall be temporarily suspended during
 5 the elections period applicable to city and county of Honolulu
 6 council offices in 2002.  This section shall apply only to city
 7 and county of Honolulu council races.
 8      SECTION 18.  Definitions.  For the purposes of this Act:
 9      "Candidate" shall have the same meaning as provided in
10 section section 11-191, Hawaii Revised Statutes.
11      "Candidate's committee" shall have the same meaning as
12 provided in section 11-191, Hawaii Revised Statutes.
13      "Commission" shall have the same meaning as provided in
14 section 11-191, Hawaii Revised Statutes.
15      "Contribution" shall have the same meaning as provided in
16 section 11-191, Hawaii Revised Statutes.
17      "Excess expenditure" means the amount of money spent or
18 obligated to be spent by a non-participating candidate in excess
19 of one hundred per cent of the public financing elections funding
20 the candidate is allocated.
21      "First special election campaign period" means the period
22 beginning ninety days before the primary election and ending two
23 weeks after the primary election.

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                                     H.B. NO.           H.D. 2

 1      "Noncandidate committee" has the same meaning as provided in
 2 section 11-191, Hawaii Revised Statutes.
 3      "Nonmonetary contribution" means a contribution other than
 4 of money, that may include goods or services.
 5      "Petty cash expenditure" means an expenditure of no more
 6 than $25, paid in cash in amounts of $100 or less per week.
 7      "Public financed candidate" or "qualified candidate" means a
 8 candidate who is certified by the commission as qualifying for
 9 public funding during the Honolulu city council special election
10 or special election campaign periods in 2002, and agrees to abide
11 by public financing elections contribution and expenditure
12 limitations.
13      "Public financing elections campaign funding" means public
14 funds to be provided to public financed candidates during the
15 2002 Honolulu city council first special and second special
16 election campaign periods.
17      "Public financing elections qualifying contribution" means a
18 $10 contribution made to a candidate during the public financing
19 qualifying period by a registered voter residing within the
20 candidate's district, that is included within the total number of
21 contributions that must be received by the candidate to qualify
22 for public funding.

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                                     H.B. NO.           H.D. 2

 1      "Public financing qualifying period" means the period during
 2 which candidates may collect qualifying contributions to qualify
 3 for public funding, beginning February 1, 2002, and ending April
 4 30, 2002.
 5      "Public funding" or "public funds" means public financing
 6 elections campaign funds.
 7      "Second special election campaign period" means the period
 8 beginning the day after the first special election and ending two
 9 weeks after the second special election.
10      "Seed money" means contributions made during the public
11 financing elections qualifying period that may be expended solely
12 for campaign start-up purposes.
13      SECTION 19.  The commission, in cooperation with other
14 relevant stakeholders, shall evaluate the effectiveness of the
15 public financing elections pilot project and draft a report to
16 the legislature that shall include:
17      (1)  A detailed summary of all seed money contributions,
18           qualifying contributions, public funds disbursements,
19           and public financed candidate expenditures;
20      (2)  A comparative study examining public financing
21           elections projects and legislation in other states;
22      (3)  A summary and evaluation of the commission's activities
23           as well as the commission's recommendations relating to

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                                     H.B. NO.           H.D. 2

 1           the implementation, administration, and enforcement of
 2           Act 254, Session Laws of Hawaii 1998; and
 3      (4)  A detailed public financing elections plan for the 2004
 4           election.
 5 The commission shall submit its report to the legislature no
 6 later than twenty days prior to the regular session of 2003.
 7      SECTION 20.  If any provision of this Act, or the
 8 application thereof to any person or circumstance is held
 9 invalid, the invalidity does not affect other provisions or
10 applications of the Act which can be given effect without the
11 invalid provision or application, and to this end the provisions
12 of this Act are severable.
13      SECTION 21.  This Act shall take effect on July 1, 2005.