Report Title:

Campaign Spending

 

Description:

Increases amount of contributions from campaign funds to charitable organizations; limits contributions to candidates in an aggregate amount of $25,000 in a 2 year election period; clarifies disposition of excess contribution; prohibits banks labor organizations or other entities organized by authority of federal or state law to make campaign contributions; prohibits the state or counties to enter into contracts with any person who has made a recent campaign contribution; clarifies "coordinated activities"; "qualifying campaign contributions" for receipt of public funds, and makes knowing falsification of campaign reports a class C felony (CD1)

THE SENATE

S.B. NO.

2431

TWENTY-FIRST LEGISLATURE, 2002

S.D. 2

STATE OF HAWAII

H.D. 1


C.D. 1

A BILL FOR AN ACT

 

RELATING TO CAMPAIGN SPENDING.

 

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

SECTION 1. Section 11-191, Hawaii Revised Statutes, is amended by amending the definition of "noncandidate committee" to read:

""Noncandidate committee" means a committee as defined in this section and includes any separate segregated fund used for a political purpose by a corporation, labor organization, membership organization, cooperative, trade association, or corporation without capital stock, but does not include a candidate's committee."

SECTION 2. Section 11-193, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The duties of the commission under this subpart are:

(1) To develop and adopt reporting forms required by this subpart;

(2) To adopt and publish a manual for all candidates and committees, describing the requirements of this subpart, including uniform and simple methods of recordkeeping;

(3) To preserve all reports required by this subpart for at least ten years from the date of receipt;

(4) To permit the inspection, copying, or duplicating of any report required by this subpart pursuant to rules adopted by the commission; provided that no information or copies from the reports shall be sold or used by any person for the purpose of soliciting contributions or for any commercial purpose;

(5) To ascertain whether any candidate, committee, or party has failed to file a report required by this subpart or has filed a substantially defective or deficient report, and to notify these persons by first class mail that their failure to file or filing of a substantially defective or deficient report must be corrected and explained. The correction or explanation shall be submitted in writing to the commission not later than 4:30 p.m. on the fifth day after notification of the failure to file or deficiency has been mailed to these persons. The commission shall publish in the newspaper, and on its website, the names of all candidates, committees, and parties who have failed to file a report or to correct their deficiency within the time allowed by the commission. Failure to file or correct a report when due, as required by this subpart, shall result in a penalty of $50. Failure to respond after a newspaper notification or website publication shall result in an additional penalty of $50 for each day a report remains overdue or uncorrected. All penalties collected under this section shall be deposited in the Hawaii election campaign fund;

(6) To hold public hearings;

(7) To investigate and hold hearings for receiving evidence of any violations;

[(8) To adopt a code of fair campaign practices as a part of its rules;

(9)] (8) To establish rules pursuant to chapter 91;

[(10)] (9) To request the initiation of prosecution for the violation of this subpart pursuant to section 11-229;

[(11)] (10) To administer and monitor the distribution of public funds under this subpart;

[(12)] (11) To suggest accounting methods for candidates, parties, and committees, as the commission may deem advisable, in connection with reports and records required by this subpart;

[(13)] (12) To employ or contract, without regard to [chapters] chapter 76 [and 77] and section 28-8.3, and, at pleasure, to dismiss persons it finds necessary for the performance of its functions, including a full-time executive director, and to fix their compensation;

[(14)] (13) To do random audits, field investigations, as necessary;

[(15)] (14) To file for injunctive relief when indicated; and

[(16) To censure any candidate who fails to comply with the code of fair campaign practices; and

(17)] (15) To render advisory opinions upon the request of any candidate, candidate committee, noncandidate committee, or other person or entity subject to this chapter, as to whether the facts and circumstances of a particular case constitute or will constitute a violation of the campaign spending laws. If no advisory opinion is rendered within ninety days after all information necessary to issue an opinion has been obtained, it shall be deemed that an advisory opinion was rendered and that the facts and circumstances of that particular case do not constitute a violation of the campaign spending laws. The opinion rendered or deemed rendered, until amended or revoked, shall be binding on the commission in any subsequent charges concerning the candidate, candidate committee, noncandidate committee, or other person or entity subject to this chapter, who sought the opinion and acted in reliance on it in good faith, unless material facts were omitted or misstated by the persons in the request for an advisory opinion."

SECTION 3. Section 11-200, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Any provision of law to the contrary notwithstanding, a candidate, campaign treasurer, or candidate's committee, as a contribution:

(1) May purchase from its campaign fund not more than two tickets for each event held by another candidate, committee, or party whether or not the event constitutes a fundraiser as defined in section 11-203;

(2) May use campaign funds for any ordinary and necessary expenses incurred in connection with the candidate's duties as a holder of an elected state or county office, as the term is used in section 11-206(c); and

(3) May make contributions from its campaign fund to any community service, educational, youth, recreational, charitable, scientific, or literary organization, provided that in any election cycle, the total amount of all contributions from campaign funds and surplus funds shall be no more than two times the maximum amount that one person or other entity may contribute to that candidate pursuant to section 11-204(a)."

SECTION 4. Section 11-204, Hawaii Revised Statutes, is amended to read as follows:

"11-204 Campaign contributions; limits as to persons.

(a) (1) No person or any other entity shall make contributions to:

(A) A candidate seeking nomination or election to a two-year office or to the candidate's committee in an aggregate amount greater than $2,000 during an election period;

(B) A candidate seeking nomination or election to a four-year statewide office or to the candidate's committee in an aggregate amount greater than $6,000 during an election period; and

(C) A candidate seeking nomination or election to the state senate, a four-year nonstatewide office, or to the candidate's committee in an aggregate amount greater than $4,000 during an election period.

These limits shall not apply to a loan made to a candidate by a financial institution in the ordinary course of business[.];

(2) No person or any other entity shall make contributions in the aggregate amount greater than $25,000 to any number of candidates in a two-year election period. This limit shall not apply to a loan made to a candidate by a financial institution in the ordinary course of business; and

[(2)] (3) For purposes of this section, the length of term of an office shall be the usual length of term of the office as unaffected by reapportionment, a special election to fill a vacancy, or any other factor causing the term of the office the candidate is seeking to be less than the usual length of term of that office.

(b) No person or any other entity shall make contributions to a noncandidate committee, in an aggregate amount greater than $1,000 in an election; except that in the case of a corporation or company using funds from its own treasury, there shall be no limit on contributions or expenditures to the corporation or company noncandidate committee.

(c) A candidate's immediate family, in making contributions to the candidate's campaign, shall be exempt from the above limitation, but shall be limited in the aggregate to $50,000 in any election period. The aggregate amount of $50,000 shall include any loans made for campaign purposes to the candidate from the candidate's immediate family.

(d) A contribution by a dependent minor shall be reported in the name of the minor but shall be counted against the contribution of the minor's parent or guardian.

(e) Any candidate, candidate's committee, or committee that receives in the aggregate more than the applicable limits set forth in this section in any primary, initial special, special, or general election from a person, shall be required to do one of the following:

[(1) Regardless of whether the excess donation was inadvertently made, to transfer an amount equal to any excess over the limits established in this section to the Hawaii election campaign fund within thirty days of receipt of the contribution, and in any event, no later than thirty days upon the receipt by a candidate, candidate's committee, or committee, of notification from the commission; or

(2) If the excess donation was inadvertently made, to return to the donor any excess over the limits established in this section and to notify the commission within thirty days of receipt of the contribution.]

(1) Any excess contribution may be returned to the original donor within thirty days from receipt of the excess contribution or submitted to the Hawaii election campaign fund.

(2) After thirty days from receipt, all excess contributions not returned to original donors shall escheat to the Hawaii election campaign fund.

A candidate, candidate's committee, or committee who complies with this subsection prior to the initiation of prosecution shall not be subject to any penalty under section 11-228.

(f) All payments made by a person or political party whose contributions or expenditure activity is financed, maintained, or controlled by any corporation, labor organization, association, political party, or any other person or committee, including any parent, subsidiary, branch, division, department, or local unit of the corporation, labor organization, association, political party, political committees established and maintained by a national political party, or any other person, or by any group of those persons shall be considered to be made by a single person or political party.

(g) A contribution made by two or more corporations shall be treated as one person when such corporations:

(1) Share the majority of members of their boards of directors;

(2) Share two or more corporate officers;

(3) Are owned or controlled by the same majority shareholder or shareholders; or

(4) Are in a parent-subsidiary relationship.

(h) An individual and any general partnership in which the individual [is a partner] owns at least a twenty-five per cent interest in the partnership, or an individual and any corporation in which the individual owns a controlling interest, shall be treated as one person.

(i) No committee [which] that supports or opposes a candidate for public office shall have as officers individuals who serve as officers on any other committee which supports or opposes the same candidate. No such committee shall act in concert with, or solicit or make contributions on behalf of, any other committee.

(j) No contributions or expenditures shall be made to or on behalf of a candidate or committee by a foreign national or foreign corporation, including a domestic subsidiary of a foreign corporation, a domestic corporation that is owned by a foreign national, or a local subsidiary where administrative control is retained by the foreign corporation, and in the same manner prohibited under 2 United States Code section 441e and 11 Code of Federal Regulations 110.4(a) and 110.9(a), as amended. No foreign-owned domestic corporation shall make contributions where:

(1) Foreign national individuals participate in election-related activities such as decisions concerning the making of contributions or the administration of a political committee; or

(2) The contribution funds are not domestically-derived.

(k) No person or any other entity other than political committees established and maintained by a national political party shall make contributions to a political party in an aggregate amount greater than $25,000 in any two-year election period. No political committee established and maintained by a national political party, shall make contributions to a political party in an aggregate amount greater than $50,000 in any two-year election period.

(l) No state or national bank, corporation, labor organization, membership organization, cooperative, or corporation without capital stock organized by authority of any law of the United States Congress or of any state shall make a contribution or expenditure in connection with the nomination for election or election of any person to political office, or in connection with any candidate committee or noncandidate committee. No officer or director of any corporation or any state or national bank or any officer of any labor organization shall consent to any contribution by the corporation, state or national bank, or labor organization, as the case may be. No person shall accept or receive any contribution prohibited by this subsection.

This subsection shall not prohibit the use of funds for the establishment or administration of, or the solicitation of contributions to, any separate segregated fund by a state or national bank, corporation, labor organization, membership organization, cooperative, or corporation without capital stock for the purpose of influencing the nomination for election, or election, of any person to political office. It shall be unlawful for the separate segregated fund to use contributions secured by physical force, job discrimination, financial reprisals, or the threat of force, job discrimination, or financial reprisal; or by dues, fees, or other moneys required as a condition of membership in a labor organization or as a condition of employment, or by moneys obtained in any commercial transaction.

Any person soliciting an employee for a contribution to such a fund shall inform the employee at the time of such solicitation of the employee's right to refuse to contribute without any reprisal. It shall be unlawful for:

(1) A corporation, or a separate segregated fund established by a corporation, to solicit contributions to the fund from any person other than its stockholders and their families and its executive or administrative personnel and their families; or

(2) A labor organization, or a separate segregated fund established by a labor organization, to solicit contributions to such a fund from any person other than its members and their families.

No funds for a separate segregated fund established by a corporation may be from dividends, bonuses, or any form of payment to stockholders and their families and its executives or administrative personnel and their families, paid solely for making a contribution to such fund.

This subsection shall not prevent a membership organization, cooperative, trade association, or corporation without capital stock, or a separate segregated fund established by a membership organization, cooperative, trade association, or corporation without capital stock, from soliciting contributions to such a fund from members of such organization, cooperative, trade association, or corporation without capital stock.

This subsection shall not apply to any state or national bank, corporation, labor organization, membership organization, cooperative, or corporation without capital stock making contributions aggregating less than $6,000 in a two-year election period.

[(l)] (m) [Except for subsection (j), this] This section shall not apply to ballot issue committees."

SECTION 5. Section 11-205.5, Hawaii Revised Statutes, is amended to read as follows:

"11-205.5 Campaign contributions by state and county contractors. [(a) Any person making a contribution to any candidate, committee, or political party, and who has received, in any calendar year, $50,000 or more through contracts from the State, or county shall register and report that fact to the commission within thirty days of the date of the contribution or within thirty days of the date of the contract, whichever occurs later; provided that this section shall not apply to a person who has received $50,000 or more through a grant, subsidy, or purchase of service agreement under chapter 42F or 103F.

(b) The commission shall prescribe forms and procedures for the reporting required in subsection (a) which, at a minimum, shall require the following information:

(1) The name and address of the person making the contribution;

(2) The name of the candidate, committee, or political party receiving the contribution;

(3) The amount of money received from the State or county, the dates, and information identifying each contract and describing the service performed or goods provided; and

(4) If an entity is making the contribution, the names and business addresses of the principals, including officers and directors.

(c) The commission shall maintain a list of such reports for public inspection both at the commission's office and through the state FYI electronic bulletin board.] (a) It shall be unlawful for the State, any of its counties, any department, agency, or entity thereof to enter into any contract or agreement including but not limited to those contracts or agreements for the rendition of professional or personal services or furnishing any material, supplies, or equipment to the State, any of its counties, any department, agency, or entity thereof or for selling any land or building to the State, any of its counties, any department, agency, or entity thereof, with any person or entity who has made contributions of money or other things of value, directly or indirectly, or promised or implied to make any such contribution to any candidate for public office or their candidate committee two years prior to the notice of the availability of the contract or agreement, or the commencement of the negotiations for the contract or agreement, whichever is earlier, during the performance of the contract or agreement, or two years subsequent to the completion of performance or termination of the contract or agreement.

(b) This section does not prohibit or make unlawful contributions to a political party, committee, or candidate for public office if that public office does not have the authority or discretion to enter into any contract or agreement for the State, any of its counties, any department, agency, or entity thereof either for the rendition of professional or personal services or furnishing any material, supplies, or equipment.

(c) This section does not prohibit contributions to a separate segregated fund established by an organization.

(d) For purposes of this section, "person" means an individual, a partnership and its partners who have at least twenty-five per cent interest, or a company and its owners who have at least a twenty-five per cent ownership interest, and the dependent household members of each of these individuals."

SECTION 6. Section 11-206, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) Such contributions may be used after a general or special election for any fundraising activity, for:

(1) Any other politically related activity sponsored by the candidate;

(2) Any ordinary and necessary expenses incurred in connection with the candidate's duties as a holder of an elected state or county office; or

(3) Any contribution to any community service, educational, youth, recreational, charitable, scientific, or literary organization, provided that in any election cycle, the total amount of all contributions from campaign funds and surplus funds shall be no more than two times the maximum amount that one person or other entity may contribute to that candidate pursuant to section 11-204(a)."

SECTION 7. Section 11-207, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Expenditures, or disbursements for electioneering communications as defined in section 11-207.6, or any other coordinated activity, made by any person or political party for the benefit of a candidate in cooperation, consultation, or concert with, or at the request or suggestion of, a candidate, a candidate's political committee, or their agents, shall be considered to be a contribution to such candidate and expenditure by such candidate.

The financing by any person or political party of the dissemination, distribution, or republication, in whole or in part, of any broadcast or any written or other campaign materials prepared by the candidate, the candidate's political committee or committees, or agents shall be considered to be a contribution to such candidate.

This subsection shall not apply to candidates for governor or lieutenant governor supporting a co-candidate in the general election.

"Coordinated activity" subject to the provisions of this subsection includes anything of value provided by a person in connection with a candidate's election who is (or who at any time during the same election cycle has been) acting in coordination with that candidate (or agent of that candidate) on any campaign activity in connection with a election in which such candidate seeks nomination or election to office (regardless of whether the value provided is in the form of a communication which expressly advocates a vote for or against any candidate), and includes any of the following:

(1) A payment made by a person in cooperation, consultation, or concert with, at the request of suggestion of, or pursuant to any general or particular understanding with a candidate, the candidate's authorized committee, the political party of the candidate, or an agent acting on behalf of the candidate, authorized committee, or the political party of the candidate.

(2) A payment made by a person for the production, dissemination, distribution, or republication, in whole or in part, of any broadcast or any written, graphic, or other form of campaign material prepared by a candidate, a candidate's authorized committee, or an agent of a candidate or authorized committee or a communication that expressly advocates a candidate's defeat, except that this paragraph shall not apply with respect to materials published on a candidate's website and republished at a cost of less than $1,000.

(3) A payment is made by a person if, in the same election cycle in which the payment is made, the person making the payment:

(A) Is serving or has previously served as an employee, fundraiser, or agent of the candidate or the candidate's authorized committee in an executive or policymaking capacity; or

(B) Has previously participated in discussions (other than on an incidental bases) with the candidate, an agent of the candidate's authorized committee, or a committee of a political party which is coordinating with the candidate regarding the candidate's campaign strategy and tactics, including (but not limited to) advertising, message, allocation of resources, fundraising, or campaign operations.

(4) A payment made by a person if, in the same election cycle, the person making the payment retains the professional services of any person that has provided or is providing those services in the same election cycle to a candidate (including services provided through a political committee of the candidate's political party) in connection with the candidate's pursuit of nomination for election, or election, to office, including services relating to the candidate's decision to seek office, and the person retained is retained to work on activities relating to that candidate's campaign.

The term "professional services" means polling, media advice, fundraising, campaign research or direct mail (except for mailhouse services) services in support of a candidate's pursuit of nomination for election, or election, to office."

SECTION 8. Section 11-218, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) Each candidate who qualified for the maximum amount of public funding in any primary[ or special primary] election and who is a candidate for a subsequent general election shall apply with the commission to be qualified to receive the maximum amount of public funds as provided in this section for the respective election. For purposes of this section qualified means meeting the qualifying campaign contribution requirements of section 11-219."

SECTION 9. Section 11-219, Hawaii Revised Statutes, is amended to read as follows:

"11-219 Qualifying campaign contributions; amounts. As a condition of receiving public funds for a primary[, special primary,] or general election, a candidate shall not be unopposed in any election for which public funds are sought, and shall have filed an affidavit with the commission pursuant to section 11-208 to voluntarily limit the candidate's campaign expenditures and shall be in receipt of the following sum of qualifying campaign contributions from individual residents of Hawaii for the candidate's respective office for each election:

(1) For the office of governor--qualifying contributions that in the aggregate, exceed $100,000;

(2) For the office of lieutenant governor--qualifying contributions that in the aggregate, exceed $50,000;

(3) For the office of mayor for each respective county:

(A) County of Honolulu--qualifying contributions that in the aggregate, exceed $50,000;

(B) County of Hawaii--qualifying contributions that in the aggregate, exceed $15,000;

(C) County of Maui--qualifying contributions that in the aggregate, exceed $10,000; and

(D) County of Kauai--qualifying contributions that in the aggregate, exceed $5,000; and

(4) For the office of prosecuting attorney for each respective county:

(A) County of Honolulu--qualifying contributions that in the aggregate, exceed $30,000;

(B) County of Hawaii--qualifying contributions that in the aggregate, exceed $10,000; and

(C) County of Kauai--qualifying contributions that in the aggregate, exceed $5,000;

(5) For the office of county council--for each respective county:

(A) County of Honolulu--qualifying contributions that in the aggregate, exceed $5,000;

(B) County of Hawaii--qualifying contributions that in the aggregate, exceed $1,500;

(C) County of Maui--qualifying contributions that in the aggregate, exceed $5,000; and

(D) County of Kauai--qualifying contributions that in the aggregate, exceed $3,000;

(6) For the office of state senator--qualifying contributions that, in the aggregate, exceed $2,500;

(7) For the office of state representative--qualifying contributions that, in the aggregate, exceed $1,500; and

(8) For all other offices, qualifying contributions that, in the aggregate, exceed $500."

SECTION 10. Section 11-220, Hawaii Revised Statutes, is amended to read as follows:

"11-220 Eligibility for payments. (a) To be eligible to receive payments under section 11-217, a candidate shall in writing:

(1) Agree to obtain and furnish to the commission any evidence of the campaign expenses of such candidate which the commission may request;

(2) Agree to keep and furnish records, books, and other information which the commission may request; and

(3) Agree to an audit and examination by the commission under section 11-225 and to pay any amounts required to be paid pursuant to such section.

(b) To be eligible to receive payments pursuant to section 11-217, a candidate shall certify to the commission that:

(1) Such candidate and all committees authorized by such candidate shall not incur campaign expenses in excess of the expenditure limitations imposed by section 11-209;

(2) Such candidate has qualified to be on the election ballot in a primary[, special primary,] or general election;

(3) Such candidate has filed a statement of intent to seek qualifying contributions. A contribution received before the filing of a statement of intent to seek public funds shall not be considered a qualifying contribution;

(4) Such candidate or committee authorized by such candidate has received the qualifying sum of private contributions for the office sought by the candidate as set forth in section 11-219;

(5) The aggregate of contributions certified with respect to any person under paragraph (4) does not exceed $100.

(c) Each candidate and all committees authorized by [such] that candidate in receipt of qualifying campaign contributions which may be taken into account for purposes of public funding shall maintain, on a form prescribed by the commission, records which show the date and amount of each such contribution and the full name and mailing address of the person making the contribution. The candidate and all committees authorized by the candidate shall transmit to the commission all reports with respect to such contributions which the commission may require.

(d) Candidates qualified to be on the election ballot for a special election shall not be eligible to receive payments under section 11-217. This provision shall not apply to those special elections held in conjunction with primary and general elections of the applicable year."

SECTION 11. Section 11-221, Hawaii Revised Statutes, is amended to read as follows:

"11-221 Entitlement to payments. Every candidate who is eligible to receive public funds pursuant to section 11-220 is entitled to payments pursuant to section 11-217 in an amount equal to each qualifying contribution received by that candidate or candidate committee during the matching payment period involved. A qualifying contribution shall be attributed to a primary[, special] or general election.

A candidate eligible to receive public funds must obtain a minimum amount of qualifying campaign contributions as set forth in section 11-219 in order to be entitled to receive any matching public funds in an election. For the purpose of this section, a candidate must have at least one other qualified candidate as an opponent for the primary[, special,] or general election to receive public funds for that election."

SECTION 12. Section 11-222, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Each candidate in receipt of the qualifying sum of contributions established for the candidate's office may apply to the commission for public funding after the candidate has become a candidate in a primary[, special primary, special,] or general election."

SECTION 13. Section 11-223, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

"(f) Each candidate, on the deadline for filing [of] a final report for any primary[, special primary, special,] or general election, shall return all unexpended public funds to the Hawaii election campaign fund."

SECTION 14. Section 11-224, Hawaii Revised Statutes, is amended to read as follows:

"11-224 Public funds; report required; return of funds. The campaign treasurer of the candidate shall produce evidence to the commission no later than twenty days after a primary [or special primary] election; and no later than thirty days after a special or general election that all public funds paid to the candidate have been [utilized] used as required by this subpart.

Should the commission determine that any part of the public funds [have] has been used for noncampaign or improper expenses, it shall report such finding to the attorney general and shall order the candidate to return all or part of the total funds paid to that candidate for a primary[, special primary, special,] or general election. When such funds are returned, they shall be deposited in the Hawaii election campaign fund."

SECTION 15. Section 11-229, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Any person who knowingly, intentionally, or recklessly violates any provision of this subpart shall be guilty of a misdemeanor. Any person who knowingly or intentionally falsifies any report required by this part with the intent to circumvent the law or deceive the commission or who violates section 11-201 or 11-202 of this part shall be guilty of a class C felony. A person who is convicted under this section shall be disqualified from holding elective public office for a period of four years from the date of conviction."

SECTION 16. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 17. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 18. This Act shall take effect on November 6, 2002.