STAND. COM. REP. NO.1131-02

Honolulu, Hawaii

, 2002

RE: S.B. No. 2431

S.D. 2

H.D. 1




Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii


Your Committee on Judiciary and Hawaiian Affairs, to which was referred S.B. No. 2431, S.D. 2, entitled:


begs leave to report as follows:

The purpose of this bill, as received, is to strengthen the State's campaign spending laws.

Specifically, this measure:

(1) Limits aggregate campaign contributions from any person or entity to not more than $25,000, in any calendar year; provided that a contribution made to a candidate during a non-election year is counted as though made to the candidate in an election year;

(2) Prohibits banks, corporations, and labor organizations from making campaign contributions, except through a separate segregated fund established for political purposes;

(3) Repeals the existing law relating to fundraising activities;

(4) Prohibits campaign contributions from contractors for a limited time before and after the contract; and

(5) Makes the intentional falsification of campaign spending reports a class C felony.

The State of Hawaii Campaign Spending Commission, Common Cause Hawaii, and League of Women Voters of Hawaii testified in support of this measure.

Your Committee realizes that the public desires campaign spending reforms to promote equity and fairness in elections. Some members of the public believe our current system of campaign finance allows donors to exert a disproportionate influence in decisions, including the award of government contracts. Your Committee finds that this measure will restore voter confidence in the independence of elected officials.

Your Committee has amended this measure by deleting its contents and replacing it with language that:

    1. Places a cap on the aggregate amount any individual or entity is permitted to contribute to all candidates during an election cycle;
    2. Prohibits unions and corporations from giving direct campaign contributions;
    3. Prohibits campaign contributions from persons who enter into state or county government contracts;
    4. Makes knowingly and intentionally falsifying any report required by the campaign financing law with the intent to circumvent the law or deceive the Campaign Spending Commission, a class C felony;

(5) Requires that campaign contributions used to qualify for public funding be received from individual residents of the state;

(6) Deletes adoption of the code of fair campaign practices as part of the campaign spending rules from enumerated duties of the Campaign Spending Commission;

(7) Clarifies provisions on return or escheat of excess contributions.

(8) Clarifies that prohibitions on corporate or labor organization contributions to non-candidate committees apply as contributions to "separate segregated funds";

(9) Deletes a provision in section 11-204(b), Hawaii Revised Statutes (HRS), that exempts a corporation or company using funds from its own treasury from the limit on contributions to the corporation or company non-candidate committee;

(10) Corrects the unintended deletion of subsections 11-204 (f) through 11-204 (j), HRS;

(11) Provides that an individual and a general partnership in which the individual is a partner are to be treated as one person only when the individual owns at least 50 percent interest in the partnership;

(12) Amends the definition of "person" in proposed section 11-205.5(e), HRS, to allow state and county government contracts with campaign contributors who are minority partners in a partnership or minority shareholders of a corporation;

(13) Revises the wording of section 11-205.5, HRS, to direct the focus on the government agency responsible for disbursement of public funds;

(14) Increases the maximum amount of contributions permitted to be made from campaign funds to community service, educational, youth, recreational, charitable, scientific or literary organizations;

(15) Amends section 11-218(d), HRS, by deleting a reference to special elections, for consistency with amendments to other related sections;

(16) Clarifies that ineligibility to receive payments under section 11-217, HRS, for "special elections" is not intended to apply to "special elections" held in conjunction with primary and general elections; and

(17) Adds, for discussion purposes, new language based in part, on provisions of the recently enacted Bipartisan Campaign Reform Act of 2002. The new provisions:

(a) Assure that political parties and candidates who receive funds from national political parties are subject to reporting requirements and contribution limits;

(b) Clarify the nature of "election activity" and "coordinated activity" that must be reported and counted toward contribution limits; and

(c) Prohibit political parties, after the nomination of a candidate for a general election, from both contributing directly to the candidate's campaign and making independent expenditures on behalf of the candidate.

Other technical, nonsubstantive amendments were made for purposes of clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Judiciary and Hawaiian Affairs that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2431, S.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2431, S.D. 2, H.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Judiciary and Hawaiian Affairs,