Topic:
CAMPAIGN FINANCE; ELECTIONS (GENERAL); GOVERNMENT PURCHASING; GRANTS; LEGISLATION; LOBBYING; POLITICAL COMMITTEES; STATE BOARDS AND COMMISSIONS;
Location:
CAMPAIGNS - FINANCE; ELECTIONS;

OLR Research Report


April 15, 2008

 

2008-R-0269

ANALYSIS OF SHB 5505, AN ACT CONCERNING THE CITIZENS' ELECTION PROGRAM, AS AMENDED BY HOUSE “A”

By: Kristin Sullivan, Associate Analyst

You asked for a summary of sHB 5505, An Act Concerning the Citizens' Election Program, as amended by House “A.”

SUMMARY

This bill, which Governor Rell signed on April 7, 2008, changes state election laws addressing the State Elections Enforcement Commission (SEEC), campaign finance, and the Citizens' Election Program. Specifically, it expands the SEEC's authority by allowing it to issue cease and desist orders for violations of statutes and regulations under its jurisdiction and order improper campaign contributions remitted to the Citizens' Election Fund (CEF), among other things.

Concerning campaign finance laws, the bill makes changes to the registration forms for political committees (known as PACs) and expands the law granting individuals the right to incur legal expenses to contest or maintain the results of an election. It subjects party candidate listings to the attribution law and repeals a requirement for certain mailings to bear a photograph of the candidate for office.

The bill exempts from the contractor contribution and solicitation ban all principals of state and prospective state contractors who are elected officials. It makes minor and technical changes to that ban and the similar ban affecting lobbyists. It also transfers from the SEEC to the State Contracting Standards Board (SCSB), the responsibility for studying subcontracts for state contracts.

With respect to the Citizens' Election Program, the bill establishes grant application deadlines and a corresponding schedule for payments from the CEF. It revises the process for reporting excess receipts and expenditures and receiving and spending supplemental grant money. The bill eliminates the requirement that supplemental grant money remain in escrow until the excess spending of an opposing candidate reaches specified thresholds. Instead, it allows a participating candidate to incur an obligation to make additional expenditures once the SEEC determines that he or she is entitled to this additional money. The bill also requires individuals who give qualifying contributions of over $50 to certify the name of their employer.

The bill extends the definitions of terms under state election law to the Citizens' Election Program. These terms include major party, minor party, primary, municipal office, and state office.

The bill makes several technical and conforming changes. It also eliminates obsolete provisions. Specifically, it eliminates references to the secretary of the state as the filing repository for campaign finance reports and replaces her with the SEEC, thus codifying current practice. It similarly eliminates a provision requiring the secretary of the state to submit to the SEEC a biennial PAC registration report since, by law, these committees register with commission. It eliminates a provision concerning a primary for delegates to a U. S. senatorial or congressional district convention, which no longer exists. Finally, the bill eliminates references to penalties for lobbyists who fail to file campaign finance reports since they are no longer required to file with the SEEC because the law prohibits them from contributing to most committees.

With one exception, the bill took effect on April 7, 2008, the date the governor signed it. The exception is for the provision limiting the sessional ban on contributions from lobbyists to contributions from client lobbyists, which is effective October 1, 2008.

SEEC'S POWERS AND DUTIES

The bill authorizes the SEEC to:

1. issue cease and desist orders and act to compel compliance with any law or regulation under its jurisdiction;

2. order any improper campaign finance contribution remitted to the CEF;

3. issue an order, after providing an opportunity for a hearing, upon a finding that there has been an intentional violation of the Citizens' Election Program;

4. attempt to secure voluntary compliance, by informal methods, with the Citizens' Election Program; and

5. refer evidence of Citizens' Election Program violations to the chief state's attorney.

The bill also specifies that the commission may conduct inspections or audits concerning candidates who participate in the Citizens' Election Program. Absent a complaint, the law restricts when and for how long the commission may audit a candidate who is currently seeking election and ran in the previous election.

Finally, the bill allows the SEEC to ask Hartford Superior Court to order compliance with an SEEC order concerning the Citizens' Election Program. It gives Hartford Superior Court the authority to order compliance with an SEEC order concerning the program.

CAMPAIGN FINANCE

PAC Registration

By law, a PAC must register with the SEEC within 10 days after its date of organization (that is, the date when it first solicits or receives contributions or funds, or makes or incurs expenditures, whichever is earlier). The bill changes the name of the form PACs must submit from “statement of organization” to “registration statement,” thus codifying current practice.

In addition, the bill gives the SEEC broader authority regarding the registration statements' contents. It authorizes the SEEC to require PACs to furnish any information the commission needs to facilitate compliance with campaign finance laws or the Citizens' Election Program.

Legal Expenses

By law, a person who exercises his or her right to incur legal expenses to contest or maintain the results of an election does so without violating campaign finance laws. The bill extends the same protection against violations to primaries and to individuals under the Citizens' Election Program. The bill specifies that only contributions from eligible sources may pay for a candidate's legal expenses. This means that candidates who participate in the Citizens' Election Program (participating candidates) may use only contributions from individuals. Candidates who do not participate in the program (nonparticipating candidates) may use contributions from individuals, most PACs, and state and prospective state contractors that do not have a state contract or state contract solicitation with the branch of government in which they are seeking office.

Campaign Finance Statements

The law requires each campaign treasurer of a committee, other than a state central committee, to file a campaign finance statement with the SEEC according to a specified schedule. The bill conforms the schedule for PACs and party committees that receive or spend $1,000 or less in a calendar year to such committees that receive or spend more than $1,000 in a year. It requires those that receive or spend $1,000 or less to file campaign finance statements on the tenth calendar day, rather than the second Thursday, in January. By law, committees that receive or spend more than $1,000 file on the tenth calendar days in January, April, July, and October, and both types of committees file on the seventh day preceding an election.

When a treasurer files a campaign finance statement, the statement must include, among other things, information about individuals who have contributed over $1,000 to the committee in the aggregate. The bill repeals the requirement that these individuals disclose whether they or their associated businesses have a state contract valued at more than $5,000. (By law, individuals who contribute over $50 to most candidates and committees must already certify that they are not a principal of a state or prospective state contractor or a communicator lobbyist or such a lobbyist's immediate family member.)

Attribution Requirement

By law, political communications paid for by people or committees cooperating with, in consultation with, or acting at the request of a candidate or his or her agent or committee to promote or defeat a candidate must include an attribution.

The bill expands the attribution law. It subjects party candidate listings to the attribution requirement for written communications, including those that are web-based. It does not cover party candidate listings for television, radio, or Internet video or audio advertising. Under

prior law, a party candidate listing, like other organization expenditures, was not considered a campaign finance expenditure and thus was not subject to the attribution law.

The bill also narrows the attribution law. It eliminates the requirement that mailings promoting the success or defeat of a candidate include (1) a photograph of the candidate who conducts the mailing and (2) the name of the candidate conducting the mailing in the same size font as the mailing's narrative.

Lobbyists

The law imposes a complete ban on contributions from communicator lobbyists, their immediate family members, and PACs they establish or control to (1) exploratory or candidate committees for statewide or legislative office candidates, (2) PACs these candidates establish or control, (3) legislative caucus or legislative leadership committees, or (4) party committees. It also imposes a ban on contributions from client and communicator lobbyists when the General Assembly is in session to committees associated with candidates for statewide or legislative office.

Since the former provision supersedes the latter with respect to communicator lobbyists, the bill limits the sessional ban to client lobbyists. The bill also eliminates references to PACs established “on behalf of” lobbyists.

The bill makes a technical correction by reinserting a provision that was inadvertently omitted from PA 06-137. The provision bans communicator lobbyists from soliciting the purchase of advertising space in a fundraising program sponsored by a town committee.

State and Prospective State Contractors

The law imposes a ban on political contributions from state and prospective state contractors, pre-qualified contractors, and their principals that is similar to the one it imposes on lobbyists except that the prohibition on giving and receiving contributions between contractors and candidates applies when the contractor has a contract with the branch of government in which the candidate is seeking office, other than the judicial branch.

Both bans create an exception for candidates for public office. The bill makes a technical change, conforming the contractor ban to the lobbyist ban with respect to candidates for public office. It further exempts from the contractor ban all principals of state and prospective state contractors who are elected officials. (By law, “principals” include the spouses and dependent children of individuals covered by the ban.) Since lobbyists are prohibited from holding state public office, the lobbyist ban exempts only the immediate family members who are elected officials, not the lobbyist himself or herself.

In addition, the bill specifies that the contractor contribution and solicitation ban applies to state and prospective state contractors with state contracts or state contract solicitations, not only to those with state contract solicitations. By law, “state contract” means an agreement or contract with the state or any state or quasi-public agency, let through the procurement process or otherwise, with a value of $50,000 or more, or a combination of contracts with a value of $100,000 or more in a calendar year for (1) the rendition of services; (2) the furnishing of goods, supplies, or items of any kind; (3) the construction, alteration, or repair or any public building or public work; (4) the acquisition, sale, or lease of any land or building; (5) a licensing agreement; or (6) a grant, loan, or loan guarantee. “State contract solicitation" means a request by a state agency or quasi-public agency, in whatever form issued, including an invitation to bid; request for proposals; request for information or quotes; or inviting bids, quotes, or other types of submittals. The definition includes requests made within or outside the competitive procurement process as authorized by law.

Lastly, the bill transfers, from the SEEC to the SCSB, the responsibility for studying subcontracts for state contracts. Under the bill, the SCSB must submit proposed legislation to the Government Administration and Elections Committee by February 1, 2010 with recommendations for extending the provisions of state contractor contribution and solicitation ban to subcontractors. Under prior law, the SEEC was required to do so by February 1, 2009. PA 07-1, September Special Session, established the SCSB effective January 1, 2009.

CITIZENS' ELECTION PROGRAM

Qualifying Contributions

The bill gives campaign treasurers the option of returning to the contributor or transmitting to the SEEC contributions that are not valid qualifying contributions. It requires the SEEC to deposit in the CEF any contribution it receives in this manner. The bill does not specify when either option must be chosen. Under prior law, campaign treasurers had to return contributions that did not qualify under the Citizens' Election Program to their contributors. The bill specifies that a contribution of less than $5 is not a valid qualifying contribution.

By law, individuals who contribute more than $50 to a participating candidate must include a certification with their qualifying contribution. The bill requires these individuals to include in the certification the name of their employer. They must already certify that they are not a communicator lobbyist, immediate family member of such a lobbyist, or a principal of a state or prospective state contractor.

The bill also directs these individuals to follow the same procedures as individuals follow when they contribute to nonparticipating candidates under CGS 9-608(c)(3). But since this section of the statute outlines procedures for the SEEC and campaign treasurers to follow, the bill's intent is unclear.

Grants from the Citizens' Election Fund

Application Deadline and Payment Schedule. The bill establishes grant application deadlines and a corresponding payment schedule; however, it has no effect on when candidates are initially authorized to apply for a grant.

For a primary or general election, participating candidates submit grant applications by (1) 5: 00 p. m. on the third Thursday in May of the year in which they are seeking nomination at a primary or election or (2) by 5: 00 p. m. on a subsequent Thursday. The SEEC may not accept applications later than 5: 00 p. m. on or after the fourth to last Friday before the primary or election.

Within four business days following Thursday or Friday submissions (i.e., by the following Wednesday or Thursday), the SEEC must review the applications it has received and determine whether to approve or reject each one. In the event of a national, regional, or local emergency or disaster, the SEEC must make this determination “as soon thereafter as is practicable.” The bill requires the SEEC to disburse the funds by the 12th business day before the primary or election.

During state election years, the bill requires the SEEC to meet two times a week from the third week of June until the third week of July to review any pending applications.

For special elections, participating candidates must submit applications to the SEEC by 5:00 p.m. on the 10th business day preceding the special election. Within three business days following the deadline, the SEEC must review the applications it has received and determine whether to approve or reject each one. In the event of a national, regional, or local emergency or disaster, the SEEC must make this determination as soon thereafter as is practicable. The bill requires the SEEC to disburse the funds by the seventh business day before the special election.

The SEEC must publish its meeting and application review schedules on its website and on the secretary of the state's website.

Prior law did not specify application deadlines. It required the SEEC to review each application and, within three business days of receiving one, determine whether a candidate qualified for a grant.

The law, unchanged by the bill, requires the SEEC to determine the amount of funds for which a candidate is eligible and inform the comptroller and the candidate of the amount. The comptroller then has two business days to notify the state treasurer and issue the check.

Written Certifications and Cumulative Itemized Accounting. By law, the candidate and campaign treasurer must sign the grant application. The application must include certain written certifications and a cumulative itemized accounting of campaign finances.

The bill expands one of the certifications by requiring campaign treasurers to attest that they will comply with all state campaign finance laws, not only the Citizens' Election Program. It also requires treasurers to certify that they will maintain and furnish all records required under any campaign finance law, the Citizens' Election Program, or related regulation.

In addition, the bill requires the cumulative itemized accounting to show expenditures as of three days before the applicable application deadline, rather than the date when the application is signed. By law, the treasurer signs the accounting under penalty of false statement.

Ballot Status. If the SEEC cannot conclude whether a candidate who applies for a grant from the CEF qualifies for the applicable full grant because the secretary of the state has not determined a candidate's “ballot status” (undefined by the bill), the commission must approve the “lesser applicable partial initial grant” (also undefined by the bill). Presumably, “ballot status” indicates whether a candidate (1) qualifies for access to the ballot, (2) will run in a primary campaign, and (3) will run opposed or unopposed in the general election. To determine a participating candidate's grant amount, whether full or “lesser applicable partial initial grant,” the SEEC must receive this information from the secretary.

If a candidates receives a “lesser applicable partial initial grant,” the bill directs the SEEC to authorize payment for the remaining portion of the applicable grant after receiving knowledge of the ballot status of the opposing candidates in the primary or general election.

Excess Expenditures and Supplemental Grants

By law, participating candidates are entitled to additional money from the CEF if their opponents exceed certain spending limits; that is, if they make excess expenditures. The bill revises the procedure for reporting excess expenditures, establishes the same one for reporting excess contributions, and changes the process for receiving and spending supplemental grant money.

Reporting. Under prior law, if a candidate in a primary or general election campaign with at least one participating candidate made or became obligated to make an expenditure exceeding 90% of the applicable grant for that campaign, his or her campaign treasurer had to file a supplemental campaign finance statement with the SEEC within 48 hours of doing so. After filing the initial supplemental statement, the candidate and opposing candidate or candidates had to file weekly supplemental statements according to a specified schedule.

Under the bill, if a candidate in a primary or general election campaign with at least one participating candidate receives contributions, loans, or other funds or makes or obligates to make an expenditure, that in the aggregate exceeds 90% of the applicable spending limit for the primary or general election period, his or her campaign treasurer must file a supplemental campaign finance statement with the SEEC.

If a candidate receives such funds or makes or obligates to make such an expenditure more than 20 days before the primary or general election, his or her treasurer must file an initial supplemental campaign finance disclosure statement with the commission within 48 hours doing so. If a candidate receives such funds or makes or obligates to make such an expenditure 20 days or less before the primary or election, the treasurer must file the initial supplemental campaign finance disclosure statement with the commission within 24 hours.

The bill eliminates the requirement for candidates who make or obligate to make an excess expenditure within the above timeframes to file a declaration of excess expenditures by the above deadlines.

Thereafter, the campaign treasurer filing the initial supplemental statement and the campaign treasurers for all opposing candidates must file periodic supplemental campaign finance statements. If the applicable primary or general election is more than five weeks away, they must file periodic statements every other Thursday, beginning with the second Thursday after the filing of the initial statement. If it is five weeks or less away, they file according to the schedule current law sets out, except, in the case of a general election, they must continue to file until the Thursday after, rather than before, the election.

The bill additionally requires the campaign treasurer of a candidate in a primary or general election campaign with at least one participating candidate to file a declaration of excess receipts or expenditures statement when the candidate committee receives contributions, loans, or other funds, or makes or obligates to make, an expenditure that in the aggregate exceeds 100% of the applicable spending limit. The treasurer must do the same if the candidate has receipts or expenditures that, in the aggregate, exceed 125%, 150%, or 175% of the applicable spending limit for the primary or general election.

Finally, the bill expands the mandatory contents of supplemental statements. It requires these statements to disclose, as of the day before the filing deadline, campaign contributions, loans, and other funds received, not only expenditures made or obligated during the primary or general election campaign, whichever is applicable.

Threshold. The bill redefines “excess expenditure” as an expenditure made or obligated to be made by a nonparticipating or participating candidate who is opposed by at least one participating candidate in a primary or general election that exceeds the applicable spending limit for the participating candidate and that is the sum of (1) the qualifying contributions the participating candidate must receive and (2) 100% of the applicable full grant for a major party candidate for the primary or general election. Under prior law, the term meant expenditures made or obligated in excess of the applicable spending limit.

Processing Payments. The bill changes the administrative procedure for processing payments to candidates whose opponents make excess expenditures. Under prior law, the SEEC had to notify each participating candidate, in addition to the state comptroller, when it determined that a nonparticipating candidate made or became obligated to make an expenditure exceeding 90% of the applicable grant. The SEEC had to direct the comptroller to hold the funds in escrow until it determined that the nonparticipating candidate made or became obligated to make an expenditure exceeding 100% of the grant. Within two business days of making that determination, the SEEC had to process a voucher payment using the comptroller's accounting system. Within three business days of receiving the authorized voucher, the comptroller had to draw an order on the state treasurer to electronically transfer the payment into each participating candidate's account. The same process occurred when a nonparticipating candidate made or obligated to make an expenditure exceeding 115%, 140%, and 165% of the applicable grant.

Under the bill, if the SEEC determines that a nonparticipating candidate has received contributions, loans, or other funds, or has made or become obligated to make expenditures, that in the aggregate exceed 100% of the applicable spending limit for the primary or general election, it must process a voucher payment for each opposing participating candidate. By law, the commission has two business days to do so and within three business days of receiving the authorized voucher, the comptroller must draw an order on the state treasurer to electronically transfer the payment into each participating candidate's account.

The bill authorizes a participating candidate to receive a supplemental grant of 25% of the applicable primary or general election grant, provided he or she has not made expenditures exceeding the sum of (1) the applicable qualifying contributions and (2) 100% of the applicable full grant for the primary or general election. Once the SEEC determines that a participating candidate is entitled to this additional money, the candidate committee may incur an obligation to make additional expenditures up to the amount of the approved supplemental grant. The same process occurs when the SEEC determines that a nonparticipating candidate has received contributions, loans, or other funds, or has made or obligated to make expenditures, that in the aggregate exceed 125%, 150%, and 175% of the applicable spending limit for the primary or general election campaign.

The bill makes a similar change to the way payments are processed when a participating candidate who is opposed by at least one other participating candidate exceeds the applicable spending limit. The bill directs the SEEC to process a voucher payment using comptroller's accounting system if it determines that a participating candidate has made or obligated to make an expenditure exceeding the sum of the required qualifying contributions and the applicable grant. The voucher payment must equal the excess expenditure. By law, the commission has two business days to do so and within three business days of receiving the authorized voucher, the comptroller must draw an order on the state treasurer to electronically transfer the payment into every other participating candidate's account.

Once the SEEC determines that a participating candidate is entitled to additional money in the form of a supplemental grant because another participating opponent exceeded the spending limit, the candidate committee may incur an obligation to make additional expenditures up to the amount of the approved supplemental grant.

By law, the maximum aggregate amount that a participating candidate can receive to match an opponent's excess spending is (1) an amount equal to the total excess spending or (2) an amount equal to the original grant, whichever is less.

Notices Within 96 hours of a Primary or an Election. Under the bill, if, during the 96-hour period beginning at 5 p. m. on the Thursday preceding a primary or an election, the SEEC receives a notice from a participating candidate that his or her opponent has received contributions, loans, or other funds, or made or obligated to make expenditures, exceeding 100%, 125%, 150%, or 175% of the applicable spending limit for the primary or general election campaign that are not yet reported, it must immediately review the notice. The SEEC must notify the comptroller, who must process the voucher using her accounting system. The amount of the supplemental grant is equal to 25% of the applicable grant for the primary or general election campaign.

Once the SEEC determines that a participating candidate is entitled to this additional money, the candidate committee may incur an obligation to make additional expenditures up to the amount of the approved supplemental grant.

Under prior law, if the SEEC received a notice during the 96-hour period from a participating candidate that his or her opponent had made or became obligated to make an excess expenditure that was not yet reported, it had to immediately review the notice. The SEEC then had to notify the comptroller and direct her to pay the qualified candidate committee, or a person the candidate's treasurer chose, an amount equal to the estimated or confirmed excess expenditures.

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