OLR Bill Analysis

SB 551

Emergency Certification

AN ACT CONCERNING CLEAN ELECTIONS.

SUMMARY:

PA 05-5, October 25 Special Session (OSS) established the Citizens' Election Program (CEP) as a voluntary public campaign financing system, changed contribution limits, and banned contributions from certain contractors and lobbyists, among other things. This bill makes changes PA 05-5, OSS, including the CEP, to conform state law to the recent decision by the U. S. Court of Appeals for the Second Circuit in Green Party of Connecticut, et al. v. Garfield, et al. , 2010 U. S. App. LEXIS 14248 (2d Cir. Conn. July 13, 2010) (see BACKGROUND). It also makes other campaign-finance related changes.

Principally, the bill:

1. eliminates the reversion clause in PA 05-5, OSS, and replaces it with a severability clause;

2. eliminates the CEP's matching grant (i. e. , “trigger”) provisions under which candidates who participate in the program (participating candidates) receive additional grant money when their opponents reach certain spending thresholds or they are the target of independent expenditures promoting their defeat;

3. limits the ban on political contributions by lobbyists, their immediate family members, and political committees (known as PACs) they establish or control;

4. authorizes communicator lobbyists to give qualifying contributions (QCs) to participating candidates;

5. limits the ban on soliciting contributions by lobbyists, state contractors, and people and PACs associated with them;

6. defines “bundling” and establishes a restriction on bundling contributions;

7. increases CEP grants for participating gubernatorial candidates; and

8. requires the State Elections Enforcement Commission (SEEC) to analyze campaign spending under the CEP and report back to the Government Administration and Elections Committee biennially.

The bill retains the ban on contributions by state contractors, which the appeals court upheld.

The bill also:

1. reduces the grant participating candidates receive if they possess a specified minimum number of lawn signs from any previous primary or general election,

2. codifies the term “slate committee” for campaign finance and CEP purposes, and

3. expands the list of items and services that are not considered contributions.

Finally, the bill makes several conforming and technical changes.

EFFECTIVE DATE: Upon passage, and the provision concerning campaign contributions is applicable to primaries and elections held on or after that date.

1—SEVERABILITY

The bill repeals the CEP's reversion clause, CGS 9-717, and replaces it with a severability clause. Under the bill, if any provision of PA 05-5, OSS, including the CEP, or any amendment to it is held invalid, the remainder must be construed as separable and severable, thus allowing those portions that are held valid to remain in effect. Generally, under current law, if a court prohibits or limits the expenditure of funds from the Citizens' Election Fund (CEF), the CEP, PA 05-5, OSS, and any amendments to it become inoperative after a specified period of time, unless amended (see BACKGROUND).

CITIZENS' ELECTION PROGRAM

The bill makes changes to the CEP affecting opposition status, grants, spending limits, and matching funds. By law, participating candidates who are (1) opposed by a major party candidate are eligible for a full grant, (2) opposed by a minor party candidate are eligible for 60% of the applicable grant, or (3) unopposed are eligible for 30% of the applicable grant.

3—Determining Opposition Status

The bill establishes a date by which participating candidates are considered “opposed” for CEP purposes. Under the bill, a participating candidate is considered to have a major party opponent if, by the nominating or petition deadline set by law (1) a major party endorses a candidate, (2) a candidate from any other major party receives at least 15% of the delegate vote on a roll-call at the party convention, or (3) a candidate qualifies as a petitioning candidate for any other major party's nomination.

2—Spending Limits

The bill changes spending limits for participating candidates. For legislative and statewide office candidates, the bill eliminates independent and excess expenditure matching grants. For gubernatorial candidates only, it also increases the general election grant.

3—General Election Grants

The bill increases the general election grant amount for participating gubernatorial candidates. The primary grant remains the same ($ 1,250,000 for major party candidates; petitioning and minor party candidates are not eligible for primary grants). Table 1 shows the current and proposed general election grant amounts.

Table 1: General Election Grants for Major Party

Gubernatorial Candidates a

Grant

Current Law

The Bill

General Election Grant,

Opposed Candidate

$ 3,000,000 b

$ 6,000,000

General Election Grant,

Unopposed Candidate

900,000

1,800,000

General Election Grant,

Nominated Candidate Opposed by Minor or Petitioning Party Candidates

1,800,000

3,600,000

a To be adjusted for inflation.

b By law, applies to a nominated major party candidate who is opposed by another major party candidate or by a minor or petitioning party candidate who has received the required QCs.

By law, minor party candidates may receive a general election grant equal to the grant for a major party candidate only if the candidate for the same office representing the same minor party at the last regular election received at least 20% of the votes cast for that office. Similarly, an eligible petitioning candidate may receive a full grant for the general election only if his or her petition is signed by a number of qualified electors equal to at least 20% of the number of votes cast for the same office at the last regular election. (Both receive a one-third grant by meeting a 10% threshold or a two-thirds grant by meeting a 15% threshold. ) Table 2 shows the current and proposed grant amounts for petitioning and minor party gubernatorial candidates.

Table 2: General Election Grants for Petitioning and Minor Party

Gubernatorial Candidates a

Grant

Current Law

The Bill

General Election, Previous Minor Party Candidate Received at Least 10% of All Votes Cast for Same Office

$ 1,000,000

$ 2,000,000

General Election, Previous Minor Party Candidate Received at Least 15% of All Votes Cast for Same Office

2,000,000

4,000,000

General Election, Previous Minor Party Candidate Received at Least 20% of All Votes Cast for Same Office

3,000,000

6,000,000

a To be adjusted for inflation.

3—Lawn Sign Reductions. The bill reduces the grant participating candidates receive if they possess a specified minimum number of lawn signs from any previous primary or general election campaign. Under the bill, all participating candidates must certify in their grant application to the SEEC whether they have custody and control over a number of signs applicable to the office for which they are running. If they do, their primary or general election grant, whichever is applicable, is reduced by a certain amount. The bill specifically prohibits a reduction based on lawn signs that are not in the candidate committee's custody or control. It does not apply to any item other than lawn signs (see BACKGROUND). For each office, Table 3 provides the applicable number of lawn signs and resulting grant reduction.

Table 3: Grant Reductions Based on Lawn Signs

Office

Applicable Minimum Number of Lawn Signs

Primary or General Election Grant Reduction

Statewide office

(governor, lieutenant governor, attorney general, state comptroller, secretary of the state, state treasurer)

500

$ 2,500

State senator

100

500

State representative

50

250

2 - 6 & 15—Matching Grants

The bill repeals the CEP's independent and excess expenditure provisions, thus eliminating matching grants for these purposes. Current law authorizes participating candidates to receive additional money in the form of matching grants if their opponent exceeds certain spending limits or they are the target of independent expenditures promoting their defeat. Specifically, they may receive up to two times the applicable primary and general election grants to match independent and excess expenditures.

The bill makes conforming changes with respect to matching funds. Among other things, it removes these funds from participating candidate spending limits.

14—SEEC Study

The bill requires the SEEC to study campaign spending after each state election. Specifically, for each election cycle, it must analyze and compile the amount of:

1. grants made from the CEF,

2. expenditures reported by each participating and nonparticipating candidate,

3. money returned by each candidate to the CEF,

4. overall and average spending for each election contest for each office, and

5. independent expenditures for each election contest for each office.

By January 1, 2012 and biennially thereafter, the SEEC must report to the Government Administration and Elections Committee on its analysis and any recommendations it may have for adjusting grant amounts.

CAMPAIGN FINANCE

The bill generally (1) modifies the bans on contributions and solicitations by lobbyists, state contractors, and certain people and PACs associated with them and (2) expands the list of items and services that are not considered contributions.

7 - 9 & 11 - 12—Lobbyists

The bill specifies that for campaign finance purposes, “lobbyist,” “communicator lobbyist,” and “client lobbyist” have the same meanings as they do under the Code of Ethics for Lobbyists (see BACKGROUND).

Current law prohibits communicator lobbyists, their immediate family members, and PACs they establish or control from making or soliciting contributions to or on behalf of the following recipients: (1) exploratory or candidate committees for statewide or legislative candidates, (2) PACs these candidates establish or control, (3) legislative caucus or legislative leadership committees, or (4) party committees. It also prohibits them from soliciting purchases for advertising space in a town committee's fundraising program (ad book). It prohibits a communicator lobbyist's agents and PACs they establish or control from soliciting contributions on behalf of these entities. Finally, it prohibits communicator lobbyists and their immediate family members from giving QCs to participating candidates.

Contributions and Solicitations. For communicator lobbyists, their immediate family members, and PACs they establish or control, the bill (1) lifts the contribution ban, but establishes a $ 100 contribution limit and (2) eliminates the absolute ban on solicitations and, beginning January 1, 2011, replaces it with a restriction on intentional solicitations from certain people associated with client lobbyists that communicator lobbyists lobby (i. e. , boards of directors, owners of at least 5% interest in the lobbying entity, employees, and partners).

Thus, the bill allows lobbyists and people and PACs associated with them to contribute $ 100 or less to the above-listed recipients. It allows the same individuals and PACs, as well as communicator lobbyists' agents and PACs they establish or control, to solicit contributions or ad book purchases from any entity except a client lobbyist for which they lobby and the people associated with the client lobbyist.

Bundling. The bill establishes a restriction on contribution bundling by communicator lobbyists, their agents, and immediate family members to (1) exploratory or candidate committees for statewide or legislative candidates, (2) PACs these candidates establish or control, (3) legislative caucus or legislative leadership committees, or (4) party committees.

The bill defines "bundle" as (1) forwarding five or more contributions to a single committee by a communicator lobbyist, his or her agent, or immediate family member or (2) raising contributions for a committee at a fundraising affair, held by, sponsored by, or hosted by a communicator lobbyist, his or her agent, or immediate family member.

The penalty for bundling is the same as that under current law for unlawfully making or soliciting campaign contributions. That is, anyone who violates the bundling ban is subject to a civil fine that the SEEC imposes of up to $ 5,000 or twice the amount of the bundled contributions, whichever is greater.

Qualifying Contributions. The bill lifts the ban on QCs made by lobbyists. It thus allows communicator lobbyists and their immediate family members to give QCs of up to $ 100 to participating candidates.

Sessional Contribution Ban. Current law imposes a ban on contributions from client lobbyists when the General Assembly is in session to committees associated with candidates for statewide or legislative office. Since the bill lifts the communicator lobbyist contribution ban, it broadens the sessional ban to include all lobbyists, not only client lobbyists.

10—Contractors

Current law bans state contractors, prospective state contractors, pre-qualified contractors, and their principals from making or soliciting contributions to or on behalf of the following recipients: (1) exploratory or candidate committees for statewide or legislative candidates, (2) PACs authorized to make contributions to or spend on behalf of candidates for statewide or legislative office, or (3) party committees (see BACKGROUND). This ban is branch-specific. (For example, a contractor that does business with only the executive branch is allowed to make contributions to legislative candidates. ) However, prequalified contractors cannot contribute to any candidates for state or legislative office.

Contributions and Solicitations. For state contractors, prospective state contractors, pre-qualified contractors, and their principals, the bill (1) retains the contribution ban and (2) eliminates the absolute ban on solicitations and beginning January 1, 2011, replaces it with a restriction on intentional solicitations from their employees. For state contractors and their principals, beginning January 1, 2011 it additionally prohibits contribution solicitations from their subcontractors or the subcontractor's principals. The bill thus allows contractors and their principals to solicit contributions from any entity or person except their employees, subcontractor, or subcontractor's principals, as applicable, on behalf of the recipients listed above. As under current law, the limitations are branch-specific.

The bill defines “subcontractor” as any person, business entity, or nonprofit organization that contracts to perform part or all of the obligations of a state contractor's state contract. A subcontractor is considered such until December 31st of the year in which the subcontract terminates. Subcontractor does not include (1) a political subdivision of the state, including any entities or associations duly created by the political subdivision exclusively amongst themselves to further any purpose authorized by statute or charter or (2) an employee in the executive or legislative branch of state government or a quasi-public agency, whether in the classified or unclassified service and full- or part-time, and only in his or her capacity as a state or quasi-public agency employee.

It defines “principal of a subcontractor” in the same way the law defines principal of a contractor. With respect to a subcontractor that is a business entity, the principals are (1) members of the board of directors; (2) individuals with ownership interest of 5% or more in the business; (3) a president, treasurer, or executive vice president of the business; (4) employees with managerial or discretionary responsibilities with respect to a subcontract with a state contractor; (5) the spouse or dependent children of individuals described above; or (6) a PAC established by or on behalf of an individual described above. With respect to a subcontractor that is a non-business entity, the definition of principal is the same as above except the bill (1) excludes board members and (2) includes a chief executive officer or officer with comparable duties, rather than president, treasurer, or executive vice president.

7—Slate Committees

The bill codifies the term “slate committee” for purposes of campaign finance and the CEP as a political committee formed by at least two candidates that will serve as the sole campaign funding vehicle (1) for nomination or election to any municipal office, (2) in a primary for the office of justice of the peace, or (3) for the position of town committee member. Although the term “slate committee” is not currently used in statute, the law does govern the activities of political committees formed solely to aid or promote the success or defeat of a candidate or referendum question (commonly referred to as “slate committees. ”) (For example, CGS 9-603 dictates where campaign finance statements are filed, 9-604 addresses the formation of candidate committees, and 9-608 prescribes the distribution of surplus campaign funds. )

7 & 13—Campaign Contributions

The bill expands the list of items and services that are not considered contributions. It does this by exempting from the definition of contribution (1) the cost of donated food and drink, up to a total of $ 50, to be consumed at a single slate, party, candidate, legislative caucus, or legislative leadership committee meeting, event, or activity, other than a fundraiser; (2) the display of a lawn sign by a human being or on real property; and (3) certain de minimis campaign activities made to benefit PACs and party, slate, legislative caucus, or legislative leadership committees, including those for participating and nonparticipating candidates.

Under the bill, “de minimis campaign activity” means sending e-mails or messages, without compensation, from an individual's personal computer or cell phone.

BACKGROUND

Green Party of Connecticut v. Garfield

In a consolidated action, the U. S. Court of Appeals for the Second Circuit considered appeals from Green Party of Conn. v. Garfield, 590 F. Supp. 2d 288 (D. Conn. 2008) (“Green Party I”) and Green Party of Conn. v. Garfield, 648 F. Supp. 2d 298 (D. Conn. 2009) (“Green Party II”). On July 13, 2010, the appeals court issued two opinions, reversing in part and affirming in part, the decisions by the federal district court for the District of Connecticut in Green Party I and Green Party II.

In its first decision, the appeals court considered the district court's ruling in Green Party II. In that case, the district court declared the entire CEP unconstitutional, finding that its (1) qualification and grant distribution provisions unconstitutionally burden minor party candidates' rights to political opportunity and (2) independent and excess expenditure provisions violate the First Amendment rights of non-candidates, non-participating candidates, and their supporters (i. e. , advocacy groups). The appeals court reversed the lower court's decision concerning minor party candidates and affirmed it concerning the trigger provisions.

In its second decision, the appeals court considered the district court's ruling in Green Party I. In that case, the district court upheld the CFRA's ban on certain contributions and solicitations by communicator lobbyists, state contractors, and their immediate family members. The appeals court (1) upheld the ban on contributions by contractors, principals, and their spouses and children; (2) struck down the ban on contributions by lobbyists, their spouses and children, and PACs they establish or control; and (3) struck down, for both lobbyists and contractors, the ban on soliciting contributions.

Since it found only parts of the CFRA unconstitutional, the appeals court remanded to the district court the question of whether the unconstitutional provisions may be severed from the law under CGS 9-717, an issue the lower court had not considered. It indicated that the lower court should develop the record to determine how the statute applies to the split judgment.

The appeals court vacated the permanent injunction that the district court placed on the CEP in Green Party II. It instructed the lower court to “reconsider the scope of the injunctive relief necessary” in light of the decision and that court's resolution of the severability issue on remand.

Reversion and Severability

Under current law, if the court prohibits or limits, or continues to prohibit or limit, the expenditure of funds from the CEF for seven days or more between the 45th day before a special election scheduled to fill a General Assembly vacancy and the day after the special election (1) the CEP and (2) the remainder of PA 05-5, OSS and any amendments to it become inoperative with respect to any race subject to the court order until the day after the special election.

If the court takes these steps for 30 days or more on or after April 15 during a state election year, or, for 15 days on or after the August primary during a state election year, or if the primary occurs during a period of 15 days or more in which the court continues to prohibit or limit expenditures, after the 30- or 15-day period (1) the CEP and (2) the remainder of PA 05-5, OSS and any amendments to it become inoperative until December 31 of that year.

In the first case, the campaign finance provisions in effect before PA 05-5, OSS, become effective until the day after the special election with respect to any race in the special election subject to the court order.

In the second and third cases, campaign finance law reverts to the law in effect prior to PA 05-5, OSS until December 31 of that year. If the injunction is still in effect on April 15 of the second year succeeding the original prohibition, campaign finance law reverts to prior law without time limitation.

Lawn Sign Grant Reductions: Related Advisory Opinion

In September 2008, the SEEC adopted Advisory Opinion 2008-02 stating that (1) a candidate's prior assets, including lawn signs, must be reported as contributions pursuant to campaign finance disclosure requirements and (2) the value of these assets is an amount equal to the original purchase price. In its opinion, the SEEC noted that some assets depreciate in value over time and that some formula for depreciation may be reasonably established in the future.

Communicator and Client Lobbyists

Under the ethics code, a “lobbyist” is a person who receives, spends, or receives and spends (or agrees to receive, spend, or both) at least $ 2,000 in a calendar year in lobbying and in furtherance of lobbying. A “client lobbyist” is a lobbyist on whose behalf lobbying takes place and who makes expenditures for lobbying and in the furtherance of lobbying. A “communicator lobbyist” is an individual or business organization that communicates directly with public officials or their staff to influence legislative or administrative action.

Principals of Contractors

By law, a “principal” of business entity includes:

1. directors;

2. owners of at least 5%;

3. the president, treasurer, executive vice president;

4. managerial or discretionary employees;

5. a spouse or dependent children of any of the above;

6. a PAC established or controlled by any of the above, including spouses and dependent children; or

7. a PAC established or controlled by the business entity.

A “principal” of a nonprofit organization includes:

1. the chief executive officer or officer with comparable duties;

2. employees performing managerial or discretionary duties with respect to the contract negotiation;

3. the spouse or dependent children of any of the above;

4. a PAC established or controlled by any of the above, including spouses and dependent children; or

5. a PAC established or controlled by the nonprofit organization.

Nonprofit board members are not considered principals.