Government Administration and Elections Committee

JOINT FAVORABLE REPORT

Bill No.:

SB-5

Title:

AN ACT CONCERNING CHANGES TO CAMPAIGN FINANCE LAWS AND OTHER ELECTION LAWS.

Vote Date:

4/5/2013

Vote Action:

Joint Favorable

PH Date:

3/25/2013

File No.:

SPONSORS OF BILL:

This bill was introduced by the Government Administration and Elections Committee based on a proposed bill by Sen. Williams, 29th Dist.

Co-Sponsors:

Sen. Williams, 29th, Dist.

REASONS FOR BILL:

This bill would increase the campaign safeguards on independent expenditures and organizations making independent expenditures by tightening contribution disclosure laws and filing requirements for independent expenditure disclosure. This bill makes further changes to campaign finance laws, increasing contribution limits to state party, town, and leadership committees, streamlining filing requirements, and making technical changes to campaign finance laws, specifically regarding the Citizens Election Program (CEP). The bill will address nominating and absentee voting procedures.

RESPONSE FROM ADMINISTRATION/AGENCY:

Michael Brandi, Executive Director and General Counsel, State Elections Enforcement Commission

Michael Brandi, Executive Director and General Counsel of the State Elections Enforcement Commission (SEEC) testified in support of this bill because “meaningful disclosure hold[s] candidates and corporations accountable for their positions and for their supporters, [and] timely disclosure is also necessary to prevent corruption and its appearance and to allow regulatory agencies to enforce the law.” The voting public needs to be able to identify the speaker (or source) of a certain message in order to evaluate it. Connecticut Citizens have a right to know and individuals or organizations should not be able to create “sham entities” to hide their support. Furthermore, while the Supreme Court decision in Citizens United v. Federal Election Commission (2010) opened “up the floodgate to allow corporations and unions” to directly make independent expenditures, the Court also reinforced the importance of disclosure of the source of these funds, a concept that has been continually upheld in courts across the country. Many of the provisions in this bill continue to improve on this state's independent expenditure disclosure law. “The proposed provisions are crucial to peel back the layers and to provide Connecticut voters with information about the actual sources” of donations. SEEC strongly supports this bill, and believes that the penalties for violations should not be equal across the board, but scaled to the seriousness of the violation.

(Michael Brandi, GAE Public Hearing, March 11, 2013)

NATURE AND SOURCES OF SUPPORT:

Senator Donald Williams, 29th Dist., Senate President Pro Tempore

Senator Donald Williams, 29th, Dist., President Pro Tempore of the Senate, testified in support of this bill because “the public deserves to know who is trying to influence their votes.” The aftermath of the Citizens United (2010) decision has led to an “explosion” of special interest money. The great amount of money and the lack of transparency coupled with the negative tone of the advertising, “strikes a blow at the integrity of our electoral system, and it also continues to erode the publics' enthusiasm for our elections (sic)” This bill increases disclosure and adds more transparency to our campaign finance system. It also promotes a more even playing field by increasing the ability of party committees and political caucuses to assist campaigns. Two provisions of this bill in an earlier draft vetoed by the Governor were problematic; first, the overseas military voting provision has been removed. Second, the most controversial provision of last year's bill, the requirement that any incorporated entity with a board of governance must gain approval before making campaign expenditures over $4,000 has been modified to clarify that newspapers hosting debates, and other events of a similar nature referenced in the Governor's veto message are not covered by this requirement. Finally, as the implications of the current legal interpretation enable unlimited special interest expenditures, it is crucial that the flow of this money is fully disclosed.

(Donald Williams, GAE Public Hearing, March 25, 2013)

Christine Horrigan, Government Director, League of Women Voters of Connecticut

Christine Horrigan, Government Director for the League of Women Voters of Connecticut submitted testimony in support of this bill because “democratic government depends upon the informed and active participations of its citizens and that the right to vote with confidence in the election process with adequate information with which to make informed decisions must be guaranteed to all.” Among other things, this bill clarifies that “entity” includes both for-profit and not-for-profit corporations and requires disclosure of sources for contributions for campaign related activities. The League supports expansion of so called “stand by your ad” provisions to require identification of an entity and direction to a complete web list of donors. However, the League is also concerned by the provisions doubling contribution limits to state central committees, town committees, legislative caucuses, and leadership committees in this legislation, and opposes them because they will augment the importance of wealthy contributors “at the expense of more numerous but smaller donors and create opportunities for undue influence.”

(Christine Horrigan, GAE Public Hearing, March 25, 2013)

Tom Swan, Executive Director, Connecticut Citizen Action Group

Tom Swan, Executive Director of the Connecticut Citizen Action Group (CCAG) submitted testimony in support of this bill because independent expenditures in 2012 “undermined our democracy and we need to act to ensure that secret outside money does not purchase elections”. CCAG thinks several additional safeguards are necessary, including increased penalties for noncompliance up to 300% of expenditures and possible criminal prosecution, immediate disclosure of campaign spending by corporations and other entities, including all sources of funds for campaign spending that does not allow front groups to hide their sources. Additionally, 501 (c) 3 organizations should be exempt because they cannot engage in partisan activities. Finally, there should be a clearer definition for what is considered an expenditure.

(Tom Swan, GAE Public Hearing, March 25, 2013)

Karen Hobert Flynn, Senior Vice President for Strategy and Programs, Common Cause

Karen Hobert Flynn, Senior Vice President for Strategy and Programs at Common Cause, submitted testimony in support of this bill because it is “a very good start to strengthening our disclosure laws.” It is essential to have prompt public disclosure of campaign-related spending by corporations and other covered organizations. However, this bill could be improved in the following ways. Firstly, by exempting 501 (c) 3 organizations from the independent expenditure and electioneering communication disclosure, because “they are charitable and educational organizations are only allowed (sic) to undertake limiting lobbying activities and no political campaign activity at all.” Secondly, the definition of “covered transfer” is under-inclusive and will likely be ineffective. This definition should include corporations, labor organizations, section 501 (c) groups and section 527 group. The definition of a “covered transfer” should also be limited to payments by “covered organizations.” Thirdly, this bill does not “clearly and explicitly define electioneering communications as part of a category of communications that needs to be disclosed in this bill.” This is different from the requirements of most states and the federal government and leads to confusion and poorer grades on surveys of disclosure laws. Fourth, groups making independent expenditures out of a segregated account only are required to disclose donations made to the account in the election year. Fifth, penalties are too weak; they should be 300% of the amount of the expenditure. Sixth, Shareholder protections are necessary to require that corporate political spending by reported. Seventh, coordination rules need to be tightened to ensure that independent expenditures remain truly independent. Regardless, the “disclosure provisions in this bill are exceptionally strong and important.”

(Karen Hobert Flynn, GAE Public Hearing, March 25, 2013)

Lori Pelletier, Secretary-Treasurer, Connecticut AFLCIO

Lori Pelletier, Secretary-Treasurer of the Connecticut AFLCIO submitted testimony in conditional support of this bill with the following concerns: “Some of the reporting requirements for local unions who send small amounts of voluntary contributions” to their national unions are onerous. AFLCIO supports transparency, but would like to see it implemented without putting local unions with volunteer treasurers at risk.

(Lori Pelletier, GAE Public Hearing, March 25, 2013)

Paul Filson, Director, Service Employees International Union Connecticut State Council

Paul Filson, Director of the Service Employees International Union (SEIU) Connecticut State Council, submitted testimony in support of this bill because it would correct some “of the extreme flaws” in the transparency of elections. Independent expenditures threaten workers and the good political work of unions to protect them by allowing individual persons or groups to dominate the debate through their wealth. While the Citizens United (2010) decision included unions, union expenses on politics have always been transparent, because their donations and sources of funds have always been reported. However, now corporations and groups have the same abilities, but without the ground level transparency that unions have. Connecticut's leadership on this issue is necessary and welcome, and SEIU is prepared to comply with the new regulations.

(Paul Filson, GAE Public Hearing, March 25, 2013)

Karen Schuessler, Director, Citizens for Economic Opportunity

Karen Schuessler, Director of Citizens for Economic Opportunity (CEO) testified in support of this bill because “the electorate needs to know who is paying for political advertising before an election so voters can make better informed decisions when they vote.” Special interest groups spending large amounts of money on elections are in a better position to threaten politicians who do not vote the way they wish, and disclosure of these expenditures will help protect people and inform the public. Disclosure has been the “bedrock of our political system for many years.” Transparency is important to “help ensure that the balance of power is not shifted to the rich and powerful.” This bill is a “giant step in the right direction by providing more transparency”.

(Karen Schuessler, GAE Public Hearing, March 25, 2013)

Alexander Taubes, Student, Yale University School of Law, Common Cause in Connecticut

Alexander Taubes, Law Student at Yale University's Legislative Advocacy Clinic representing Common Cause in Connecticut testified in support of this bill because it would provide key legal updates to strengthen disclosure law. This bill would; require disclosure of all donors funding independent expenditures, including disclosure of donors behind transfers between organizations making independent expenditures, thereby closing an important loophole that enables donors to give anonymously. Additionally, this bill strengthens Connecticut's requirements for disclosure of independent expenditures directly before an election and improves disclaimers in independent expenditure advertisements. More effective disclosures and disclaimer laws are essential to preserving the Citizens Election Program, which enables many candidates to mount a serious campaign who would not otherwise be able to. Independent expenditures would allow candidates with public financing to benefit from outside money while still remaining within public financing limits. This bill would help disclose such relationships, prevent coordination, and help keep candidates free from special interest conflicts. Furthermore, the Citizens United (2010) decision indicated that courts will uphold comprehensive disclosure laws “as a constitutional means of empowering Connecticut voters to make informed political choices.” Finally, requiring disclosure of individual donors behind independent expenditures is constituent with precedent set by the U.S. Supreme Court. “This bill is a necessary and constitutional measure that will help protect the integrity of Connecticut elections.”

(Alexander Taubes, GAE Public Hearing, March 25, 2013)

Aaron Goldzimer, Student, Yale University School of Law

Aaron Goldzimer, Student at the Yale University School of Law, testified in support of this bill because it will “strengthen our democracy.” However, there are several weaknesses or opportunities for strengthening in the current bill. First, the bill does not increase the fines in current law, which should be at least 200% of the expenditures involved, in order to provide incentives for compliance. Second, the bill appears to only require disclosure of donors “behind one level of intermediaries – and might be evaded by moving funds through two front groups.” Finally, this bill addresses concerns about “chilling” of free speech by preventing disclosures of membership lists to allow nonpolitical donors to contribute to an organization anonymously. While special interests are allowed to speak, their identity and interest should be disclosed.

(Aaron Goldzimer, GAE Public Hearing, March 25, 2013)

Matthew Zagaja, Attorney and campaign worker

Matthew Zagaja, an attorney and campaign worker, testified in support of this bill because “disclosure is an important mechanism for assessing credibility”, and “disclosure will reduce negative campaign ads”. Voters today have to wade through a huge amount of political information to make an informed decision. Disclosure allows voters to know the source of information and make an informed assessment about the information. In addition, today's campaigns are often cited as being too negative, yet remain negative despite many complaints and “universal” discomfort with the negativity. Campaign professionals are still under the opinion that this negative adds work despite evidence to the contrary. Anonymity supports an environment of negativity, and disclosure would prevent that. Finally, disclosure provides important information to the public, as it exposes potential links or common interests between organizations or interest groups and political candidates.

(Matthew Zagaja, GAE Public Hearing, March 25, 2013)

Luther Weeks, Executive Director, CTVotersCount

Luther Weeks, Executive Director of CTVotersCount, testified in support of this bill because “more transparency of this nature is good for democracy.” “It is insufficient to know that something is a paid advertisement. It is insufficient to know the chosen name of a front group, which may leave an impression completely divorced from the actual source.” This bill would create more transparency, which contributes to good government that works for everyone.

[NOTE FROM THE CLERK: Mr. Weeks' testimony on this bill is erroneously labeled as S.B. No. 4 on his coversheet. His testimony on the bill, on page 3 of the linked document, is correctly labeled.]

(Luther Weeks, GAE Public Hearing, March 25, 2013)

Doug Sutherland, Trumbull

Doug Sutherland, of Trumbull, submitted testimony in support of this bill because, while the state and the people of the state do not have the power to reverse the Citizens United (2010) decision, “what we can do is bring greater transparency to our elections so that We the People can know who is trying to influence our election process and our elected officials.” Stronger rules are necessary to make sure that independent disclosures remain independent and ensure disclosures. Reporting requirements need to be clearer so that indeviduals can know how much was spent by whom for what purpose. Finally, this bill should only contain campaign finance disclosure rules- other provisions regarding the funding an operation of the CEP should be reserved for other bills so that this bill will be less vulnerable to opposition.

(Doug Sutherland, GAE Public Hearing, March 25, 2013)

NATURE AND SOURCES OF OPPOSITION:

Anthony Rescigno, President, Greater New Haven Chamber of Commerce

Anthony Rescigno, President of the Greater New Haven Chamber of Commerce (GNHCC), submitted testimony in opposition to section 8 of this bill because it would require organizations like (GNHCC) to disclose their membership lists and dues payments of organizations making political contributions. Information about dues payments and membership lists is proprietary and should remain confidential. “Furthermore, membership and dues dollars must be distinguished from donations.” Membership payments indicate interest in the organization and not necessarily support for a particular cause, and should be kept separate. Finally, GNHCC has concerns with the shortened reporting timetable, which will make compliance very difficult.

(Anthony Rescigno, GAE Public Hearing, March 25, 2013)

Lynn G. Ward, President and CEO, Waterbury Regional Chamber

Lynn G. Ward, President and CEO of the Waterbury Regional Chamber submitted testimony in opposition to this bill because the modifications to expenditure laws in this bill would “limit ancillary groups, such as local libraries or newly-formed interest groups that may be included in an organization's communications.” This change may greatly impact the operations of these organizations. Furthermore, the Waterbury Regional Chamber is opposed to provisions forcing the disclosure of dues payments or membership lists. In addition to these lists being proprietary information, requiring disclosure could set a dangerous precedent for other organizations. Dues payments are unrelated to campaign expenditures and should not be treated as such.

(Lynn Ward, GAE Public Hearing, March 25, 2013)

Andy Schatz, President, American Civil Liberties Union of Connecticut

Andy Schatz, President of the American Civil Liberties Union (ACLU) of Connecticut testified in opposition to this bill because it “would infringe on the First Amendment rights of free speech and freedom of association, limit debate and discussion of public policy and pose significant threats to non-profit advocacy organizations and their donors whose activities are not in involved in election campaigns but issue advocacy.” This bill would deter pure issue advocacy, and threaten donors who contribute to organizations because of causes the believe in that are not political, as issue advocacy organizations would be required to disclose their donors as a result of political activities of the organization unrelated to their donation. This could suppress public participation in issue advocacy and have a chilling effect on free speech.

(Andy Schatz, GAE Public Hearing, March 25, 2013)

Christine Horrigan, Government Director, League of Women Voters of Connecticut

See testimony of Christine Horrigan in partial opposition to the provisions regarding donations to party, town and leadership committees in Nature and Sources of Support above.

Cyndi Zoldy, Executive Director, Smaller Manufacturers' Association of Connecticut

Cyndi Zoldy, Executive Director of the Smaller Manufacturers' Association (SMA) of Connecticut submitted testimony in opposition to section 8 of this act, because it would impact all membership organizations, not just political organizations. Organizations like work hard to advocate for issues important to their members, and all members should not be penalized by having their names disclosed. This bill is dangerous because it could lead to more disclosures requirements of this nature.

(Cyndi Zoldy, GAE Public Hearing, March 25, 2013)

Tom Mongellow and Fritz Conway, Connecticut Bankers Association

Tom Mongellow and Fritz Conway of the Connecticut Bankers Association (CBA) submitted testimony in opposition to section 8 of this bill because the “new State 'transparency' requirement is unnecessary and will harm the value of each association's proprietary information.” This information is already reported on tax forms, but should not have to be provided in the event the association makes a political contribution. “It would be similar to asking a commercial business to make their customer list and activity available to competitors.” This could also shorten the existing timelines for reporting independent expenditures, which could make compliance very difficult. Finally, section 3 restricts who CBA and other associations can send their communications too, which is their primary reason for existing. This new standard is unclear and confusing.

(Tom Mongellow and Fritz Conway, GAE Public Hearing March 25, 2013)

Bill Ashworth, State Policy Counsel, Google Inc.

Bill Ashworth, State Policy Counsel for Google Inc., testified in opposition to this bill because it “fails to strike the appropriate balance between promoting transparency while ensuring the continued development of innovative and dynamic advertising tools enabled through Internet advertising platforms.” Internet platforms provide a great and inexpensive way for candidates to get their message out, however they are often not designed in a way that allows easy compliance with election laws and the provisions proposed in this bill. This bill would make these platforms unavailable for messages funded through an Independent Expenditure committee. Some states (e.g. Maryland and Florida) have provided exemptions or accommodations for internet and new media platforms. Google urges the same approach with this bill.

(Bill Ashworth, GAE Public Hearing, March 25, 2013)

Steve DelBianco, Executive Director, NetChoice

Steve DelBianco, Executive Director of NetChoice, submitted testimony in opposition to this bill because it could chill the use of the online medium while exposing the personal information of Connecticut's politically active citizens. This bill would expose the private information of residents to disclosure by requiring all donors to be disclosed, even if contributions are minimal. Second, this bill would impair the fundraising ability of any organization that also engages in political advertising, as the membership or donor lists would have to be disclosed if the organization placed a political add. Thirdly, the design of computer systems and the architecture of web based tools like twitter makes complying with such disclosure laws difficult. Finally, this bill should be amended to mirror the laws of Florida and Maryland which exempt text adds “under 200 characters and have a link that directs users to another Internet website that contains the requires disclosures”, and small display adds where compliance with the requirements are not reasonably practical due to graphic size, and has a link that directs the user to an Internet website with the required disclosure statements.

(Steve DelBianco, GAE Public Hearing, March 25, 2013)

Jennifer Herz, Assistant Counsel, Connecticut Business & Industry Association

Jennifer Herz, Assistant Counsel for the Connecticut Business & Industry Association (CBIA) submitted testimony in partial opposition to this bill, expressing concerns with the affects to membership and dues disclosure for organizations, limiting communications in order to be considered an exempt expenditure, and the halving of the reporting timetable. The new disclosure provisions could require organizations to disclose their membership rolls and dues payments, something that very few do. Protecting the organization and its members should be of concern here. Secondly, limits on who may receive an organization's communications in order for it to be considered an exempt expenditure could adversely impact an organization's efforts to communicate with its membership. Thirdly, this bill shortens the time frames for reporting independent expenditures by half, imposing significant hardship on entities trying to comply with the law.

(Jennifer Herz, GAE Public Hearing, March 25, 2013)

Kris Lorch, President, Alloy Engineering Company

Kris Lorch, President of Alloy Engineering Company, submitted testimony in opposition to section 8 of this bill, because it will impact all membership organizations in the state. Membership lists and dues of organizations are important documents and should remain confidential, especially for reasons of competition. Additionally this bill would cause harm to volunteer organizations because they do not have the staff to comply with the accounting requirements.

(Kris Lorch, GAE Public Hearing, March 25, 2013)

Reported by: Ted Fisher

Date: 04/22/2013