OLR Bill Analysis
AN ACT CONCERNING REVISIONS TO CAMPAIGN FINANCE LAWS.
This bill modifies laws affecting elections, campaign finance, the Citizens' Election Program (CEP), and the State Elections Enforcement Commission (SEEC). Among other things, the bill:
1. expands the contribution and expenditure exemptions for certain communications;
2. eliminates aggregate individual contribution limits;
3. creates a category of spenders called “coordinated spenders” and defines their expenditures as contributions subject to campaign finance reporting and limits;
4. codifies “independent expenditure political committees” as a type of PAC and requires them to register with SEEC;
5. expands certain independent expenditure (IE) reporting requirements and changes others, including for political committees established by an individual acting as an agent for another person (known as Affiliated PACs);
6. expands certain covered transfer disclosure requirements;
7. potentially increases maximum penalties for failing to file IE reports;
8. establishes a uniform deadline for certifying minor party nominations, submitting nominating petitions, and filing affidavits of intent under the CEP for candidates not in a primary;
9. reduces CEP grants, from 30% to 20% of a full grant, for eligible participating candidates who are unopposed in the general election;
10. freezes inflationary CEP grant adjustments until January 2018; and
11. establishes a limit of $250,000 on organization expenditures made by state central committees to benefit the general election campaign of a legislative candidate participating in the CEP.
The bill also makes minor and technical changes.
EFFECTIVE DATE: Upon passage
§§ 3 & 4 & 11—CONTRIBUTIONS AND EXPENDITURES
Current law defines “contribution,” in part, as anything of value made to promote the success or defeat of any candidate seeking nomination or election.
The bill (1) expands the definition to cover persons, not only candidates, seeking nomination or election and (2) makes the same change to the parallel definition of expenditure. It thus covers contributions and expenditures made to benefit or oppose people who are not officially candidates.
The law further defines contribution and expenditure, in part, as any communication that refers to one or more clearly identified candidates and (1) is broadcast by radio, television (other than a public access channel), satellite communication, via the Internet, or as a paid-for telephone communication; (2) appears in a newspaper, magazine, or on a billboard; or (3) is sent by mail.
Under current law, such a communication is not considered a contribution or expenditure if it is made more than 90 days before the primary or election and for the purpose of influencing legislative or administrative action, as defined by the Ethics Code, or executive action.
The bill (1) extends the exemption to include all communications made more than 90 days before the primary or election and (2) exempts communications that constitute candidate debates, or that solely promote debates, and that are made by or on behalf of the debate sponsor.
Aggregate Limit for Individuals
Current law prohibits an individual from contributing more than $30,000 in the aggregate during a single primary and election to (1) candidate committees; (2) exploratory committees; and (3) slate PACs for justice of the peace (in a primary). The bill removes this limit, thus allowing individuals to make unlimited aggregate contributions to these committees (see BACKGROUND).
§ 5—INDEPENDENT AND COORDINATED EXPENDITURES
The law authorizes persons (including individuals, entities, and committees) to make unlimited IEs and defines “independent expenditure” as an expenditure that is made without the consent, coordination, or consultation of a (1) candidate or candidate's agent, (2) candidate committee, (3) PAC, or (4) party committee. It creates a rebuttable presumption that certain expenditures are not IEs, and thus are coordinated and considered contributions for campaign finance purposes.
1. creates a new category of spenders called “coordinated spenders;”
2. establishes their relationship to candidates and candidate committees;
3. specifies that their expenditures are coordinated, not independent, and thus are contributions subject to campaign finance limits; and
4. modifies the rebuttable presumption.
The bill specifies that a “candidate” with respect to independent expenditures and coordinated spenders includes any person who later becomes a candidate who benefits from (1) an expenditure made by a coordinated spender or (2) other coordinated spending.
By law, “person” means an individual, committee, firm, partnership, organization, association, syndicate, company trust, corporation, limited liability company, or any other legal entity of any kind. It does not mean the state or any of its political or administrative subdivisions.
Under the bill, expenditures by coordinated spenders are deemed to be made with the candidate's or candidate committee's consent, coordination, or consultation, or at its request or suggestion. Unlike existing law, which creates a rebuttable presumption that certain expenditures are not IEs, coordinated spenders' expenditures are by definition not IEs. Since, by law, expenditures that are not IEs are contributions, coordinated spenders' expenditures are considered contributions.
Under the bill, a “coordinated spender,” with respect to a candidate or candidate committee, is:
1. a person directly or indirectly formed, controlled, or established in the current election cycle by, at the request or suggestion of, or with the encouragement of, the candidate or his or her candidate committee or agent, including with the candidate's, candidate committee's, or agent's express or tacit approval;
2. a person established, directed, or managed by a person who, during the current election cycle (a) was employed or retained as a political, media, or fundraising advisor or consultant for the candidate, his or her candidate committee, or any entity directly or indirectly controlled by the candidate or committee, or (b) held a formal position, with a title, for the candidate or his or her committee;
3. a person that is established, directed, or managed by a member of the candidate's family;
4. a person, or officer or agent of the person, that has had more than incidental discussion with a member of the candidate's family about the candidate's or his or her committee's campaign advertising, message, strategy, policy, polling, resource allocation, or fundraising or campaign operations;
5. an IE-only PAC that has received contributions exceeding $2,000, in the aggregate, in an election cycle from a family member of the candidate; or
6. with one exception, a person on whose behalf the candidate, his or her candidate committee, or agent, during an election cycle, solicits funds or engages in fundraising activity, including providing donor or other lists to assist with fundraising activity, regardless of whether the person pays fair market value for the information.
The bill creates an exception under the last type of coordinated spender. Under the exception, a person is not considered a coordinated spender if funds that the candidate or his or her candidate committee or agent raises for the person are:
1. segregated from other accounts controlled by the person and
2. not used to make (a) IEs benefitting the candidate or his or her committee or (b) contributions or covered transfers to any other person who later makes IEs, contributions, or covered transfers benefitting the candidate or his or her committee.
The bill defines “member of the family” as the candidate's spouse, child, grandparent, brother, half-brother, sister, or half-sister, or the spouse of any of these.
The law creates a rebuttable presumption that certain expenditures are not IEs, and thus are coordinated and considered contributions for campaign finance purposes. The bill expands one type of expenditure under the rebuttable presumption and partially expands and partially narrows two others, as shown in Table 1.
Table 1: Expenditures Not Considered IEs Under The Rebuttable Presumption
Expenditures made by an individual who, in the same election cycle, is serving or has served (a) as the campaign chairperson, treasurer, or deputy treasurer of a candidate committee, PAC, or party committee benefiting from the expenditure, or (b) in any other executive or policymaking position, including as a member, employee, fundraiser, consultant, or other agent, of a candidate committee, PAC, or party committee
Adds expenditures by an individual who served as an employee, fundraiser, consultant, or other agent of a candidate
Expenditures made by a person for the production, dissemination, distribution, or publication, in whole or substantial part, of any broadcast or written, graphic, or other form of political advertising or campaign communication prepared by (1) a candidate, candidate committee, PAC, or party committee or (2) a consultant or other agent acting on behalf of a candidate, candidate committee, PAC, or party committee
(1) Adds video and audio political advertising or campaign communications and (2) specifies that the advertising or communication must be used in support of the candidate or committee or in opposition to any candidate
Expenditures made by a person or an entity, on or after January 1st in an election year, that benefit a candidate when (1) the person or entity has hired an individual as an employee or consultant and (2) such individual was an employee of, or consultant to, the candidate's committee or that of his or her opponent during any part of the 18-month period preceding the expenditure
Specifies that the (1) provision also applies to individuals who were employees of, or consultants to, the candidate and (2) applicable time period covers the current election cycle, rather than the 18-month period preceding the expenditure
Additionally, the bill eliminates a prohibition on SEEC presuming that certain activities constitute evidence of consent, coordination, or consultation. Generally, they are:
1. participation by a candidate or his or her agent in an event that an entity sponsors;
2. membership of the candidate or his or her agent in the entity; and
3. financial support for, or solicitation or fundraising on behalf of, the entity by a candidate or his or her agent.
§§ 1-2, 8-10, 12-18 — IE-ONLY PACS
The bill codifies “independent expenditure political committees” (known as IE-Only PACs) as a type of PAC under Connecticut's campaign finance laws and, like other committees that make IEs, requires their registration with SEEC. It defines them as PACs that (1) make IEs and (2) are prohibited from making contributions, other than unlimited contributions to other IE-Only PACs.
The bill authorizes individuals, businesses, labor unions, and party committees to make unlimited contributions to IE-Only PACs. By law, these persons may also make IEs (see BACKGROUND).
§ 9 — Lawful Purposes
The bill defines “lawful purposes of the committee” for IE-Only PACs as promoting (1) a political party, (2) the success or defeat of a candidate for nomination or election, or (3) the success or defeat of a referendum question. It requires these committees to act entirely independently of any candidate or agent of a candidate, candidate committee, PAC, or party committee.
§ 8 — Registration
The bill requires a group of two or more individuals who join to form an IE-Only PAC to register with SEEC if the group makes or incurs expenditures exceeding $1,000, in the aggregate. Under the bill, IE-Only PACs must register within 10 days after reaching the $1,000 expenditure threshold.
§ 10 — Periodic Campaign Finance Statements
By law, candidate committees, PACs, and party committees must file periodic campaign finance statements with SEEC according to specified schedules. The statements must include, among other things, an itemized accounting of each contribution the committees and PACs receive.
The bill requires IE-Only PACs to include the name of any person that makes a covered transfer to one of its contributors if the covered transfer (1) equals $25,000 or more, in the aggregate and (2) occurs during the 12-month period before the primary or general election, whichever applies.
By law, a “covered transfer” is, with certain exceptions, any donation, transfer, or payment of funds by a person to a recipient that (1) makes IEs or (2) transfers funds to another person who makes IEs.
§§ 6, 7, & 19 — IE REPORTING REQUIREMENTS
The law requires a person that makes IEs to disclose information about the IEs to SEEC. Under current law, a person must file a long-form report, as well as a short-form report, after first making or obligating to make an IE during a primary or general election campaign that (1) promotes the success or defeat of a statewide office or legislative candidate and (2) exceeds $1,000 in the aggregate. For any subsequent IE, a person must file only the short-form report. Both reports must be filed with SEEC electronically within 24 hours after making or obligating to make an IE.
The bill instead applies these requirements to IEs made on or after July 1 in a regular election year through the day following the primary or general election for which the IE is made or incurred.
The bill adds to the required contents of the long- and short-forms. Specifically, it requires the long-form report to also identify (1) for the person making or obligating to make the IE, the Federal Employee Identification Number and Federal Election Commission Identification Number, if applicable, and (2) for a referendum, its date, the question's text, and whether the IE supported or opposed it. The short-form report must also identify (1) for a referendum, its date and the question's text and (2) any other information SEEC requires to facilitate compliance with state campaign finance laws.
The bill also specifies that reports of any IEs not subject to the long-and short-form requirements must be filed according to the same schedule as the periodic statements filed by PACs, rather than the same schedule of statements filed by candidate committees.
Disclosing Covered Transfers
As part of both the long- and short-form reports, the law requires a person to disclose the source and amount of any covered transfer of $5,000 or more, in the aggregate, it received during the 12 months before the applicable primary or election if the IE (for which the report is being filed) is made or obligated to be made 180 or less days before the primary or election.
The bill extends the requirement to all covered transfers meeting these criteria, not only those intended to promote or oppose a candidate for statewide or legislative office as under current law. It thus applies to covered transfers made to promote or oppose referenda.
The law exempts from this disclosure requirement a person that discloses the source and amount of a covered transfer in a report it files with the Federal Election Commission (FEC) or Internal Revenue Service (IRS), provided the person includes a copy of such report in the report it files with SEEC. The bill extends the exemption to people that include in their IE reports information sufficient for SEEC to find their FEC or IRS report.
Top Five Transferors. By law, printed, video, and audio political advertisements must include certain attributions, known as “disclaimers.” Under current law, a person that makes an IE (“IE maker”) during the 90 days before a primary or general election must, among other things, list the names of the five persons that made covered transfers, in the five largest aggregate amounts, during the 12 months immediately preceding the applicable primary or election. If a person listed as a “top five transferor” is also a recipient of a covered transfer (“recipient transferor”), the IE maker must disclose in its reports to SEEC the names of the top five transferors to that recipient transferor.
The bill redefines “top five transferors,” with respect to these recipient transferors as the five persons that made the five largest aggregate covered transfers to the recipient transferor during the 12 months before “the covered transfer” to the recipient transferor. Under current law, the period covers the 12 months immediately preceding the applicable primary or election. It is unclear under the bill which covered transfer would trigger the 12-month period.
The bill eliminates provisions in current law prohibiting disclaimers from listing certain persons that make covered transfers. Specifically, current law prohibits disclosing the name of any person that made a covered transfer to a 501(c)(4) organization if the organization is a top five transferor. Under federal law, these organizations are not required to publicly disclose their donors.
Current law also prohibits disclosing the name of any person that made a covered transfer to a top five transferor listed on a disclaimer if the recipient accepts covered transfers from at least 100 different sources. The prohibition applies if no such source accounts for 10% or more of the covered transfers accepted by the recipient during the 12 months immediately preceding the applicable primary or election.
Penalties for Failure to File an IE Report
By law, persons that make or obligate to make IEs exceeding $1,000 in the aggregate during a primary or general election campaign must file IE reports with SEEC. For an IE made or obligated to be made 90 days or fewer before a primary or general election, the bill potentially increases the maximum (1) civil penalties SEEC may impose for failure to file the required IE report and (2) fine SEEC or a court may impose for a knowing and willful failure to file.
Specifically, under current law, SEEC may impose a maximum penalty of $20,000 for failure to file 90 days or less before a primary or general election. The bill instead allows SEEC to impose a penalty of up to $20,000 or twice the amount of any unreported expenditure, whichever is greater.
Currently, a knowing and willful failure to file an IE report is a crime punishable by up to $50,000. Under the bill, violators may be fined up to $50,000 or 10 times the amount of any unreported expenditure, whichever is greater. By law, (1) SEEC may refer the matter to the chief state's attorney and (2) any knowing and willful violation of Chapter 155 of the General Statutes (i.e., campaign finance, other than the CEP) is a class D felony punishable by up to five years in prison, a fine of up to $5,000, or both.
§ 8 – AFFILIATED PACS
By law, most PACs must register with SEEC, and the registration statement must include, among other things, the name of the committee and its purpose. The bill requires PACs established by an individual acting as an agent for another person (known as Affiliated PACs) to additionally include (1) the name of the person for whom the agent is acting and (2) if the PACs filed a report with the Federal Election Commission or other out-of-state agency, a statement to that effect and indicating the agency name.
§§ 20-22—CANDIDATE DEADLINES
The bill changes certain deadlines associated with (1) minor party nominations and certifications, (2) nominating petitions, and (3) affidavits of intent to participate or not participate in the CEP (see BACKGROUND).
Specifically, the bill moves the deadline for:
1. certifying minor party nominations, from the 62nd day before the election to the 10th day after the primary (e.g., from September 3 to August 22, 2014);
2. submitting nominating petitions, from the 90th day before the election to the 10th day after the primary (e.g., from August 6 to August 22, 2014); and
3. filing affidavits of intent under the CEP for candidates not in a primary, from the 40th day before the election to the 10th day after the primary (e.g., September 25 to August 22, 2014).
By law, minor party nomination certificates and CEP affidavits are due by 4:00 p.m. on the day of the deadline. The bill establishes the same requirement for nominating petitions.
§§ 23-26—CITIZENS' ELECTION PROGRAM
§ 25 – Grants to Unopposed Candidates
The bill reduces the grant amount for eligible participating candidates who are unopposed in the general election. Under current law, the grant is equal to 30% of the full amount, while under the bill, it is equal to 20% of the full amount.
In the 2014 general election, for example, the full grants for major party candidates for state senator and state representative were $94,690 and $27,850, respectively. The unopposed grants for these candidates were $28,407 and $8,355, respectively. Under the bill, the unopposed grants would have been $18,938 and $5,570, respectively.
§§ 23 & 24 — Grant Adjustments for Inflation
By law, SEEC must adjust CEP grant amounts for inflation before each legislative or statewide election. The bill freezes, until January 15, 2018, inflation adjustments to CEP grants for legislative candidates. SEEC last adjusted these grants in January 2014.
§ 26—Organization Expenditures
By law, organization expenditures are made by legislative caucus, legislative leadership, or party committees for the benefit of candidates or their committees. They are not considered campaign contributions, but the law places restrictions on those made to benefit legislative candidates participating in the CEP. For example, the maximum amount that a town committee or legislative caucus or leadership committee may spend on organization expenditures made to benefit the general election campaign of a CEP candidate for state senator or state representative is $10,000 or $3,500, respectively.
The bill establishes limits on organization expenditures made by state central committees to benefit the general election campaign of a participating legislative candidate participating in the CEP. Under the bill, the limit is $250,000 for a candidate for state senator and state representative.
CEP Affidavits of Intent
With one exception, the law requires candidates to file an Affidavit of Intent to Abide or an Affidavit of Intent Not to Abide by the CEP's spending limits. Candidates do not have to file an affidavit if they will not receive or spend more than $1,000 from outside sources. These candidates are considered “nonparticipating candidates.”
Candidates who intend to participate must file the Affidavit of Intent to Abide only once, at which point they are considered “participating candidates.” Those who file before a primary and win the party endorsement are not required to re-file before the general election. The affidavit must include certain certifications from the candidate and his or her treasurer.
Aggregate Contribution Limits
In McCutcheon et al. v. Federal Election Commission, 134 S.Ct. 1434 (2014), the U.S. Supreme Court held that aggregate limits on contributions by individuals to federal candidates, political parties, and PACs were unconstitutional under the First Amendment.
In Advisory Opinion 2014-03, SEEC announced that, unless it received further guidance from the legislature or a court of competent jurisdiction, it would no longer enforce current law's $30,000 aggregate limit on contributions by individuals during a single primary and election to (1) candidate committees, (2) exploratory committees, and (3) slate PACs for justice of the peace (in a primary).
In Declaratory Ruling 2013-02, SEEC ruled that, in light of a line of cases ruling that contribution limits to IE-Only PACS are unconstitutional, it would no longer enforce contribution limits to PACs that receive and spend funds only for IEs, unless it received further guidance from the legislature or a court of competent jurisdiction.
Government Administration and Elections Committee
Joint Favorable Substitute