OLR Bill Analysis
sHB 5511 (as amended by House "A")*
AN ACT CONCERNING DISCLOSURE OF COORDINATED AND INDEPENDENT SPENDING IN CAMPAIGN FINANCE.
This bill modifies laws affecting campaign finance and the State Elections Enforcement Commission (SEEC). Principally, it:
1. expands independent expenditure (IE) reporting requirements, including for IEs that support or oppose referenda;
2. expands certain covered transfer disclosure requirements;
3. potentially increases maximum penalties for failing to file IE reports;
4. makes SEEC, rather than town clerks, the filing repository for certain filings related to municipal referenda; and
5. eliminates aggregate individual contribution limits.
The bill also makes several minor, conforming, and technical changes.
*House Amendment “A” makes SEEC the filing repository for certain filings related to municipal referenda and eliminates provisions in the underlying bill that (1) expand the contribution and expenditure exemptions for certain communications; (2) create a category of spenders called “coordinated spenders” and define their expenditures as contributions subject to campaign finance reporting and limits; (3) codify “independent expenditure political committees” as a type of PAC and require them to register with SEEC; and (4) prohibit business entities from controlling, not only establishing, more than one PAC.
EFFECTIVE DATE: Upon passage
§§ 1 & 5 — IE REPORTING REQUIREMENTS
By law, persons must disclose information about IEs they make that exceed $1,000 in the aggregate. 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 promotes the success or defeat of a statewide office or legislative candidate. 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 (1) requires all persons that make IEs at or above the threshold amount, including IEs supporting or opposing municipal candidates or referenda, to use the long- and short-form reports; (2) adds to the reports' required contents; and (3) requires that IE reports, except those that promote the success or defeat of statewide office or legislative candidates as described above, be filed according to the same schedule as the periodic statements filed by PACs.
In addition to its current contents, the bill requires that the long-form report include (1) if applicable, a statement indicating that the person files a report with the Federal Election Commission (FEC), the Internal Revenue Service (IRS), or any similar out-of-state agency, and the identification number or other identifying information under which any such filings are made; (2) the person's street address, if different from the mailing address; and (3) the street address, if different from the mailing address, of the agent for service of process.
With respect to referenda, the bill requires that the (1) long-form report include the date, the question's text, and whether the IE supported or opposed it and (2) short-form report identify the question's text and whether the IE supported or opposed it.
The bill requires that both the long- and short-form report also include any other information SEEC requires to facilitate compliance with state campaign finance laws.
Disclosing Covered Transfers (§ 1)
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 fewer days before the primary or election. The bill extends the requirement 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 FEC or IRS, provided the person includes a copy of such report in its filing with SEEC. The bill allows such persons to instead include in their IE reports information sufficient for SEEC to find their FEC or IRS report. It also extends the exemption to persons that disclose the source and amount of a covered transfer in a report with a similar out-of-state agency.
Penalties for Failure to File an IE Report (§ 1)
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. The bill potentially increases the maximum civil penalties SEEC may impose for failure to file certain required IE reports, including failures that are knowing and willful. It also subjects IEs that support or oppose referendum questions to these penalties.
Specifically, the law allows SEEC to impose a maximum penalty of $10,000 for failure to file more than 90 days before a primary or general election. The bill extends this penalty to IEs that support or oppose a referendum.
For failure to file 90 days or fewer before a primary or general election, SEEC may currently impose a maximum penalty of $20,000. The bill instead allows SEEC to impose a penalty of up to $20,000 or twice the amount of any unreported IE, including for a referendum, whichever is greater.
Currently, a knowing and willful failure to file an IE report is punishable by a fine of up to $50,000. The bill instead allows SEEC to impose a penalty of up to $50,000 or 10 times the amount of any unreported expenditure, whichever is greater.
By law, in addition to the penalties described above, (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 Citizens' Election Program) is a class D felony punishable by up to five years in prison, a fine of up to $5,000, or both.
§ 2 — REFERENDA FILINGS
The bill makes SEEC, rather than town clerks, the filing repository for campaign finance statements filed by PACs formed to support or oppose a municipal referendum question. It similarly requires groups of individuals that join solely to promote a referendum question, but that do not have to form a PAC because they will not receive or spend more than $1,000 in the aggregate, to file the exemption certification with SEEC, rather than town clerks.
§ 3 — AFFILIATED PACS
By law, most PACs must register with SEEC, and the registration statement must include, among other things, the committee's name and purpose. The bill requires a PAC established by an individual acting as an agent for another person (known as Affiliated PACs) to additionally (1) include the name of the person for whom the agent is acting and (2) indicate whether the PAC filed a report with the FEC or other out-of-state agency and, if so, include the agency name.
§ 4 — INDIVIDUAL CONTRIBUTION LIMITS
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 instead allows individuals to make unlimited aggregate contributions to these committees (see BACKGROUND).
Aggregate Individual 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, 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).
Government Administration and Elections Committee
Joint Favorable Substitute