To be eligible to receive a public subsidy, the candidate would have to sign a spending limit agreement and an affidavit of contributions as under current law. An eligible candidate who has an opponent in a major party primary would receive a public subsidy equal to 25 percent of the candidate's spending limit upon filing for office and the balance of the 65 percent after winning the primary. The candidate would receive payments to match excess spending and independent expenditures within five days after the expenditures were reported to the Board of Campaign Finance and Public Disclosure.

A candidate's agreement to limit spending would also constitute an agreement to limit contributions to no more than $100 a year from an individual and to accept no contributions from a political committee, political fund, party unit, or a lobbyist. The full amount of each $100 contribution could be recovered by the individual contributor through the political contribution refund program, whose maximum would be increased from $50 to $100 per person per year.

In addition to agreeing to spending limits and lower contribution limits in order to be eligible to receive the public subsidy, a candidate would also have to agree to participate in at least two public debates before the primary and at least two public debates before the general election.

In addition to a new system of contribution limits, spending limits, public subsidies, and public debates for candidates, the bill would provide new contribution limits, spending limits, and public subsidies for political parties and legislative party caucuses. The income tax checkoff money that now goes to the state committee of a political party would be repealed. In its place would be an appropriation from the general fund of $200,000 each general election year for each major political party that has signed a spending limit agreement, plus $200,000 if the state committee of any other major political party had not likewise signed a spending limit agreement. The agreement would be that neither the state committee of the political party nor any of its party units would make independent expenditures on behalf of its candidates. A political party that did not agree to this limit on independent expenditures would not be eligible to participate in the political contribution refund program.

A legislative party caucus would not be eligible to participate in the political contribution refund program unless it had signed an agreement to limit contributions and expenditures. The new limit on contributions to a party caucus would be $100 in a year from an individual and no money from a political committee, political fund, or party unit. The spending limit for a caucus would be $500,000 in a general election year and 20 percent of that amount in a nonelection year. A caucus would be released from expenditure limits but still eligible to receive the public subsidy and participate in the political contribution refund program if another caucus in the same house of the legislature had not agreed to the limits and had received contributions or made expenditures in excess of 50 percent of the expenditure limit. A legislative caucus that agreed to these contribution and expenditure limits would receive a public subsidy of $100,000 each general election year, plus $100,000 if any other major political party caucus in the same house with at least ten members in the Senate or 20 members in the House had not signed a spending limit agreement.

A political committee, political fund, or party unit would be limited to accepting $500 in an election cycle from each individual or association.

An individual would be limited to contributing $5,000 in an election cycle to all candidates and committees combined.

The bill includes a variety of other changes to the campaign finance laws, which will be explained in the section-by-section summary that follows.

Section 1 states legislative findings that the current system of financing election campaigns undermines democracy in a number of ways and that a new law is needed to enable campaigns to be conducted without special interest money.

Section 2 creates a new definition of "campaign expenditure" designed to bring more political advertisements within the definition of an "independent expenditure." The definition is similar to one in section 201 of Public Law 107-155, the Bipartisan Campaign Reform Act of 2002. In addition to the "magic words" that the U.S. Supreme Court has previously held to constitute "express advocacy," the definition would add "words that in context can have no reasonable meaning other than to advocate the election or defeat of one or more clearly identified candidates" or similar content that, in context, is clearly expressing support for or opposition to a candidate.

Section 3 amends the definition of "independent expenditure" to strike the sentence found unconstitutional in Republican Party of Minnesota vs. Pauly, 63 F. Supp. 2d 1008 (D. Minn. 1999) and to create a rebuttable presumption that various subtle methods of coordinating spending are not "independent."

Section 4 changes the definition of "lobbyist" by lowering the threshold of compensation needed to become a lobbyist from $3,000 to $2,000 a year and limiting the exemption for travel expenses to $1,000 a year. It also makes "lobbyists" of any employees of a public higher education system who spend more than 50 hours in a month attempting to influence legislative, administrative, or metropolitan local governmental action.

Section 5 requires that when the Campaign Finance and Public Disclosure Board publishes reports or statements on its Web site they not publish the home street address or telephone number of an individual.

Section 6 requires that the statement of organization of a principal campaign committee list any individuals authorized to accept contributions on behalf of the principal campaign committee. This ties to an amendment to Minnesota Statutes, section 10A.27, subdivision 1, that limits the delivery of bundled contributions to a candidate to those persons registered with the Board under this section.

Section 7 requires that certain campaign finance reports be filed with the Board in an electronic format approved by the Board. The threshold for being required to file electronically is contributions or expenditures of more than $5,000 in a year. All campaign finance reports filed with the Board, whether filed electronically or not, would have to be published on the Board's Web site within seven days after their due date.

Section 8 requires that a political committee or a political fund that makes independent expenditures related to a special election file reports on the independent expenditures seven days before the special primary and special election and ten days after the special election cycle.

Section 9 makes changes to the subdivision requiring notice of independent expenditures that was struck down by a federal court in 1994 in the case of Day vs. Holahan, 34 F.3d 1356 (8th Cir. 1994). It increases from 24 to 48 hours the time a group making independent expenditures has to report those expenditures to the Board and increases the threshold for reporting independent expenditures in statewide races from $100 to $500. It adds a requirement that, in addition to stating the amount of the expenditure, the notice must include an affidavit identifying the candidate in support of or opposition to whom the expenditure is made and affirming that the expenditure was independent and involved no cooperation or coordination with a candidate or political party. Expenditures made during the last three weeks before the primary or general election still must be reported within 24 hours. If the Campaign Finance and Public Disclosure Board determines that a notice was false and the Board has distributed a public subsidy to a candidate based on the false notice, the candidate must return the subsidy to the Board.

Section 10 requires that a candidate who has not signed a spending limit agreement and who spends more than the spending limit of an opponent who has signed a spending limit agreement must report that excess spending within 48 hours after exceeding the limit by more than $100 for a candidate for legislative office or $500 for a candidate for statewide office. Additional reports of spending over the limit must be filed every 48 hours.

Section 11 provides that the spending limits on political parties and legislative caucuses apply only to a party or a caucus that has signed and filed a spending limit agreement.

Section 12 changes spending limits from per year to per election cycle and sets the limits at roughly the same as they are currently for the election year, except that the limit for governor would be less for an election cycle than it currently is for the election year. It also increases spending limits dollar for dollar to match spending over the spending limit by a nonparticipating candidate and to match independent expenditures made in opposition to a participating candidate.

Section 13 is a conforming change to the spending limit that applies when a candidate runs for more than one office during an election cycle.

Section 14 prohibits a political party or party unit that has signed an agreement not to make independent expenditures from making independent expenditures.

Section 15 provides a spending limit of $500,000 in an election year and 20 percent of that amount in a nonelection year for a legislative party caucus that has signed a spending limit agreement. In return for agreeing to the spending limit, the legislative caucus would receive $100,000 each election year. If another party caucus in the same house of the legislature chooses not to sign a spending limit agreement, the caucus that has signed an agreement would be freed from the spending limit and receive an additional public subsidy of $100,000.

Section 16 strikes a reference to an election year expenditure limit for a candidate, since the candidate's expenditure limits would now be based on an election cycle.

Section 17 applies the current limits for an election year to an entire election cycle and reduces the contribution limit for candidates for governor from $2,000 in an election year to $1,000 in an election cycle. It also limits a delivery of bundled contributions to a candidate to members of the candidate's principal campaign committee who have been registered with the Campaign Finance and Public Disclosure Board.

Section 18 imposes a contribution limit of $100 a year on candidates who agree to spending limits and also prohibits them from accepting any contribution from a political committee, political fund, party unit, or lobbyist.

Section 19 applies to candidates who have not signed a spending limit agreement. They are currently limited to no more than 20 percent of their spending limit from PACs, lobbyists, and large contributors. This change would add contributions from political party units to that 20-percent limit.

Section 20 limits a party caucus that has signed a spending limit agreement to accepting contributions of no more than $100 in a year and none from a political committee, political fund, party unit, or lobbyist.

Section 21 limits a political committee, political fund, or party unit to accepting $500 in an election cycle from each individual or association.

Section 22 limits an individual to contributing $5,000 in an election cycle to all candidates and committees combined.

Section 23 limits the kinds of expenditures by a political party that may qualify as multicandidate expenditures and thus not be counted against a candidate's spending limit. It requires that a telephone conversation mentioning the names of three or more individuals whose names are to appear on the ballot mention each of them "with roughly equal emphasis" in order not to be counted. It eliminates expenditures for party fundraising and on party staff.

Section 24 adds penalties for a political party or legislative party caucus that spends more than its spending limit. The penalty is a civil penalty of up to four times the amount by which expenditures exceed the limit.

Section 25 adds similar penalties for a legislative party caucus that exceeds its contribution limit.

Section 26 strikes references to payments from the income tax checkoff money in the party account and general account since those accounts are repealed later in the bill.

Section 27 adds to the spending limit agreement an agreement that a candidate will participate in at least two debates before the primary and two debates before the general election. It also advances from September 1 to the day after the candidate files for office the deadline for filing a spending limit agreement. This makes the deadline for filing during a general election the same as it now is for a special election. The section also adds spending limit agreements for a political party and legislative party caucus and a misdemeanor penalty for the chair of a party unit or legislative caucus who signs a political contribution receipt form without having signed a spending limit agreement.

Section 28 provides a public subsidy of up to 65 percent of the candidate's spending limit for candidates who sign a spending limit agreement and who file an affidavit of contributions in the same amounts as required under current law. A candidate with a primary opponent would receive 25 percent of the candidate's spending limit within ten days after the close of filings and candidates who survive the primary would receive the balance of their 65 percent within one week after the state canvassing board has certified the results of the primary. Participating candidates would also receive payments to match spending by their nonparticipating opponents in excess of their own spending limit and to match independent expenditures made against them or in favor of their nonparticipating opponents. These two additional subsidies would be paid dollar for dollar, subject to an overall limit that the candidate not be paid more than three times the candidate's original spending limit. The income tax checkoff and subsidies currently paid from the party account and the general account are repealed later in the bill.

Section 29 provides a public subsidy to major political parties who sign a spending limit agreement. The amount of the subsidy is $200,000 each general election year, plus $200,000 if the state committee of any other major political party has not likewise signed and filed a spending limit agreement. The section provides a public subsidy to each major political party caucus and a house of the legislature that has a general election that year and at least ten members in the Senate or 20 members in the House. The amount of the subsidy is $100,000, plus $100,000 if the chair of any other major political party caucus in the same house with at least ten members in the Senate or 20 members in the House has not likewise signed and filed with the Board a spending limit agreement. These public subsidies may not be used to support a candidate who has not signed and filed a spending limit agreement.

Section 30 requires any candidate who receives a public subsidy to agree to participate in at least two public debates before the primary and two public debates before the general election if an appropriate organization offers to sponsor the debate.

Section 31 adds to chapter 200 the same definition of party unit that now appears in chapter 10A.

Section 32 increases the amount of the political contribution refund from $50 to $100 per person. It limits the political contribution refund program to political parties and legislative party caucuses that have signed a spending limit agreement. It also strikes references to the income tax checkoff program, which is repealed.

Section 33 provides that the new contribution and expenditure limits begin the day following final enactment

Section 34 contains the repealers.

Section 10A.25, subdivision 6, is the spending limit for nonelection years, which is no longer needed since spending limits would be for an election cycle.

Section 10A.31 creates the income tax checkoff program and provides for distributions from the party account and general account.

Section 35 makes the act effective the day following final enactment.

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