Contribution Limits

Contribution limits would apply to the entire election cycle, instead of the current system of separate limits for election and nonelection years. The new contribution limit for candidates who participate in the public subsidy program would be $50 per election cycle. They could not contribute more than $500 to their own campaign. Contribution limits on nonparticipating candidates would be the same as the election year limits under current law, except that the contribution limit for candidates for secretary of state and state auditor would be doubled, to equal the limit for candidates for attorney general.

Candidates who do not accept a public subsidy would be prohibited from accepting contributions from a political party in excess of ten times the limit on contributions from an individual.

A political committee or political fund would be prohibited from accepting more than $1,000 in a calendar year in aggregate contributions from an individual and would be prohibited from accepting any contributions from another political committee or political fund.

Political parties would be prohibited from accepting more than $10,000 each election cycle in aggregate contributions from an individual or association. They would be prohibited from accepting money from any other party unit in another state or at the national level, unless the transfer were from a separate fund that contained only contributions from individuals and associations that would have been permitted under the law of Minnesota if they had been made directly to the political party unit.

An individual would be prohibited from making more than $10,000 in an election cycle in aggregate contributions for any purpose to all candidates, and to all political committees, political funds, and party units.

Spending Limits

Spending limits would apply to the entire election cycle. The dollar amounts for most candidates would be similar to the current limits for the election year. The amount for candidates for secretary of state and state auditor would be more than double the current limit for the election year. A candidate would be permitted to spend a small amount of additional money during the qualifying period from private contributions to the candidate. The total of the base amount plus qualifying expenditures for candidates for state senator would be $60,000 and for state representative would be $30,000. A first-time candidate's spending limit would be increased by ten percent.

Issue Ads

There would be a rebuttable presumption that an expenditure in excess of certain limits for a communication close to election day that contained the name or picture of a candidate is a campaign expenditure.

Independent Expenditures

There would be a rebuttable presumption that a campaign expenditure that was made after certain contacts between the spender and a candidate was not "independent," and thus must be counted against the candidate's spending limit.

Disclosure

All candidates would have to report the name and address of all contributors of more than $50 a year. Committees reporting contributions or expenditures of more than $5,000 in a year would have to file electronically. The Campaign Finance and Public Disclosure Board would have to post all campaign finance reports on its Web site within seven days after they were due.

Conduit funds would have to register and file periodic reports with the Board.

Public Subsidy

To qualify for a public subsidy, a candidate would have to raise a certain amount in contributions, counting only the first $5 from individuals eligible to vote in this state and, in the case of legislative candidates, at least one-half from individuals eligible to vote for the candidate.

Upon determining that the candidate had met all the requirements, the Board would designate the candidate as "participating" and pay the candidate a public subsidy equal to 20 percent of the candidate's public subsidy base. Within one week after the close of filings for office, a participating candidate who had an opponent in either the primary or general election would be paid a public subsidy equal to 20 percent of the candidate's public subsidy base. Within one week after results of the primary were known, a participating candidate with an opponent in the general election would be paid a public subsidy equal to 60 percent of the candidate's public subsidy base.

Upon receipt of a report that a nonparticipating opponent of a participating candidate had received contributions in excess of the participating candidate's spending limit, the Board would pay to the participating candidate a public subsidy equal to the participating candidate's public subsidy base. The additional public subsidy could be spent only in the amount that the nonparticipating candidate's contributions exceeded the participating candidate's spending limit.

Upon receipt of a notice that an individual or association had disseminated a communication paid for with independent expenditures that aggregated more than $500 during an election cycle, the Board would pay to each participating candidate in the affected race a public subsidy equal to the candidate's public subsidy base. The additional public subsidy could be spent only in the amount of independent expenditures made to defeat the candidate or one-half the amount of independent expenditures made to elect the participating candidate's opponent, subject to certain additional limits.

Throwback Rule

To pay for the public subsidies, the corporate franchise tax would be changed by adding a throwback rule. If tangible personal property were shipped from this state to another state and the taxpayer were not taxable in the state of delivery, the sale would be taxable in this state.

Penalties

The penalty for exceeding contribution or spending limits would be up to ten times the amount of the excess.

In addition to the civil penalties, the Board would be authorized to bring a court action to have a candidate who had filed a false report or who had exceeded contribution or spending limits removed from office. If the court found the candidate had violated the law, the court could declare the office vacant, in the case of a constitutional officer, or would forward a transcript of its judgment to the Senate or the House of Representatives for further consideration, in the case of a member of the Legislature.

Free Broadcast Time

Television and radio stations that receive a public subsidy from the State would be required to provide free broadcast time to participating candidates for constitutional officer and either broadcast time or archived audio or video clip time for participating legislative candidates. The amount of time would be 30 minutes each election cycle for candidates for constitutional officer and 60 seconds each election cycle for candidates for the Legislature. The broadcast would include only the candidate speaking in the candidate's own voice.

Filing Fees

Filing fees would be eliminated for participating candidates.

Voter's Guide

The Secretary of State would be required to publish a voters guide at least 21 days before the state primary and general election, mail it to every household in the state, and publish it on the Secretary of State's Web site.

Form of the Bill

The bill is in the form of a repeal and reenactment, repealing the campaign finance provisions of Minnesota Statutes, chapter 10A, and reenacting them, as amended, as a new chapter 10B. Chapter 10A retains the provisions establishing the Board, regulating lobbyists and principals, requiring disclosure of conflicts of interest, and providing remedies for violations of either chapter 10A or chapter 10B.

A section-by-section description of the bill follows.

Section 1 names the bill the "Fair and Clean Elections Act."

Sections 2 to 13 provide that the definitions and enforcement power of the Board in chapter 10A also apply to the campaign finance provisions in chapter 10B.

Section 6 prohibits the Board from publishing an individual's home street address or telephone number on its Web site.

Section 10 adds a civil penalty of up to ten times the amount of the error for filing a false report. It also authorizes the Board to order a violator to return any public subsidy the violator has received. It authorizes the Board to bring a court action to have the nomination or election declared forfeited. The forfeiture would occur upon the judgment of the court, in the case of a constitutional officer, or upon action by the Senate or House of Representatives, in the case of a legislator.

Section 12 limits the civil penalties imposed by the Board to $1,000, unless otherwise provided.

Section 14 reenacts the definitions relating to campaign finance formerly coded in section 10A.01 in chapter 10B, with the following substantive changes:

Subdivision 7, paragraph (b) includes the cost of sham "issue ads" as campaign expenditures.

Paragraph (c) creates a rebuttable presumption that an expenditure in excess of certain limits for a communication close to election day that contains the name or picture of a candidate is a campaign expenditure.

Paragraph (f), clause (3), limits the exemption from the definition of "expenditure" for news items to those published by news media not owned by or affiliated with a candidate.

Paragraph (f), clause (4), adds an exemption for in-house newsletters, as defined in paragraphs (g) to (k).

Subdivision 9 adds a definition of "conduit fund."

Subdivision 16, paragraph (a), omits the sentence that used to say a political party could not make independent expenditures on behalf of its own candidates, which was struck down by U.S. District Judge Ann D. Montgomery in the case of Republican Party of Minnesota v. Pauly, 63 F. Supp.2d 1008 (D. Minn. 1999). Rather, paragraph (b) creates a rebuttable presumption that various subtle methods of coordinating spending are not "independent."

Section 15 is a reenactment of section 10A.105, requiring a candidate to have a principal campaign committee.

Section 16 is a reenactment of section 10A.11, requiring political committees and party units to have a chair and treasurer.

Section 17 is a reenactment of section 10A.12, requiring political funds to have a treasurer.

Section 18 is new, requiring conduit funds to have a treasurer and not be commingled with other funds.

Section 19 is a reenactment of section 10A.13, requiring regulated committees and funds, to keep certain accounts, but amended to include conduit funds.

Section 20 is a reenactment of section 10A.14, requiring committees and funds to register with the Board when they have received contributions or made expenditures of more than $100, amended to include conduit funds.

Subdivision 2, clause (4), is amended to require a principal campaign committee to register with the Board the name and address of any individual authorized to accept contributions on behalf of the principal campaign committee.

Section 21 is a reenactment of section 10A.15, imposing record-keeping requirements for contributions received by a committee or fund, amended to include conduit funds.

Section 22 is a reenactment of section 10A.16, prohibiting earmarking of contributions.

Section 23 is a reenactment of section 10A.17, requiring certain records to be kept of expenditures by a committee or fund, amended to include conduit funds.

Section 24 is a reenactment of section 10A.18, requiring bills for materials or services to be submitted to a committee or fund within 60 days after the materials or services were provided.

Section 25 is a reenactment of section 10A.20, requiring committees and funds to file various reports with the Board, amended to include conduit funds and further amended as follows:

Subdivision 2, paragraph (b), requires principal campaign committees to file additional reports on April 30, July 31, and November 30 in a year in which the candidate's name is on the ballot.

Paragraph (c) requires political committees, political funds, conduit funds, and party units to file reports each election year at the same times as principal campaign committees.

Paragraph (d) requires committees and funds that make expenditures related to a special election to file reports seven days before the special primary and special election and ten days after the special election cycle.

Subdivision 3 requires committees that report contributions or expenditures of more than $5,000 in a year to file electronically. It requires the Board to post all campaign finance reports on its Web site within seven days after they are due.

Subdivision 4, paragraphs (b) and (d), require candidates to report the name and address of each individual who contributes or loans more than $50 a year.

Paragraph (c) requires every political committee, political fund, principal campaign committee, and party unit to disclose the sum of all contributions received through each conduit fund and through all conduit funds.

Subdivision 5 requires conduit funds to disclose the sum of all contributions received by the fund and the sum of contributions given to each political committee, political fund, principal campaign committee, and party unit and to all of them together during the reporting period.

Subdivision 7 requires a nonparticipating candidate to report to the Board any contributions the candidate has received in excess of the spending limit of the candidate's participating opponent. Additional reports are due each Monday for any excess contributions received during the week ending the previous Friday and within 48 hours during the last three weeks before a primary or general election and the last two weeks before a special primary or special election.

Subdivision 10 requires an individual or association to report to the Board and notify each candidate in the affected race within 48 hours after disseminating a communication paid for by an independent expenditure of more than $500 during an election cycle. During the last three weeks before the primary or general election and the last two weeks before a special primary or special election, the notice must be filed within 24 hours. The notice must also include a copy or transcript of the advertisement purchased with the independent expenditure.

(The current law requiring reports of independent expenditures of more than $100 to be filed with the Board within 24 hours was held unconstitutional in Day v. Holahan, 34 F.3d 1356 (8th Cir. 1994).)

Subdivision 14 increases the penalty for late filing of a report due January 31 from $5 to $10 a day and increases the maximum penalty from $100 to $500.

Section 26 is a reenactment of section 10A.27, imposing contribution limits, amended as follows:

Subdivision 1 applies contribution limits to the entire election cycle, instead of the current system of separate limits for election and nonelection years. It makes contribution limits on nonparticipating candidates the same as the election year limits under current law, except that the contribution limit for candidates for secretary of state and state auditor would be doubled, to equal the limit for candidates for attorney general. It prohibits a participating candidate from accepting more than $50 per election cycle. It also limits the delivery of contributions to a candidate to members of the principal campaign committee registered with the Board for that purpose.

Subdivision 2 prohibits a candidate who does not accept a public subsidy from accepting contributions from a political party in excess of ten times the limit on contributions from an individual.

Subdivision 5 prohibits a candidate who accepts a public subsidy from contributing more than $500 to the candidate's own campaign.

Subdivision 8 prohibits a political committee or political fund from accepting more than $1,000 each year in aggregate contributions from an individual and from accepting any contributions from another political committee or political fund. (The previous limit of $100 on contributions by an individual to a political committee or political fund was held unconstitutional in Day v. Holahan, 34 F.3d 1356 (8th Cir. 1994), and stricken by Laws 1999, chapter 220, section 34.)

Subdivision 9, paragraph (a), prohibits political parties from accepting more than $10,000 each election cycle in aggregate contributions from an individual, or from an association that makes contributions to candidates.

Paragraph (b) prohibits political parties from accepting money from any other party unit in another state or at the national level, unless the transfer is from a separate fund that contains only contributions from individuals and associations that would have been permitted under the law of Minnesota if they had been made directly to the political party unit.

Subdivision 10 prohibits an individual from making more than $10,000 in aggregate contributions for any purpose to all candidates, and to all political committees, political funds, and party units, in an election cycle.

Section 27 is a reenactment of section 10A.273, prohibiting certain fund-raising during a session of the Legislature.

Section 28 is a reenactment of section 10A.29, prohibiting circumvention of contribution limits by making a contribution through another.

Section 29 is a reenactment of section 290.06, subdivision 23, the political contribution refund program, amended in subdivision 2 to eliminate the political contribution refund for contributions to candidates and to require a political party to agree not to make independent expenditures if it wants to be eligible for the refund program. A party unit's claim for a refund may not be made before March 4 in each odd-numbered year, since parties will be required to file their agreement not to make independent expenditures before March 1 and allowed until March 4 to rescind their agreement (which they may want to do if an opposing party does not file an agreement).

Section 30 is a reenactment of section 10A.25, providing for voluntary spending limits, amended as follows:

Subdivision 1 applies the prohibition on making independent expenditures to a political party that has signed and not rescinded a spending limit agreement.

Subdivision 2 applies spending limits to the entire election cycle. The dollar amounts for candidates for governor, attorney general, and the legislature would be less than the current limits for an election year. The amount for candidates for secretary of state and state auditor would be more than the current limit for an election year.

As part of the spending limit, a candidate is permitted to raise and spend the following amounts during the election cycle before qualifying for public money:

A first-time candidate will continue to receive a ten percent increase in spending limit and public subsidy.

Subdivision 3 requires a candidate who runs for more than one statewide office during an election cycle to count expenditures for the several offices against the spending limit for each office.

Subdivision 5 prohibits a candidate from making independent expenditures.

Subdivision 6 permits a participating candidate to be released from a spending limit agreement if the candidate's nonparticipating opponent receives contributions in excess of the amounts the participating candidate has received from contributors and the public subsidy through that part of the election cycle.

Subdivision 7 prohibits political parties from making independent expenditures.

Section 31 is a reenactment of section 10A.275, exempting multicandidate expenditures by political parties from a candidate's contribution and spending limits, amended to omit spending for telephone conversations, fund-raising efforts, and party staff services.

Section 32 is a reenactment of section 10A.322, providing the terms of the spending limit agreement, amended as follows:

Subdivision 2 requires the spending limit agreement to be filed no sooner than January 1 of the election year and no later than one day after the candidate files the affidavit of candidacy for the office.

Subdivision 3 requires a political party to agree not to make independent expenditures as a condition of receiving a public subsidy in the form of a political contribution refund. The agreement must be filed by the first March 1 of a general election cycle and may not be rescinded after the first March 4 of a general election cycle.

Section 33 is a reenactment of section 10A.323, requiring candidates to raise a certain amount in qualifying contributions in order to be eligible to receive a public subsidy, amended as follows: The qualifying contributions count only the first $5, rather than $50 under current law; contributors must be eligible to vote in this state, and one-half the contributors to a legislative candidate must be eligible to vote for the candidate. Threshold amounts are changed, as follows:

A statewide candidate will have to raise at least five percent of the qualifying amount in each congressional district. The dollar amounts for legislative candidates will be adjusted following each decennial census to represent the ideal population of a senate or house district, respectively, times .025, (or $5 times .05 percent of the population of the ideal district) rounded to the nearest $100.

Subdivision 2 requires a candidate who intends to participate in the public subsidy program to file with the Board a statement of intent to participate.

Subdivision 3 requires a participating candidate to get a signed receipt from each contributor of a qualifying contribution and to file with the Board a list of the name and home address of each contributor, indicating those who are eligible to vote for the candidate.

Subdivision 4 provides that the deadline for qualifying is the day after the candidate files for office.

Subdivision 5 provides that qualifying amounts for a special election are one-third of those for a general election.

Section 34 is a reenactment of section 10A.30, creating the state elections campaign fund, amended to provide a new method of balancing the amount in the fund with the amount of subsidies paid out to candidates.

Subdivision 2 imposes a spending cap for each calendar year of $5 times the number of Minnesota residents who filed personal income tax returns during the previous calendar year.

Subdivision 3 requires the commissioner of finance to transfer excess balances in the state elections campaign fund to the general fund. The amount transferred is appropriated to the board of public defense.

Subdivision 4 authorizes the Campaign Finance and Public Disclosure Board to reduce first the public subsidy paid to match excess expenditures and the public subsidy paid to match independent expenditures, and second the percentage of the candidate's spending limit that is paid as a public subsidy, if the Board determines there is not enough money in the state elections campaign fund to pay subsidies at the full rate.

Subdivision 5 provides that, in an emergency, the Board may reduce all public subsidy payments proportionately.

Section 35 is new. It provides for payment of the public subsidy from the state elections campaign fund. Candidates for state office who agree to lower contribution limits will receive a public subsidy from the general fund equal to about 80 percent of their campaign spending limit.

Subdivision 1 provides that, upon determining that the candidate has met all the requirements, the Board must designate the candidate as "participating."

Subdivision 2, paragraph (a), sets forth the dollar amount of each candidate's public subsidy base:

Subdivision 2, paragraph (b), provides an increase of ten percent for a first-time candidate.

Subdivision 3 provides for adjustment of the dollar amounts by the increase in the Consumer Price Index.

Subdivision 4 requires the Board to pay the candidate a public subsidy equal to 20 percent of the candidate's public subsidy base within one week after designating the candidate as "participating."

Subdivision 5 provides that, within one week after the close of filings for office, a participating candidate with an opponent in either the primary or general election will be sent a check for 20 percent of the public subsidy base.

Subdivision 6 provides that 60 percent of the candidate's public subsidy base will be paid immediately following the primary. A candidate with no general election opponent will receive six percent.

Subdivision 7 provides that, upon receipt of a report that a nonparticipating opponent of a participating candidate has received contributions in excess of the participating candidate's spending limit, the Board must pay to the participating candidate a public subsidy equal to the participating candidate's public subsidy base. The additional public subsidy may be spent only in the amount that the nonparticipating candidate's contributions exceeded the participating candidate's spending limit.

Subdivision 8 provides that a participating candidate will receive an additional public subsidy, and increase in spending limit, to match independent expenditures made to defeat the candidate or elect the participating candidate's opponent. Upon receipt of a notice that an individual or association intends to make independent expenditures of more than $500, the Board must pay to each participating candidate in the affected race a public subsidy equal to the candidate's public subsidy base. The additional public subsidy may be spent only in the amount of independent expenditures made to defeat the candidate or one-half the amount of independent expenditures made to elect the participating candidate's opponent, subject to certain additional limits.

Subdivision 9 provides a public subsidy in special elections on the same terms as in the general election, except that the entire subsidy is paid when the candidate qualifies. The candidate may spend the money only 20 percent upon being designated as participating, 20 percent upon filing for office, and 60 percent upon being certified to appear on the ballot in the general election.

Subdivision 10 authorizes the Board to withhold payment of a public subsidy to a candidate who has not filed a required report or who owes money to the Board.

Section 36 reenacts section 10A.324, which requires return of any part of the public subsidy not used for campaign expenditures.

Section 37 reenacts section 10A.257, which restricts the amount a candidate may carry forward from one election cycle to the next.

Section 38 reenacts section 10A.28, which imposes penalties for exceeding contribution or expenditure limits, with several amendments. The criminal penalties are removed and the amount of the civil penalty that may be imposed is increased from four times to ten times the amount of the excess. The Board may bring a court action to vacate the nomination or election of a candidate who has violated contribution or spending limits. If the court finds the candidate has violated the limits, the court may judge the candidate to have forfeited the nomination or election, in the case of a constitutional officer, or may forward a transcript of the judgment to the Senate or House of Representatives for further consideration.

Section 39 reenacts section 10A.242, which requires inactive committees to dissolve.

Section 40 reenacts section 10A.24, which requires committees to settle their debts before they dissolve.

Section 41 reenacts section 10A.241, which allows a candidate to transfer unpaid debts from a dissolving committee to a continuing one.

Section 42 requires public television stations that receive a public subsidy from the State to provide free time to participating candidates. The free time could be broadcast time for candidates, for constitutional officer, and video clip time for legislative candidates. The amount of time would be 30 minutes each election cycle for candidates for constitutional officer and 60 seconds each election cycle for candidates for the Legislature. The broadcast would include only the candidate speaking in the candidate's own voice.

Section 43 applies the same requirements to public radio stations.

Section 44 eliminates filing fees for all candidates eligible to participate in the public subsidy program.

Section 45 requires the Secretary of State to publish a voters guide at least 21 days before the state primary and general election, mail it to every household in the state, and publish it on the Secretary of State's Web site. The cost of the voter's guide must be paid from the state elections campaign fund.

Sections 46 and 47 update cross-references from chapter 10A to chapter 10B.

Section 48 creates a cross-reference in the Fair Campaign Practices Act to the new definition of "conduit fund" in chapter 10B.

Section 49 restricts use of the term "participating candidate" in campaign material to a candidate who has been so designated by the Board.

Section 50 enacts a throwback rule for the corporate franchise tax. If tangible personal property is shipped from this state to another state and the taxpayer is not taxable in the state of delivery, the sale is taxable in this state.

Sections 51 to 53 update cross-references from chapter 10A to chapter 10B.

Section 54 provides for the transition from the old campaign finance law to the new one, starting a new election cycle the day the new limits become effective but permitting contributions and expenditures that were legal when made to remain legal.

Section 55 contains the repealers. The sections in chapter 10A are all those relating to campaign finance. Section 290.06, subdivision 23, is the political contribution refund program.

Section 56 instructs the Revisor of Statutes to note in Minnesota Statutes the sections of chapter 10A that the sections in chapter 10B were derived from.

Section 58 makes the act effective August 1, 2005.

PSW:ph

cc: Kelly Wolfe

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