HBA-JEK H.B. 2 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2 By: Gallego Elections 2/5/2001 Introduced BACKGROUND AND PURPOSE The amount of money invested in campaigns is a significant factor in many elections. It has been argued that the current campaign finance system discourages competition in elections and discourages small contributions from individuals. Current disclosure laws contain several loopholes which may prevent full disclosure of campaign contributions, and a failure to report contributions in a complete and timely manner is subject to minimal civil and criminal fines. House Bill 2 strengthens the guidelines for candidates and officeholders regarding the raising and spending of campaign funds, and modifies provisions relating to disclosure of contributions and expenditures. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas Ethics Commission in SECTION 5 (Section 251.035, Election Code), SECTION 69 (Section 254.128, Election Code), and SECTION 84 (Section 255.009, Election Code) of this bill. ANALYSIS House Bill 2 amends the Election Code relating to the regulation of certain political contributions, political expenditures, and political advertising. Principal Political Committees H.B. 2 requires a candidate or officeholder to designate in writing a political committee to serve as the person's principal political committee (principal committee) under which a candidate is required to maintain all their contributions in. The bill sets forth provisions relating to the creation of and the duties of a principal committee. The bill prohibits a person from establishing a specific-purpose committee for supporting or opposing only one candidate or assisting only one officeholder (Sec. 251.010). The bill provides that a candidate or officeholder is civilly liable for an act or omission by the person's principal committee only if the person authorized, requested, commanded, performed, or recklessly or negligently tolerated the act or omission (Sec. 251.011). The bill requires a person who is a candidate on September 1, 2001 to designate a principal committee by September 15, 2001, and requires a candidate or officeholder to transfer each applicable asset to its committee by the 15th day after the date a candidate or officeholder designates a committee (SECTION 86). Fair Campaign Spending Fund H.B. 2 establishes the fair campaign spending fund (fund) to be administered by the Texas Ethics Commission (commission) as part of the general revenue fund and describes the fund's contents and authorized uses. The bill also requires that the fund be permitted, to the extent practicable, to accumulate until the balance is sufficient to permit the secretary of state to publish a voter's guide. The bill sets forth guidelines for the contents and the publishing of the guide, and requires the commission to adopt rules under which a candidate may provide a statement to the commission for inclusion in the guide (Secs. 251.034 and 251.035). Political Contributions by Candidates or Officeholders H.B. 2 prohibits a candidate or officeholder from accepting a political contribution in connection with the person's own candidacy or office unless it is being accepted on behalf of the person's principal committee and the committee itself would be authorized to accept the contribution and establishes penalties (Sec. 253.0311). The bill also prohibits a candidate or officeholder from making a political contribution or expenditure from personal funds in connection with the person's own candidacy or office unless the person makes the contribution or expenditure to the person's own principal committee and establishes penalties (Sec. 253.0312). Loans The bill prohibits the committee of a judicial or nonjudicial candidate or officeholder from using political contributions in an amount that exceeds the aggregate amounts set forth in the bill to repay a loan or extend credit from the candidate's or officeholder's personal funds. The bill prohibits a committee from using political contributions in an amount that exceeds the aggregate amounts set forth in the bill to repay any loan or extension of credit for which the committee's judicial or nonjudicial candidate or officeholder is personally liable (Secs. 253.042 and 253.162). Contributions to Principal Political Committees The bill prohibits a principal committee's acceptance of a political contribution during the period beginning on the ninth day before the day of an election in which the candidate's name appears on the ballot and ending on the day after election day. The bill requires the committee to refuse the contribution and establishes that a committee's acceptance of a loan or a political contribution in the form of a loan during that period is a Class B misdemeanor. The bill specifies that a person who violates these provisions is liable for a civil penalty not to exceed three times the amount of the contributions or loans accepted (Sec. 253.043). H.B. 2 prohibits a child from knowingly making or authorizing political contributions to a committee that, in connection with each election in which its candidate or officeholder is involved, exceed $100 in the aggregate. The bill requires a person to refuse a contribution in violation of this provision and provides that accepting such a contribution from a child is a Class B misdemeanor (Sec. 253.044). The bill increases from $50 to $100 the amount of a contribution from certain persons associated with a law firm that a committee of a judicial candidate or officeholder is prohibited from accepting (Sec. 253.157). Reports The bill increases from $50 to $100 the amount of each political contribution that a committee or caucus must report (Sec. 254.031). The bill sets forth that this increase also applies to reports of the committee of a judicial candidate or judicial officeholder, and to a general purpose committee (Secs. 254.0611 and 254.151). The bill sets forth guidelines for information a principal committee or legislative caucus (caucus) must report for political contributions from individuals that in the aggregate exceed $1,000 during the reporting period and provides that the report must include the person's principal occupation and employer's name (Secs. 254.031 and 254.0311). The bill provides that a person or the person's campaign treasurer is to use best efforts to obtain, maintain, and report the information required for an individual who contributes in excess of $1,000 (Sec. 254.0312). The bill increases from $50 to $100 each political expenditure which a committee or caucus must report. The bill also provides that a committee or caucus must report the total amount or a specific listing of political contributions or expenditures that are $100 or less (Secs. 254.031 and 254.0311). The bill also modifies the amounts of contributions that committees supporting or opposing specific types of candidates or officeholders are to report when filing additional reports (Sec. 254.038). The bill extends the deadline by which a report is to be filed before an election. The bill reduces from 48 to 24 hours the time in which a contribution is to be reported after it is accepted (Sec. 254.039). The bill removes exceptions to the provisions for the availability of electronic reports on the Internet (Sec. 254.0401). The bill prohibits a political committee that does not file a required political report from knowingly accepting a political contribution or knowingly making a political expenditure when the report is outstanding. The bill provides that a person who accepts such a contribution or makes such an expenditure commits a Class B misdemeanor and is liable for a penalty not to exceed three times the amount of the contribution or expenditure (Sec. 254.043). The bill provides that each committee of a candidate or officeholder report the amount of each known political contribution or expenditure made on behalf of the committee by a specific-purpose or generalpurpose committee (Secs. 254.061, 254.091, and 254.128). The bill requires a specific-purpose committee that makes a political expenditure that benefits more than one candidate or officeholder to allocate the expenditure in compliance with rules adopted by the commission and in the manner set forth in the bill (Sec. 254.128). The bill sets forth that a general-purpose committee's intentional failure to file a complete political report on time is a Class B misdemeanor (Sec. 254.164). Reports by Principal Political Committee of Political Party H.B. 2 provides that each report by the principal committee of the state executive committee of a political party (party committee) must list the political contributions and political expenditures made in connection with each candidate or officeholder on a separate schedule. The bill provides that a party committee report must include the total amount of political contributions made during the calendar year to a candidate's or officeholder's committee, as well as the total amount of political expenditures made during the calendar year for the benefit of the candidate or officeholder (Sec. 254.1511). Reports by Federally Registered Committees H.B. 2 provides that each report by the campaign treasurer of a general-purpose, federally registered committee must report each political contribution, expenditure, or loan that exceeds $200 in the aggregate for that calendar year and the amount of the contribution, the full name, address, and principal occupation of the contributor, and the full name of that person's employer (Sec. 254.1512). Monthly Reports The bill increases from $10 to $20 the maximum amount of a political contribution, expenditure, or loan that is not required to be individually reported by a general-purpose committee in its monthly report (Sec. 254.156). Out-of-state Political Committees The bill repeals law which provides that out-of-state political committees are not subject to the campaign treasurer and political reporting provisions of the Election Code (SECTION 85). The bill provides that an out-of-state political committee must file a campaign treasurer appointment that includes the information set forth in the bill (SECTION 87). The bill sets forth certain reporting requirements for political contributions accepted by and political expenditures made by out-of-state political committees (Sec. 254.031). Retaining Certain Political Contributions, Assets, and Income H.B. 2 prohibits a person who ceased to be an officeholder or candidate on or after September 1, 1995, from retaining certain contributions, assets purchased with political contributions, or interest and other income earned on the contributions for more than six years after the date the person leaves office or the date of the most recent election in which the person was a candidate, whichever is later. The bill removes the provision that a person may not retain political contributions for more than six years after filing a final report (Secs. 254.203 and SECTION 87). The bill provides that a former officeholder or candidate required to remit any unexpended political contributions may submit them to the commission for deposit in the fair campaign spending fund (Sec. 254.204). The bill requires a person who ceased to be an officeholder or who was last a candidate in an election before September 1, 1995, to dispose of unexpended contributions and assets and income related to contributions not later than January 1, 2002 (SECTION 87). Political Advertising and Campaign Communications H.B. 2 prohibits a person from knowingly entering into a contract or an agreement to print, copy, publish, or broadcast political advertising that does not, within the advertising itself, indicate that it is political advertising, and that does not include the full names and addresses of specified individuals and committees as set forth in the bill (Sec. 255.001). The bill provides that a person who fails to pay a civil penalty imposed by the commission must follow the provisions relating to disclosure set forth in the bill if the civil penalty was a result of a violation of the provisions regulating political funds and campaigns. The bill requires the commission to adopt rules providing for the minimum size of the disclosure of certain unpaid civil penalties required on political advertising that appears on television or in writing. The bill also requires the commission to adopt rules providing for the minimum duration of the disclosure required on political advertising that appears on televison or radio. The bill exempts a civil penalty from the disclosure requirements if the penalty is the subject of an appeal. A violation of these provisions is a Class B misdemeanor (Sec. 255.009). H.B. 2 requires a person who conducts a telephone advertising campaign or poll in connection with a certain campaign for office to file with the commission the script that will be used within 24 hours of when the campaign or poll starts. The bill prohibits the commission from taking any action in connection with the script other than making it available to the public on request. Failure to file a script is a Class B misdemeanor (Sec. 255.010). Early Voting Ballots House Bill 2 prohibits an applicant who is applying to vote with an early voting ballot by mail from using an application form that is part of or is included with a campaign communication or political advertising. The bill provides that a form furnished in violation of this provision must be returned directly to the county clerk by the person who is applying for the early voting ballot (Sec. 84.001). The bill sets forth that this provision does not apply if the application form and campaign communication or political advertising are furnished to the applicant by the principal political committee of the state executive committee or a county executive committee of a political party, or an individual, candidate, or officeholder not working in concert with another person (Sec. 255.011). Repealed Sections H.B. 2 repeals provisions excluding out-of-state committees from the campaign treasurer and political reporting provisions that limit contributions by out-of-state committees and relate to officeholder contributions used in connection with a campaign (SECTION 85). EFFECTIVE DATE September 1, 2001.