SB111: Bill Text

LRB-1801/7

JTK/JK/MES:kg:km

1999 - 2000 LEGISLATURE

1999 Senate BILL 111

April 7, 1999 - Introduced by Senator Burke, cosponsored by Representative Freese. Referred to Committee on Agriculture, Environmental Resources and Campaign Finance Reform.

SB111,2,13 An Act to repeal 11.26 (9) (b) and (c), 11.31 (2m), 11.31 (3m), 11.31 (4), 11.31 (7) (d), 11.50 (2) (h), 11.50 (2m), 11.50 (6) (title) and 13.625 (1) (c) 1. and 2.; to renumber 11.24 (2), 11.50 (1) (a) 1. and 11.50 (7) (a) to (d); to renumber and amend 11.16 (1) (d), 11.26 (9) (a), 11.50 (1) (a) 2., 11.50 (2) (a), 11.50 (5), 11.50 (6), 11.50 (9) and 13.625 (1) (c) (intro.); to amend 11.01 (5m), 11.06 (1) (a), 11.06 (1) (d) and (L), 11.06 (2), 11.06 (11) (c), 11.10 (1), 11.12 (1) (c), 11.14 (1), 11.14 (2), 11.21 (15), 11.25 (2) (a), 11.25 (2) (b), 11.26 (1) (intro.), 11.26 (1) (a), (b) and (c), 11.26 (2) (intro.), 11.26 (2) (a), (b) and (c), 11.26 (4), 11.26 (10), 11.26 (12m), 11.26 (13), 11.31 (1) (intro.), 11.31 (1) (a) to (d), 11.31 (1) (e) and (f), 11.31 (2), 11.31 (3), 11.31 (7) (a) to (c), 11.50 (2) (b) 5., 11.50 (2) (g), 11.50 (2) (i), 11.50 (3) (a) (intro.), 11.50 (3) (a) 1. and 2., 11.50 (3) (b), 11.50 (4) (a), 11.50 (4) (c), 11.50 (4) (cm), 11.50 (4) (d), 11.50 (7) (intro.), 11.50 (8), 11.50 (11) (e), 11.50 (11) (g), 13.625 (1) (b) 3., 13.625 (2), 13.625 (6), 20.510 (1) (q), 20.510 (1) (q), 20.855 (4) (b), 25.42, 71.10 (3) (a), 71.10 (3) (b), 71.10 (3) (b), 71.26 (1) (a) and chapter 77 (title); and to create 7.08 (2) (cs), 11.01 (9m), 11.05 (14), 11.16 (1) (d) 2., 11.21 (17), 11.22 (11), 11.24 (1s), 11.24 (4), 11.25 (4), 11.31 (1) (de), 11.31 (1m), 11.31 (9), 11.50 (1) (a) 1. (intro.), 11.50 (1) (a) 2., 11.50 (1) (am), 11.50 (1) (bm) and (cm), 11.50 (2) (a) 1. and 2., 11.50 (2) (b) 3m., 11.50 (2m), 11.50 (2s), 11.50 (2w), 11.50 (5) (c), 11.50 (7) (c), 11.50 (14), 11.60 (4m), 11.70, 20.566 (3) (f), 20.855 (4) (ba), 20.855 (4) (bb), 71.05 (6) (a) 21., 71.07 (5) (a) 8., 71.26 (2) (b) 1g., 71.26 (3) (e) 4., 71.34 (1) (ad), 71.45 (2) (a) 15., 71.80 (21) and subchapter XIII of chapter 77 [precedes 77.997] of the statutes; relating to: campaign financing, political contributions by lobbyists, refunds for certain political contributions, imposition of a campaign treasury surplus earnings tax, income and franchise tax deductions for certain business expenses related to lobbying, providing an exemption from emergency rule procedures, granting rule-making authority, requiring the exercise of rule-making authority, making appropriations and providing penalties.

Analysis by the Legislative Reference Bureau

This bill makes numerous changes in the campaign finance law, authorizes a state refund for certain political contributions, imposes a tax on the earnings of campaign treasury surpluses and eliminates a corporate income and franchise tax deduction for certain lobbying expenses. Significant changes include:

Disbursement limitations

Under current law, disbursement (expenditure) levels are specified for candidates for various state and local offices. These levels become a binding limitation upon any candidate for state office who accepts a state grant from the Wisconsin election campaign fund or who agrees to be bound by the limitation, unless the candidate is opposed by a major opponent who could have qualified for a grant but who declines to accept one and declines to file an affidavit of voluntary compliance with disbursement and contribution limitations. Additionally, the disbursement levels for candidates for the offices of state senator and representative to the assembly are subdivided between the primary and election campaign periods in such a way that only about 60% of the total applicable disbursement level for either office may be allocated by a candidate to either the primary or the election campaign period.

This bill:

1. Eliminates the disbursement limitation, applicable to candidates for the offices of state senator and representative to the assembly, that requires the overall limitation to be subdivided between the primary and election campaign periods in such a way that only about 60% of the statutory disbursement level is allocated to either the primary or election campaign period.

2. Revises the current disbursement levels applicable to candidates for the offices shown in the following chart: - See PDF for table

3. Provides that the disbursement limitation for a candidate who seeks an office for the first time, and has not previously been a candidate for any other national, state or local office in a jurisdiction or district which includes at least one-third of the residents who reside in the jurisdiction or district in which the candidate seeks office, is 110% of the amount provided for other candidates for that office.

4. Creates a biennial cost-of-living adjustment that causes the statutory disbursement levels to be adjusted biennially, beginning in 2002, in accordance with a formula tied to the "consumer price index" determined by the U.S. department of labor, with the result in turn adjusted by the rate of increase or decrease in the voting age population of this state, as determined by the federal election commission.

5. Deletes current law that permits a candidate who does not accept a grant to continue to bind an opponent to disbursement and contribution limitations by filing an affidavit of voluntary compliance.

Currently, the campaign of a candidate, for purposes of the applicability of disbursement limitations, extends from July 1 preceding the date of a spring primary or election at which the candidate seeks office or January 1 preceding the date of a September primary or general election at which the candidate seeks office or the date of the candidate's public announcement of candidacy, whichever is earlier, through the last day of the month following the month of the primary or election at which the candidate seeks office, except that orders placed for goods or services to be provided for a campaign are included within the campaign regardless of when the goods or services are paid for, and debts incurred for goods or services received during a campaign period are included within the campaign regardless of when the debts are retired. Under this bill, the campaign of a candidate, for purposes of disbursement limitations, begins on the day after the date on which the previous campaign of the candidate ends or the date on which the candidate becomes a candidate at a future election, whichever is earlier (except as to goods or services provided for the campaign and paid for before that date), and ends at the same time as currently provided. The effect of the change is to include all disbursements within the limitation applicable to a current or former campaign.

Other disbursement restrictions

Currently, a personal campaign committee may make contributions to candidates other than the candidate whom it is organized to support, subject to applicable contribution limitations. If a candidate dies or ceases to be a candidate, the personal campaign committee remains subject to the same limitations. However, if the committee thereafter files a statement affirming under oath its independence from any candidate, the committee may, in addition to making contributions, make disbursements in an unlimited amount to advocate the election or defeat of a candidate.

This bill provides that, if a candidate dies or ceases to be a candidate, and the candidate's personal campaign committee thereafter files a statement affirming under oath its independence of any candidate, the committee may not make any disbursement to advocate the election or defeat of a clearly identified candidate that is derived in whole or in part from contributions received by the committee prior to filing the statement in an amount or value exceeding the maximum contribution that the committee is permitted to make to that candidate under contribution limitations currently prescribed by law.

Contribution limitations

Current law specifies limitations on the maximum amount of contributions which may be given to and accepted by a candidate for state or local office. Current law also limits the total contributions that a candidate for state or local office may accept from all political committees, including political party and legislative campaign committees, and from the Wisconsin election campaign fund to 65% of the value of the statutory disbursement level specified for the office which the candidate seeks. The total amount that a candidate may accept from committees other than political party and legislative campaign committees and from the Wisconsin election campaign fund is limited to 45% of that disbursement level.

This bill changes contribution limitations applicable to individuals and committees making contributions to candidates for the office of governor, lieutenant governor, secretary of state, state treasurer, attorney general, state superintendent of public instruction, justice of the supreme court, state senator or representative to the assembly per campaign, as follows: - See PDF for table

The bill also creates a new contribution limitation which prohibits any candidate for state or local office from accepting total contributions from all political committees, including political party and legislative campaign committees and committees serving as conduits (see below), equal, in the aggregate, to more than 25% of the value of the statutory disbursement level specified for the office which the candidate seeks.

Other contribution restrictions

This bill creates the following new prohibitions on contributions:

1. It prohibits contributions from special interest ("political action") committees, including conduit committees, and from individuals operating as conduits to incumbents who are seeking reelection to a partisan state office from the first Monday in January of each odd-numbered year through the enactment of the biennial budget act and, thereafter, during any floorperiod, including any special or extraordinary session floorperiod. The prohibition does not apply to contributions to an incumbent who is a candidate for state office at a special election during the period beginning on the date that a special election is ordered and ending on the date of the special election.

2. It prohibits any lobbyist from making a contribution to a partisan elective state official or candidate for a partisan elective state office or to such an official's or candidate's personal campaign committee. Currently, a lobbyist may make such a contribution in the year that an official or candidate seeks election between June 1 and the day of the general election.

3. It prohibits any candidate from making a contribution to another candidate except to dispose of residual contributions in the candidate's campaign treasury upon termination of registration. The bill also prohibits any candidate from accepting a contribution made by another candidate except upon termination of registration by the other candidate. Currently, a candidate is generally permitted to make a contribution for any political purpose that is not specifically prohibited by law.

Contributions through conduits

Under current law, a "conduit" is an individual or organization that receives a contribution and transfers the contribution to another individual or organization without exercising discretion as to the amount that is transferred and the individual to whom or the organization to which the transfer is made. When a conduit transfers a contribution, the conduit is required to identify itself in writing to the transferee as a conduit and to report to the transferee information about the original contributor. The conduit must include this information in its financial reports for the date on which the contribution was received and transferred. The campaign financing reports filed by the candidate identify only the original contributor, not the conduit. A contribution from a conduit is considered to be a contribution from the original contributor and, for the purpose of contribution limitations, a contribution of money received from a conduit which is properly identified and reported is considered to be a contribution received from the original contributor. Contributions received by a candidate for state office from an individual through a conduit may be used to qualify for a grant from the Wisconsin election campaign fund.

This bill requires the campaign finance reports filed by candidates to identify any conduit from whom a contribution is received, as well as the original contributor.

The bill also treats conduits in the same manner as "political action committees" by:

1. Not allowing contributions made by an individual through a conduit to be used to qualify for a grant from the Wisconsin election campaign fund.

2. Subjecting contributions from conduits to the same limitations that currently apply to the amount of contributions that a candidate may accept from any committee other than a political party or legislative campaign committee and to the new limitation upon receipt of aggregate contributions from committees imposed under the bill.

Mass media and telephoning activities

Currently, individuals who accept contributions, organizations which make or accept contributions, or individuals who or organizations which incur obligations or make disbursements for the purpose of influencing an election for state or local office are generally required to register with the appropriate filing officer and to file financial reports with that officer, regardless of whether they act in conjunction with or independently of any candidate who is supported or opposed. Currently, when a person is alleged to have violated registration and reporting requirements, the state has the burden of proving that the violation occurred.

This bill provides that, whenever any person publishes, disseminates or broadcasts any communication that includes a reference to a candidate for an office to be filled at an election, during the 60-day period preceding that election or during the 30-day period preceding any primary for that election, and the communication is substantially directed toward the electorate for that election, it is presumed that the communication is made for the purpose of influencing the election or nomination for election of that candidate, unless the person making the communication establishes, by a preponderance of the evidence, that the communication was not made for that purpose.

Wisconsin election campaign fund:

I. Sources and uses of funds

Under current law, the Wisconsin election campaign fund is financed through an individual income tax "checkoff". Every individual filing a state income tax return who has a tax liability or is entitled to a tax refund may direct that $1 of general purpose revenue be transferred to the fund. Individuals filing a joint return may separately choose whether to direct that the $1 transfer be made. All moneys transferred to the fund are placed in accounts for specified state offices, and candidates for those offices at the general or a special election may qualify for grants from the fund to be used for specified campaign expenses. No moneys in the fund may be used for any other purpose. Grants at special elections are funded by reallocating moneys set aside to provide grants to candidates at the general election, to the extent that moneys are available.

This bill:

1. Increases the amount of the individual income tax checkoff for the Wisconsin election campaign fund from $1 to $5. Under the bill, individuals filing a joint return may separately choose whether to make the $5 checkoff. The bill also permits individuals to determine whether to designate their checkoffs for a "general account", which is distributed in the same manner as currently provided, or for the account of an eligible political party (see below).

2. Provides a sum sufficient appropriation from general purpose revenue to supplement the amounts otherwise available for campaign financing through the Wisconsin election campaign fund equal to $3,000,000 in each fiscal year plus, in each fiscal year, the amount determined by the secretary of revenue to have been collected by the state from the campaign treasury surplus earnings tax imposed under this bill, and the elimination of the corporate income and franchise tax deduction for lobbying expenses under this bill (see below).

3. Directs the state elections board to set aside 5% of the moneys transferred to the Wisconsin election campaign fund in each of the six years following the year in which the bill becomes law in order to provide public information concerning the purpose and effect of designations to the fund. The bill directs the department of revenue to cooperate in providing such public information. Currently, no moneys in the fund are authorized to be used for this purpose.

II. Grant eligibility requirements and amounts

Under current law, public financing from the Wisconsin election campaign fund is available to eligible candidates for the offices of state senator, representative to the assembly, governor, lieutenant governor, attorney general, state treasurer, secretary of state, justice of the supreme court and superintendent of public instruction. To receive a grant, a candidate must file an application with the state elections board no later than the deadline for filing nomination papers. Following the primary election or the date on which a primary would be held, if required, the board determines whether a candidate who applies for a grant meets the following eligibility requirements:

1. If the candidate seeks a partisan state office at a general election, the candidate must have received at least 6% of the total votes cast in the primary and won the primary. If the candidate seeks a partisan state office at a special election, the candidate must either: a) appear on the ballot or in the column of a political party whose candidate for the same office at the preceding general election received at least 6% of the vote; or b) receive at least 6% of the votes cast at the special election.

2. The candidate must have an opponent in the election.

3. The candidate must receive, during a specified time period, a specified amount through contributions from individuals of $100 or less. For a candidate for the office of governor, lieutenant governor, secretary of state, state treasurer, attorney general, justice of the supreme court or superintendent of public instruction, the amount is 5% of the authorized disbursement level for the office which the candidate seeks. For a candidate for the office of state senator or representative to the assembly, the amount is 10% of the authorized disbursement level for the office which the candidate seeks.

Under current law, a candidate for any office who accepts a grant must comply with statutorily prescribed contribution and disbursement limitations, unless one or more of the candidate's opponents who receive at least 6% of the votes cast for all candidates for that office at a partisan primary, if a primary was held, do not accept a grant and do not voluntarily comply with the contribution and disbursement limitations for that office. Currently, a candidate is no longer bound by disbursement limitations after the last day of the month following the election in which the candidate appears on the ballot. The maximum grant that a candidate may receive is that amount which, when added to all other contributions accepted from sources other than individuals, political party committees and legislative campaign committees, is equal to 45% of the authorized disbursement level for the office which the candidate seeks, if there are sufficient moneys in the Wisconsin election campaign fund to finance the full amount of grants for which candidates qualify.

Currently, a candidate may use moneys in his or her campaign treasury for any political purpose not prohibited by law.

This bill:

1. Provides that all candidates for partisan state offices need receive contributions from individuals equal to only 5% of the authorized disbursement level for the office which the candidate seeks in order to qualify for a grant, but provides that the contributions must be in amounts of $50 of or less. The bill also provides that at least 50% of the qualifying contributions must be received from individuals who are residents of this state and, in the case of a candidate for legislative office, at least 50% of the contributions must be received from individuals who reside in the district in which the candidate seeks office.

2. Increases the maximum grant that a candidate may receive to 50% of the authorized disbursement level for the office which the candidate seeks, irrespective of contributions received from other sources.

3. Retains the current system of grants from a "general account" for which moneys may be designated by tax filers, except that it increases by 50% the amounts allocated for the offices of justice of the supreme court and state superintendent of public instruction. Under the bill, amounts otherwise payable from the general account to a candidate who reaches this limit are redistributed to other qualifying candidates who have not reached this limit, if any.

4. Permits political parties that qualify for a separate column or row on the ballot at the general election to obtain grants from checkoffs made by tax filers. The bill provides for 9.7% of the moneys designated for political parties by tax filers to be paid directly as grants to the designated parties to be used for specified multicandidate expenses. Under the bill, disbursements made by a political party from such a grant are not considered to be in-kind contributions to the candidates who benefit from the disbursements. The bill provides for 97% of the remaining moneys designated by tax filers to be paid to candidates of the designated parties for state offices, except the office of district attorney, in accordance with an apportionment formula specified in the bill that takes into account, in the case of candidates for legislative office, the votes cast for candidates of the designated party for partisan state offices, except the office of district attorney, within each legislative district. Amounts otherwise payable to a candidate who would qualify to receive a grant if the candidate had an opponent are redistributed to the parties for multicandidate expenses. Amounts otherwise payable to a candidate for an office for which a party has no candidate or to a candidate who is opposed but who fails to qualify for a grant are lapsed to the state general fund.

5. Provides that an agreement by a candidate for state office to be bound by contribution and disbursement limitations becomes effective on the first day of the second month following the previous election for an office, or the date that the application containing the agreement is filed, whichever is later. An application may be filed no later than the deadline provided under current law. An agreement remains binding until the end of the month following the month in which the election is held for which a grant is provided, unless the board determines that the candidate who entered into the agreement does not qualify for a grant or unless the candidate who enters into the agreement becomes a candidate at a special election.

6. Provides for grants payable to candidates for state office at special elections to be payable in full from general purpose revenue.

Penalties for violations

Currently, violators of the campaign finance law are subject to a forfeiture (civil penalty) of not more than $500 for each violation, except that violators of contribution limitations are subject to a forfeiture of not more than treble the amount unlawfully contributed. In addition, intentional violators are guilty of a misdemeanor and are subject to a fine of not more than $1,000 or imprisonment for not more than six months or both. This bill provides, in addition, that, if any candidate or campaign treasurer of a candidate who accepts a grant violates the agreement to limit self-contributions and disbursements that was entered into by that candidate, the candidate is personally liable for a forfeiture of not more than four times the amount of any unlawful contributions or disbursements made.

Currently, if a candidate or any other registrant violates the campaign finance law, any forfeitures incurred by the registrant may be paid from the campaign depository account of the registrant. This bill provides that no moneys derived from contributions that are reportable under the campaign finance law may be used to pay any forfeiture incurred by a candidate or candidate's campaign treasurer. Under the bill, if a candidate or candidate's campaign treasurer violates the law, the candidate is personally liable for payment of the forfeiture. A campaign treasurer and personal campaign committee also remain liable for payment of any forfeitures that they incur.

Initial applicability

All campaign finance changes under the bill apply to elections held on or after the day on which the bill becomes law.

Political contribution refund

This bill permits any individual who is a resident of this state and of eligible voting age to request a refund from the department of revenue of not more than $50 per year for any contribution or contributions of money made to a qualifying candidate for state office or political party. The bill also permits two married individuals who are both residents of this state and are of eligible voting age to file a joint request for a refund of not more than $100 per year for such contributions made jointly or individually. In order to qualify for a refund, a contribution must be made to a political party that has qualified for a separate ballot or one or more separate columns or rows on a ballot or to a candidate for state office who has filed a valid application to receive a grant from the Wisconsin election campaign fund, together with a binding agreement to abide by disbursement and self-contribution limitations, and has qualified to receive a grant. For a contribution to a candidate to be eligible for a refund, the candidate must have a signed agreement in effect at the time that a contribution is made. The refunds are made by the department of revenue from general purpose revenue.

Campaign treasury surplus earnings tax

This bill imposes a tax on every candidate and personal campaign committee at the rate of 15% on the earnings received by that candidate or committee on any campaign treasury surplus during the period beginning on the first day of the month following an election at which a candidate appears on the ballot (except a primary election if the candidate was nominated at the primary to appear on the ballot at a subsequent election) and ending on the date that the candidate files a valid declaration of candidacy together with valid nomination papers, if required, to appear on the ballot at a succeeding election. The tax is payable to the department of revenue semiannually.

Tax deductions for lobbying expenses

This bill eliminates a current corporate income and franchise tax deduction for certain business expenses that lobbyists incur. Currently, this deduction may be claimed for expenses incurred in direct connection with: a) appearances before, submission of statements to, or sending communications to a federal, state or local legislative body, a legislative committee or an individual legislator with respect to legislation or proposed legislation of direct interest to a taxpayer; or b) communications between a taxpayer and an organization of which the taxpayer is a member with respect to legislation or proposed legislation of direct interest to the taxpayer and the organization. Under the bill, dues paid to any organization remain deductible to the extent that they are attributable to expenses of these activities.

This bill will be referred to the joint survey committee on tax exemptions for a detailed analysis, which will be printed as an appendix to the bill.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB111, s. 1 Section 1. 7.08 (2) (cs) of the statutes is created to read:

SB111,11,3 7.08 (2) (cs) In each even-numbered year, certify to the state treasurer for the period beginning with the month following certification and ending with the month in which the next certification is made by the board:

SB111,11,7 1. No later than July 1, the name of each political party that qualifies under s. 11.50 (1) (am) 1. as an eligible political party as of the preceding June 1 and whose state chairperson has filed a request to establish an account for the party under s. 11.50 (2s) (a).

SB111,11,11 2. No later than December 15, the name of each political party that qualifies under s. 11.50 (1) (am) 2. as an eligible political party as of the date of the preceding general election and whose state chairperson has filed a written request to establish an account for the party under s. 11.50 (2s) (a).

SB111, s. 2 Section 2. 11.01 (5m) of the statutes is amended to read: