Senate Bill No. 284

(By Senators Grubb, Humphreys, Withers and Macnaughtan)

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[Introduced March 4, 1993; referred to the Committee
on the Judiciary.]

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A BILL to amend and reenact section five, article eight, chapter three of the code of West Virginia, one thousand nine hundred thirty-one, as amended; and to further amend said chapter by adding thereto a new article, designated article eight-a, all relating to elections generally; requiring the disclosure of certain candidate financial information; establishing a system of public financing of election campaigns for governor; defining certain terms; providing for a voluntary tax check-off system; setting out application procedures; qualifications; limiting campaign contributions and expenditures; establishing certain exceptions to expenditure limitations; requiring participation in televised candidate forums or debates; providing for voluntary compliance with expenditure and contribution limitations; requiring notice of independent expenditures; providing that the secretary of state certify eligible candidates and distribute funds to eligible
candidates; limiting the use of campaign grant funds; allowing for the return of campaign grant funds; providing for the lawful use of campaign grant funds; requiring a report on the use of campaign grant funds; and allowing the use of certain statements regarding campaign grant funds for loan purposes.
Be it enacted by the Legislature of West Virginia:
That section five, article eight, chapter three of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; and that said chapter be further amended by adding thereto a new article, designated article eight-a, all to read as follows:
ARTICLE 8. REGULATION AND CONTROL OF ELECTIONS.

§3-8-5. Detailed accounts and verified financial statements required.

Except as provided in subdivision (e) of this section, every candidate, financial agent, person and association of persons, organization of any kind, including every corporation, directly or indirectly, supporting a political committee established pursuant to paragraph (C), subdivision (1), subsection (b), section eight of this article or engaging in other activities permitted by said section eight of this article and also including the treasurer or equivalent officer of such association or organization; advocating or opposing the nomination, election or defeat of any candidate, or the passage or defeat of any issue, thing or item to be voted upon, and the treasurer of everypolitical party committee shall keep detailed accounts of every sum of money or other thing of value received by him, including all loans of money or things of value, and of all expenditures and disbursements made, liabilities incurred, by such candidate, financial agent, person, association or organization or committee, for political purposes, or by any of the officers or members of such committee, or any person acting under its authority or on its behalf.
Every person or association of persons required to keep detailed accounts under this section shall file with the officers hereinafter prescribed a detailed itemized statement, subscribed and sworn to before an officer authorized to administer oaths, according to the following provisions and times:
(a) On the last Saturday in March or within fifteen days thereafter next preceding the primary election day whenever the total of all financial transactions relating to an election exceed five hundred dollars a statement which shall include all financial transactions which have taken place by the date of that statement, subsequent to any previous statement filed within the previous five years under this section, or if no previous statement was filed, all financial transactions made within the preceding five years; and
(b) Not less than seven nor more than ten days preceding each primary or other election, a statement which shall include all financial transactions which have taken place by the date of such statement, subsequent to the previous statement, if any; and
(c) Not less than twenty-five nor more than thirty days after each primary or other election, a statement which shall include all financial transactions which have taken place by the date of such statement, subsequent to the previous statement; and
(d) On the first day of July, one thousand nine hundred eighty-five, and thereafter on the last Saturday in March or within fifteen days thereafter annually, whenever contributions or expenditures relating to an election exceed five hundred dollars or whenever any loans are outstanding, a statement which shall include all financial transactions which have taken place by the date of such report, subsequent to any previous report; and
(e) Candidates for governor shall file a detailed itemized statement containing the information required by this section, subscribed and sworn to before an officer authorized to administer oaths, on the fourth, eleventh, eighteenth, twenty- fifth, thirty-second and forty-fifth days prior to each primary or other elections. The reports shall include all financial transactions required by this section which have taken place as of the date of each statement, subsequent to the previous statement. In addition to these reports, candidates for governor shall file a detailed itemized statement, subscribed and sworn to before an officer authorized to administer oaths in accordance with the provisions and times as set forth in subdivision (a) of this section.
Financial transactions shall include all contributions orloans received and all repayments of loans or expenditures made to promote the candidacy of any person by any candidate or any organization advocating or opposing the nomination, election or defeat of any candidate or to promote the passage or defeat of any issue, thing or item to be voted on.
Every person who shall announce as a write-in candidate for any elective office and his financial agent or election organization of any kind shall comply with all of the requirements of this section after public announcement of such person's candidacy has been made.
ARTICLE 8A. PUBLIC FINANCING OF ELECTION CAMPAIGNS FOR GOVERNOR.

§3-8A-1. Statement of intent and purpose.

The Legislature finds and declares the following:
(a) The enactment of a system of public financing of election campaigns for governor is an essential means to protect the integrity of the electoral process and ensure the maintenance of free government.
(b) It is desirable to encourage the broadest possible participation in financing campaigns by all citizens of the state, and to enable candidates to have an equal opportunity to present their programs to the voters.
(c) Our democratic system of government can be maintained only if the electorate is informed.
(d) A publicly funded system of financing election campaigns for governor in this state will encourage full discussion of issues, provide a fair and equal opportunity for all candidatesfor governor to participate in the election process, and reduce the influence of special interests in election campaigns and the daily affairs of government.
(e) Public financing provides a neutral source of revenue to assist candidates in raising sufficient money to communicate their views and positions adequately to the voters. Public financing provides a level playing field to facilitate competitive campaigns and promote public discussion of the issues. By providing public financing of election campaigns, the potential corrupting influence of special interests and large contributions is diminished, and candidates can reduce their reliance on these sources of funding. Public financing reduces the fund raising advantages of incumbents while allowing all candidates to devote less time to fund raising and more time to discussion of the issues.
(f) Public funding of election campaigns permits the state to regulate the escalating amount of expenditures on political campaigns, while providing an equal opportunity for candidates to present their views and to provide for a better informed electorate.
§3-8A-2. Definitions.

For purposes of this article:
(a) "Fund" means the competitive elections fund.
(b) "Grant" means a contribution from the fund.
(c)(1) "Qualifying contribution" means:
(i) A contribution of five hundred dollars or less;
(ii) Made to a candidate;
(iii) By and from a qualified elector residing in this state;
(iv) Received on or after the first day of September of the calendar year prior to the election in which the recipient is a candidate for office, or, if a special election, after the date the special election is called.
(2) A qualifying contribution does not include a loan, pledge or nonmonetary contribution.
(d) "Political action committee" means an organization that comes into existence by specific written authorization of the board of directors, or equivalent governing body, of one or more corporation(s) the purpose of which is to solicit funds for, and make expenditures on behalf of, public issues or political candidates and their agents, political committees or political party committees.
(e) "Campaign finance report" means a detailed account as provided by section five, article eight of this chapter.
§3-8A-3. Competitive elections fund.

(a) Each individual filing an income tax return for any taxable year who has a tax liability or is entitled to a tax refund or other payment from the department of tax and revenue may designate an amount of not more than twenty dollars to be deposited into a special fund in the state treasury entitled the "Competitive Elections Fund." If individuals filing a joint return have a tax liability or are entitled to a tax refund orother payment from the department of tax and revenue, each individual may make a designation under this section.
(b) A designation does not increase a taxpayer's liability or decrease a refund or other payment to the individual from the department of tax and revenue.
(c) The department of tax and revenue shall place on the top one third of the first page of all tax returns to be filed the following language:
COMPETITIVE
ELECTIONS I designate __$5.00 __$10.00 __$20.00 to go
FUNDto the Competitive Elections Fund.
FUND NOTE: A designation will not increase the taxes you pay or reduce your refund or other payment from the department of tax and revenue.

(d)(1) If sufficient funds are not available in the competitive elections fund, during a fiscal year which contains an election for governor, the Legislature may, in its final budget, appropriate to the competitive elections fund an amount sufficient to fully fund all candidates for governor eligible to receive a grant from the competitive elections fund.
(2) The secretary of state shall provide a written estimate of the amount necessary to fully fund all eligible candidates for governor no later than the first day of January preceding an election year.
(3) General revenue moneys shall be appropriated to meet any shortfall in the competitive elections fund if the estimate ofthe secretary of state clearly indicates a need for additional funds.
(e) Each political action committee shall pay to the secretary of state a five percent assessment on all contributions to candidates, excluding in-kind contributions. The assessment shall be deposited in the competitive elections fund.
(f) Each political action committee which reports expenditures of more than five thousand dollars in an election year shall pay an administrative fee of two hundred dollars to the secretary of state. The fee shall be deposited in the competitive elections fund, and shall be paid by the political action committee within seven days after the campaign finance report which indicates expenditures greater than five thousand dollars is filed. No political action committee shall be required to pay this administrative fee more than once per calendar year.
§3-8A-4. Application and withdrawal procedures.

(a) Each candidate for governor shall file a statement of intent to accept or to reject a grant from the competitive elections fund. The statement shall be filed no later than the deadline for certificates of announcement of candidacy as provided in section seven, article five of this chapter.
(b) A candidate for governor who intends to accept a grant shall swear or affirm that the candidate and the candidate's authorized agents have complied with and will continue to comply with all applicable contribution and expenditure limits at alltimes.
(c) A candidate for governor shall designate in the statement of acceptance whether the candidate will accept or reject a grant in either the primary or the general election. A candidate may designate both.
(d) A candidate for governor may rescind the statement of acceptance:
(1) For a primary election grant no later than ten calendar days after the last date for filing nomination papers; or
(2) For a general election grant no later than ten calendar days after the primary election.
§3-8A-5. Qualification procedures; penalties.


(a) The secretary of state shall approve the payment of a primary or a general election grant or both a primary election grant and a general election grant if an eligible candidate for governor meets all of the following requirements:
(1) The candidate has filed a timely statement of acceptance.
(2) The candidate is certified to appear on the ballot for the election for which the grant is sought.
(3) The candidate is opposed by a candidate for the same office:
(i) Who has qualified to receive a grant; or
(ii) Whose campaign finance reports indicate that the opposing candidate has received, expended, or has cash on hand ofat least two hundred fifty thousand dollars.
(4) The campaign finance reports filed by or on behalf of the candidate as of the date of qualification indicate that the candidate has received qualifying contributions of at least fifty thousand dollars.
(b) A candidate who rejects expenditure limits in a primary election shall not be eligible to receive a grant from the fund in the general election.
(c) A candidate who rejects a grant from the fund but who accepts expenditure limits in a primary but does not accept expenditure limits in a general election shall pay a fine equal to the amount he or she exceeded the expenditure limits.
(d) A candidate who accepts expenditure limits and receives a grant from the fund in the primary election but who does not agree to expenditure limits in the general election shall pay a fine equal to the amount he or she exceeded the expenditure limits, or an amount equal to the amount he or she has received in grants from the fund, whichever is greater.
§3-8A-6. Contribution limits.

(a) A candidate for governor, filing a statement of acceptance, may not receive contributions or loans from the candidate's own funds or from those of the candidate's immediate family that exceed five thousand dollars. For purposes of this subsection, immediate family means the candidate's spouse, parents, brother, sister and children.
(b)(1) For purposes of this section, a loan made to acandidate or a candidate committee is considered a loan from the maker and the guarantor of the loan;
(2) The proceeds of a loan made to a candidate which meet the requirements of this subdivision are not subject to the contributions limits if the loan is:
(A) Made by a commercial lending institution;
(B) Made in the regular course of business;
(C) Made on the same terms ordinarily available to the public; and
(D) One which is secured or guaranteed.
(c) A candidate for governor, filing a statement of acceptance, may not receive contributions from political action committees in excess of forty thousand dollars per election.
(d) An eligible candidate for governor, filing a statement of acceptance, may receive a primary election grant, a general election grant, or both a primary election grant and a general election grant up to five hundred thousand dollars for each election.
(e) An eligible candidate for governor, filing a statement of acceptance, may voluntarily limit the amount of the grant received by designating a reduced grant amount in writing:
(1) For a primary election grant, no later than ten calendar days after the deadline for certificates of announcement of candidacy; or
(2) For a general election grant, no later than ten calendar days after the primary election.
§3-8A-7. Expenditure limits.

(a) A candidate for governor who files a statement of acceptance of a grant from the competitive elections fund may not make a qualified campaign expenditure or qualified campaign expenditures in excess of one million dollars in the primary election and one million dollars in the general election.
(b)(1) For the purpose of the expenditure limits, a qualified campaign expenditure made before the last day of the month in which the primary election is held, shall be considered a primary election expenditure.
(2) A qualified expenditure made from the first day of the month following the month in which the primary election is held through the thirty-first day of December of the general election year shall be considered a general election expenditure.
(3) Notwithstanding the provisions of paragraphs (1) and (2) above, in the event that payments are made, but the goods or services are not used during the period purchased, the payments shall be considered qualified campaign expenditures for the time period when they are used or during which benefit is derived from them. Payment for goods and services used in both time periods shall be prorated.
(c) In computing applicable expenditure limits, a candidate or campaign treasurer may exclude the following items:
(1) A contribution or contributions returned to the contributor;
(2) A loan repayment;
(3) An expense incurred as a direct result of a recount; and
(4) A refund of a deposit paid.
§3-8A-8. Exceptions to expenditure limits.

(a)(1) If a candidate filing a statement of acceptance of a grant:
(i) Is opposed by a candidate who has declined to accept a grant; and
(ii) The opposing candidate does not voluntarily agree to limit the receipt of contributions and expenditures under section eleven of this article; or
(iii) If aggregate independent expenditures are made in an amount greater than two hundred fifty thousand dollars in support of or in opposition to a candidate for governor, the expenditure limits are no longer applicable to all candidates except those whom the independent expenditure or expenditures in an amount greater than two hundred fifty thousand dollars was intended to support.
(2) If an independent expenditure is made in an amount greater than two hundred fifty thousand dollars in support of or in opposition to a candidate for governor, each candidate, except those whom the independent expenditure or expenditures in an amount greater than two hundred fifty thousand dollars was intended to support, who has filed a statement of acceptance of a grant or an affidavit voluntarily agreeing to abide by spending and contribution limits, shall be permitted to receive an additional one hundred thousand dollars for the election in whichthe independent expenditure occurs, as appropriate, notwithstanding the contribution limits otherwise applicable to the election.
§3-8A-9. Notice of independent expenditures; penalties.

Any individual, group, organization, or committee making an independent expenditure or expenditures in excess of one thousand dollars on behalf of or in opposition to a candidate for governor shall deliver notice in writing of such independent expenditure, as well as the amount of such expenditure and a detailed description of the media type or use of such expenditure, within twenty-four hours after obligating any funds for such expenditure. An expenditure is obligated upon the purchase of any political advertising or the entering into any agreement, either oral or written, to purchase any political advertising. Such notice shall be delivered to all of the candidates in the affected race, the candidate committee treasurers, and to the secretary of state. The notice shall specifically state the name of the candidate whom the independent expenditure is designed to support or oppose. For purposes of this subsection, notice shall include, but is not limited to, personal hand delivery or overnight mail. Each new expenditure shall require the delivery or filing of an additional new notice.
In addition to the powers and authority vested in the state election commission, under the provisions of article one-a of this chapter, the state election commission may also issue civil citations and fines for violations of the provisions of thischapter.
Any person, organization, group or committee violating the provisions of this section may be cited and fined by the state elections commission, upon a complaint filed by the secretary of state or designee and after a hearing on the matter, in an amount up to five thousand dollars or an amount equal to ten percent of the independent expenditure which was made without the notice required by this section.
§3-8A-10. Required participation in televised candidate forums or debates; penalties.

(a) Any candidate who elects to receive a grant from the fund shall participate preceding any primary or general election in which he participates, in a year in which the governor is elected, in a reasonable number of televised candidate forums or debates managed or designed by the West Virginia educational broadcasting authority in a manner to ensure participation by all candidates. However, a candidate who receives a grant from the fund shall not be required to participate in more than six televised candidate forums or debates preceding a primary, or six preceding a general election. The authority shall make the televised candidate forums or debates available at no charge to all other media. The authority shall promulgate administrative regulations necessary to implement the requirements of this subsection.
(1) The authority shall maintain editorial integrity in accordance with accepted public broadcasting principles. Noappointed or elected state officeholder shall directly or indirectly attempt to secure or create privileges, exemptions, or advantages for himself or others in derogation of the public interest at large in a manner that seeks to leave any person assigned responsibility for candidate forum or debate programming decisions no alternative but to comply with the wishes of the officeholder or person. Persons assigned candidate forum or debate programming decisions shall be free of obligation to any interest other than the public right to know. It shall not be considered a violation of this subsection for an officeholder or other person to seek remedies in a court of law to any programming he considers to be an abridgement of his legal rights.
(2) The secretary of state shall promulgate regulations which prescribe the grounds for which failure of a candidate to participate in any of the televised candidate forums or debates required by subsection (a) of this section shall be excused and the process by which a qualifying candidate shall inform the secretary of state of the grounds for the candidate's failure to participate.
(3) If the secretary of state determines that failure of a candidate to participate in any televised candidate forum or debate required by subsection (a) of this section was not justified, no grant shall be made to the candidate for that election if he shall be otherwise qualified to receive one. If the secretary of state determines that a candidate who hasalready received a grant from the fund has unjustifiably failed to participate in any required televised forum or debate, the candidate's campaign committee shall reimburse the fund the amount of the grant within thirty days of the date on which the secretary of state's determination becomes final. If the candidate's campaign committee has not reimbursed the fund the amount of the grant within the thirty-day period, the candidate shall be personally liable to the fund for the grant amount to be reimbursed. A candidate may appeal an adverse ruling by the secretary of state within twenty days of filing a notice of appeal in the supreme court of appeals in accordance with the rules of civil procedure and the appeal of a ruling by the secretary of state shall be advanced on the docket to permit a timely decision.
§3-8A-11. Voluntary compliance with expenditure and contribution limitations by candidates filing rejection of grant; penalties.

(a) A candidate filing a rejection of a grant from the election campaign fund may file an affidavit agreeing to voluntarily comply with the applicable contribution and expenditure limits no later than the deadline for filing certificates of announcement of candidacy. An affidavit filed under this section shall be binding unless rescinded:
(1) No later than ten calendar days after the deadline for filing certificates of announcement of candidacy in the case of primary expenditure limits; or
(2) No later than ten calendar days after the primary election in the case of general election expenditure limits.
(b) Notwithstanding any other applicable provision of this article, any candidate who files an affidavit as provided for in subsection (a) above and subsequently exceeds the expenditure limits as provided in subsection (a), section eight of this article shall pay the competitive elections fund an amount equal to the amount of excess contributions or expenditures. Such penalty shall not be an allowable campaign expense and shall be paid from the personal funds of the candidate.
§3-8A-12. Disbursement of funds.

(a) The secretary of state shall immediately review the:
(1) Statements of acceptance;
(2) Certificates of announcement; and
(3) Campaign finance reports of candidates for governor filing a statement of intent to accept a grant to determine the eligibility of a candidate filing a statement of acceptance.
(b) The secretary of state shall certify whether a candidate is eligible to receive a primary election grant no later than seven calendar days before the deadline for certifying the candidate for the primary election ballot.
(c) The secretary of state shall certify whether a candidate is eligible to receive a general election grant no later than seven calendar days after the certification of the primary election results.
(d) A separate determination shall be made for a primary anda general election grant.
(e) The certification by the secretary of state must indicate:
(1) Whether a candidate is eligible to receive a grant; and
(2) The amount of grant the candidate is eligible to receive.
(f) Each candidate who has been certified to receive a grant from the fund shall be entitled to distribution of funds on a one-to-one basis based on the amount of qualifying contributions.
Aggregate contributions from an individual in excess of five hundred dollars will be matched only up to five hundred dollars.
(g) If a candidate who has filed a statement of intent to accept a grant is not eligible to receive a grant, the certification must:
(1) State the reasons why the candidate is not eligible to receive a grant; and
(2) What action, if any, the candidate may take to qualify for a grant.
(h) The secretary of state shall certify a candidate who becomes eligible after the deadline in subsections (b) and (c) if the candidate qualifies after the deadline, but before the primary election or general election for which the funds are sought.
(i) The grant check shall be included with the certification.
(j) The amount of the grant may not exceed fifty percent ofthe applicable expenditure limit.
§3-8A-13. Return of grant funds.

(a)(1) Grant funds disbursed under section twelve of this article remain the property of the state until disbursed or encumbered for lawful campaign purposes.
(2) Grant funds that are not spent or unencumbered by a candidate on the date after the election in which the candidate participates revert to the state for deposit in the competitive elections fund. A deposit or refund derived from grant funds that are received by a candidate after the day of the election in which the candidate participates shall revert to the state. All reversions shall be returned to the secretary of state who shall deposit the money in the fund.
(b) Return of grant funds after the withdrawal date set forth in section four of this article does not remove applicable contribution and expenditure limits.
§3-8A-14. Lawful use of grant funds.

(a) A person may not:
(1) Expend;
(2) Authorize the expenditure of; or
(3) Incur an obligation to expend a grant;
for a purpose other than to advance the candidacy by lawful means of the specific candidate or candidates who qualify for the grant.
(b) A person may not:
(1) Expend;
(2) Authorize the expenditure of; or
(3) Incur an obligation to expend a grant;
after the date of an election where the grant is returnable to the state under section thirteen of this article.
(c) A candidate may not:
(1) Expend;
(2) Authorize the expenditure of; or
(3) Incur an obligation to expend a grant;
if the candidate violates the pledge required under section four of this article.
(d) A person may not prepare or transmit to the secretary of state evidence that purports to demonstrate the amount or purpose for which a grant has been used if such evidence specifies an amount or purpose for which a payment is received other than the true amount or purpose.
(e) All grants must be deposited in the candidate committee's campaign depository account.
§3-8A-15. Proof of payment.

(a) The candidate or the candidate's campaign treasurer shall deliver or transmit to the secretary of state sufficient proof of payment of all disbursements made from grant funds no later than the due date for the next campaign finance report occurring at least thirty days after the election in which the candidate received the grant, as provided in section five of this article.
(b) The secretary of state shall conduct a random audit ofthe accounts and records of a candidate filing a statement of intent to accept a grant.
§3-8A-16. Miscellaneous provisions.

(a) A candidate or a candidate's treasurer may use the candidate's statement of intent to accept a grant as security for a loan made for campaign purposes from an institution that ordinarily makes loans in the course of its business.
(b) To the extent that proceeds of a loan obtained under the provisions of subsection (a) of this section are used for a purpose set forth in section fourteen of this article repayment of the loan may be made from grant funds.
§3-8A-17. Penalties.

In addition to any other penalties which may be applicable under the election code, any candidate who receives a grant from the fund which exceeds the applicable expenditure limit, except as authorized in section eight of this article, or falsely reports qualifying matching contributions and thereby receives contributions from the fund to which he or she was not entitled may be cited and fined by the state elections commission in an amount equal to three times the amount at issue: Provided, That a complaint has been filed by the secretary of state and a hearing to determine whether the violation occurred was held before the state election commission.



NOTE: The purpose of this bill is to establish a system to provide public financing of election campaigns for governor. The bill allows taxpayers to designate up to twenty dollars on taxreturns to be used to establish a competitive elections fund to be used by eligible candidates in campaigns for governor. To qualify as an eligible candidate, the bill requires that a candidate receive not less than fifty thousand dollars in qualifying contributions from other sources in addition to meeting other campaign standards. The bill requires an eligible candidate for governor to swear and affirm to abide by contribution and expenditure limits. Expenditure limits are set at one million dollars in the primary election and one million dollars in the general election. An eligible candidate may receive five hundred thousand dollars from the fund for each election, and is required to participate in a reasonable number of televised candidate forums or debates. The bill provides that the secretary of state certify eligible candidates and issue grant moneys from the fund. The bill also requires candidates for governor to submit campaign finance reports on the 4th, 11th, 18th, 25th, 32nd and 45th days prior to an election.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.

Article eight-a is new; therefore, strike-throughs and underscoring have been omitted.