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A04980 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A4980E
 
SPONSOR: Silver (MS)
  TITLE OF BILL: An act to amend the election law, in relation to enacting the "2014 Fair Elections Act"; to amend the election law, the state finance law and the tax law, in relation to providing for optional partial public financing of certain election campaigns in this state; and to amend the general business law, in relation to additional surcharges   SUBJECT AND PURPOSE: To provide optional public financing of campaigns for statewide and state legislative offices and constitutional convention delegates.   SUMMARY AND DESCRIPTION OF PROVISIONS: This bill would create an optional public financing system for certain elections within the state of New York. Specifically, the bill adds a new Title III to Article 14 to provide for public financing of Primary and general election campaigns for statewide office, primary, general and special election campaigns for state legislative office and primary and general election campaigns for constitutional convention delegates. The "E Print" updates this legislation to remove provisions contained in the original print which have since been enacted in the 2014-15 Execu- tive budget creating an independent office of campaign finance enforce- ment and regulating the disclosure of so called "independent expendi- tures." Under current law, the newly enacted office of campaign finance enforcement has jurisdiction over all of Article 14 in the Election law. The public financing system that would be enacted under the new Title III in this bill would be staffed and overseen by a fair elections board. A fair elections enforcement counsel would oversee regulation and enforcement of the new public financing system. The bill also contains provisions to require the disclosure of interme- diaries and contributions collected on behalf of donors for candidates by intermediaries. The so called LLC loophole which treats said organ- izations like natural people for purposes of contribution limits would also be closed.   OPTIONAL PUBLIC FINANCING OF ELECTIONS:   CRITERIA FOR PARTICIPATION: To be eligible for public financing, a candidate for nomination or election to a statewide office, state legislative office or as a consti- tutional convention delegate must satisfy the legal requirements for having his or her name on the ballot, elect to participate in the public financing system, meet the threshold for eligibility and agree to file required statements and authorize a single participating committee.   ELIGIBILITY THRESHOLD: Governor: Must collect not less than $650,000 from at least 6,500 match- able contributions made up of sums of up to $250 per individual contrib- utor who resides in New York State. Lt. Governor (primary only), Attorney Gen. & Comptroller: Must collect not less than $200,000 from at least 2,000 matchable contributions made up of sums of up to $250 per individual contributor who resides in New York State. Senate: Must collect not less than $20,000 from at least 200 matchable contributions made up of sums of up to $250 per individual contributor who resides in New York State including at least $10,000 from at least 100 individual contributors who reside in the senate district, or in any part of any county in the Senate district, in which the seat is to be filled. Assembly: Must collect not less than $10,000 from at least 100 matchable contributions made up of sums of up to $250 per individual contributor who resides in New York State including at least $5,000 from at least 50 individual contributors who reside in the assembly district, or in any part of any county in the Assembly district, in which the seat is to be filled. At-large Delegate to a Constitutional Convention: Must collect not less than $20,000 from at least 200 matchable contributions made an of sums of up to $250 per individual contributor who resides in New York State. District Delegate to a Constitutional Convention: Must collect not less than $5,000 from at least 50 matchable contributions made up of sums of up to $250 per individual contributor who resides in the district, or any part of any county in the district, in which the seat is to be filled.   MATCHABLE CONTRIBUTIONS: Matchable contributions may be collected after January first of the year of the primary or general-election. For a special election, may be collected up to six months before the election. Consist of the net amount of contributions after deduction of the value of any food, drink or entertainment provided in exchange for the contribution. Only contributions from persons who reside in New York State are matchable.   THE MATCH: Eligible contributions up to $250 are matched at the rate of $6 for every $1.   MISC. RULES: To receive public funds for a primary election, a participating candi- date must agree to receive public funding for the general election. Participating candidates who are unopposed in a primary election may not receive public funds. Participating candidates are deemed unopposed unless there is at least one other candidate, as defined by § 14-100(7) of the election law, in the race for the same office. Participating candidates that are unopposed may raise private funds of up to 50% of the expenditure limit if there is a contest in the primary for at least one other party for such office. Such funds may only be raised with contributions of up to $2000 per contributor. Candidates who are challenged in a primary and who do not seek public funds are not eligible for public funds for the general election. Candidates who are unopposed in a general or special election may not receive public funds.   PERMISSIBLE AND PROHIBITED USES OF PUBLIC FUNDS: Public funds may be used only for qualified campaign expenditures during the year of the primary or general election. For a special election, such funds may only be used in the 3 months prior to the election. They may not be used for expenditures in violation of law, for payments to a candidate or to a relative of the candidate (or to any business entity of which such a person is an officer or employee or has a. ten percent or greater ownership interest) in excess of the fair market value for services rendered, for payments in excess of fair market value, for any expenditure after the candidate or the candidate's only remaining oppo- nent has been disqualified (until and unless reversed), to challenge an opponent's petitions or certificates, for non-campaign related food, drink or entertainment, or for gifts. Public funds may not be given as a campaign contribution or a transfer.   CONTRIBUTION LIMIT: All candidates who choose to participate in the public financing system have a contribution limit of $2,000 per contributor.   PUBLIC FUNDS RECEIPT LIMITS: The following limits on public funds apply to all candidates who partic- ipate in the public financing system: General Election Primary Governor $12,000,000 $9,000,000 Lt. Governor --------- $6,000,000 Attorney General $8,000,000 Same as Lt. Governor & Comptroller State Senator $ 400,000 $350,000 Member of Assembly $ 200,000 $150,000 At-Large Delegate $ 350,000 $ 75,000 District Delegate $ 75,000 $ 50,000 NOTE: A participating candidate may raise unlimited amounts of private money subject to the $2,000 per contributor limitation.   PARTY EXPENDITURES IN SUPPORT OF PARTICIPATING CANDIDATES: Notwithstanding the expenditure limits for participating candidates, a state party committee may make the following expenditures for services to participating candidates the party has nominated: Gov. and Lt. Gov. $2,500,000 Att. Gen or Comp. $1,000,000 Senate $100,000 State Assembly $50,000 At-large Delegate $50,000 District Delegate $10,000 * Transfers to a participating candidate may constitute up to 25% of such party expenditures.   ENFORCEMENT: Enforcement of the new Title III will be handled by the fair elections board office of enforcement counsel and also a fair elections board which will sit within the state board of elections. The fair elections board will be comprised of five members. The members of the board will be appointed as follows: one by the Governor and one by each of the four legislative leaders. The fair elections board will appoint a counsel who will oversee and enforce all campaign finance laws, rules and regulations on behalf of the fair elections board. All actions, rules and regulations issued by the fair elections board are subject to review at the discretion of the state board of elections.   DEBATES: Participating candidates are required to participate in at least one debate before the primary election and in at least one debate before the General election for which the candidate receives public funds, unless The participating candidate is running unopposed. A non-participating candidate may be a party to such debates.   SOURCES OF FUNDING: The bill provides for three separate sources of funding for the public financing regime: 1) The bill provides an income tax check-off of $5. Such monies would be paid into a separate fund, known as the New York State Fair elections fund. The taxpayers' tax liability would not be affected by making this designation. 2) In addition, the bill imposes an additional 10% surcharge on recov- eries for fraudulent practices relating to stocks, bonds, other securi- ties as well as all other recoveries having to do with fraud by the Attorney General. 3) If the state fair elections fund lacks the money to pay all properly certified claims, the deficiency will be paid from the general fund.   PENALTIES: CIVIL: * The failure to make proper campaign finance filings, as required by Title III and rules and regulations promulgated thereunder, shall subject the offender to a civil penalty of up to $5000. * Any person or authorized committee who knowingly and willfully violates any other Provision of Title III or any regulations promulgated thereunder shall subject the offender to a civil penalty of up to $10, 000,   CRIMINAL: * All prosecutions under Title III. for criminal acts shall he prose- cuted by the Attorney General. * The failure to make proper campaign finance filings, as required by Title II within 10 days or anyone that willfully violates any other provision of this title shall he guilty of a misdemeanor, and in addi- tion to such other penalties as may be provided by law, shall be subject to a fine not to exceed the amount of $10,000. * Any person who knowingly and willfully contributes, accepts or aids or participates in the acceptance of a contribution in an amount exceeding an applicable maximum specified in this article shall be guilty of a misdemeanor and shall be subject to a fine not to exceed the amount of $10,000. * Any person who knowingly and willfully makes a false statement or knowingly omits a material fact to the fair election board or an auditor designated by the fair elections board during any audit conducted pursu- ant to new section 14-314 of the Election Law shall be guilty of a class E felony. * In addition to any other sentence lawfully imposed upon a finding of guilt in a criminal prosecution commenced under the provisions of this bill, a court may order a defendant to repay to the fair elections board any public matching funds obtained as a result of any criminal conduct. This bill also requires disclosure for "bundlers". Bundlers are those individuals or organizations who aggregate a number of contributions from others and deliver them to a candidate or a candidate's authorized committee.   LEGISLATIVE HISTORY: A9885--D of 2012 & A8902--A of 2009.   JUSTIFICATION: This public financing bill provides a comprehensive yet balanced approach to the public financing of political campaigns. It contains significant but realistic limitations on expenditures and contribution receipts, a means for recovering public funds when they are unspent, excessive or used for prohibited purposes, and penalties for violations of the filing requirements or the expenditure limitations for partic- ipants. The "matching grant" structure of the program has several advantages. It will reduce the amount of time a candidate must spend raising money, leaving more time to address the issues that are important to the public. The matching component allows for participation by private citi- zens throughout the campaign while also conserving resources by ensuring that only candidates who can show substantial voter support and face opposition will be eligible to receive public funds. Overall, the bill strikes a balance that allows challengers and incum- bents to compete fairly while capping the amount of public funds that will be expended.   FISCAL IMPLICATIONS: There could be a cost in 2014 if a comptroller candidate participates. In 2016, there could be costs associated with participating candidates seeking election to state legislative office. In 2018, there could be costs associated with participating candidates seeking election to a statewide office or as a constitutional delegate. Other states that have public financing systems in place have had very low participation rates at first with increasing participation in later elections. The long term cost of the system in New York is unknown.   EFFECTIVE DATE: This act takes effect immediately; provided, however, that candidates for state comptroller will be eligible to participate in the public financing system beginning with the 2014 election, state legislative candidates will be eligible to participate in 2016 and all statewide candidates and constitutional delegates will be eligible to participate in 2018.
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