Enacts the "2010 Campaign Finance Reform Act"

The bill adds a new Title II to Article 14 to provide for public financ- ing 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.

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, authorize a single participating committee; and identify the source of all campaign material.

Eligibility Threshold:

Governor: Must collect not less than $900,000 from at least 9,000 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 $300,000 from at least 3,000 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 $25,000 from at least 250 matchable contributions made up of sums of up to $250 per individual contributor who resides in New York state including at least $12,500 from at least 125 individual contributors who reside 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 in which the seat is to be filled.

At-large Delegate to a Constitutional Convention: Must collect not less than $25,000 from at least 250 matchable contributions made up 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 in which the seat is to be filled.

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 $4 for every $1.

Triggers: If, however, a candidate who does not elect to receive public funds raises, spends or contributes his or her own personal funds in an amount greater than the expenditure limit established for such office for candidates participating in the public financing system, an addi- tional grant of public funds is given to the participating candidate.

Grants: A participating candidate may receive up to four grants equaling 25% of the amount of public funds previously received by the candidate as a match for matchable contributions obtained and reported to the state board of elections. Each of the grants is added to the original expenditure limit, effectively creating a new TRIGGER for the next grant when the nonparticipating candidate raises, spends or contributes his or her own personal funds in an amount greater than the new expenditure limit.

Misc. Rules: To receive public funds for a primary election, a partic- ipating candidate 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 whose opponents don't raise or spend 10% of the expenditure limit are deemed unopposed.

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 three 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 owner- ship interest), 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 (except brochures, buttons, signs and other campaign material).

Contribution Limit: All candidates who choose to participate in the public financing system have a contribution limit of $2,000 per contrib- utor.

Expenditure Limits: The following expenditure limits apply to all candi- dates who participate in the public financing system:

General Election Primary

$12,000,000 $1.1 per enrolled voter or $600,000, whichever is more, but not to exceed $6,000,000

Lt. Governor --- $1.1 per enrolled voter or $300,000, whichever is more, but not to exceed $3,000,000

Attorney General & $ 8,000,000 Same as Lt. Governor Comptroller

State Senator $ 375,000 $2.50 per enrolled whichever is more, but not to exceed $350,000

Member of Assembly $ 150,000 $2.50 per enrolled voter or $15,000 whichever is more, but not to exceed $150,000

At-Large Delegate $ 350,000 $.15 per enrolled voter or $75,000, whichever is more, but not to exceed $175,000

District Delegate $ 75,000 $1.10 per enrolled voter in the district or $5,000, whichever is more, but not to exceed $50,000

Party Expenditures in Support of participating Candidates:

Notwithstanding the expenditure limits for participating candidates, state party committees may make the following expenditures for services to participating candidates:

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.

Tax Check-off: 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 Campaign Finance Fund. The taxpayers' tax liability would not be affected by making this designation. If the state campaign finance fund lacks the money to pay all properly certified claims, the deficiency will be paid from the general fund.

TITLE I

The bill amends Article 14 of the election law to designate the existing law Title I, and adds the following:

* Identification of Independent Political Communications: The bill requires all independent political communications that expressly advocate for the election or defeat of a candidate or the Success or defeat of a ballot proposal to identify the source of the funding for such communication.

* Independent Expenditures: The bill requires reporting of independent expenditures that cost more than $1000 and expressly advocates for the election or defeat of a clearly identified candidate or the success or defeat of a ballot proposal. Independent expenditures made

after the last filing before an election must be reported within 24 hours.

* The bill adds an identification requirement for independent political communications, a filing requirement for independent expenditures and a requirement that certain candidates disclose their intent to spend personal funds in a campaign.

* Lowering Contribution Limits: The bill sets contribution limits for campaigns for statewide office or citywide office in New York City at $2,400 for candidates for election and $2,400 for candidates for nomination (or between $2,000 and $6,000 for minor party candidates, based on an existing formula that is unchanged by this bill). The bill would set campaign contribution limits for candidates for State Senate and State Assembly at $2,400 per election (or a total of $4,800 for a primary and general election cycle), the current federal level. This bill would not affect local laws currently in place in New York City, which currently set limits for citywide candidates that are lower than the limits in state law.

* Disclosure of the Intent to Use Personal Funds: Within 3 days of the last day to file designating petitions, all candidates for statewide office, state legislative office or constitutional convention delegate must file a statement with the state board of elections disclosing whether the candidate has or will contribute personal funds to his or her committee and estimating the amount of such funds.

* Personal Use of Campaign Funds: Delineates how candidates for elected office can and cannot use their campaign funds, establish rules and methods for the disposal of excess campaign funds and for the timing of such disposal, require that they specifically detail campaign contributions by lobbyists and prohibit the soliciting or receiving of contribution for campaigns for state or federal office by senior policy makers in the executive and legislative branch.

* Campaign Finance Enforcement: The bill codifies an enforcement unit within the State Board of Elections (SBOE) with a mandate that at least 35 percent of the SBOE's annual budget be dedicated to the unit to promote increased enforcement of campaign finance laws.

The bill expands the jurisdiction of the enforcement unit and promote the independence of the enforcement counsel by making the office a 4 year term, and the office of special counsel, the other legal unit at the SBOE, a four-year term and codifies the requirement that the deputy in each unit be a member of the opposite political party than the counsel.

The bill changes the way that campaign finance enforcement matters are processed at the SBOE by requiring three of the four SBOE commissioners to vote to stop an investigation by the enforcement counsel, rather than requiring, as current law does, three votes to begin an investigation.

The bill mandates that all votes to stop an investigation, or to act on the recommendation of the enforcement counsel after an investigation, Occur in public, as currently all discussion and all determinations made regarding campaign finance enforcement matters Occur in executive session and not in public.

Penalties:

TITLE I

The knowing and willful failure to identify the source of independent expenditures will subject the person or entity to a civil fine equal to $1000 or the cost of the communication, whichever is greater.

A failure to file the statements required for an independent expenditure shall subject the person or entity to a civil fine of $500.

A knowing and willful failure to file the statement required regarding the use of personal funds in a campaign shall subject the candidate to a civil fine of up to $5000.

TITLE II

The failure to make proper campaign finance filings, as required by Title II and rules and regulations promulgated thereunder, shall subject the offender to a civil penalty of up to $5000.

If a participating candidate's aggregate expenditures exceed the expenditure limitations, the candidate is liable for a civil penalty in an amount equal to three times the amount of the excess.

Legislative history

New bill.

Justification

Public Financing:

This 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 participants.

The hybrid "matching plus 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 citizens 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. The grant components, containing four separate triggers, allow candidates that are outspent to remain competitive without giving a participating candidate an unnecessary windfall.

The identification requirement for independent political communications, the filing requirement for independent expenditures and the requirement that candidates disclose their intent to spend personal funds in a campaign provide both participants and nonparticipants with a more transparent and fairer political dynamic. The opportunity for party committees to make limited expenditures in support of participating candidates provides flexibility to both the candidates and the parties.

Overall, the bill strikes a balance that allows challengers and incumbents to compete fairly while capping the amount of public funds that will be expended.

Contribution Limits for Non-Participating Candidates:

Presently a single contributor may give up to $55,900 to a candidate during a single election cycle ($18,100 for the primary and $37,800 for the general election). This figure is the highest among any of the 45 states that place limits on campaign contributions. It is important that the legislature take steps to reduce the excessive contributions currently permitted by law.

Personal Use of Campaign Funds:

This bill addresses a number of concerns with how campaign funds are raised and expended. Currently, New York's election law, allowing candidates to spend campaign funds for "any lawful purpose," is among the most lax in the nation. While spending campaign funds for personal use is technically prohibited, the lack of any definition for what constitutes a personal use renders the provision meaningless. This shortcoming in the law is striking when compared to the detailed restrictions issued by the Federal Election Commission. And when it is combined with the provision that allows elected officials to retain campaign funds for any use related to the holding of public office, it gives legislators virtual carte blanche for expenditures that are, at best, tangentially related to their campaigns and official duties.

Examples of successful, unsuccessful or former candidates using excess campaign funds for luxury vehicles, sky boxes, extravagant meals, international travel and home improvements have regularly appeared in newspapers across the state. There is a growing and justifiable public perception that campaign funds are being used to enhance the post election lifestyles of candidates for public office. Such largesse turns the ideal of representatives serving the public on its head.

Campaign donors have a reasonable expectation that their contributions will be used for the candidate's election efforts and the execution of his or her duties. They do not expect their contributions to subsidize personal spending. This legislation addresses these abuses while preserving elected officials' ability to fund the legitimate work of their offices.

By adding a detailed list, both in generalities and specific examples, to the current language, the line as to what can and cannot be done is brightly drawn. In addition to the obvious need to spend campaign funds on campaigns, the expanded definition makes it clear that expenditures related to holding public office are restricted to those costs that would not otherwise be incurred if an individual was a private citizen.

In addition, the bill sets limits on how long campaign committees can be maintained by former candidates. Reports of committees continuing years after campaigns were ended are all too common. By setting time limits and also specifying how excess funds can be disbursed, this abuse will be eliminated.

The bill also requires campaign committees to identify contributions from registered lobbyists. This is in response to concerns that recent changes in the interpretation of what constitutes an illegal gift by the commission will result in the use of campaign funds from lobbyists in place of the prohibited gifts from lobbyists. Coupled with the more stringent standard for the personal use of campaign funds, the detailing of lobbyists contributions will make it all the more difficult to justify such expenditures.

Finally the bill prohibits the soliciting or receiving of contributions for a campaign for state or federal office while in a senior policy position in the legislative or executive branch. This is in response to the recent disclosure that the head of an executive agency who acknowledged that he was not a candidate for any office, continued to raise and spend campaign funds to enhance his life style. To engage in such actions while overseeing an industry which is actively and at great expense lobbies state government, at the very least gives the impression that favorable decisions were being sold and, true or not, feeds public cynicism. The legislation, again in conjunction with the new, more clearly delineated limits on the use of campaign funds, prohibits such misuse of campaign funds.

Strengthened Campaign Finance Enforcement:

To promote increased enforcement of campaign finance reform laws, the legislation creates an enforcement unit within the New York State Board of Elections (BOE). Additionally, it expands the jurisdiction of the enforcement unit and promotes the independence of the enforcement counsel by making the office a four-year term.

The bill also requires that at least 35% of the annual State Board of Elections budget go toward paying the expenses of the enforcement unit.

Fiscal implications

There would be no cost in 2011, 2012 and 2013. In 2014, there could be costs associated with participating candidates seeking election to a statewide office and constitutional delegate. There will be no cost in 2015. In 2016, there could be costs associated with participating candidates seeking election to state legislative office. There would be no cost in 2017. In 2018, there could be costs associated with participating candidates seeking election to a statewide office, state legislative office and 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 all statewide candidates and constitutional delegates will be eligible to participate in 2014 and state legislative candidates will be eligible to participate in 2016.