Ding, Dong, HB 7 is dead!

Flanked by the four legislative leaders, Gov. Pat Quinn today vetoed HB 7, the severely flawed contribution limits bill approved this May, and said he would work with all interested parties to craft a new campaign finance system by this fall.

Quinn said he has a “firm commitment” from the legislative leaders -- Senate President John Cullerton, Speaker Michael Madigan, House Republican Leader Tom Cross and Senate Republican Leader Christine Radogno – that they will work with his office and all interested parties to create a better campaign finance system. Gov. Quinn said he expects the new legislation will be finished in time for the legislative session in October, commonly known as the veto session.

ICPR strongly opposed HB 7 and we commend the governor for rejecting this legislation. We also applaud the legislative leaders, and sponsor Sen. Don Harmon, for agreeing to head back to the negotiating table and creating a better campaign finance system for Illinois.

We look forward to working with the leaders and Gov. Quinn to create a campaign finance system that creates meaningful campaign contribution limits, while also improving disclosure and enforcement provisions.

In his statements to the press, Gov. Quinn said he decided to veto the bill because of the feedback he heard from Illinois residents. We thank you for contacting Gov. Quinn, along with your lawmakers, to ask them to support meaningful campaign finance legislation, and we encourage you to continue speaking out.

HB 7 in Detail: Independent Expenditures

Today we resume our series on the problems with HB 7, beyond the astronomical dollar limits. Previous posts are here and here and here and here and here.

Independent expenditures are so common in federal elections that they are routinely referred to by the initials "IE." These IE campaigns spring up in part because federal law limits how much anybody can give to a candidate, so that groups that want to spend more in support or opposition to a candidate have to work outside of that candidate's campaign. And there are explicit disclosure and contribution limit rules for IE efforts in federal law.

It makes sense for Illinois to adopt rules for IE campaigns at the same time that we adopt limits on campaign contributions generally. But while HB 7 has a section on "independent expenditures," it uses the term in very different ways than federal law does. These differences threaten the effectiveness and legality of the bill.

While federal law applies to any organization, the provision in HB 7 dealing with independent expenditures applies only to those "made by a natural person," meaning single individuals acting alone. The immediate consequence of this is to suggest that no other entity can engage in "independent expenditures," and the consequences of that would be vast. It would turn the contribution limits into spending limits, for one, which would certainly draw a skeptical judicial eye in the inevitable challenge (note that the bill exempts parties and some other committees from this limit).

There are also apparent drafting problems in this section. The section ensures a modicum of disclosure from natural persons acting independently of any political committee. Individuals are required to report when they have spent $3,000 and again at $20,000. It is not clear that the bill would require any continuing obligation to report -- say, at increments of $20,000. Nor is it clear that the person would have any obligation to disclose at the time that they commit to making an expenditure. If they have to disclose only when they actually pay the bills, that disclosure may well come well after the ads have run, and long after Election Day.

To the extent that HB 7 tried to ensure that individuals making large expenditures in relation to candidates are covered by disclosure requirements, the bill is on a useful errand. But the section is drafted in ways that fall short of that goal and threaten the abilities of others to make their voices heard in the course of campaigns. It needs to be re-written.

HB 7 in Detail: Effective Date

All new laws take effect eventually. Many laws take effect within a few weeks of passage; in some instances, they'll take effect a few months after passage. But HB 7 isn't like most other bills. The majority of HB 7 would not take effect until January 1, 2011, more than 19 months after the House and Senate approved it.

There can be valid reasons for delaying implementation, but contribution limits should not be delayed that long. HB 7 deals with the rules of campaign finance, and changing those rules in such a fundamental way in the middle of a campaign can cause great confusion. When New Mexico adopted contribution limits in March of this year, their legislature set the effective date at November 3, 2010. That's a long way off, but it's the day after the 2010 General Election, so it makes sense -- as soon as the next election cycle is over, the rules change. And that's one of the two effective dates that we kicked around in regard to HB 24 (the other being, "immediately").

There are at least two significant problems with January 1, 2011 as a start date. First, it gives politicians 7 weeks after the 2010 General Election to get ready. One of ICPR's early legislative wins was the ban on taking campaign funds for personal use, which became law in 1998. In order to win approval of the law, we had to agree to a kind of "grandfather clause" that exempted funds raised before the effective date of the law. Wouldn't you know it, one legislator's campaign fund "borrowed" $100K on the day before the effective date. They paid it back the day after, but on the day the law took effect, they had an extra $100K in their fund, money they will be able to claim for personal use when they retire. (On the upside, there was only one legislator who was this crafty). Setting the effective date for contribution limits 7 weeks after the election will likewise allow for more last minute shenanigans, as contributors evaluate incumbents and decide which should get a final outsized donation before the law takes effect.

The other problem with the effective date is that it occurs just 7 weeks prior to the 2011 municipal elections. Candidate petitions will be due in December, objections will be decided and the ballot fixed and then the campaign finance rules will change. Candidates can take huge sums in December, 2010, but after January 1st anyone who didn't get their fundraising ramped up in time will have to comply with new rules. This scenario will play out in localities all over Illinois, including the City of Chicago.

There are serious policy reasons why the date should be moved up to November 3, 2010.

While we're on the subject of dates in the bill, one more bears notice. HB 7 creates a study commission to examine the question of public financing for judicial campaigns. A bill to create public financing for judicial elections has passed the Senate with bi-partisan majorities in each of the last three sessions. (Then-Sen. Barack Obama was the chief sponsor the first time it passed.) But House Speaker Michael Madigan never called the bill for a vote in the House. So it would seem the key issue for a study commission is to figure out what objections the House has to the bill. The study commission is supposed to report back on January 1, 2012 -- two and a half years from now. Will it really take that long to figure out what changes are needed to satisfy the House?

HB 7 in Detail: Calendar year cycles

Contribution limits always come with time limits. In federal elections, a contributor may give $2,400 to a candidate for each election, so that a contributor who maxed out before Election Day can give again after Election Day. HB 7 sets astronomically high limits on giving to campaigns, much higher than in federal elections. And it sets those limits by calendar year, rather than by election. This difference raises some legal and policy questions.

At least one court has declared that calendar year limits are unconstitutional. A federal appeals court ruled in SEIU v. Fair Elections Practice Commission (1992) that the State of California does not have a sufficient interest in calendar years to overcome a person's right to participate in the political process. Courts are divided on this; other courts have approved calendar year limits. But when setting limits, it is fair to ask why giving more than the amount in a given time frame should be prohibited. Both the amount and the time frame have to be justifiable, and it is not at all clear what is so magical about January 1, that limits should restart on that date.

There are also policy concerns. Our state elections include primaries, now in early February, and general elections, in early November. Setting limits by calendar year means that a donor who maxes in January, before the primary, cannot give again to that candidate until long after the general election.

Now, most incumbent legislators are not opposed in the primary, and about half are not opposed in either the primary or the general, so maybe they aren't so concerned about this issue. But how is it in the state's interest to say that if you give the max on December 31, you can give the max again the next day, but if you max out right before the primary, you cannot give again until after the general? How does that time-frame address the fact or appearance of corruption?

Too, setting limits by calendar year allows incumbents to get a leg up on fundraising. This is especially true for officials in four-year terms, who can take in a couple of calendar years’ worth of contributions before a challenger would even consider running for their seats. How is a challenger who sat out the first two years of a four-year term without raising any money to compete against an incumbent who holds regular golf outings?

The better time frame for all offices is to set limits by the election cycle.

HB 7 in Detail: Constituent Services

Today, ICPR continues its series on the problems with HB 7, beyond the astronomical dollar limits. Previous posts are here and here.

HB 7 creates a wholly new type of committee, one dedicated to "constituent services" -- a new type that's ripe for abuse. It's true that for many years, public officials have used personal funds or campaign contributions to supplement the public funding allocated to their district offices. While the proper solution to underfunded district offices is to increase the public allocation, the use of a small portion of campaign funds has become a normal practice in Illinois.

HB 7 institutionalizes this practice by creating new committees dedicated to supplementing the district office allocation. But it raises very troubling questions. Will incumbents be able to use their constituent services committees to produce and distribute mailers and hold public events? It will be difficult if not impossible to determine when such activities are political (aimed at voters in the district), as compared to expenditures that are (as HB 7 states) “related to constituent services and the maintenance of the official’s public office” as these are aimed at the exact same people, and may occur at the exact same time. Note that there are none of the restrictions on Constituent Services Committees that apply to mailings on behalf of legislators by the Legislative Printing Unit, for instance.

Furthermore, would donors be able to contribute money to an official’s constituent service committee at the same time that they lobby them? Session day fundraisers have been banned for over a decade. The law now bars legislators from holding "fundraising functions" on session days. But a separate bill, SB 54, makes a change to the section of the 2003 Ethics Act regarding session day fundraisers, inserting the word "political" before the phrase "fundraising functions" (this change is on page 18 of SB 54):

1 (5 ILCS 430/5-40)
2 Sec. 5-40. Fundraising in Sangamon County. Except as
3 provided in this Section, any executive branch constitutional
4 officer, any candidate for an executive branch constitutional
5 office, any member of the General Assembly, any candidate for
6 the General Assembly, any political caucus of the General
7 Assembly, or any political committee on behalf of any of the
8 foregoing may not hold a political fundraising function in
9 Sangamon County on any day the legislature is in session (i)
10 during the period beginning February 1 and ending on the later
11 of the actual adjournment dates of either house of the spring
12 session and (ii) during fall veto session. For purposes of this
13 Section, the legislature is not considered to be in session on
14 a day that is solely a perfunctory session day or on a day when
15 only a committee is meeting.

On its face, this change would seem to allow non-political fundraising. Perhaps the intent is merely to let legislators sponsor events for groups like United Way or the Cancer Society. But coupled with the creation of Constituent Services Committees, which are by intention for non-political purposes, this provision is very disturbing. Could a Constituent Services Committee hold a session day funder? The law doesn't say, and where the law is silent, loopholes are formed.

HB 7 in Detail: Defining when a committee "receives" a contribution

Today, ICPR continues its series on the problems with HB 7, beyond the astronomical dollar limits. Previous posts are here.

In revisions to the Election Code, HB 7 changes the definition of when a committee "receives" a contribution. The date of receipt determines when a committee must report a contribution, and is especially important during the A-1 reporting period: the final 30 days before an election, when committees are required to report contributions over $500 within two working days of receipt. The date of receipt also becomes a factor around the end of the regular reporting period, in determining when the public is told of a contribution.

Current law uses the word "receipt" but does not define it in statute, relying instead on the common sense of the word. The State Board of Elections has defined the word in regulation, relying again on the common sense meaning of the term.

HB 7 changes the definition to when the "candidate or campaign treasurer" has "actual personal physical possession of the contribution." This greatly narrows the definition in ways that are deeply problematic. When, for instance, would the candidate or treasurer have "actual personal physical possession" of an electronic funds transfer? An on-line contribution? An inter-bank exchange?

But there are deeper problems, and an example will illustrate: In 2006, Todd Stroger, then a candidate for Cook County Board President, missed statutory deadlines to make public reports of more than $250,000 in contributions received in the final weeks before the election. He later claimed that the contributions had been “received” by the committee but were being vetted, and so were not “received” by the officers of the committee. After much haggling, the State Board of Elections disagreed with Stroger's interpretation. Under current law, he was found to have violated the Election Code and was fined just over $25,000. This provision in HB 7 would validate his failure to disclose.

With this change, a committee could receive a contribution without triggering reporting requirements. Until the candidate or treasurer of the committee directed a staff person to hand the contribution to the treasurer or candidate, creating the necessary “actual personal physical possession,” there might be no obligation to report a contribution. There is nothing to require a committee to disclose once a staff person has told the candidate or treasurer of the receipt, so long as the staffer does not deliver "actual personal physical possession" of the contribution. The chair of the committee or other staff could have "actual personal physical possession" of a contribution indefinitely without ever triggering disclosure. Contributions received by the committee before Election Day could, under this proposal, be held until after the voting is over, then delivered to the treasurer, deposited, and used to pay debts incurred before Election Day. This could postpone disclosure for months, completely defeating the purpose of A1 reports.

This is a huge step backward, and one of several reasons why ICPR believes that HB 7 is worse than nothing.

HB 7 in Detail: Ballot Questions

HB 7, the campaign finance measure, has garnered a lot of media attention, none of it positive. (see, for instance, today's editorial in the Daily Herald). The bill was sent to Gov. Quinn on June 30, and he has until later this month to decide whether to sign it, veto it, recommend changes with an amendatory veto, or allow it to become law without his signature.

Our opposition to HB 7 is well known. Yes, we object to the provisions that would allow for astronomically high contributions. Where federal law allows contributions of $2,400 for people and $5,000 from political committees each election, HB 7 allows contributions of up to $10,000 from people and $90,000 from committees each calendar year. But that is far from the only flawed section of the bill. Over the next few days, we intend to outline our concerns with the non-limit parts of the bill. Some of these reflect ambiguous drafting. Some reflect intentional changes to the statute that will have adverse consequences. In the next few days, we'll focus on different parts of HB 7, other than the astronomical dollar amounts, in order to explain our concerns.

Start with how HB 7 treats ballot questions. HB 7 defines “single candidate committee” (on page 39 of the bill) as:

4 "Single-candidate committee" means a political
5 committee organized to support or oppose the election of a
6 single, specific candidate or public official or to support
7 or oppose one or more questions of public policy. (emphasis added)

The term "single candidate committee" is a misnomer, as the definition also encompasses committees formed to support or oppose ballot questions. It has been long established that governments can require financial disclosure as it relates to these questions of public policy, but cannot impose limits. At least since Buckley v Valeo, the US Supreme Court's landmark ruling on campaign finance, courts have held that there is no public interest in limiting giving to ballot question committees.

That's because the purpose of contribution limits is to address the fact or appearance of corruption and ballot questions are not "corruptible," or even sentient. Ballot questions do not exercise judgment or discretion. They pass or fail, and then it is up to other officials to implement them. Including ballot questions in the definition of a "single candidate committee" may be sloppy drafting or careless thinking but it is also certainly an invitation to a legal challenge.

In the next few days, we'll post concerns with other portions of the bill.