Amends TCA Title 2, Chapter 10; Title 3, Chapter 6; Title 4, Chapter 55; Title 8, Chapter 50, Part 5 and Title 57.

This bill changes the defined term "political campaign committee" to "political action committee" throughout the code, and defines a "political action committee" to mean the following:<br /> <br /> (1) A club, corporation, association, or other group of persons that receives contributions or makes expenditures to support or oppose a measure; or<br /> <br /> (2) A club, corporation, association, or other group of persons that receives contributions or makes expenditures to support or oppose two or more candidates for public office during a calendar year, and the contributions or expenditures in the aggregate exceed $2,000.<br /> <br /> FILINGS BY CANDIDATES AND COMMITTEES<br /> <br /> Present law requires the following:<br /> <br /> (1) That each candidate for state public office and political campaign committee in a state election must file with the registry of election finance ("registry") a statement of all contributions received and all expenditures made by or on behalf of the candidate or committee. Present law requires the statement of each candidate to include the date of receipt of each contribution, and the statement of a committee to include the date of each expenditure that is a contribution to a candidate in any election; and<br /> <br /> (2) That each candidate for local public office and political campaign committee for a local election must file with each county election commission of the county where the election is held a statement of all contributions received and all expenditures made by or on behalf of such candidate or committee. Present law requires the statement of each candidate to include the date of receipt of each contribution, and the statement of a committee to include the date of each expenditure that is a contribution to a candidate in any election.<br /> <br /> This bill adds to (1) and (2) above that the report of expenditures by a political action committee, which replaced political campaign committee, must consist of all amounts paid by the committee from received contributions.<br /> <br /> CAMPAIGN ACCOUNTS<br /> <br /> Present law requires a candidate or political campaign committee that complies with (1) and (2) above, as well as laws requiring campaign funds to be deposited into and maintained in an insured financial institution, the United States comptroller of the currency, or the federal reserve board, to ensure that all funds in a campaign account remain separate and segregated from other funds, including from personal funds. A candidate or committee found to be in violation of this provision commits a Class 2 offense and is subject to a civil penalty by the registry of not more than $25.00 per day, up to a maximum of not more than $10,000.<br /> <br /> Pursuant to this bill, the above requirement no longer applies to a committee, and a candidate found to be in violation is no longer subject to a civil penalty; however, this bill requires a candidate to additionally ensure the following:<br /> <br /> (1) That all funds in a campaign account remain separate and segregated from other funds, including from the funds of a political action committee controlled either directly or constructively by the candidate; and<br /> <br /> (2) That all credit transactions incurred on behalf of the candidate's campaign activities or officeholder activities are separate and segregated from other credit transactions incurred on behalf of the candidate personally, the candidate's business, if any, the candidate's non-campaign or non-officeholder related activity, or the activity of a political action committee controlled either directly or constructively by the candidate.<br /> <br /> SWORN COMPLAINTS<br /> <br /> Under present law, a registered voter of this state may file a sworn complaint alleging that a statement filed regarding an election for which that voter was qualified to vote does not conform to law or to truth, or that a person has failed to file a statement required by law.<br /> <br /> Present law requires all sworn complaints on a statement of a candidate for state public office or a statewide political campaign committee, to be filed in the office of the registry. This bill removes the reference to a statewide political campaign committee, and, instead, makes the requirement apply to a political action committee contributing to a candidate for state public office, or one registered with the registry.<br /> <br /> Additionally, this bill adds the following to the above provisions:<br /> <br /> (1) If the complaint is not factually and legally sufficient, then this bill requires the registry to dismiss the complaint and notify the complainant. If the registry determines the complaint is factually and legally sufficient, then this bill authorizes the registry to refer the complaint to the office of the attorney general, who is required to conduct a preliminary investigation and report the findings to the registry. Alternatively, if the registry determines that the complaint is factually and legally sufficient and that the circumstances are appropriate, then this bill authorizes the registry to order the registry's staff to conduct an investigative audit of the alleged violator's campaign finance disclosure reports. In such instances, the alleged violator is obligated to produce all documentation required to be maintained by financial disclosure law and to comply with all requests for documentation or clarification properly requested by the registry's auditor or counsel; and<br /> <br /> (2) Once either the attorney general's investigation or the audit is complete, this bill requires the registry to set the complaint for a show cause hearing to determine if the registry should take action regarding the complaint, including assessing civil penalties.<br /> <br /> Present law requires sworn complaints on a statement of a candidate for local public office or a local political campaign committee, to be filed in the office of the district attorney general who represents the judicial district in which the voter resides. This bill removes this requirement for complaints of a local political campaign committee but applies the requirement to complaints of a political action committee contributing to a candidate for local public office, or one registered with a local election commission.<br /> <br /> Present law requires each district attorney general to do the following:<br /> <br /> (1) Investigate a sworn complaint filed in accordance with the Campaign Financial Disclosure Act of 1980; and<br /> <br /> (2) Seek injunctions from the chancery courts of this state to enforce the Campaign Financial Disclosure Act of 1980 against a committee or candidate about whom a sworn complaint has been filed, if justified.<br /> <br /> This bill removes (2) and adds that a district attorney is required, upon review and completion of an investigation of a complaint, to refer its investigative report to the registry for consideration of the assessment of civil penalties.<br /> <br /> SHOW CAUSE HEARING<br /> <br /> This bill authorizes the registry, upon review of an investigative report received from a district attorney general as described above, to dismiss the complaint if the complaint is not factually and legally sufficient. This bill requires the registry to notify the complainant of the dismissal. If the registry determines the complaint is factually and legally sufficient, then this bill authorizes the registry to set the complaint for a show cause hearing to determine if the registry should take action regarding the complaint, including, but not limited to, assessing civil penalties.<br /> <br /> <br /> This bill authorizes both the alleged violator and the complainant to, upon request, present evidence before the registry at, or prior to, any show cause hearing. This bill requires the registry to notify the alleged violator and the complainant that evidence will be presented to the registry if requested. This bill authorizes the registry to determine the appropriate procedure for presenting evidence. After the conclusion of the hearing, this bill requires the registry to reduce its decision to writing and provide a written statement of the registry's decision to all parties.<br /> <br /> <br /> CLASS 2 OFFENSES<br /> <br /> Present law authorizes the registry to impose a civil penalty for a violation of the Campaign Financial Disclosure Act of 1980. Present law defines "Class 2 offense" as failing to file a report required by the Campaign Financial Disclosure Act of 1980 within 35 days after service of process or receipt of notice by registered or certified mail of an assessment or other violation of the Campaign Financial Disclosure Act of 1980. Under present law, a Class 2 offense is punishable by a maximum civil penalty of not more than $10,000 or 15 percent of the amount in controversy, if 15 percent of the amount in controversy is greater than $10,000.<br /> <br /> To request a waiver or reduction, or to contest a Class 2 penalty imposed by the registry, present law requires a candidate for a state or local public office to file a petition with the registry. The petition may be considered as a contested case proceeding under the Uniform Administrative Procedures Act. This bill adds that in a contested case proceeding, the candidate or political action committee bears the burden of proof to establish that the candidate or committee's conduct, or submitted reports, complied with the requirements of the Campaign Financial Disclosure Act of 1980.<br /> <br /> CAMPAIGN FUNDS<br /> <br /> Present law requires a candidate for public office in this state to allocate an unexpended balance of contributions after the election in certain ways. Generally, present law prohibits a candidate from using campaign funds for any other purpose other than a contribution or expenditure as defined by the Campaign Financial Disclosure Act of 1980; the disbursement of campaign funds for a candidate's own personal use is not permitted. For the purpose of this law, "personal use" means any use by which the candidate for public office or elected public official would be required to treat the amount of the expenditure as gross income under federal law, or any subsequent corresponding Internal Revenue Code section. Under present law, a violation of this provision is a Class 2 offense as defined above.<br /> <br /> TRANSFERS OF FUNDS OR ASSETS<br /> <br /> This bill deletes current provisions regarding the transfer of funds or assets from a candidate's campaign committee or account for a federal election to a political campaign committee of or for such candidate for public office in this state, and transfers of excess funds for election to a local public office, and provides, instead, the following:<br /> <br /> (1) Transfers of funds or assets from a candidate's campaign account or a political action committee controlled by a candidate for a federal election to a candidate's campaign account or a political action committee controlled by the candidate for the candidate in an election for a state or local public office in this state are prohibited; and<br /> <br /> (2) Transfers of excess funds or assets from a candidate's political action committee or campaign account for election to a local public office to a political action committee or campaign account of or for the candidate in an election to the general assembly or governor in this state, or to federal office, are prohibited.<br /> <br /> CAMPAIGN CONTRIBUTIONS<br /> <br /> This bill prohibits a candidate for state or local public office, or an elected state or local public office holder, from accepting a contribution with respect to an election in excess of the loans and obligations outstanding from the election after the close of the reporting period following the date of the election, not including the reporting period in which the election occurs. This bill authorizes a successful candidate for state or local public office who reports no outstanding loans or obligations to continue to accept contributions for the purpose of defraying officeholder expenses until the close of the reporting period following the date of the election, not including the reporting period in which the election occurs.<br /> <br /> Beginning with the reporting period following the date of the election, not including the reporting period in which the election occurs, this bill requires a candidate for state or local public office reporting an unexpended balance or an outstanding loan or obligation who has not affirmatively created a new campaign account for the next election, in addition to other reporting requirements, to file a complete copy of the candidate's campaign account banking statements corresponding to the full term of the reporting period with the registry or local election commission, as applicable.<br /> <br /> This bill requires such banking statements to continue to be filed by the candidate for each required reporting period until the candidate no longer possesses an unexpended balance of funds or an outstanding loan or obligation, or until the candidate transfers the funds, loans, or obligations to another campaign fund for a subsequent election, whichever occurs earlier. A failure to file the required banking statements is a Class 2 offense as defined above.<br /> <br /> Pursuant to this bill, the above provision does not prevent the following:<br /> <br /> (1) A candidate who is a candidate in the general election, or such candidate's authorized political action committee, from paying primary election loans and obligations with funds which represent contributions made with respect to the general election; or<br /> <br /> (2) A candidate who is a candidate in a run-off election, or such candidate's authorized political action committee, from paying loans and obligations with respect to the previous election with funds which represent contributions made with respect to the runoff election.<br /> <br /> This bill requires contributions received by a candidate or political action committee to be attributed to the appropriate election, and reported, in accordance with the following criteria:<br /> <br /> (1) In the case of a contribution designated in writing by the contributor for a particular election, the election so designated; and<br /> <br /> (2) In the case of a contribution not designated in writing by the contributor for a particular election, the next election after the contribution is made. <br /> <br /> This bill further requires the following:<br /> <br /> (1) That a contribution designated in writing for a particular election, but made after that election, must be made only to the extent that the contribution does not exceed the contribution limits from such election. To the extent that such contribution exceeds the contribution limits from such election, this bill requires the candidate or the candidate's authorized political action committee to either return the contribution to the contributor or obtain written authorization from the contributor to redesignate the contribution to another election within 60 calendar days of the receipt of the contribution; and<br /> <br /> (2) That a contribution made by more than one person, except for a contribution made by a partnership, must include the signature of each contributor on the check, money order, or other negotiable instrument or in a separate writing. If a contribution made by more than one person does not indicate the amount to be attributed to each contributor, then the contribution is deemed to be attributed equally to each contributor.<br /> <br /> This bill provides that the limitations on contributions apply separately to contributions made by spouses, even if only one spouse has income as long as each spouse signs the check, money order, or other negotiable instrument or the separate contributions are designated in writing by the contributing spouses as being independent contributions. This bill requires contributions made from an account shared by spouses, regardless of the type of account, to be presumed to be made by the individual authorizing the contribution alone, absent the written designation of independent contributions. This bill further provides that the limitations on contributions apply separately with respect to each election, and an election in which a candidate is unopposed is a separate election for the purposes of the limitations.<br /> <br /> WAIVERS, REDUCTIONS, AND PENALTIES<br /> <br /> To request a waiver or reduction or in any way to contest a penalty imposed by the staff of the registry, present law requires a person to file a petition with the registry. The petition must be considered as a contested case proceeding under the Uniform Administrative Procedures Act. This bill clarifies that a political action committee is also required to file a petition with the registry to request a waiver or reduction, or to contest a penalty imposed by the registry; and adds that in such a case proceeding, the person or committee bears the burden of proof to establish that the person or committee's conduct complied with the Campaign Contribution Limits Act of 1980.<br /> <br /> Under present law, if a civil penalty lawfully assessed under the Campaign Contribution Limits Act of 1980 against a multicandidate political campaign committee is not paid within 30 days after the assessment becomes final, then the treasurer and the officers of the committee listed on the forms on file with the registry at the time the conduct that gave rise to the civil penalty occurred are ineligible to qualify for election to a state or local public office until the penalty is paid.<br /> <br /> This bill replaces the term " multicandidate political campaign committee" with "political action committee"; changes "30 days" to "30 calendar days"; and adds that if a civil penalty lawfully assessed and all lawfully assessed costs attendant to the penalty are not paid within 30 calendar days, then the political action committee owing the civil penalty is prohibited from receiving contributions; making expenditures to support or oppose candidates; or making expenditures to other political action committees. This bill further adds that the treasurer and officers of such delinquent political action committee are prohibited from creating another political action committee or serving as a treasurer or an officer for another political action committee until such penalty and all costs attendant to the penalty are paid in full.<br /> <br /> ANNUAL REPORT BY REGISTRY<br /> <br /> This bill changes from January 15 to July 1, the date by which the registry must provide an annual report to the governor and the general assembly concerning the administration and enforcement of the disclosure law that includes recommendations by the registry or a statement that the registry makes no recommendations.<br /> <br /> ON FEBRUARY 23, 2023, THE SENATE ADOPTED AMENDMENT #1 AND PASSED SENATE BILL 160, AS AMENDED.<br /> <br /> AMENDMENT #1 removes the newly created definition for "political action committee," and substitutes "political campaign committee" for that term throughout the bill.<br /> <br /> ON MARCH 13, 2023, THE HOUSE SUBSTITUTED SENATE BILL 160 FOR HOUSE BILL 183, ADOPTED AMENDMENT #1 AND PASSED SENATE BILL 160, AS AMENDED.<br /> <br /> AMENDMENT #1 incorporates the change made by Senate Amendment #1 and revises the provision of this bill prohibiting transfers of funds or assets from a candidate's campaign account or a political action committee controlled by a candidate for a federal election to a candidate's campaign account or a political campaign committee controlled by the candidate for the candidate in an election for a state or local public office in this state, such that only such transfers from a candidate's campaign account or a political action committee of or for such candidate, instead of controlled by a candidate, are prohibited.<br />