Legal Corner: Update to Campaign Finance Laws

Christina Estes-Werther, League General Counsel

The Arizona Legislature enacted several new laws impacting campaign finance, which became effective on July 3, 2015. As we move into election season, this article provides an overview of these new laws and how they affect municipalities.

What is a Political Committee?

A key piece of legislation this year redefined the definition of political committee, which is a fundamental term for the application of campaign finance laws. This revision was precipitated by the decision in Galassini v. Town of Fountain Hills, No. CV-11-02097-PHX-JAT, 2014 WL 6883063 (D. Ariz. Dec. 4, 2014). In 2011 Dina Galassini sued the Town of Fountain Hills alleging that her inability to protest a municipal bond measure without first registering as a political committee was unconstitutional because it burdened her right to free speech and association in violation of the First and Fourteenth Amendment of the United States Constitution. In December 2014 the U.S. District Court found the political committee definition unconstitutional due to vagueness and overbreadth. The State had previously intervened to defend the constitutionality of the statute and appealed.

Pending appeal, the Legislature enacted H.B. 2649 in response to the court's decision. See Laws 2015, Ch. 297. The legislation revised the definition of political committee to correct the grammar and overall structure. Further, the bill distinguished active political groups engaging in the political process from smaller, informal organizations for the purpose of clarifying the registration and reporting requirements.

The New Definition of Political Committee - A.R.S. § 16-901(19)

Given the court's reasoning for finding the definition unconstitutional, the definition of political committee has been amended to be a list of committee types rather than the block style provision previously contained in the law. Certain categories in the list remained unchanged including a candidate's campaign committee, a separate segregated fund, a political party, a political organization, and an exploratory committee. These committee types must continue to register, disclose, and report as previously required by law.

The legislation also removed two types of committees from the definition: an independent expenditure committee and a committee organized to support or oppose one or more candidates. Further, categories involving ballot measures or recall were revised to apply only to an association or combination of persons that circulates petitions. Therefore, the definition no longer includes a group opposing a ballot measure or recall. However, all the groups that were removed or revised may still be defined as a political committee under new criteria created in the legislation.

The new subsection (f) states that registration as a political committee is required if an association or combination of persons is organized, conducted or combined for the primary purpose of influencing the result of any election and knowingly receives contributions or makes expenditures of more than five hundred dollars in connection with any election during the calendar year. Upon meeting the criteria, the group must file a statement of organization with the filing officer within five business days after meeting the definition of a political committee. See A.R.S. § 16-902.01. For groups that do not intend to spend or receive more than five hundred dollars, the five hundred dollar threshold statement may still be filed; however, under the new definition of political committee, registration or reporting is not required until more than five hundred dollars is spent or received and the all the criteria are met.

Last month in the Galassini case, the State moved to dismiss the appeal as moot and vacate the District Court's order since the political committee definition has been revised. The State argued that under these new revisions, Ms. Galassini would not have been required to register under the criteria, and therefore her constitutional rights would not have been infringed.

Other Campaign Finance Updates

In addition to the political committee revision in H.B 2649, three other bills were enacted that impact campaign finance laws including changes to accounting requirements and contribution limits, the timing of penalties for late filings of campaign finance reports, and the ability of local governments to participate in the State's campaign finance system.

"Election" Redefined - A.R.S. § 16-901(7)

In 2013 H.B. 2593 amended the definition of "election," which created separate committees for the primary election and the general election. See Laws 2013, Chapter 98. This resulted in additional accounting requirements for two elections in the same cycle. In 2014 the Legislature once again modified the definition of "election" to clarify that only one committee was required for an election cycle while maintaining the separate accounting requirements for the primary election and the general election. See Laws 2014, Chapter 241. This year H.B. 2415 eliminated the separate accounting requirements for the primary and general election accounts, retroactive to November 4, 2014, the date of the 2014 general election, returning to the single committee accounting requirements in effect prior to the 2013 enactment. See Laws 2015, Chapter 286.

Contribution Limits - A.R.S. § 16-905

House Bill 2415 also increased contribution limits based on an election cycle, rather than each election. "Election cycle" is defined in the legislation as the period beginning 21 days after a general election and ending 20 days after the next successive general election for a particular elected office for purposes of candidate campaign committees and contribution limits. For local candidates, contributions increase from $2,500 per election to $6,250 per election cycle from an individual or single political committee, and from $5,000 per election to $12,500 per election cycle from a certified political committee (Super PAC). A new provision allows partnerships to contribute up to $6,250 for local candidates. The contribution must be allocated to the individual partners and are subject to the limits on the individual's contribution to that candidate. Additionally, individuals are able to contribute personal monies from a revocable trust. Several session law enactments allow the transfer of monies between accounts and committees as the separate accounting and contribution revisions overlap different election cycles. All contribution changes are retroactive to November 4, 2014.

Campaign Finance Reporting - A.R.S. § 16-918

House Bill 2595 amended when a late fee accrues on a political committee for filing a late campaign finance report. See Laws 2015, Chapter 292. Previously a filing officer was prohibited from accepting a late report without payment of the late fee at the time of filing. The Legislature revised the law to specify that a late penalty accrues until the day the late report is filed and requires the filing officer to accept the late report unless penalties have been assessed pursuant to an enforcement matter. Additionally, on the thirty-first day after the filing deadline, the filing officer may notify the appropriate enforcement officer that a committee has failed to file a report.

Use of the State Campaign Finance System - A.R.S. § 16-916.02

House Bill 2589 allows a political subdivision to opt in to the State's campaign finance system subject to legislative appropriation and the State's development of an electronic filing system compatible with local elections. See Laws 2015, Chapter 291. If the system is developed and a city or town desires to opt in, notice must be given to the Secretary of State thirty days before the first report is due for the calendar year, and a fee will be assessed on the municipality as determined by the Secretary of State. The Secretary of State's Office has initiated discussions on this project but currently there is no definitive timeline for the development of the system.

The Legislature was actively engaged in election laws this year and significant changes were made to Arizona's campaign finance laws. As election season begins for some local governments and others prepare for the 2016 election cycle, it is important to be aware of these changes and how they will affect your city or town. A more in-depth presentation will be provided at the Arizona Municipal Clerks' Association Annual Conference at the end of July. While this article provided background on campaign finance updates, the Legislature amended other election laws and more information can be found in the League's 2015 New Laws Report along with the resources listed below. Specific questions about campaign finance and other election matters can be directed to your attorney, the League, or the Secretary of State's Office.

Resources

League of Arizona Cities and Towns 2015 New Laws Report

Arizona State Legislature

Arizona Campaign Finance Guide, Secretary of State's Office
 

League of Arizona Cities and Towns
1820 W. Washington St.
Phoenix, AZ  85007
Phone: 602-258-5786
Fax: 602-253-3874
http://www.azleague.org

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