GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1999

H	1 

HOUSE BILL 921*

Short Title:  Campaign Finance Changes.	(Public)

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Sponsors: Representatives Baddour, Alexander, Bonner; Barefoot, Goodwin, Hurley, Insko, Luebke, and Wainwright.

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Referred to:  Election Law and Campaign Finance Reform.

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April 5, 1999

A BILL TO BE ENTITLED
AN ACT TO MAKE CHANGES IN THE CAMPAIGN FINANCE LAWS.
The General Assembly of North Carolina enacts:
– REDEFINING "POLITICAL COMMITTEE,"PROHIBITING CIRCUMVENTION OF CONTRIBUTION LIMITS BY PROLIFERATION OF COMMITTEES, AND RELATED CHANGES.
Section 1.(a) G.S. 163-278.6(14) reads as rewritten:
"(14)	The term 'political committee' means a combination of two or more individuals, or any person, committee, association, organization, or other entity that makes, or accepts money to make, contributions or expenditures and has one or more of the following characteristics:
a.	Is controlled by a candidate;
b.	Is a political party or executive committee of a political party or is controlled by a political party or executive committee of a political party;
c.	Is created by a corporation, business entity, insurance company, labor union, or professional association pursuant to G.S. 163-278.19(b); or
d.	Has as a significant purpose to support or oppose the nomination or election of one or more clearly identified candidates.
	Supporting or opposing the election of clearly identified candidates includes supporting or opposing the candidates of a clearly identified political party.
	An entity is presumed to have as a significant purpose to support or oppose the nomination or election of one or more clearly identified candidates if it contributes or expends or both contributes and expends during an election cycle more than three thousand dollars ($3,000). Contributions to referendum committees and expenditures to support or oppose ballot issues shall not be facts considered to give rise to the presumption.
	If the entity qualifies as a 'political committee' under sub-subdivision a., b., c., or d. of this subdivision, it continues to be a political committee if it receives contributions or makes expenditures or maintains assets or liabilities. A political committee ceases to exist when it winds up its operations, disposes of its assets, and files its final report. Entities that are financed, maintained, or controlled by the same entity, as determined by the State Board of Elections, shall be considered as one entity for the purpose of determining whether they are a political committee."
Section 1.(b) G.S. 163-278.6 is amended by adding a new subdivision to read:
"(8a)	The term 'election cycle' means the period of time from January 1 after an election for an office through December 31 after the election for the next term of the same office. Where the term is applied in the context of several offices with different terms, 'election cycle' means the period from January 1 of an odd-numbered year through December 31 of the next even-numbered year."
Section 1.(c) G.S. 163-278.13 is amended by adding a new subsection to read:
"( e2)	Political committees and candidates' campaigns that are financed, maintained, or controlled by the same entity, as determined by the State Board of Elections, shall be considered as one political committee for the purposes of applying the contribution limits of this section. No individual or other entity shall contribute funds to a candidate or political committee for the purpose of circumventing the contribution limits of this section."
Section 1.(d)	G.S. 163-278.16(a) reads as rewritten:
"(a)	Except as provided in G.S. 163-278.6(14) and G.S. 163-278.12, no contribution may be received or expenditure made by or on behalf of a candidate, political committee, or referendum committee:
(1)	Until the candidate, political committee, or referendum committee appoints a treasurer and certifies the name and address of the treasurer to the Board; and
(2)	Unless the contribution is received or the expenditure made by or through the treasurer of the candidate, political committee, or referendum committee."
– REDEFINING "CONTRIBUTION"AND "EXPENDITURE"; DEFINING "INDEPENDENT EXPENDITURE"; AND CHANGING THE SPECIAL REPORTING REQUIREMENT FOR CONTRIBUTIONS AND INDEPENDENT EXPENDITURES.
Section 2.(a)	G.S. 163-278.6(6) reads as rewritten:
"(6)	The terms 'contribute' or 'contribution' mean any advance, conveyance, deposit, distribution, transfer of funds, loan, payment, gift, pledge or subscription of money or anything of value whatsoever, to a candidate, political committee, political party, or referendum committee, whether or not made in an election year, and any contract, agreement, promise or other obligation, whether or not legally enforceable, to make a contribution. These terms include, without limitation, such contributions as labor or personal services, postage, publication of campaign literature or materials, in-kind transfers, loans or use of any supplies, office machinery, vehicles, aircraft, office space, or similar or related services, goods, or personal or real property. These terms also include, without limitation, the proceeds of sale of services, campaign literature and materials, wearing apparel, tickets or admission prices to campaign events such as rallies or dinners, and the proceeds of sale of any campaign-related services or goods. Notwithstanding the foregoing meanings of 'contribution,' the word shall not be construed to include services provided without compensation by individuals volunteering a portion or all of their time on behalf of a candidate, political committee, or referendum committee. The term 'contribution' does not include an 'independent expenditure.'"
Section 2.(b)	G.S. 163-278.6(9) reads as rewritten:
"(9)	The terms 'expend' or 'expenditure' mean any purchase, advance, conveyance, deposit, distribution, transfer of funds, loan, payment, gift, pledge or subscription of money or anything of value whatsoever, whether or not made in an election year, and any contract, agreement, promise or other obligation, whether or not legally enforceable, to make an expenditure, to support or oppose the nomination, election, or passage of one or more clearly identified candidates, or ballot measure. Supporting or opposing the election of clearly identified candidates includes supporting or opposing the candidates of a clearly identified political party. The term 'expenditure' also includes any payment or other transfer made by a candidate, political committee, or referendum committee. The special definition of 'expenditure' in G.S. 163-278.12A applies only in that section."
Section 2.(c)	G.S. 163-278.6 is amended by adding a new subdivision to read:
"(9a)	The term 'independently expend' or 'independent expenditure' means an expenditure to support or oppose the nomination or election of one or more clearly identified candidates that is made without consultation or coordination with a candidate or agent of a candidate whose nomination or election the expenditure supports or whose opponent's nomination or election the expenditure opposes. Supporting or opposing the election of clearly identified candidates includes supporting or opposing the candidates of a clearly identified political party. A contribution is not an independent expenditure. As applied to referenda, the term 'independent expenditure' applies if consultation or coordination does not take place with a referendum committee that supports a ballot measure the expenditure supports, or a referendum committee that opposes the ballot measure the expenditure opposes."
Section 2.(d)	G.S. 163-278.12 reads as rewritten:
"§ 163-278.12.  Special reporting of contributions and independent expenditures.
(a)	Subject to G.S. 163-278.16(f) and 163-278.14, it shall be permissible for an individual other than a candidate to make independent expenditures.  In the event an individual or entity permitted to make independent expenditures but not otherwise required to report them makes independent expenditures in excess of one hundred dollars ($100.00), then, within 10 days after making such an independent expenditure, that individual or entity shall file a statement of such independent expenditure with the appropriate board of elections using forms and timetables prescribed by the State Board of Elections.
(b)	Any entity other than an individual that is permitted to make contributions but is not otherwise required to report them shall report each contribution in excess of one hundred dollars ($100.00) with the appropriate board of elections using forms and timetables prescribed by the State Board of Elections.
(c)	In prescribing the forms in subsections (a) and (b) of this section, the State Board of Elections shall require the identification of each entity making a donation of more than one hundred dollars ($100.00) to the entity filing the report if the donation was made for the purpose of furthering the reported independent expenditure or contribution."
– REDEFINING THE TERM "CANDIDATE".
Section 3.  G.S. 163-278.6(4) reads as rewritten:
"(4)	The term 'candidate' means any individual who, with respect to a public office listed in G.S. 163-278.6(18), has filed a notice of candidacy or a petition requesting to be a candidate, or has been certified as a nominee of a political party for a vacancy, has otherwise qualified as a candidate in a manner authorized by law, or has received funds or made payments or has given the consent for anyone else to receive funds or transfer anything of value for the purpose of exploring or bringing about that individual's nomination or election to office. Transferring anything of value includes incurring an obligation to transfer anything of value. Status as a candidate for the purpose of this Article continues if the individual is receiving contributions to repay loans or cover a deficit or is making expenditures to satisfy obligations from an election already held."
– REMOVING THE TERM "POLITICAL PURPOSE".
Section 4.(a)	G.S. 163-278.6(16) is repealed.
Section 4.(b)	G.S. 163-278.16(g) reads as rewritten:
"(g)	All printed matter from a political party or political committee which opposes the nomination or election of a clearly identified candidate shall indicate in type no smaller than 12 point the name of the political party or political committee and the name of the candidate that is intended to benefit from the printed matter."
Section 4.(c)	G.S. 163-278.36 reads as rewritten:
"§ 163-278.36. Elected officials to report funds.
All donations to, and all payments from any 'booster fund,' 'support fund,' 'unofficial office account' or any other similar source made or used in support of an individual's candidacy for elective office, or in support of an individual's duties and activities while in an elective office shall be deemed contributions and expenditures as defined in this Article and shall be reported as contributions and expenditures as required by this Article. The reports due in January and July of each year shall show the balance of each separate fund or account maintained on behalf of the elected office holder."
Section 4.(d)	G.S. 163-278.19(a) reads as rewritten:
"(a)	Except as provided in subsections (b), (d), (e), and (f) of this section it shall be unlawful for any corporation, business entity, labor union, professional association or insurance company directly or indirectly:
(1)	To make any contribution to a candidate or political committee (except a loan of money by a national or State bank or federal or State savings and loan association made in accordance with the applicable banking or savings and loan association laws and regulations and in the ordinary course of business) or to make any expenditure to support or oppose the nomination or election of a clearly identified candidate;
(2) 	To pay or use or offer, consent or agree to pay or use any of its money or property for any contribution to a candidate or political committee or for any expenditure to support or oppose the nomination or election of a clearly identified candidate; or
(3)	To compensate, reimburse, or indemnify any person or individual for money or property so used or for any contribution or expenditure so made;
and it shall be unlawful for any officer, director, stockholder, attorney, agent or member of any corporation, business entity, labor union, professional association or insurance company to aid, abet, advise or consent to any such contribution or expenditure, or for any person or individual to solicit or knowingly receive any such contribution or expenditure. Supporting or opposing the election of clearly identified candidates includes supporting or opposing the candidates of a clearly identified political party. Any officer, director, stockholder, attorney, agent or member of any corporation, business entity, labor union, professional association or insurance company aiding or abetting in any contribution or expenditure made in violation of this section shall be guilty of a Class 2 misdemeanor, and shall in addition be liable to such corporation, business entity, labor union, professional association or insurance company for the amount of such contribution or expenditure, and the same may be recovered of him upon suit by any stockholder or member thereof."
– PERMITTING CONTRIBUTIONS AND INDEPENDENT EXPENDITURES BY NONBUSINESS CORPORATIONS; REMOVING REDUNDANT STATUTES CONCERNING CORPORATE AND INSURANCE COMPANY CONTRIBUTIONS; AND MAKING CONFORMING CHANGES.
Section 5.(a)	G.S. 163-278.19 is amended by adding a new subsection to read:
	"( f) This section does not prohibit a contribution or independent expenditure by an entity that:
(1)	Was formed with an express purpose of promoting political ideas and not to generate business income;
(2)	Does not have shareholders or other persons which have an economic interest in its assets and earnings;
(3)	Is exempt from federal income taxation; and
(4)	Was not established by a business corporation, by an insurance company, by a business entity, including, but not limited to, those chartered under Chapter 55, Chapter 55A, Chapter 55B, or Chapter 58 of the General Statutes, by a professional association, or by a labor union and does not receive more than ten percent (10%) of its total revenues in a calendar year from such entities."
Section 5.(b)	G.S. 163-269 and G.S. 163-270 are repealed.
Section 5.(c)	G.S. 163-278.13 reads as rewritten:
"§ 163-278.13. Limitation on contributions.
(a)	No individual, political committee, or other entity shall contribute to any candidate or other political committee any money or make any other contribution in any election in excess of four thousand dollars ($4,000) for that election.
(b)	No candidate or political committee shall accept or solicit any contribution from any individual, other political committee, or other entity of any money or any other contribution in any election in excess of four thousand dollars ($4,000) for that election.
(c)	Notwithstanding the provisions of subsections (a) and (b) of this section, it shall be lawful for a candidate or a candidate's spouse, parents, brothers and sisters to make a contribution to the candidate or to the candidate's treasurer of any amount of money or to make any other contribution in any election in excess of four thousand dollars ($4,000) for that election.
(d)	For the purposes of this section, the term 'an election' means any primary, second primary, or general election in which the candidate or political committee may be involved, without regard to whether the candidate is opposed or unopposed in the election, except that where a candidate is not on the ballot in a second primary, that second primary is not 'an election' with respect to that candidate.
(e)	This section shall not apply to any State, district or county executive committee of any political party. For the purposes of this section only, the term 'political party' means only those political parties officially recognized under G.S. 163-96.
(e1)	No referendum committee which received any contribution from a corporation, labor union, insurance company, business entity, or professional association may make any contribution to another referendum committee, to a candidate or to a political committee.
(f)	Any individual, candidate, political committee, referendum committee, or other entity that violates the provisions of this section is guilty of a Class 2 misdemeanor."
Section 5.(d) G.S. 163-278.13B(a)(1) reads as rewritten:
"(1)	'Limited contributor' means a lobbyist registered pursuant to Article 9A of Chapter 120 of the General Statutes, that lobbyist's agent, that lobbyist's principal as defined in G.S. 120-47.1(7), or a political committee that employs or contracts with or whose parent entity employs or contracts with a lobbyist registered pursuant to Article 9A of Chapter 120 of the General Statutes."
Section 5.(e)  G.S. 163-278.15 reads as rewritten:
"§ 163-278.15.  No acceptance of contributions made by corporations, foreign and domestic.
No candidate, political committee, political party, or treasurer shall accept any contribution made by any corporation, foreign or domestic, regardless of whether such corporation does business in the State of North Carolina.  This section does not apply with regard to entities permitted to make contributions by G.S. 163-278.19(f)."
– CLARIFYING WHAT IS COVERED BY ARTICLE 22A AND WHAT IS ACTIVITY THAT CONSTITUTES INDIRECT CONTRIBUTIONS BY CORPORATIONS, ETC.
Section 6.(a) Part 1 of Article 22A of Chapter 163 of the General Statutes is amended by adding a new section to read:
"§ 163-278.5. Scope of Article; severability.
The provisions of this Article apply to primaries and elections for North Carolina offices and do not apply to primaries and elections for federal offices or offices in other States. Any provision in this Article that regulates a non-North Carolina entity does so only to the extent that the entity's actions affect elections for North Carolina offices.
The provisions of this Article are severable. If any provision is held invalid by a court of competent jurisdiction, the invalidity does not affect other provisions of the Article that can be given effect without the invalid provision."
Section 6.(b) G.S. 163-278.19 is amended by adding a new subsection to read:
"( a1)	A transfer of funds shall be deemed to have been a contribution or expenditure made indirectly if it is made to any committee or political party account, whether inside or outside this State, with the intent or purpose of being exchanged in whole or in part for any other funds to be contributed or expended in an election for North Carolina office or to offset any other funds contributed or expended in an election for North Carolina office."
Section 7. This act is effective when it becomes law.