GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2007

S                                                                                                                                                    D

SENATE DRS35237-RRx-17  (02/20)

Short Title:     Voter-Owned Elections.		(Public)
Sponsors:	Senators Nesbitt, and Hartsell.
Referred to:

A BILL TO BE ENTITLED

AN ACT to provide candidates for certain council of state offices with the option of financing their campaigns from a publicly supported fund, provided that they gain authorization to do so from registered voters and that they abide by strict fund‑raising and spending limits; and to impose regulatory surcharges to finance the fund.

The General Assembly of North Carolina enacts:

SECTION 1.  Chapter 163 of the General Statutes is amended by adding a new Article to read:

"Article 22G.

"The Voter‑Owned Elections Act.

"§ 163‑278.95.  Purpose and establishment of Voter‑Owned Elections Act.

The purpose of this Article is to ensure the vitality and fairness of democratic elections in North Carolina to the end that any eligible citizen of this State can realistically choose to seek and run for public office. It is also the purpose of this Article to protect the constitutional rights of voters and candidates from the detrimental effects of increasingly large amounts of money being raised and spent in North Carolina to influence the outcome of elections. It is essential to the public interest that the potential for corruption or the appearance of corruption is minimized and that the equal and meaningful participation of all citizens in the democratic process is ensured. Accordingly, this Article establishes the North Carolina Voter‑Owned Elections Fund as an alternative source of campaign financing for candidates who obtain a sufficient number of qualifying contributions from registered voters and who voluntarily accept strict fund‑raising and spending limits. This Article is available to candidates for the Council of State offices of Secretary of State, Auditor, Treasurer, Superintendent of Public Instruction, Attorney General, Commissioner of Agriculture, Commissioner of Labor, and Commissioner of Insurance in elections to be held in 2012 and thereafter.

"§ 163‑278.96.  Definitions.

The following definitions apply in this Article:

(1) Board. – The State Board of Elections.

(2) Campaign‑related expenditure. – An expenditure that benefits the candidate's current campaign in accordance with guidelines established by the Board.

(3) Candidate. – An individual who becomes a candidate as described in G.S. 163‑278.6(4). The term includes a 'candidate campaign committee' as defined in G.S. 163‑278.38Z(3).

(4) Certified candidate. – A candidate for office who chooses to receive campaign funds from the Fund and who is certified under G.S. 163‑278.98(c).

(5) Contested primary and contested general election. – An election in which there are more candidates than the number to be elected.

(6) Contribution. – Defined in G.S. 163‑278.6. A distribution from the Fund pursuant to this Article is not a 'contribution' and is not subject to the limitations of G.S. 163‑278.13 or the prohibitions of G.S. 163‑278.15 or G.S. 163‑278.19.

(7) Expenditure. – Defined in G.S. 163‑278.6.

(8) Fund. – The North Carolina Voter‑Owned Elections Fund established in G.S. 163‑278.97.

(9) Independent expenditure. – Defined in G.S. 163‑278.6.

(10) Maximum qualifying contributions. – An amount equal to two hundred thousand dollars ($200,000).

(11) Nonparticipating candidate. – A candidate for office who is not seeking to be certified under G.S. 163‑278.98(c).

(12) Office. – The Council of State offices of Secretary of State, Auditor, Treasurer, Superintendent of Public Instruction, Attorney General, Commissioner of Agriculture, Commissioner of Labor, and Commissioner of Insurance.

(13) Participating candidate. – A candidate for office who has filed a declaration of intent to participate under G.S. 163‑278.98(a).

(14) Political committee. – Defined in G.S. 163‑278.6.

(15) Qualifying contribution. – A contribution of not less than ten dollars ($10.00) and not more than one hundred dollars ($100.00) in the form of a check or money order to the candidate or the candidate's committee that meets both of the following conditions:

a. Made by any registered voter in this State.

b. Made only during the qualifying period and obtained with the approval of the candidate or candidate's committee.

c. Acknowledged by a written receipt, on a multicopy form approved by the Board, which identifies the complete name, residence address, and county of residence of the contributor and the amount and date of the contribution made; states that the contributor is a registered voter; states that the contributor authorizes the candidate to use the contribution to qualify to receive funds from the Fund; and is signed by the candidate or the candidate's representative.

(16) Qualifying period. – The period beginning 300 days before the close of the filing period for candidates for party nomination for the office and ending on the day of the primary.

(17) Trigger for rescue funds. – The dollar amount at which rescue funds are released for certified candidates. In the case of a contested primary, the trigger equals one hundred fifty thousand dollars ($150,000). In the case of a contested general election, the trigger equals the base level of funding available under G.S. 163‑278.99(b)(2).

"§ 163‑278.97.  Voter‑Owned Elections Fund established; sources of funding.

(a) Establishment of Fund. – The North Carolina Voter‑Owned Elections Fund is established to finance the election campaigns of certified candidates for office and to pay administrative and enforcement costs of the Board related to this Article. The Fund is a special, dedicated, nonlapsing, nonreverting fund. Any interest generated by the Fund is credited to the Fund. The Board shall administer the Fund.

(b) Sources of Funding. – Money received from all the following sources must be deposited in the Fund:

(1) Unspent Fund revenues distributed for an election that remain unspent or uncommitted at the time the recipient is no longer a certified candidate in the election.

(2) Voluntary donations made directly to the Fund.

(3) Regulatory surcharges in accordance with Article 2E of Chapter 105 of the General Statutes.

(c) Determination of Fund Amount. – By January 1, 2011, and every two years thereafter, the Board, in conjunction with the Advisory Council established under G.S. 163‑278.68(b), shall prepare and provide to the Joint Legislative Commission on Governmental Operations of the General Assembly a report documenting, evaluating, and making recommendations relating to the administration, implementation, and enforcement of the Voter‑Owned Elections Act. In its report, the Board shall set out the funds received to date and the expected needs of the Fund during the next election cycle.

"§ 163‑278.98.  Requirements for participation.

(a) Declaration of Intent to Participate. – Any individual choosing to receive campaign funds from the Fund shall first file with the Board a declaration of intent to participate in the act as a candidate for a stated office. The declaration of intent shall be filed before or during the qualifying period and before collecting any qualifying contributions. In the declaration, the candidate shall swear or affirm that only one political committee, identified with its treasurer, shall handle all contributions, campaign‑related expenditures, and obligations for the participating candidate and that the candidate will comply with the contribution and expenditure limits set forth in subsection (e) of this section and all other requirements set forth in this Article or adopted by the Board. Failure to comply is a violation of this Article.

(b) Demonstration of Support of Candidacy. – In order to be certified, participating candidates must obtain qualifying contributions from at least 2,000 registered voters in this State. No more than a third of a candidate's qualifying contributions submitted to the Board for purposes of certification shall come from registered voters who are residents of the same congressional district. No payment, gift, or anything of value shall be given in exchange for a qualifying contribution.

(c) Certification of Candidates. – Upon receipt of a submittal of the record of qualifying contributions by a participating candidate, the Board shall determine whether or not the candidate has:

(1) Signed and filed a completed declaration of intent to participate in this Article.

(2) Submitted copies of the appropriate number of forms described in G.S. 163‑278.96(15), which the Board shall verify through a random sample or other means it adopts.

(3) Filed a notice of candidacy with the Board as a candidate for the office.

(4) Otherwise met the requirements for participation in this Article.

The Board shall certify candidates complying with the requirements of this section as soon as possible and no later than five business days after receipt of a satisfactory record of qualifying contributions.

(d) Final Report for Qualifying Contributions. – No later than five business days after the end of the qualifying period, all participating candidates shall submit a report to the Board of all previously unreported qualifying contributions, together with copies of the contribution forms described in G.S. 163‑278.96(15), in accordance with procedures developed by the Board. Within seven business days after submittal of the final report, the Board shall determine, through a random audit or other means it adopts, whether the contributions abide by the definition of qualifying contributions, whether they must be returned to the donor, and whether they exceed the maximum amount of qualifying contributions.

(e) Restrictions on Contributions and Expenditures for Participating and Certified Candidates. – The following restrictions shall apply to contributions and expenditures with respect to participating and certified candidates:

(1) Beginning January 1 of the year before the election and before filing a declaration of intent, a candidate shall limit campaign‑related expenditures to ten thousand dollars ($10,000) and shall not accept more than ten thousand dollars ($10,000) from sources and in amounts permitted by Article 22A of this Chapter. A candidate who exceeds either of these limits shall be ineligible to file a declaration of intent or receive funds from the Fund.

(2) From the filing of a declaration of intent through the end of the qualifying period, a candidate may accept only qualifying contributions, contributions under ten dollars ($10.00) from North Carolina voters, in‑kind party contributions as permitted in subdivision (4) of this subsection, and personal and family contributions permitted under subdivision (4a) of this subsection. The total contributions the candidate may accept during this period shall not exceed the maximum qualifying contributions for that candidate. In addition to these contributions, the candidate may only expend during this period the remaining money raised pursuant to subdivision (1) of this subsection and possible rescue funds received pursuant to G.S. 163‑278.101.

(3) After the qualifying period and through the date of the general election, the candidate shall expend only the funds the candidate receives from the Fund pursuant to G.S. 163‑278.99(b)(2) plus any funds remaining from the qualifying period, in‑kind contributions permitted by subdivision (4) of this subsection, and possible rescue funds.

(4) A candidate may accept in‑kind contributions from political party executive committees and their affiliates, up to an aggregate value of thirty thousand dollars ($30,000) for the election cycle.

(4a) During the qualifying period, the candidate may contribute up to one thousand dollars ($1,000) of that candidate's own money to the campaign. Debt incurred by the candidate for a campaign expenditure shall count toward that limit. The candidate may accept in contributions one thousand dollars ($1,000) from each member of that candidate's family consisting of spouse, parent, child, brother, and sister, as long as the candidate accepts no more than two thousand dollars ($2,000) from all those family members combined.

(5) A candidate and the candidate's committee shall limit the use of all revenues permitted by this subsection to expenditures for campaign‑related purposes only. The Board shall publish guidelines outlining permissible campaign‑related expenditures. In establishing those guidelines, the Board shall differentiate expenditures that reasonably further a candidate's campaign from expenditures for personal use that would be incurred in the absence of the candidacy. In establishing the guidelines, the Board shall review relevant provisions of G.S. 163‑278.16B, G.S. 163‑278.42(e), the Federal Election Campaign Act, and rules adopted pursuant to it, and similar provisions in other states.

(6) Any contribution received by a participating or certified candidate that falls outside that permitted by this subsection shall be returned to the donor as soon as practicable. Contributions intentionally made, solicited, or accepted in violation of this Article are subject to civil penalties as specified in G.S. 163‑278.103. The funds involved shall be forfeited to the Civil Penalty and Forfeiture Fund.

(7) A candidate shall return to the Fund any amount distributed for an election that is unspent and uncommitted at the date of the election or at the time the individual ceases to be a certified candidate, whichever occurs first. For accounting purposes, all qualifying, personal, and family contributions shall be considered spent before revenue from the Fund is spent or committed.

(f) Revocation. – A candidate may revoke, in writing to the Board, a decision to participate in the Fund at any time. After a revocation, that candidate may accept and expend outside the limits of this Article without violating this Article. Within 10 days after revocation, a candidate shall return to the Board all money received from the Fund.

"§ 163‑278.99.  Distribution from the Fund.

(a) Timing of Fund Distribution. – The Board shall distribute to certified candidates amounts from the Fund specified under subsection (b) of this section on the following schedule:

(1) For candidates in contested primary elections, the later of the following: within two business days after the date set in G.S. 163‑106(c) deadline for candidate filing in the election year or within two business days of the time the candidate becomes certified in accordance with G.S. 163‑278.98(c).

(2) For candidates in contested general elections, the later of the following: within seven business days after receiving the candidate's final report of qualifying contributions or within two business days after the certification pursuant to G.S. 163‑122, 163‑123, or 163‑98 of the first opposition candidate.

(b) Amount of Fund Distribution. – By April 1, 2011, and no less frequently than every four years thereafter, the Board shall determine the base level of funds to be distributed to certified candidates. No funds are distributed for uncontested elections. The actual amount distributed to a certified candidate is the base level of funds reduced by any qualifying contributions raised above the maximum amount of qualifying contributions. The base level is determined in the following manner and rounded to the nearest one hundred dollars ($100.00):

(1) Contested primary elections. – The base level of funds is the median amount of campaign‑related expenditures made by all major party candidates who reported campaign expenditures for contested primary races for the immediately preceding two primaries for that office, but not less than fifty thousand dollars ($50,000).

(2) Contested general elections. – The base level of funds is the median amount of campaign‑related expenditures made by all major party candidates who reported campaign expenditures for contested general election races for the immediately preceding two general elections for that office, but not less than three hundred thousand dollars ($300,000).

(c) Method of Fund Distribution. – The Board, in consultation with the State Treasurer and the State Controller, shall develop a rapid, reliable method of conveying funds to certified candidates. In all cases, the Board shall distribute funds to certified candidates in a manner that is expeditious, ensures accountability, and safeguards the integrity of the Fund. If the money in the Fund is insufficient to fully fund all certified candidates, then the available money shall be distributed proportionally, according to each candidate's eligible funding, and the candidate may raise additional money in the same manner as a nonparticipating candidate for the same office up to the unfunded amount of the candidate's eligible funding.

"§ 163‑278.100.  Reporting requirements.

(a) Reporting by Nonparticipating Candidates and Independent Expenditure Entities. – Any nonparticipating candidate with a certified opponent shall report total income, expenses, and obligations to the Board by facsimile machine or electronically within 24 hours after the total amount of campaign‑related expenditures or obligations made, or funds raised or borrowed, exceeds eighty percent (80%) of the trigger for rescue funds as defined in G.S. 163‑278.96(17). Any entity making independent expenditures in support of or opposition to a certified candidate, or in support of a candidate opposing a certified candidate, or paying for electioneering communications, as defined in G.S. 163‑278.80 or G.S. 163‑278.90, or candidate‑specific communications, as defined in G.S. 163‑278.100 or G.S. 163‑278.110, referring to one of those candidates, shall report the total funds received, spent, or obligated for those expenditures or payments to the Board by facsimile machine or electronically within 24 hours after the total amount of expenditures or obligations made, or funds raised or borrowed, for the purpose of making the independent expenditures, electioneering communications, or candidate‑specific communications exceeds five thousand dollars ($5,000). After this 24‑hour filing, the nonparticipating candidate or other reporting entity shall comply with an expedited reporting schedule by filing additional reports after receiving an additional amount in excess of one thousand dollars ($1,000) or after making or obligating to make an additional expenditure or payment in excess of one thousand dollars ($1,000). The schedule and forms for reports required by this subsection shall be made according to procedures developed by the Board.

(b) Reporting by Participating and Certified Candidates. – Notwithstanding other provisions of law, participating and certified candidates shall report any money received and all campaign expenditures, obligations, and related activities to the Board according to procedures developed by the Board. Upon the filing of a final report for any losing primary election, special election, or general election, each candidate who has revenues from the Fund remaining unspent shall return those revenues to the Board. In developing these procedures, the Board shall utilize existing campaign reporting procedures wherever practicable.

(c) Timely Access to Reports. – The Board shall ensure prompt public access to the reports received in accordance with this Article. The Board may utilize electronic means of reporting and storing information.

"§ 163‑278.101.  Rescue funds.

(a) When Rescue Funds Become Available. – When any report or group of reports shows that 'funds in opposition to a certified candidate or in support of an opponent to that candidate' as described in this section, exceed the trigger for rescue funds as defined in G.S. 163‑278.96(17), the Board shall issue immediately to that certified candidate an additional amount equal to the reported excess within the limits set forth in this section. 'Funds in opposition to a certified candidate or in support of an opponent to that candidate' shall be equal to the sum of subdivisions (1) and (2) as follows:

(1) The greater of the following:

a. Campaign expenditures or obligations made, or funds raised or borrowed, whichever is greater, reported by any one nonparticipating opponent of a certified candidate. Where a certified candidate has more than one nonparticipating opponent, the measure shall be taken from the nonparticipating candidate showing the highest relevant dollar amount.

b. The funds distributed in accordance with G.S. 163‑278.99(b) to a certified opponent of the certified candidate.

(2) The aggregate total of all expenditures and payments reported in accordance with G.S. 163‑278.100(a) of entities making independent expenditures, electioneering communications, or candidate‑specific communications in opposition to the certified candidate, in support of any opponent of that certified candidate, or referring to either candidate.

(b) Limit on Rescue Funds in Contested Primary. – Total rescue funds to a certified candidate in a contested primary shall be limited to an amount equal to two times the maximum qualifying contributions.

(c) Limit on Rescue Funds in Contested General Election. – Total rescue funds to a certified candidate in a contested general election shall be limited to an amount equal to two times the amount described in G.S. 163‑278.99(b)(2).

(d) Determinations by Board. – In the case of electioneering communications and candidate‑specific communications, the Board shall determine which candidate is entitled to receive rescue funds as a result of the communication. The Board shall notify each candidate it determines is entitled to receive rescue funds based on those communications, the sponsor of those communications, and any candidate who is an opponent of the candidate it determines is entitled to the rescue funds. The Board shall give the sponsor of the communication and any opposing candidate an adequate opportunity to rebut the determination of the Board. In considering the rebuttal, all candidates in the race and the sponsor shall be given adequate and equal opportunity to be heard. The Board shall adopt procedures for implementing this subsection, balancing in those procedures adequacy of opportunity to rebut and adequacy and equality of opportunity to be heard on the rebuttal with the need to expedite the decision on awarding rescue funds.

"§ 163‑278.102.  Unaffiliated and new‑party candidates.

Unaffiliated candidates certified pursuant to G.S. 163‑122 and new‑party candidates certified pursuant to G.S. 163‑98 shall be eligible for revenues from the Fund in the same amounts and at the same time as specified in G.S. 163‑278.99. For unaffiliated candidates and new‑party candidates not certified to appear on the ballot by noon on the date set in G.S. 163‑106(c) deadline for candidate filing in the election year, the deadline for seeking certification to receive revenue from the Fund is noon on the first business day of July of the election year.

"§ 163‑278.103.  Enforcement by the Board; civil penalty.

The Board, with the advice of the Advisory Council established under G.S. 163‑278.68(b), shall administer the provisions of this Article in the same manner as described in Article 22D of this Chapter. In addition to any other penalties that may be applicable, any individual, political committee, or other entity that violates any provision of this Article is subject to a civil penalty in the same manner as described in Article 22D of this Chapter."

SECTION 2.  G.S. 163‑278.13(e) reads as rewritten:

"(e)      Except as provided in subsections (e2) and (e3) (e2), (e3), and (e5) of this section, this section shall not apply to any national, 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."

SECTION 3.  G.S. 163‑278.13 is amended by adding a new subsection to read:

"(e5) In order to make meaningful the provisions of Article 22G of this Chapter, no candidate for any office that is in that current election subject to the provisions of Article 22G of this Chapter shall accept a contribution during the period beginning 21 days before the day of the general election and ending the day after the general election. No contributor shall make a contribution to a candidate for any office that is in that current election subject to the provisions of Article 22G of this Chapter during the period beginning 21 days before the general election and ending the day after the general election if that contribution causes the candidate to exceed the 'trigger for rescue funds' defined in G.S. 163‑278.96(17). The prohibitions in this subsection shall also apply to a political committee the principal purpose of which is to support a candidate for those offices. Nothing in this subsection shall prohibit a candidate from making a contribution or loan secured entirely by that candidate's assets to that candidate's own campaign or to a political committee the principal purpose of which is to support that candidate's campaign. This subsection applies with respect to a candidate only if both of the following statements are true regarding that candidate:

(1) That candidate is opposed in the general election by a certified candidate as defined in Article 22G of this Chapter.

(2) That certified candidate has not received the maximum rescue  funds available under G.S. 163‑278.101(c).

The recipient of a contribution that apparently violates this subsection has three days to return the contribution or file a detailed statement with the State Board of Elections explaining why the contribution does not violate this subsection."

SECTION 4.  Chapter 105 of the General Statutes is amended by adding a new Article to read:

"Article 2E.

"Regulatory Surcharges.

"§ 105‑113.120.  Surcharge imposed.

(a) Surcharge. – A surcharge is imposed on a person who pays a regulatory charge listed under G.S. 113‑121. The surcharge imposed is equal to one percent (1%) of the amount of the charge.

(b) Collection and Use. – The agency that collects a charge upon which the surcharge imposed by this section is due must collect the surcharge due under this section at the same time. The head of each agency that collects a surcharge under this section must remit the proceeds of the surcharge to the Department of Revenue on a monthly basis. The Department must credit the proceeds of the surcharge collected under this section to the Voter‑Owned Election Fund created pursuant to G.S. 163‑278.97.

"§ 105‑113.121.  Charges subject to surcharge.

The surcharge imposed by this Article applies to the following regulatory charges:

(1) Insurance regulatory charges and license fees as provided in G.S. 58‑6‑25 and G.S. 58‑33‑125(a).

(2) Elevator and boiler inspection fees as provided in G.S. 95‑110.5 and G.S. 95‑69.11.

(3) Business filing fees with the Secretary of State as provided in G.S. 55‑1‑22, 57C‑1‑22, and 25‑9‑525.

(4) Security dealers and salespersons registration fees as provided in G.S. 78A‑37(b)."

SECTION 5.  The provisions of this act are severable. If any provision of this act is held invalid by a court of competent jurisdiction, the invalidity does not affect other provisions of the act that can be given effect without the invalid provision.

SECTION 6.  This act applies to elections for Secretary of State, Auditor, Treasurer, Superintendent of Public Instruction, Attorney General, Commissioner of Agriculture, Commissioner of Labor, and Commissioner of Insurance in 2012 and thereafter. Section 4 of this act becomes effective July 1, 2008, and applies to fees and other charges due on or after that date. The remainder of this act is effective when it becomes law.