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: Penalties for violations

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

Suppose you think the dollar amounts you are allowed to contribute in HB 7 are too low. (Stop laughing, this is a serious blog post!) If you wanted to give more money to a committee than HB 7 would let you, what do you do? Let's consider the consequences of violating HB 7.

The penalty section in HB 7 is here (it starts on page 42 of HB 7):

18 (h) Contributions or transfers in violation of this
19 Section. A political committee that receives a contribution or
20 transfer in violation of this Section shall dispose of the
21 contribution or transfer by returning the contribution or
22 transfer, or an amount equal to the contribution or transfer,
23 to the contributor or transferor or donating the contribution
24 or transfer, or an amount equal to the contribution or
25 transfer, to a charity. A contribution or transfer received in
26 violation of this Section that is not disposed of as provided
1 in this subsection within 30 days after its receipt shall
2 escheat to the General Revenue Fund.

That's it. The committee would have 30 days to give the money back, or the state could lay claim to it. Alternately, the committee could give an equal amount to charity within 30 days. The contributor pays no penalty, even if the contribution was knowingly and intentionally excessive. And other than the loss of the excess amount, the committee pays no penalty, even if the committee plotted and planned with the contributor to violate the law.

So what do you do if you need cash for that final push before Election Day? ICPR would never counsel anyone to break the law. But, strictly hypothetically, what if someone did break the law? Here's what happens: If the candidate wins, the committee would have a few weeks to raise enough money from other donors to refund the excess to those who gave illegal contributions, or make a donation to charity. And winning candidates usually have a comparatively easy time raising money from new donors; from a contributor's point of view, the candidate's a sure thing. And if the candidate loses? So what if the state may lay claim to the money; if the committee is broke, there's no money for the state to seize. Dissolve the committee, and there will be no continuing obligations to worry about.

Real reform laws need real teeth. The penalties section in HB 7 needs to be improved.

A victory for reform: Freedom of Information Act improvements signed into law

The state law intended to guarantee Illinoisans access to government records got a much-needed overhaul today, when Gov. Patrick Quinn signed a bill strengthening the law’s enforcement provisions.

The Freedom of Information Act, or FOIA, is supposed to ensure taxpayers have access to government records. But the law is too-often not followed or altogether ignored, preventing Illinoisans from gathering information about their governments’ work.

Numerous reform groups, including ICPR and the Illinois Reform Commission, worked with Attorney General Lisa Madigan’s office this winter and spring to draft a rewrite of the existing FOIA. On Monday, Quinn signed into law the group’s work-product, Senate Bill 189.

The new law, which takes effect Jan. 1, 2010, makes a number of critical improvements to FOIA and its partner, the Open Meetings Act. Among them:

- Shortens the amount of time public bodies have to respond to FOIA requests to five business days from the current seven-day allowance. The legislation also shortens the extension public bodies can grant themselves to five days from the current seven.

- Makes permanent the position of Public Access Counselor, or PAC, within the Attorney General’s office, and grants the counselor power to help resolve FOIA disputes. The PAC will have the power to issue both advisory and binding opinions as to whether requested records are public.

- Mandates that courts award attorneys’ fees to records-requestors who successfully sue for access to open records after illegally being denied access to them. The current law gives judges discretion to award attorneys' fees, which means that people who take their records requests to court -- and win -- might be left to foot their attorneys' bill.

- Requires designated government employees to complete annual FOIA and Open Meetings Act training to educate them about state law and help ensure compliance.

- Strengthens enforcement provisions by allowing courts to impose civil penalties for public bodies that intentionally disregard the law.

You can check out the text of the new law here.

A look at what's on the the governor's desk

A bunch of bills dealing with the reform agenda were sent to the governor's desk earlier this year. Where are they now, and what does the future hold? Let's take them in alphabetical and numerical order:

HB 7, relating to campaign finance, was sent to the governor on June 30. The governor has until Saturday, August 29 to take action.

HB 35, creating an "accountability portal" on the Internet with state expenditure and salary information, was signed into law on Tuesday, August 11. It's PA 06-225.

HB 267, which allows grace period voter registration as late as 7 days prior to an election (now, grace period registration ends 14 days prior), was sent to the governor on June 17. The governor has until Sunday, August 16 to take action.

HB 723, which imposes petition signature requirements on candidates nominated for office after a primary election, was sent to the governor on June 26. The governor has until Tuesday, August 25 to take action.

SB 51, which makes improvements to the procurement code, was sent to the governor on June 19. The governor has until Tuesday, August 18 to take action.

SB 54, which changes the 2003 Ethics Act and the Lobbyist Registration Act, among other things, was sent to the governor on June 19. The governor has until Tuesday, August 18 to take action.

SB 189, which makes improvements to the Freedom of Information Act, was sent to the governor on June 26. The governor has until Tuesday, August 25 to take action.

SB 1592, which allows for the late filing of Statements of Economic Interest when the filer has suffered a "serious and catastrophic" injury or is serving in the military, was sent to the governor on June 18. The governor has until Monday, August 16 to take action.

(Today we're taking a break from our litany of concerns about HB 7. That analysis will resume tomorrow)

Problems with Proposed Lobbying Changes

One of the hit-or-miss bills that passed the General Assembly this year was SB 54, which, among other things, made substantial changes to the Lobbyist Registration Act (LRA). The genesis of the LRA portion of the bill is plainly found in HB 736, which ICPR supported, but SB 54 differs in some key ways.

One difference is the disclosure of lobbyist costs, and several recent news stories make clear how the differences between HB 736, which did not pass the GA, and SB 54, which did, will impact public policy discussion. In one news story, the federal government gave billions to the financial services industry, and the industry responded by spending dramatically more on lobbying. In another news story, Congress took up legislation to regulate student loans, and lo and behold, the industry hired a bunch of lobbyists to fight the proposals. A third national news story compares the progress of the debate over health care reform with spending by health care interests (noting, also, that health care interests combine to spend more on lobbying at the federal level than any other sector).

All of these stories are built around disclosure of lobbyist contracts. At the federal level, lobbyists are required to report how much they bill their clients. Indeed, spending on lobbying is often in the same ballpark as spending on elections. Interest groups that spend millions on campaign contributions to candidates often spend similar amounts to hire lobbyists to influence elected officials. Just as disclosure of campaign finance is in the public interest, so too is it in the public interest to let the public know how much an interest group is spending to influence legislation.

The Illinois General Assembly has yet to go that far in statute. HB 736, the bill that did not pass, would have mandated disclosure of lobbying costs, but SB 54 did not include that provision. This was a missed opportunity to help the public better understand how particular interests are trying to sway the General Assembly.

Another provision in SB 54 that did not come from HB 736 raises the registration fee for lobbyists. And the increase is a whopper. Currently, most lobbyists pay $350 per lobbyist per year to register with the Secretary of State (non-profits, including ICPR, pay $150 per lobbyist per year). SB 54 raises that fee for all lobbyists, including non-profits, to $1,000. For most lobbyists, it's a steep increase; for non-profits, it's a huge added cost.

The increase is particularly steep because of the way that lobbying is defined. Generally, anyone who communicates with officials to influence legislative, executive, or administrative actions is a lobbyist. There are exceptions, of course (it's statute, after all) but broadly, once you are paid or reimbursed $500 for such communication, you become a lobbyist and must register. Which is to say, once you are paid or reimbursed $500, you must pay $1,000 to register. And the entity that paid or reimbursed you the $500 must also pay $1,000 to register. That's $2,000 in registration fees for $500 in reimbursements. Large lobbying firms will likely be able to absorb these costs, but smaller groups, especially non-profits, will have a harder time.

SB 54 increases the registration fee in order to cover additional administrative costs, but some of the cost of registration (the $200 difference between the for-profit and non-profit rate) goes into the General Revenue Fund. It seems that the state is still using lobbyist registration fees to produce income for the General Revenue Fund.

Both of these changes are unfortunate components of the new Lobbyist Registration Act. Gov. Quinn, or the General Assembly, would do well to revisit them.