GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2015

H 1

HOUSE BILL 737

Short Title: Reinstate NC Public Campaign Fund.		(Public)
Sponsors:	Representatives G. Martin and Glazier (Primary Sponsors). For a complete list of Sponsors, refer to the North Carolina General Assembly Web Site.
Referred to:	Elections, if favorable, Finance, if favorable, Appropriations.

April 15, 2015

A BILL TO BE ENTITLED

AN ACT to reinstate the north carolina public campaign fund for judicial candidates of the appellate division and to make various conforming statutory changes.

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 22N.

"The North Carolina Public Campaign Fund.

"§ 163‑278.350. Purpose of the North Carolina Public Campaign Fund.

The purpose of this Article is to ensure the fairness of democratic elections in North Carolina and to protect the constitutional rights of voters and candidates from the detrimental effects of increasingly large amounts of money being raised and spent to influence the outcome of elections, those effects being especially problematic in elections of the judiciary, since impartiality is uniquely important to the integrity and credibility of the courts. Accordingly, this Article establishes the North Carolina Public Campaign Fund as an alternative source of campaign financing for candidates who demonstrate public support and voluntarily accept strict fund‑raising and spending limits. This Article is available to candidates for justice of the Supreme Court and judge of the Court of Appeals in elections to be held in 2018 and thereafter.

"§ 163‑278.351. Definitions.

The following definitions apply in this Article:

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

(2) Candidate. – An individual who becomes a candidate as described in G.S. 163‑278.6(4). The term includes a political committee authorized by the candidate for that candidate's election.

(3) Certified candidate. – A candidate running for office who chooses to receive campaign funds from the Fund and who is certified under G.S. 163‑278.353(c).

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

(5) 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.

(6) Electioneering communication. – As defined in G.S. 163‑278.6, except that it is made during the period beginning 30 days before absentee ballots become available for a primary and ending on primary election day and during the period 60 days before absentee ballots become available for a general election and ending on general election day.

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

(8) Fund. – The North Carolina Public Campaign Fund established in G.S. 163‑278.352.

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

(10) Maximum qualifying contributions. – An amount of qualifying contributions equal to 60 times the filing fee for candidacy for the office.

(11) Minimum qualifying contributions. – An amount of qualifying contributions equal to 30 times the filing fee for candidacy for the office.

(12) Nonparticipating candidate. – A candidate running for office who is not seeking to be certified under G.S. 163‑278.353(c).

(13) Office. – A position on the North Carolina Court of Appeals or North Carolina Supreme Court.

(14) Participating candidate. – A candidate for office who has filed a declaration of intent to participate under G.S. 163‑278.353.

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

(16) Qualifying contribution. – A contribution of not less than ten dollars ($10.00) and not more than five hundred dollars ($500.00) in the form prescribed for noncash monetary contributions in G.S. 163‑278.14(b) to the candidate or the candidate's committee that meets both of the following conditions:

a. Made by an individual who is a registered voter in this State at the time of the submittal of the report specified in G.S. 163‑278.353(c).

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

(17) Qualifying period. – The period beginning September 1 in the year before the election and ending on the day of the primary of the election year.

(18) Referendum committee. – Defined in G.S. 163‑278.6.

"§ 163‑278.352. North Carolina Public Campaign Fund established; sources of funding.

(a) Establishment of Fund. – The North Carolina Public Campaign 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. All expenses of administering this Article, including production and distribution of the Voter Guide required by G.S. 163‑278.357 and personnel and other costs incurred by the Board, including public education about the Fund, shall be paid from the Fund and not from the General 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 of the following sources must be deposited in the Fund:

(1) Designations made to the Public Campaign Fund by individual taxpayers pursuant to G.S. 105‑159.3.

(2) Public Campaign 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.

(3) Money ordered returned to the Public Campaign Fund in accordance with G.S. 163‑278.358.

(4) Voluntary donations made directly to the Public Campaign Fund. Corporations, other business entities, labor unions, and professional associations may make donations to the Fund.

(5) Money collected from the sixty‑dollar ($60.00) surcharge on attorney membership fees in G.S. 84‑34.

(c) Determination of Fund Amount. – By October 1, 2018, and every two years thereafter, the Board 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 this Article. In its report, the Board shall set out the funds received to date and the expected needs of the Fund for the next election.

"§ 163‑278.353. Requirements for participation; certification of candidates.

(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, expenditures, and obligations for the participating candidate and that the candidate will comply with the contribution and expenditure limits set forth in subsection (d) 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. – Participating candidates who seek certification to receive campaign funds from the Fund shall first, during the qualifying period, if seeking office on the Supreme Court, obtain qualifying contributions from at least 425 registered voters in an aggregate sum that at least equals the amount of minimum qualifying contributions described in G.S. 163‑278.351(11) but that does not exceed the amount of maximum qualifying contributions described in G.S. 163‑278.351(10). If a participating candidate is seeking certification for an office on the Court of Appeals, the candidate must obtain qualifying contributions from at least 400 registered voters in an aggregate sum that at least equals the amount of minimum qualifying contributions described in G.S. 163‑278.351(11) but that does not exceed the amount of maximum qualifying contributions described in G.S. 163‑278.351(10).

No payment, gift, anything of value, or the opportunity to win 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 demonstrated support by a participating candidate, the Board shall determine whether or not the candidate has complied with all of the following requirements:

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

(2) Submitted a report itemizing the appropriate number of qualifying contributions received from registered voters, which the Board shall verify through a random sample or other means it adopts. The report shall include the county of residence of each registered voter listed.

(3) Filed a valid notice of candidacy pursuant to Article 25 of this Chapter.

(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 demonstrated support.

(d) 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 the filing of a declaration of intent, a candidate for office may accept in contributions up to twenty‑five thousand dollars ($25,000) from sources and in amounts permitted by Article 22A of this Chapter and may expend up to twenty‑five thousand dollars ($25,000) for any campaign purpose. A candidate who exceeds either of these limits shall be ineligible to file a declaration of intent or receive funds from the Public Campaign 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, and personal and family contributions permitted under subdivision (4) 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. Except for personal and family contributions permitted under subdivision (4) of this subsection, multiple contributions from the same contributor to the same candidate shall not exceed five hundred dollars ($500.00).

(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. 163‑278.355(b)(4) plus any funds remaining from the qualifying period.

(4) During the qualifying period, the candidate may contribute up to one thousand dollars ($1,000) of that candidate's own money to the campaign and 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. Up to five hundred dollars ($500.00) of a contribution from the candidate's family member may be treated as a qualifying contribution if it meets the requirements of G.S. 163‑278.351(16)a. and b.

(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 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. 163‑278.358. 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.

(e) Revocation. – A candidate may revoke, in writing to the Board, a decision to participate in the Public Campaign Fund at any time before the deadline set by the Board for the candidate's submission of information for the Voter Guide described in G.S. 163‑278.357. After a timely 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.

"§ 163‑278.354. Special participation provisions for candidates in vacancy elections.

(a) Participation Provisions Modified. – Candidates involved in elections described in G.S. 163‑329 may participate in the Fund subject to the provisions of G.S. 163‑278.353 as modified by this section. The Board shall adapt other provisions of this Article to those elections.

(b) Qualifying. – The State Board of Elections shall designate a special qualifying period of no less than four weeks for these candidates, beginning at the close of the notice‑of‑candidacy filing period. To receive certification, a participating candidate shall raise at least 225 qualifying contributions, totaling at least 20 times the amount of the filing fee for the office, for a four‑week qualifying period. If the State Board of Elections sets a longer qualifying period, then for each additional week that the qualifying period extends beyond four weeks, the minimum number of qualifying contributions required for certification shall increase by 25, and the minimum amount of the qualifying contributions shall increase by two times the filing fee. The minimum qualifying contributions shall not exceed the limit set by G.S. 163‑278.353(b).

(c) Allocations. – Certified candidates shall receive one percent (1%) of the funding to which they would be eligible under G.S. 163‑278.355 times the number of calendar days between the end of the special qualifying period and the day of the general election. That amount shall not exceed one hundred percent (100%) of the funding to which they would be eligible under G.S. 163‑278.355.

"§ 163‑278.355. Distribution from the Fund.

(a) Timing of Fund Distribution. – The Board shall distribute to a certified candidate revenue from the Fund in an amount determined under subdivision (b)(4) of this section within five business days after the certified candidate's name is approved to appear on the ballot in a contested general election but no earlier than five business days after the primary.

(b) Amount of Fund Distribution. – By August 1, 2018, and no less frequently than every two years thereafter, the Board shall determine the amount of funds, rounded to the nearest one hundred dollars ($100.00), to be distributed to certified candidates as follows:

(1) Uncontested primaries. – No funds shall be distributed.

(2) Contested primaries. – No funds shall be distributed.

(3) Uncontested general elections. – No funds shall be distributed.

(4) Contested general elections. – Funds shall be distributed to a certified candidate for a position on the Court of Appeals in an amount equal to 225 times the candidate's filing fee as set forth in G.S. 163‑324. Funds shall be distributed to a certified candidate for a position on the Supreme Court in an amount equal to 350 times the candidate's filing fee as set forth in G.S. 163‑324.

(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 noncertified candidate for the same office up to the unfunded amount of the candidate's eligible funding.

(d) Beginning October 1, 2020, and every five years thereafter, the Board shall appoint a three‑member committee to conduct an independent review regarding any need for modification of funds distributed to certified candidates pursuant to this section. The committee shall consist of one member from the North Carolina Bar Association, one member who is a public financing expert, as determined by the Board, and one member who is a former Justice of the North Carolina Supreme Court or Judge of the North Carolina Court of Appeals who has used the Fund. In conducting the independent review, the committee shall, at a minimum, consider the need for modification of funds as a result of changes in election costs and inflationary adjustments.

"§ 163‑278.356. Reporting requirements.

(a) Reporting by Participating and Certified Candidates. – Notwithstanding other provisions of law, participating and certified candidates shall report any money received, including all previously unreported qualifying contributions, all campaign expenditures, obligations, and related activities to the Board according to procedures developed by the Board. A certified candidate who ceases to be certified or ceases to be a candidate or who loses an election shall file a final report with the Board and return any unspent revenues received from the Fund. In developing these procedures, the Board shall utilize existing campaign reporting procedures whenever practical.

(b) 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.

…

"§ 163‑278.358. Civil penalty.

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 of up to ten thousand dollars ($10,000) per violation or three times the amount of any financial transactions involved in the violation, whichever is greater. In addition to any fine, for good cause shown, a candidate found in violation of this Article may be required to return to the Fund all amounts distributed to the candidate from the Fund. If the Board makes a determination that a violation of this Article has occurred, the Board shall calculate and assess the amount of the civil penalty and shall notify the entity that is assessed the civil penalty of the amount that has been assessed. The Board shall then proceed in the manner prescribed in G.S. 163‑278.34. In determining whether or not a candidate is in violation of this Article, the Board may consider as a mitigating factor any circumstances out of the candidate's control."

SECTION 2. G.S. 163‑278.69 is recodified as G.S. 163‑278.357.

SECTION 3. G.S. 163‑278.5 reads as rewritten:

"§ 163‑278.5. Scope of Article; severability.

…

This section applies to Articles ~~and [Article]~~ 22M and 22N of the General Statutes to the same extent that it applies to this Article."

SECTION 4. G.S. 163‑278.23 reads as rewritten:

"§ 163‑278.23. Duties of Executive Director of Board.

…

This section applies to Articles ~~and [Article]~~ 22M and 22N of the General Statutes to the same extent that it applies to this Article."

SECTION 5. G.S. 163‑278.99E reads as rewritten:

"§ 163‑278.99E. Voter education.

(a) through (c) Repealed by Session Laws 2013‑381, s. 38.1(b), as amended by Session Laws 2014‑111, s. 8, effective July 1, 2013.

(d) Relationship to the Judicial Voter Guide. – The Board may publish the Voter Guide in conjunction with the Judicial Voter Guide described in ~~G.S. 163‑278.69.~~G.S. 163‑278.357."

SECTION 6. G.S. 84‑34 reads as rewritten:

"§ 84‑34. Membership fees and list of members.

Every active member of the North Carolina State Bar shall, prior to the first day of July of each year, pay to the secretary‑treasurer an annual membership fee in an amount determined by the Council but not to exceed three hundred dollars ($300.00), ~~and every~~plus a surcharge of sixty dollars ($60.00) for the implementation of Article 22N of Chapter 163 of the General Statutes. A member shall be provided the option to designate that the surcharge required by this section be used in its entirety for the Judicial Voter Guide described in G.S. 163‑278.357. Every member shall notify the secretary‑treasurer of the member's correct mailing address. Any member who fails to pay the required dues by the last day of June of each year shall be subject to a late fee in an amount determined by the Council but not to exceed thirty dollars ($30.00). All dues for prior years shall be as were set forth in the General Statutes then in effect. The membership fee shall be regarded as a service charge for the maintenance of the several services authorized by this Article, and shall be in addition to all fees required in connection with admissions to practice, and in addition to all license taxes required by law. The fee shall not be prorated: Provided, that no fee shall be required of an attorney licensed after this Article shall have gone into effect until the first day of January of the calendar year following that in which the attorney was licensed; but this proviso shall not apply to attorneys from other states admitted on certificate. The fees shall be disbursed by the secretary‑treasurer on the order of the Council. The sixty‑dollar ($60.00) surcharge shall be sent on a monthly schedule to the State Board of Elections. The secretary‑treasurer shall annually, at a time and in a law magazine or daily newspaper to be prescribed by the Council, publish an account of the financial transactions of the Council in a form to be prescribed by it. The secretary‑treasurer shall compile and keep currently correct from the names and mailing addresses forwarded to the secretary‑treasurer and from any other available sources of information a list of members of the North Carolina State Bar and furnish to the clerk of the superior court in each county, not later than the first day of October in each year, a list showing the name and address of each attorney for that county who has not complied with the provisions of this Article. The name of each of the active members who are in arrears in the payment of membership fees shall be furnished to the presiding judge at the next term of the superior court after the first day of October of each year, by the clerk of the superior court of each county wherein the member or members reside, and the court shall thereupon take action that is necessary and proper. The names and addresses of attorneys so certified shall be kept available to the public. The Secretary of Revenue is hereby directed to supply the secretary‑treasurer, from records of license tax payments, with any information for which the secretary‑treasurer may call in order to enable the secretary‑treasurer to comply with this requirement.

The list submitted to several clerks of the superior court shall also be submitted to the Council at its October meeting of each year and it shall take the action thereon that is necessary and proper."

SECTION 7. Part 2 of Article 4 of Chapter 105 of the General Statutes is amended by adding a new section to read:

"§ 105‑159.3. Designation of tax to North Carolina Public Campaign Fund.

(a) Allocation to the North Carolina Public Campaign Fund. – To ensure the financial viability of the North Carolina Public Campaign Fund established in Article 22N of Chapter 163 of the General Statutes, the Department must allocate to that Fund three dollars ($3.00) from the income taxes paid each year by each individual with an income tax liability of at least that amount, if the individual agrees. A taxpayer must be given the opportunity to indicate an agreement to that allocation in the manner described in subsection (b) of this section. In the case of a married couple filing a joint return, each individual must have the option of agreeing to the allocation. The amounts allocated under this subsection to the Fund must be credited to it on a quarterly basis.

(b) Returns. – Individual income tax returns must give an individual an opportunity to agree to the allocation of three dollars ($3.00) of the individual's tax liability to the North Carolina Public Campaign Fund. The Department must make it clear to the taxpayer that the dollars will support a nonpartisan court system, that the dollars will go to the Fund if the taxpayer marks an agreement, and that allocation of the dollars neither increases nor decreases the individual's tax liability. The following statement satisfies the intent of this requirement: "Three dollars ($3.00) will go to the North Carolina Public Campaign Fund to support a nonpartisan court system, if you agree. Your tax remains the same whether or not you agree." The Department must consult with the State Board of Elections to ensure that the information given to taxpayers complies with the intent of this section.

The Department must inform the entities it approves to reproduce the return of the requirements of this section and that a return may not reflect an agreement or objection unless the individual completing the return decided to agree or object after being presented with the information required by subsection (c) of this section. No software package used in preparing North Carolina income tax returns may default to an agreement or objection. A paid preparer of tax returns may not mark an agreement or objection for a taxpayer without the taxpayer's consent.

(c) Instructions. – The instruction for individual income tax returns must include the following explanatory statement: "The North Carolina Public Campaign Fund provides campaign money to nonpartisan candidates for the North Carolina Supreme Court and Court of Appeals who voluntarily accept strict campaign spending and fund‑raising limits. The Fund also helps finance educational materials about voter registration, the role of the appellate courts, and the candidates seeking election as appellate judges in North Carolina. Three dollars ($3.00) from the taxes you pay will go to the Fund if you mark an agreement. Regardless of what choice you make, your tax will not increase, nor will any refund you are entitled to be reduced.""

SECTION 8. Sections 21.1(i), 21.1(j), and 21.1(l) of S.L. 2013‑360 and Sections 38.1(l), 38.1(m), and 38.1(o) of S.L. 2013‑381 are repealed.

SECTION 9. Sections 1 through 5 and Section 8 of this act are effective when it becomes law, provided, that distributions from the Fund shall begin in the 2018 election year; and further provided, that G.S. 163‑278.352(b)(7), as enacted by Section 1 of this act, becomes effective January 1, 2018, and applies to the membership fees due for 2018. Section 6 of this act becomes effective January 1, 2018, and applies to the membership fees due for 2018. Section 7 of this act becomes effective for taxable years beginning on or after January 1, 2018. Except as otherwise provided, this act is effective when it becomes law.