2017 -- S 0808

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LC001847

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO ELECTIONS - CAMPAIGN CONTRIBUTIONS

     Introduced By: Senator Erin P. Lynch Prata

     Date Introduced: April 25, 2017

     Referred To: Senate Judiciary

     (Board of Elections)

It is enacted by the General Assembly as follows:

     SECTION 1. Sections 17-25-3 and 17-25-10.1 of the General Laws in Chapter 17-25

entitled "Rhode Island Campaign Contributions and Expenditures Reporting" are hereby amended

to read as follows:

     17-25-3. Definitions.

     As used in this chapter, unless a different meaning clearly appears from the context:

     (1) "Business entity" means any corporation, whether for profit or not for profit, domestic

corporation or foreign corporation, as defined in § 7-1.2-106, financial institution, cooperative,

association, receivership, trust, holding company, firm, joint stock company, public utility, sole

proprietorship, partnership, limited partnership, or any other entity recognized by the laws of the

United States and/or the state of Rhode Island for the purpose of doing business. The term

"business entity" shall not include a political action committee organized pursuant to this chapter

or a political party committee or an authorized campaign committee of a candidate or office

holder. The term "business entity" shall not include any exempt nonprofit as defined herein or any

organization described in § 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent

corresponding internal revenue code of the United States, as amended from time to time, for the

purposes of chapter 17-25.3 of the general laws only.

     (2) "Candidate" means any individual who undertakes any action, whether preliminary or

final, which is necessary under the law to qualify for nomination for election or election to public

office, and/or any individual who receives a contribution or makes an expenditure, or gives his or

her consent for any other person to receive a contribution or make an expenditure, with a view to

bringing about his or her nomination or election to any public office, whether or not the specific

public office for which he or she will seek nomination or election is known at the time the

contribution is received or the expenditure is made and whether or not he or she has announced

his or her candidacy or filed a declaration of candidacy at that time.

     (3) "Conduit" or "intermediary" means any person who receives and forwards an

earmarked contribution to a candidate or a candidate's authorized committee, except as otherwise

limited in this chapter.

     (3)(4) "Contributions" and "expenditures" include all transfers of money, credit or debit

card transactions on-line or electronic payment systems such as "pay pal," paid personal services,

or other thing of value to or by any candidate, committee of a political party, or political action

committee or ballot question advocate. A loan shall be considered a contribution of money until it

is repaid.

     (5) "Earmarked" means a designation, instruction, or encumbrance, whether direct or

indirect, express or implied, oral or written, which results in all or any part of a contribution or

expenditure being made to, or expended on behalf of, a clearly identified candidate or a

candidate's authorized committee.

     (4)(6) "Election" means any primary, general, or special election or town meeting for any

public office of the state, municipality, or district or for the determination of any question

submitted to the voters of the state, municipality, or district.

     (5)(7) "Election cycle" means the twenty-four (24) month period commencing on January

1 of odd number years and ending on December 31 of even number years; provided, with respect

to the public financing of election campaigns of general officers under §§ 17-25-19, 17-25-20,

and 17-25-25, "election cycle" means the forty-eight (48) month period commencing on January

1 of odd numbered years and ending December 31 of even numbered years.

     (6)(8) "In-Kind Contributions" means the monetary value of other things of value or paid

personal services donated to, or benefiting, any person required to file reports with the board of

elections.

     (7)(9) "Other thing of value" means any item of tangible real or personal property of a

fair market value in excess of one hundred dollars ($100).

     (8)(10) "Paid personal services" means personal services of every kind and nature, the

cost or consideration for which is paid or provided by someone other than the committee or

candidate for whom the services are rendered, but shall not include personal services provided

without compensation by persons volunteering their time.

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     (9)(11) "Person" means an individual, partnership, committee, association, corporation,

union, charity and/or any other organization. The term "person" shall not include any exempt

nonprofit as defined herein or any organization described in § 501(c)(3) of the Internal Revenue

Code of 1986, or any subsequent corresponding internal revenue code of the United States, as

amended from time to time, for the purposes of chapter 17-25.3 of the general laws only.

     (10)(12) "Political action committee" means any group of two (2) or more persons that

accepts any contributions to be used for advocating the election or defeat of any candidate or

candidates. Only political action committees that have accepted contributions from fifteen (15) or

more persons in amounts of ten dollars ($10.00) or more within an election cycle shall be

permitted to make contributions, and those committees must make contributions to at least five

(5) candidates for state or local office within an election cycle.

     (11)(13) "Public office" means any state, municipal, school, or district office or other

position that is filled by popular election, except political party offices. "Political party offices"

means any state, city, town, ward, or representative or senatorial district committee office of a

political party or delegate to a political party convention, or any similar office.

     (12)(14) "State" means state of Rhode Island.

     (13)(15) "Testimonial affair" means an affair of any kind or nature including, but not

limited to, cocktail parties, breakfasts, luncheons, dinners, dances, picnics, or similar affairs

expressly and directly intended to raise campaign funds in behalf of a candidate to be used for

nomination or election to a public office in this state, or expressly and directly intended to raise

funds in behalf of any state or municipal committee of a political party, or expressly and directly

intended to raise funds in behalf of any political action committee.

     (14)(16) "Electioneering communication" means any print, broadcast, cable, satellite, or

electronic media communication not coordinated, as set forth in § 17-25-23, with any candidate,

authorized candidate campaign committee, or political party committee and which

unambiguously identifies a candidate or referendum and is made either within sixty (60) days

before a general or special election or town meeting for the office sought by the candidate or

referendum; or thirty (30) days before a primary election, for the office sought by the candidate;

and is targeted to the relevant electorate.

     (i) A communication which refers to a clearly identified candidate or referendum is

"targeted to the relevant electorate" if the communication can be received by two thousand

(2,000) or more persons in the district the candidate seeks to represent or the constituency voting

on the referendum.

     (ii) Exceptions: The term "electioneering communication" does not include:

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     (A) A communication appearing in a news story, commentary, or editorial distributed

through the facilities of any broadcasting station, unless such facilities are owned or controlled by

any political party, political committee, or candidate;

     (B) A communication which constitutes a candidate debate or forum conducted pursuant

to regulations adopted by the board of elections or which solely promotes such a debate or forum

and is made by or on behalf of the person sponsoring the debate or forum; or

     (C) A communication made by any business entity to its members, owners, stockholders,

or employees;

     (D) A communication over the Internet, except for (I) Communications placed for a fee

on the website of another person, business entity, or political action committee; and (II) Websites

formed primarily for the purpose, or whose primary purpose is, to expressly advocate the election

or defeat of a clearly identified candidate or the passage or defeat of a referendum; or

     (E) Any other communication exempted under such regulations as the board of elections

may promulgate (consistent with the requirements of this paragraph) to ensure the appropriate

implementation of this paragraph.

     (15)(17) "Independent expenditure" means an expenditure which, when taken as a whole,

expressly advocates the election or defeat of a clearly identified candidate, or the passage or

defeat of a referendum, or amounts to the functional equivalent of such express advocacy, and is

in no way coordinated, as set forth in § 17-25-23, with any candidate's campaign, authorized

candidate committee, or political party committee. An expenditure amounts to the functional

equivalent of express advocacy if it can only be interpreted by a reasonable person as advocating

the election, passage, or defeat of a candidate or referendum, taking into account whether the

communication mentions a candidate or referendum and takes a position on a candidate's

character, qualifications, or fitness for office. An independent expenditure is not a contribution to

that candidate or committee.

     (i) Exceptions: The term "independent expenditure" does not include:

     (A) A communication appearing in a news story, commentary, or editorial distributed

through the facilities of any broadcasting station, unless such facilities are owned or controlled by

any political party, political committee, or candidate;

     (B) A communication which constitutes a candidate debate or forum conducted pursuant

to regulations adopted by the board of elections or which solely promotes such a debate or forum

and is made by or on behalf of the person sponsoring the debate or forum;

     (C) A communication made by any business entity to its members, owners, stockholders,

or employees;

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     (D) A communication over the Internet, except for (I) Communications placed for a fee

on the website of another person, business entity, or political action committee; and (II) Websites

formed primarily for the purpose, or whose primary purpose is, to expressly advocate the election

or defeat of a clearly identified candidate or the passage or defeat of a referendum; or

     (E) Any other communication exempted under such regulations as the board of elections

may promulgate (consistent with the requirements of this paragraph) to ensure the appropriate

implementation of this paragraph.

     (16)(18) "Covered transfer" means any transfer or payment of funds by any person,

business entity or political action committee to another person, business entity, or political action

committee if the person, business entity, or political action committee making the transfer: (i)

Designates, requests, or suggests that the amounts be used for independent expenditures or

electioneering communications or making a transfer to another person for the purpose of making

or paying for such independent expenditures or electioneering communications; (ii) Made such

transfer or payment in response to a solicitation or other request for a transfer or payment for the

making of or paying for independent expenditures or electioneering communications or making a

transfer to another person for the purpose of marking or paying for such independent expenditures

or electioneering communications; (iii) Engaged in discussions with the recipient of the transfer

or payment regarding independent expenditures or electioneering communications or making a

transfer to another person for the purpose of marking or paying for such independent expenditures

or electioneering communications; or (iv) Made independent expenditures or electioneering

communications in an aggregate amount of five thousand dollars ($5,000) or more during the two

(2) year period ending on the date of the transfer or payment, or knew or had reason to know that

the person receiving the transfer or payment made such independent expenditures or

electioneering communications in such an aggregate amount during that two (2) year period.

     (A) Exceptions: The term "covered transfer" does not include:

     (I) A transfer or payment made by a person, business entity or political action committee

in the ordinary course of any trade or business conducted by the person, business entity or

political action committee or in the form of investments made by the person, business entity or

political action committee; or

     (II) A transfer or payment made by a person, business entity or political action committee

if the person, business entity or political action committee making the transfer prohibited, in

writing, the use of such transfer or payment for independent expenditures, electioneering

communications, or covered transfers and the recipient of the transfer or payment agreed to

follow the prohibition and deposited the transfer or payment in an account which is segregated

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from any account used to make independent expenditures, electioneering communications, or

covered transfers.

     (17)(19) For the purposes of chapter 17-25.3 of the general laws, "donation" means all

transfers of money, credit or debit card transactions on-line or electronic payment systems such as

"pay pal," paid personal services, or other thing of value to or by any person, business entity, or

political action committee. A loan shall be considered a donation of money until it is repaid.

     (18)(20) For the purposes of chapter 17-25.3 of the general laws, "donor" means a

person, business entity, or political action committee that makes a donation.

     (19)(21) "Exempt nonprofit" means any organization described in § 501(c)(4) of the

Internal Revenue Code that spends an aggregate annual amount of no more than ten percent

(10%) of its annual expenses or no more than fifteen thousand dollars ($15,000), whichever is

less, on independent expenditures, electioneering communications, and covered transfers as

defined herein and certifies the same to the board of elections seven (7) days before and after a

primary election and seven (7) days before and after a general or special election.

     (20)(22) For purposes of chapter 17-25.3 of the general laws, "referendum" means the

same as the definition set forth in § 17-5-1 of the general laws.

     17-25-10.1. Political contributions -- Limitations.

     (a) (1) No person, other than the candidate to his or her own campaign, nor any political

action committee shall make a contribution or contributions to any candidate, as defined by § 17-

25-3, or political action committee or political party committee which in the aggregate exceed

one thousand dollars ($1,000) within a calendar year, nor shall any person make contributions to

more than one state or local candidate, to more than one political action committee, or to more

than one political party committee, or to a combination of state and local candidates and political

action committees and political party committees which in the aggregate exceed ten thousand

dollars ($10,000) within a calendar year, nor shall any political action committee make such

contributions which in the aggregate exceed twenty-five thousand dollars ($25,000) within a

calendar year, nor shall any candidate or any political action committee or any political party

committee accept a contribution or contributions which in the aggregate exceed one thousand

dollars ($1,000) within a calendar year from any one person or political action committee.

     (2) Notwithstanding the provisions of subdivision (1) of this subsection, a person or

political action committee or political party committee may contribute an amount which in the

aggregate does not exceed ten thousand dollars ($10,000) within a calendar year to a political

party committee, which funds can be utilized for organizational and party building activities, but

shall not be used for contributions to candidates state and local for public office.

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     (b) Contributions to a named candidate made to any political committee authorized by

that candidate to accept contributions on the candidate's behalf shall be considered to be

contributions made to the candidate. Contributions to a candidate by a political committee for

another person shall be considered to be contributions by that person.

     (c) Expenditures made by any person in cooperation, consultation or concert with, or at

the request or suggestion of, a candidate, the candidate's authorized political committees, or their

agents shall be considered to be a contribution to the candidate.

     (d) The financing by any person of the dissemination, distribution, or republication, in

whole or in part, of any broadcast or any written, graphic, or other form of campaign materials

prepared by the candidate, the candidate's campaign committees, or their authorized agents shall

be considered to be a contribution to a candidate.

     (e) Nothing in this section shall be construed to restrict political party committees

organized pursuant to this title from making contributions to the candidates of that political party;

provided, that these contributions, other than allowable "in-kind" contributions, shall not exceed,

in the aggregate, twenty-five thousand dollars ($25,000) to any one candidate within a calendar

year, nor shall any candidate accept a contribution or contributions, other than allowable "in-

kind" contributions, which in the aggregate exceed twenty-five thousand dollars ($25,000) within

a calendar year from all committees of his or her political party. There shall be no restriction on

the amount of "in-kind" contributions that a political party committee may make to a candidate of

its political party; provided, that for the purposes of this subsection only, the cost of any

preparation and airing of television and/or radio advertisements and the cost of any print

advertisements shall not be considered an allowable "in-kind" contribution and shall be subject to

the aggregate limitation of twenty-five thousand dollars ($25,000).

     (f) (1) A contribution from an individual's dependent children, as defined in § 36-14-2,

shall be deemed a contribution from the individual for the purpose of determining whether

aggregate contributions exceed either the one hundred dollar ($100) threshold for reporting

purposes or the one thousand dollar ($1,000) maximum for contributions to a single candidate or

political action committee or the ten thousand dollar ($10,000) maximum for contributing to all

candidates and political action committees within a calendar year.

     (2) No dependent child shall contribute an amount which, when added to contributions

already made by that child's parent or legal guardian and by other dependent children of that

parent or legal guardian, exceed the one thousand dollar ($1,000) maximum for contributions to a

single candidate or political action committee or exceed the ten thousand dollar ($10,000)

maximum for contributions to all state or local candidates and political action committees within

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a calendar year.

     (g) Nothing in this section shall be construed to restrict the amount of money that a

candidate can borrow in his or her own name, and subsequently contribute or loan to his or her

own campaign.

     (h) (1) It shall be unlawful for any corporation, whether profit or non-profit, domestic

corporation or foreign corporation, as defined in § 7-1.2-106, or other business entity to make any

campaign contribution or expenditure, as defined in § 17-25-3, to or for any candidate, political

action committee, or political party committee, or for any candidate, political action committee,

or political party committee to accept any campaign contribution or expenditure from a

corporation or other business entity. Any contribution made in the personal name of any

employee of a corporation or other business entity, for which the employee received or will

receive reimbursement from the corporation or other business entity, shall be considered as a

contribution by the corporation or other business entity, in violation of this section.

     (2) Any voluntary payroll deduction and/or contribution made by employees of a

corporation or other business entity shall not be deemed a contribution of a corporation or other

business entity, notwithstanding that the contributions were sent to the recipient by the

corporation or other business entity.

     (i) All contributions of funds shall be by check, money order, or credit card and may be

made over the Internet, but in each case the source of the funds must be identified; provided, that

candidates, political action committees and political party committees may accept contributions in

cash which do not exceed twenty-five dollars ($25.00) in the aggregate from an individual within

a calendar year. The cash contribution must be delivered directly by the donor to the candidate,

his or her the campaign treasurer, or deputy treasurer. The treasurer or deputy treasurer shall

maintain a record of the name and address of all persons making these cash contributions.

     (j) Except as provided in subsection (h) of this section, no entity other than an individual,

a political action committee which is duly registered and qualified pursuant to the terms of this

chapter, political party committee authorized by this title, or an authorized committee of an

elected official or candidate established pursuant to this chapter shall make any contribution to or

any expenditure on behalf of or in opposition to any candidate, political action committee, or

political party.

     (k) For purposes of the limitations imposed by this section, all contributions made by a

person, either directly or indirectly, on behalf of a particular candidate, including contributions

which are in any way earmarked or otherwise directed through an intermediary or conduit to such

candidate, shall be treated as contributions from such person to such candidate. The intermediary

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or conduit shall report the original source and the intended recipient of such contribution to the

board of elections and to the intended recipient, in accordance with regulations and reporting

requirements promulgated by the board of elections.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO ELECTIONS - CAMPAIGN CONTRIBUTIONS

***

     This act would define the terms "conduit" and "earmarked" for purposes of reporting

campaign contributions. In addition, it would eliminate aggregate contributions limits and add a

prohibition on earmarked contributions. It also recognizes political action committees and

political party committees as lawful recipients of minimal cash contributions.

     This act would take effect upon passage.

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