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NO. 64. AN ACT RELATING TO PUBLIC FINANCING OF ELECTION CAMPAIGNS, DISCLOSURE REQUIREMENTS AND LIMITS ON CAMPAIGN CONTRIBUTIONS AND EXPENDITURES.

(H.28)

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1. LEGISLATIVE FINDINGS AND INTENT

(a) The General Assembly finds that:

(1) Election campaigns for statewide and state legislative offices are becoming too expensive. As a result many Vermonters are financially unable to seek election to public office and candidates for statewide offices are spending inordinate amounts of time raising campaign funds.

(2) Some candidates and elected officials, particularly when time is limited, respond and give access to contributors who make large contributions in preference to those who make small or no contributions.

(3) In the context of Vermont, contributions larger than the amounts specified in this act are considered by the legislature, candidates and elected officials to be large contributions.

(4) Robust debate of issues, candidate interaction with the electorate, and public involvement and confidence in the electoral process have decreased as campaign expenditures have increased.

(5) Increasing campaign expenditures require candidates to seek and rely on a smaller number of larger contributors, often outside the state, rather than a large number of small contributors.

(6) In the context of Vermont, contributions scaled in proportion to the size of the electoral district of the office and up to the amounts specified in this act adequately allow contributors to express their opinions, level of support and their affiliations.

(7) In the context of Vermont, candidates can raise sufficient monies to fund effective campaigns from contributions no larger than the amounts specified in this act.

(8) Limiting large contributions, particularly from out-of-state political committees or corporations, and limiting campaign expenditures will encourage direct and small group contact between candidates and the electorate and will encourage the personalinvolvement of a large number of citizens in campaigns, both of which are crucial to public confidence and the robust debate of issues.

(9) Large contributions and large expenditures by persons or committees, other than the candidate and particularly from out-of-state political committees or corporations, reduce public confidence in the electoral process and increase the appearance that candidates and elected officials will not act in the best interests of Vermont citizens.

(10) Citizen interest, participation and confidence in the electoral process is lessened by excessively long and expensive campaigns.

(11) Public financing of campaigns, conditioned on an appropriate number of qualifying contributions, will increase citizen participation and will limit the time spent soliciting contributions, and will reduce the need of elected officials to respond to, and provide access to, contributors. As a result candidates will be freed to devote more time and energy to debate of the issues and elected officials will be able to spend more time responding to constituents and to performing their official duties.

(12) Public financing of campaigns, coupled with generally applicable contribution and expenditure limitations, will level the financial playing field among candidates and provide resources to independent candidates, both of which will increase the debate of issues and ideas.

(13) In Vermont, campaign expenditures by persons who are not candidates have been increasing and public confidence is eroded when substantial amounts of soft money are expended, particularly during the final days of a campaign.

(14) Identification of persons who publish political advertisements assists in enforcement of the contribution and expenditure limitations established by this act.

(15) Because it is essential for all candidates to have their names and positions on issues known to the electorate and because incumbents have a substantial advantage in these areas, public grants and campaign expenditures must be reduced for incumbents.

(b) This act is necessary in order to implement more fully the provisions of Article 8 of Chapter I of the Constitution of the State of Vermont, which declares "That all elections ought to be free and without corruption, and that all voters, having a sufficient, evident,common interest with, and attachment to the community, have a right to elect officers, and be elected into office, agreeably to the regulations made in this constitution".

(c) The General Assembly adopts this act to provide public campaign financing for elections for certain offices, initially the offices of governor and lieutenant governor, to provide restrictions on excessive campaign expenditures, and to provide other regulations of contributions to and expenditures for election to office in the state.

Sec. 2. 17 V.S.A. chapter 59, subchapter 6 is added to read:

Subchapter 6. Vermont Campaign Finance Option

2851. DEFINITIONS

As used in this subchapter:

(1) "Affidavit" means the Vermont campaign finance affidavit required under section 2852 of this title.

(2) "General election period" means the period beginning the day after the primary election and ending the day of the general election.

(3) "Primary election period" means the period beginning the day after primary petitions must be filed under section 2356 of this title and ending the day of the primary election.

(4) "Vermont campaign finance qualification period" means the period beginning February 15 of each even-numbered year and ending on the date on which primary petitions must be filed under section 2356 of this title.

(5) "Secretary" means the secretary of state.

2852. FILING OF VERMONT CAMPAIGN FINANCE AFFIDAVIT

(a) A candidate for the office of governor or lieutenant governor who intends to seek Vermont campaign finance grants from the Vermont campaign fund shall file a Vermont campaign finance affidavit on the date on or before which primary petitions must be filed, whether the candidate seeks to enter a party primary or is an independent candidate.

(b) The secretary of state shall prepare a Vermont campaign finance affidavit form, informational materials on procedures and financial requirements and notification of the penalties for violation of this subchapter. The Vermont campaign finance affidavit shallset forth the conditions of receiving grants under this subchapter and provide space for the candidate to agree that he or she will abide by such conditions and all expenditure and contribution limitations, reporting requirements, and other provisions of this chapter. The affidavit shall also state the candidate’s name, legal residence, business or occupation, address of business or occupation, party affiliation, if any, the office sought and whether the candidate intends to enter a party primary. The affidavit shall also contain a list of all the candidate’s qualifying contributions together with the name and town of residence of the contributor and the date each contribution was made. The affidavit may further require affirmation of such other information as deemed necessary by the secretary for the administration of this subchapter. The affidavit shall be sworn and subscribed to by the candidate.

2853. VERMONT CAMPAIGN FINANCE GRANTS; CONDITIONS

(a) A person shall not be eligible for Vermont campaign finance grants if, during a two-year general election cycle, he or she becomes a candidate by accepting contributions totaling $500.00 or more or by making expenditures totaling $500.00 or more prior to February 15 of the general election year.

(b) A candidate who accepts Vermont campaign finance grants, shall:

(1) Not solicit, accept or expend any contributions except qualifying contributions, Vermont campaign finance grants and contributions authorized under section 2855 of this title, which contributions may be solicited, accepted or expended only in accordance with the provisions of this subchapter.

(2) Deposit all qualifying contributions, Vermont campaign finance grants and any contributions accepted in accordance with the provisions of section 2855 of this title in a federally insured noninterest bearing checking account.

(3) Not later than 40 days after the general election, deposit in the Vermont campaign fund, after all permissible expenditures have been paid, the balance of any amounts remaining in the account established under subdivision (2) of this subsection.

2854. QUALIFYING CONTRIBUTIONS

(a) In order to qualify for Vermont campaign finance grants, a candidate for the officeof governor or lieutenant governor must obtain during the Vermont campaign finance qualification period the following amount and number of qualifying contributions for the office being sought:

(1) For governor, a total amount of no less than $35,000.00 collected from no fewer than 1,500 qualified individual contributors making a contribution of no more than $50.00 each.

(2) For lieutenant governor, a total amount of no less than $17,500.00 collected from no fewer than 750 qualified individual contributors making a contribution of no more than $50.00 each.

(b) No candidate may accept more than one qualifying contribution from the same contributor and no contributor may make more than one qualifying contribution to the same candidate in any Vermont campaign finance qualification period. For the purpose of this section, a qualified individual contributor means an individual who is registered to vote in Vermont. No more than 25 percent of the total number of qualified individual contributors may be residents of the same county.

(c) Each qualifying contribution must indicate the name and town of residence of the contributor, the date received, and be acknowledged by the signature of the contributor.

(d) A candidate may retain and expend qualifying contributions obtained under this section. A candidate may expend the qualifying contributions for the purpose of obtaining additional qualifying contributions and may expend the remaining qualifying contributions during the primary and general election periods. Amounts expended under this subsection shall be considered expenditures for purposes of this chapter.

2855. VERMONT CAMPAIGN FINANCE GRANTS; AMOUNTS; TIMING

(a) To the extent funds are available, the secretary of state shall make grants from the Vermont campaign fund in separate grants for the primary and general election periods to candidates who have qualified for Vermont campaign finance grants under this subchapter.

(b) Whether a candidate has entered a primary or is an independent candidate, Vermont campaign finance grants shall be in the following amounts:

(1) For governor, $75,000.00 in a primary election period and $225,000.00 in ageneral election period, provided that the grant for a primary election period shall be reduced by an amount equal to the candidate’s qualifying contributions.

(2) For lieutenant governor, $25,000.00 in a primary election period and $75,000.00 in a general election period, provided that the grant for a primary election period shall be reduced by an amount equal to the candidate’s qualifying contributions.

(3) A candidate who is an incumbent of the office being sought shall be entitled to receive a grant in an amount equal to 85 percent of the amount listed in subdivision (1) or (2) of this subsection.

(c) In an uncontested general election and in the case of a candidate who enters a primary election and is unsuccessful in that election, an otherwise eligible candidate shall not be eligible for a general election period grant. However, such candidate may solicit and accept contributions and make expenditures as follows: contributions shall be subject to the limitations of section 2805 of this title and expenditures shall be limited to an amount equal to the amount of the grant set forth in subsection (b) of this section for the general election for that office.

(d) Grants awarded in a primary election period, but not expended by the candidate in the primary election period, may be expended by the candidate in the general election period.

(e) If the Vermont campaign fund contains insufficient revenues to provide Vermont campaign finance grants to all candidates under this section, the available funds shall be distributed proportionately among all qualifying candidates. If grants are reduced under this subsection, a candidate may solicit and accept additional contributions equal to the amount of the difference between the amount of the Vermont campaign finance grants authorized and the amount received under this section. Additional contributions authorized under this subsection shall be governed by the provisions of sections 2805 and 2853 of this title.

(f) Vermont campaign finance grants for a primary election period shall be paid to qualifying candidates within the first ten business days of the primary election period. Vermont campaign finance grants for a general election period shall be paid to qualifyingcandidates during the first ten business days of the general election period.

2856. VERMONT CAMPAIGN FUND

(a) A Vermont campaign fund is created for distribution of Vermont campaign finance grants to candidates for the offices of governor and lieutenant governor. The fund shall be administered by the state treasurer, and payments shall be made under warrants issued by the secretary of state.

(b) The fund shall consist of revenues from the following sources:

(1) Any amounts required to be deposited in the fund under section 2853 of this title.

(2) All penalties and fines levied for violations of this chapter.

(3) Forty percent of the amounts paid as annual report fees by domestic corporations under subdivision 1.22(a)(17) of Title 11A and 33 percent of the amounts paid as annual report fees by foreign corporations under subdivision 1.22(a)(16) of Title 11A.

(4) All amounts collected from the tax on lobbying expenditures imposed under 2 V.S.A. 264a.

(5) All amounts collected under section 5862c of Title 32, the Vermont campaign fund add-on.

(6) Any gifts received by the fund.

(7) Any amounts appropriated to the Vermont campaign fund by act of the general assembly.

(c) All principal and interest remaining in the fund at the close of any fiscal year shall not revert but shall remain in the fund for use in succeeding fiscal years.

* * * Penalties * * *

Sec. 3. 17 V.S.A. 2806 is amended to read:

2806. PENALTIES

(a) *[No certificate of nomination or election shall be granted to a candidate until the candidate or his treasurer has timely filed reports as required in this chapter.]*

*[(b)]* A person who knowingly and intentionally violates a provision of subchapters 2through 4 of this chapter shall be fined not more than $1,000.00 or imprisoned not more than six months or both.

*[(c)]*(b) *[A candidate who voluntarily agrees to limit campaign expenditures and who exceeds any of the limitations established in section 2842 of this title shall remit the amount of the excess expenditure to the secretary of state for deposit in the general fund within 90 days after the election, or be subject to a fine equaling 10 percent of the applicable amount established under section 2842 of this title.]* A person who violates any provision of this chapter shall be subject to a civil penalty of up to $10,000.00 for each violation and shall refund the unspent balance of Vermont campaign finance grants received, if any, calculated as of the date of the violation.

*[(d)]*(c) In addition to the other penalties herein provided, a state's attorney or the attorney general may institute any appropriate action, injunction, or other proceeding to prevent, restrain, correct or abate any violation *[hereof]* of this chapter.

* * * Regulation of Political Advertising * * *

Sec. 4. 17 V.S.A. chapter 59, subchapter 7 is added to read:

Subchapter 7. Political Advertisements

2881. DEFINITIONS

As used in this subchapter, "political advertisement" means any communication, including communications published in any newspaper or periodical or broadcast on radio, television or over any public address system, placed on any billboards, outdoor facilities, buttons or printed material attached to motor vehicles, window displays, posters, cards, pamphlets, leaflets, flyers or other circulars, or in any direct mailing, which expressly or implicitly advocates the success or defeat of a candidate.

2882. IDENTIFICATION

All political advertisements shall contain the name and address of the person who paid for the advertisement. The advertisement shall clearly designate the name of the candidate, party or political committee by or on whose behalf the same is published or broadcast. In the case of printed or written matter, the name and address shall be printed or written large enough to be clearly legible, except that this shall not apply to buttons orany written or printed matter attached to or displayed on any motor vehicle.

2883. NOTICE OF EXPENDITURE

(a) For purposes of this section, "mass media activities" includes television commercials, radio commercials, mass mailings, literature drops and central telephone banks which include the name or likeness of a candidate for office.

(b) In addition to any other reports required to be filed under this chapter, a person who makes expenditures totaling $500.00 or more for mass media activities within 30 days of a primary or general election shall report such expenditures to the secretary of state, and to the candidate whose name or likeness is included in the activity, within 24 hours of making the expenditure. The report shall identify the person who made the expenditure with the name of the candidate involved in the activity and any other information relating to the expenditure that is required to be disclosed under the provisions of subsections (a) and (b) of section 2803 of this title.

* * * Contribution and Expenditure Limitations * * *

Sec. 5. 17 V.S.A. 2801 is amended to read:

2801. DEFINITIONS

As used in this chapter,

* * *

(2) "Contribution" means a payment, distribution, advance, deposit, loan or gift of money or anything of value, paid or promised to be paid to a *[candidate or political committee]* person for the purpose of influencing an election, advocating a position on a public question, or supporting or opposing one or more candidates in any election, but shall not include services provided without compensation by individuals volunteering their time on behalf of a candidate, political committee or political party. For purposes of this chapter, "contribution" shall not include a personal loan *[to a candidate or political committee]* from a lending institution.

(3) "Expenditure" means a payment, disbursement, distribution, advance, deposit, loan or gift of money or anything of value, paid or promised to be paid, for the purpose of influencing an election, advocating a position on a public question, or supporting oropposing one or more candidates*[, by a candidate, political committee or political party or any person, committee or group authorized by a candidate or political committee or political party to make an expenditure]*.

(4) "Political committee" or "political action committee" means any formal or informal committee of two or more individuals, not including a political party, which receives contributions or makes expenditures of more than $500.00 in any one calendar year for the purpose of supporting or opposing one or more candidates, influencing an election or advocating a position on a public question, in any election or affecting the outcome of an election.

* * *

(9) "Two-year general election cycle" means the 24-month period that begins the day after a general election.

(10) "Full name" means an individual’s full first name, middle name or initial, if any, and full legal last name, making the identity of the person who made the contribution apparent by unambiguous reference.

Sec. 6. 17 V.S.A. 2805 is amended to read:

2805. LIMITATIONS OF CONTRIBUTIONS

(a) *[No]* A candidate *[or political committee]* for state representative or local office shall not accept contributions totaling more than *[$1,000.00]* $200.00 from a single source *[for any election]*, political committee or political party in any two-year general election cycle. A candidate for state senator or county office shall not accept contributions totaling more than $300.00 from a single source, political committee or political party in any two-year general election cycle. A candidate for the office of governor, lieutenant governor, secretary of state, state treasurer, auditor of accounts, or attorney general shall not accept contributions totaling more than $400.00 from a single source, political committee or political party in any two-year general election cycle. A political committee, other than a political committee of a candidate, or a political party shall not accept contributions totaling more than $2,000.00 from a single source, political committee or political party in any two-year general election cycle.

(b) *[No candidate or political committee shall accept contributions totaling more than $3,000.00 from a political committee for any election]* A single source, political committee or political party shall not contribute more to a candidate, political committee or political party than the candidate, political committee or political party is permitted to accept under subsection (a) of this section.

(c) *[No candidate or political committee shall accept contributions totaling more than $1,000.00 from a candidate for federal office for any election]* A candidate, political party or political committee shall not accept, in any two-year general election cycle, more than 25 percent of total contributions from contributors who are not residents of the state of Vermont or from political committees or parties not organized in the state of Vermont.

(d) *[All contributions in excess of $50.00 shall be]* A candidate shall not accept a contribution in excess of $50.00 unless made by check.

(e) A candidate, political party or political committee shall not accept a contribution which is not directly from the contributor, but was transferred to the contributor by another person for the purpose of transferring the same to the candidate, or otherwise circumventing the provisions of this chapter.

*[(e)]*(f) This section shall not be interpreted to limit the amount a candidate or his or her immediate family may contribute to his or her own campaign. For purposes of this subsection, "immediate family" means individuals related to the candidate in the first, second or third degree of consanguinity.

*[(f)]*(g) The limitations on contributions established by this section shall not apply to contributions made for the purpose of advocating a position on a public question, including a constitutional amendment.

(h) For purposes of this section, the term "candidate" includes the candidate’s political committee.

Sec. 7. 17 V.S.A. 2805a is added to read:

2805a. CAMPAIGN EXPENDITURE LIMITATIONS; AMOUNTS

(a) The following campaign expenditure limitations shall apply to all candidates, for all primary, general and local elections, whether or not a candidate accepts Vermontcampaign finance grants under subchapter 6 of this chapter, is financing his or her campaign from private contributions, or from the candidate’s own resources or that of his or her immediate family.

(1) A candidate for governor shall limit campaign expenditures to no more than $300,000.00 in any two-year general election cycle.

(2) A candidate for lieutenant governor shall limit campaign expenditures to no more than $100,000.00 in any two-year general election cycle.

(3) A candidate for secretary of state, state treasurer, auditor of accounts or attorney general shall limit campaign expenditures to no more than $45,000.00 in any two-year general election cycle.

(4) A candidate for state senator or county office shall limit campaign expenditures to no more than $4,000.00 plus, in the case of state senator, an additional $2,500.00 for each additional seat in the senate district, in any two-year general election cycle.

(5) A candidate for state representative in a single-member district shall limit campaign expenditures to no more than $2,000.00, and in a two-member district to no more than $3,000.00, in any two-year general election cycle.

(b) Recognizing the jurisdiction of the Congress of the United States to enact expenditure limitations and campaign finance reforms for candidates for federal office, the general assembly of the state of Vermont expects candidates for the United States House of Representatives and Senate to observe the contribution and expenditure limitations that apply to candidates for the office of governor.

(c) If a candidate for the office of governor, lieutenant governor, secretary of state, state treasurer, auditor of accounts or attorney general is an incumbent of the office being sought, the candidate shall be permitted to expend only 85 percent of the amount allowed for that office under this section. If a candidate for the general assembly is an incumbent of the office being sought, the candidate shall be permitted to expend only 90 percent of the amount allowed for that office under this section.

(d) For purposes of this section, the term "candidate" includes the candidate’s political committee.

* * * Independent Expenditures - "Soft Money" * * *

Sec. 8. 17 V.S.A. 2809 is added to read:

2809. ACCOUNTABILITY FOR RELATED EXPENDITURES

(a) A related campaign expenditure made on a candidate’s behalf shall be considered a contribution to the candidate on whose behalf it was made.

(b) A related campaign expenditure made on a candidate’s behalf shall be considered an expenditure by the candidate on whose behalf it was made. However, if the expenditure did not exceed $50.00, the expenditure shall not be considered an expenditure by the candidate on whose behalf it was made.

(c) For the purposes of this section, a "related campaign expenditure made on the candidate’s behalf" means any expenditure intended to promote the election of a specific candidate or group of candidates, or the defeat of an opposing candidate or group of candidates, if intentionally facilitated by, solicited by or approved by the candidate or the candidate’s political committee.

(d) An expenditure made by a political party or by a political committee that recruits or endorses candidates, that primarily benefits six or fewer candidates who are associated with the political party or political committee making the expenditure, is presumed to be a related expenditure made on behalf of those candidates. An expenditure made by a political party or by a political committee that recruits or endorses candidates, that substantially benefits more than six candidates and facilitates party or political committee functions, voter turnout, platform promotion or organizational capacity shall not be presumed to be a related expenditure made on a candidate’s behalf. In addition, an expenditure shall not be considered a "related campaign expenditure made on the candidate’s behalf" if all of the following apply:

(1) The expenditures were made in connection with a campaign event whose purpose was to provide a group of voters with the opportunity to meet the candidate personally.

(2) The expenditures were made only for refreshments and related supplies that were consumed at that event.

(3) The amount of the expenditures for the event was less than $100.00.

(e) A candidate may seek a determination that an expenditure is a related expenditure made on behalf of an opposing candidate by filing a petition with the superior court of the county in which either candidate resides. Within 24 hours of the filing of a petition, the court shall schedule the petition for hearing. Except as to cases the court considers of greater importance, proceedings before the superior court, as authorized by this section, and appeals therefrom, take precedence on the docket over all cases and shall be assigned for hearing and trial or for argument at the earliest practicable date and expedited in every way. The findings and determination of the court shall be prima facie evidence in any proceedings brought for violation of this chapter.

(f) The secretary of state may adopt rules necessary to administer the provisions of this section.

* * * On-Line Database - Administration * * *

Sec. 9. 17 V.S.A. 2810 is added to read:

2810. CANDIDATE INFORMATION PUBLICATION; ON-LINE DATABASE

(a) For each two-year general election cycle, the secretary of state shall develop and continuously update a publicly accessible campaign database. The database shall contain at least the following information for all candidates for statewide and county office and for the general assembly: for candidates receiving public financing grants, the amount of each grant awarded; the information contained in campaign finance reports filed under this chapter; and all reports of mass media activity expenditures filed under section 2883 of this title. The database shall also include campaign finance reports filed by candidates for federal office. The information in the database, together with any biographical sketches and position statements submitted to the secretary of state by such candidates, shall be made available to the public through the Vermont state home page on-line service, or through printed reports from the secretary in response to a public request within 14 days of the date of the request.

(b) Any candidate for statewide office and any candidate for federal office qualified to be on the ballot in this state may submit to the secretary of state a photograph,biographical sketch and position statement of a length and format specified by the secretary for the purposes of preparing a candidate information publication. Without making changes in the material presented, the secretary shall prepare a candidate information publication for statewide distribution prior to the general election, which includes the candidates’ photographs, biographies and position statements, a brief explanation of the process used to obtain candidate submissions, and, with respect to offices for which public financing is available, an indication of which candidates are receiving Vermont campaign finance grants and which candidates are not receiving Vermont campaign finance grants. The secretary shall prepare, publish and distribute the candidate information publication throughout the state no later than one week prior to the general election. The secretary shall also seek voluntary distribution of the candidate information publication in weekly and daily newspapers and other publications in the state. The candidate information publication shall also be available in large type, audiotape and Internet versions.

Sec. 10. 17 V.S.A. 2810a is added to read:

2810a. ADMINISTRATION

The secretary of state shall administer this chapter and shall perform all duties required under this chapter. The secretary may employ or contract for the services of persons necessary for performance of these duties.

* * * Amendments to Reporting Requirements * * *

Sec. 11. 17 V.S.A. 2803(a) and (b) are amended to read:

(a) The secretary of state shall prescribe and provide a uniform reporting form for all campaign finance reports. The reporting form shall be designed to show the following information:

(1) the full name, town of residence and mailing address of each contributor who contributes an amount in excess of $100.00, the date of the contribution, and the amount contributed;

(2) the total amount of all contributions of $100.00 or less and the total number of all such contributions;

(3) each expenditure listed by amount, date, to whom paid and for what purpose;

(4) the amount contributed or loaned by the candidate to his or her own campaign during the reporting period; and

(5) each debt or other obligation, listed by amount, date incurred, to whom owed and for what purpose, incurred during the reporting period.

(b) The form shall require the reporting of all contributions and expenditures *[received]* accepted or spent during the reporting period and *[not previously reported]* during the campaign to date and shall require full disclosure of the manner in which any indebtedness is discharged or forgiven. Contributions and expenditures for the reporting period and for the campaign to date also shall be totalled in an appropriate place on the form. The form shall contain a list of the required filing times so that the person filing may designate for which time period the filing is made. Contributions and expenditures received or spent during the 48 hour period prior to the filing deadline shall be reported on the next report.

Sec. 12. 17 V.S.A. 2811 is amended to read:

2811. CAMPAIGN REPORTS; CANDIDATES FOR STATE OFFICE, THE

GENERAL ASSEMBLY, POLITICAL COMMITTEES AND POLITICAL

PARTIES

(a) Each candidate for state office, each candidate for the general assembly who has made expenditures or received contributions of $500.00 or more, and each political committee and each political party required to register under section 2831 of this title shall file with the secretary of state campaign finance reports *[as follows:]*

*[(1) forty]* 40 days before *[both]* the primary election and on the 25th of each month thereafter and continuing to the general *[elections;]* election.

*[(2) ten days before both the primary and general elections;]*

*[(3) ten days following the general election;]*

*[(4) further campaign reports shall be filed on the fifteenth day of July and annually thereafter or until all contributions and expenditures have been accounted for and any]* *[indebtedness and surplus have been eliminated.]*

(b) At any time, but not later than 40 days following the general election, a candidatefor state office *[may]* and each candidate for the general assembly who has made expenditures or received contributions of $500.00 or more shall file with the secretary of state a "final report" which lists a complete accounting of all contributions and expenditures, and disposition of surplus, and which shall constitute the termination of his or her campaign activities.

(c) A political committee or political party shall file a campaign finance report not later than 40 days following the general election. At any time, a political committee or a political party may file a "final report" which lists a complete accounting of all contributions and expenditures and which shall constitute the termination of its campaign activities.

(d) In odd-numbered years campaign finance reports shall be filed on July 15.

(e) Each candidate for the general assembly required to file campaign finance reports under this section shall also file such reports with the clerk of the candidate’s respective senate or house district.

Sec. 13. 17 V.S.A. 2821 is amended to read:

2821. CAMPAIGN REPORTS; *[LEGISLATIVE AND]* COUNTY OFFICE

CANDIDATES

(a) Each candidate for *[representative or senator in the general assembly and each]* *[candidate for]* county office who has made expenditures or accepted contributions of $500.00 or more shall file campaign finance reports with the officer with whom his or her nomination papers are filed as follows:

(1) 10 days before the primary election;

(2) 10 days before the general election;

(3) further campaign reports shall be filed on the *[fifteenth]* 15th day of July and annually thereafter or until all contributions and expenditures have been accounted for and any indebtedness and surplus have been eliminated.

(b) Within *[thirty]* 40 days after the general election, each candidate for *[representative or senator and each candidate for]* county office who has made expenditures or accepted contributions of $500.00 or more shall file a "final report" which lists a completeaccounting of all contributions and expenditures, and disposition of surplus, and which shall constitute the termination of his or her campaign activities.

(c) Copies of reports filed under this section shall be forwarded by the officer to the secretary of state within five days of receipt.

Sec. 14. 17 V.S.A. 2831 is amended to read:

2831. CAMPAIGN REPORTS; POLITICAL COMMITTEES AND PARTIES

(a) Each political committee and each political party which has accepted contributions or made expenditures of $500.00 or more shall register with the secretary of state stating its full name and address, the name of its treasurer, and the name of the bank in which it maintains its campaign checking account within ten days of reaching the $500.00 threshold*[, and shall file with the secretary of state campaign finance reports as follows:]* .

*[(1) forty days before both the primary and general elections;]*

*[(2) ten days before both the primary and general elections;]*

*[(3) ten days following the general elections.]*

*[(b) Further campaign finance reports shall be filed on the fifteenth day of July and annually thereafter or until all contributions and expenditures have been accounted for and any indebtedness and surplus have been eliminated.]*

*[(c) At any time a political committee or political party may file with the secretary of state a "final report" which lists a complete accounting of all contributions and expenditures and which shall constitute the termination of its campaign activities.]*

*[(d)]*(b) A political committee or political party which has accepted contributions or made expenditures of $500.00, or more, for the purpose of influencing a local election or supporting or opposing one or more candidates in a local election shall, in addition to other filings required by this chapter, file campaign finance reports ten days before and ten days after the local election with the clerk of the municipality in which the election is held and with the secretary of state.

Sec. 15. 17 V.S.A. 2832 is amended to read:

2832. FILING WITH FEDERAL ELECTION COMMISSION

A political committee or political party may satisfy the filing requirements of thissubchapter and subchapter 2 of this chapter by filing with the secretary of state a copy of that portion of the campaign finance reports applicable to candidates seeking election in this state which the committee or party has filed with the Federal Election Commission and by designating an in-state agent in the report.

* * * Financing Provisions * * *

Sec. 16. 32 V.S.A. 5862c is added to read:

5862c. VERMONT CAMPAIGN FUND ADD-ON

(a) For taxable years beginning on and after January 1, 1998, all returns filed by individuals shall include, on a form prescribed by the commissioner of taxes, an opportunity to designate funds to the Vermont campaign fund established under section 2856 of Title 17.

(b) Amounts so designated shall be deducted from refunds due to, or overpayments made by, the designating taxpayers. All amounts so designated and deducted shall be deposited in an account by the commissioner of taxes for payment to the Vermont campaign fund. If at any time after the payment of amounts so designated to the account it is determined that the taxpayer was not entitled to all or any part of the amount so designated, the commissioner may assess, and the account shall then pay to the commissioner, the amount received, together with interest at the rate prescribed by section 3108 of this title, from the date the payment was made until the date of repayment.

(c) The commissioner of taxes shall explain to taxpayers the purposes of the account and how to contribute to it. The state treasurer shall make available to taxpayers the annual income and expense report of the Vermont campaign fund, and the commissioner of taxes shall provide notice in the instructions for the state individual income tax return that the report is available at the state treasurer’s office.

(d) If amounts paid with respect to a return are insufficient to cover both the amount owed on the return under this chapter and the amount designated by the taxpayer as a contribution to the Vermont campaign fund, the payment shall first be applied to the amount owed on the return under this chapter and the balance, if any, shall be deposited in the Vermont campaign fund.

(e) Nothing in this section shall be construed to require the commissioner to collect any amount designated as a contribution to the Vermont campaign fund.

Sec. 17. 11A V.S.A. 1.22(a)(16) and (17) are amended to read:

(16) Annual report of a foreign corporation *[100.00]* 150.00

(17) Annual report of a domestic corporation *[15.00]* 25.00

Sec. 18. 2 V.S.A. 264a is added to read:

264a. TAX ON EXPENDITURES OF LOBBYISTS

(a) There is imposed and shall be collected a tax on the expenditures of lobbyists and employers of lobbyists. The tax shall be at the rate of five percent of the amount of the expenditures in excess of $2,500.00 required to be reported in each calendar year by lobbyists and employers of lobbyists under section 264 of this title.

(b) The tax shall be paid to the secretary of state at the time that each periodic disclosure report is required to be filed under section 264(a) of this title.

(c) If any tax is not paid when due under subsection (b) of this section, the secretary shall notify the commissioner of taxes of the name, address and taxpayer identification number of such taxpayer and any other information necessary to determine the tax liability. The commissioner of taxes shall collect and enforce the tax imposed by this section, and shall have all the powers granted the commissioner for the collection and enforcement of the sales and use tax under chapter 233 of Title 32. Persons liable for the payment of the tax imposed by this section shall be subject to all penalties imposed on and have all rights of appeal afforded to persons liable for payment of the sales and use tax under chapter 233 of Title 32.

(d) All revenues collected by the secretary of state and the commissioner of taxes from the tax imposed by this section shall be submitted to the state treasurer for deposit in the Vermont campaign fund established under section 2856 of Title 17.

* * * Miscellaneous Provisions * * *

Sec. 19. 32 V.S.A. 586(b) is amended to read:

(b) The provisions of this subchapter shall not apply to:

* * *

(7) the Vermont campaign fund created by section 2856 of Title 17.

Sec. 20. REPEAL

17 V.S.A. chapter 59, subchapter 5 (relating to voluntary campaign expenditure limitations) is repealed.

Sec. 21. REPEAL

17 V.S.A. 2022 (relating to anonymous political literature) is repealed.

Sec. 22. 2 V.S.A. 267a is added to read:

267a. INVESTIGATIONS

The attorney general may investigate, as the attorney general finds necessary, to determine whether a person has violated this chapter. The attorney general may administer oaths, require filing of a statement under oath, take evidence and require the production, by subpoena or otherwise, of financial records, books, papers, correspondence and other documents and records the attorney general considers to be relevant and material to the investigation.

* * * Reports and Effective Dates * * *

Sec. 23. REPORTS

The committee on government operations in the senate and the committee on local government in the house shall evaluate the 2000 primary and general elections to determine whether the major provisions of this act are accomplishing their intended purposes. The committee shall also evaluate the effects of contribution and expenditure limitations and public financing on the election process and the merits of extending public financing to elections for additional statewide offices and to elections for the offices of state senator and state representative. The committees shall report their findings and recommendations, if any, to the General Assembly on or before March 15, 2001.

Sec. 24. APPROPRIATION

There is appropriated from the Vermont campaign fund for fiscal year 1999 to the secretary of state the amount of $100,000.00. This amount shall be in addition to all other amounts appropriated to the secretary of state in that fiscal year and shall be used by the secretary for the administration of this act.

* * * State Treasurer * * *

Sec. 25. FINDINGS

The General Assembly finds:

(1) The office of state treasurer is responsible for millions of dollars of contracted services to assist in managing billions of dollars and issuing debt.

(2) A concern has risen regarding the connection between campaign contributions of and solicitations by certain vendors to state treasurers and the awards of contracts to vendors in the fields of investment, banking, legal or debt services. The concern is that such awards have not been made on the objective basis of cost and expertise, but rather on the basis of favoritism. Even when no actual corruption occurs, there exists an overwhelming appearance of impropriety regarding the awarding of such lucrative contracts to campaign contributors or those who solicit campaign contributions. Avoidance of such corruption and the threat of such corruption is critical to maintaining the citizens’ confidence and trust in their government and elected officials.

(3) Prohibiting political contributions and solicitations from those persons and entities that either have existing contracts with the state treasurer’s office or desire contracts with the state treasurer’s office will protect Vermont’s citizens from corruption or the potential of corruption and will increase the public’s confidence in the office of state treasurer.

Sec. 26. 32 V.S.A. 109 is added to read:

109. SOLICITATIONS AND CONTRIBUTIONS PROHIBITED

(a) As used in this section:

(1) "Firm" means any person or entity that provides investment services and includes the owner of the firm, excluding those shareholders owning less than one percent holdings in the firm’s outstanding shares, and all managers, officers, directors, partners or employees who have managerial or discretionary responsibility to invest funds, manage funds or provide investment services.

(2) "Investment services" means legal services, investment banking services, investment advisory services, underwriting services, financial advisory services orbrokerage firm services for brokerage, underwriting and financial advisory activities which are within the statutory purview of the treasurer.

(3) "Treasurer" means the treasurer of the state of Vermont.

(b) A firm that currently has a contract with the state treasurer or a political committee established by that firm shall not make a contribution to, or solicit contributions on behalf of, a candidate for the office of treasurer. A violation of this subsection shall be considered a material breach and a default by the firm of any contract issued to it by the treasurer. Upon the occurrence of such a material breach and default, the treasurer shall notify the firm of the state’s intention to terminate the firm’s contract. The treasurer shall forthwith seek to reissue the contract to another person or entity in accordance with existing law and procedures. This subsection shall not preclude the payment of compensation, expenses or fees to a firm that has violated this subsection regarding work performed or expenses incurred prior to the date the contract is terminated.

(c) The treasurer shall not enter into any contract with any firm if the firm or a political committee established by that firm has made a contribution or solicited contributions on behalf of a candidate for the office of treasurer after July 1, 1997 and within five years of the date of the contract.

Sec. 27. EFFECTIVE DATES

The provisions of this act shall take effect as follows:

(1) On July 1, 1997, this section, Sec. 1 (findings), Sec. 3 (penalties), Sec. 4 (political advertisements), Sec. 10 (administration), Sec. 21 (repeal), Sec. 22 (investigations), Sec. 23 (reports), Sec. 24 (appropriation), and Secs. 25 and 26 (state treasurer).

(2) On January 1, 1998, that part of Sec. 2 which adds 17 V.S.A. 2856 (Vermont campaign fund), Sec. 16 (individual income tax add-on), Sec. 17 (corporate fees), Sec. 18 (tax on lobbying expenditures) and Sec. 19 (special funds).

(3) On the day after the 1998 General Election, Sec. 2, except that part of Sec. 2 which adds 17 V.S.A. 2856 creating a Vermont campaign fund (Vermont campaign finance option), Sec. 5 (definitions), Sec. 6 (contribution limitations), Sec. 7 (expenditurelimitations), Sec. 8 (related expenditures), Sec. 9 (information publication; on-line database), Secs. 11 through 15 (campaign finance reports) and Sec. 20 (repeal).

Approved: June 26, 1997