GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2001
H	1
HOUSE BILL 1410

 
 
Short Title:	Voter-Owned Elections Act.	()	
Sponsors:	Representatives Alexander, Earle, Goodwin, Nesbitt (Primary Sponsors);  Adams, Allen, Barefoot, Bell, Blue, Bonner, Church, Coates, Cole, Culpepper, Cunningham, Easterling, Edwards, Fitch, Gulley, Hackney, Hall, Hill, Holliman, Hunter, Hurley, Insko, Jarrell, Jeffus, Lucas, Luebke, McAllister, Michaux, Miller, Oldham, Preston, Redwine, Rogers, Russell, Saunders, Smith, Tolson, Underhill, Wainwright, Walker, Warner, Warren, Weiss, Womble, Wright, and Yongue.	
Referred to:	Election Law and Campaign Finance Reform.	
April 26, 2001

A BILL TO BE ENTITLED
AN ACT to phase in a voluntary program that gives candidates for certain elective offices the option of choosing to finance their campaigns from a publicly supported fund, provided that they gain authorization to do so from registered voters and that they abide by fund-raising and spending limits.

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 22D.
"The Voter-Owned Elections Act.
"§ 163-278.61.  Definitions.
When used in this Article:
(1)	The term 'Board' means the State Board of Elections.
(2)	For purposes of calculating amounts certified candidates receive, the term 'campaign expenditure' shall not include loan payments, refunds, or contributions made by candidates to other candidates, political committees, referendum committees, or political parties.
(3)	The term 'certified candidate' means a candidate running for office who chooses to participate in the Voter-Owned Elections Act and who is certified as a Voter-Owned Election Act candidate under G.S. 163-278.64(e).
(4)	The terms 'contested primary election' and 'contested general election' mean elections in which there are more candidates than the number to be elected.
(5)	The terms 'contribution' and 'expenditure' have the same meaning as defined in G.S. 163-278.6.
(6)	The term 'election cycle' comprises the primary, runoff primary, and general election for election to the same term of the same office.
(7)	The term 'Fund' means the North Carolina Democracy Fund established in G.S. 163-278.63.
(8)	The term 'nonparticipating candidate' means a candidate running for Governor, Lieutenant Governor, other office in the Council of State, State Senator, or State Representative who does not choose to participate in the Voter-Owned Election Act and who is not seeking to be certified under G.S. 163-278.64(e).
(9)	The term 'office', as used in this Article, means Governor, Lieutenant Governor, other office in the Council of State, each district seat held by a State Senator, or each district seat held by a State Representative.
(10)	The term 'participating candidate' means a candidate who is running for office who is seeking to be certified as a Voter-Owned Elections Act candidate under G.S. 163-278.64(e).
(11)	The term 'qualifying contribution' means a donation of not less than ten dollars ($10.00) and not more than one hundred dollars ($100.00) in the form of a check or money order payable to the candidate that is:
a.	Made by any registered voter who resides in a county served by the office the candidate is seeking;
b.	Made during the designated qualifying period and obtained through efforts made with the knowledge and approval of the candidate; and
c.	Acknowledged by a written receipt, on a multicopy form provided by the Board, which identifies the complete name, residence address, and county of residence of the contributor and the amount and date of the contribution made; states that the contributor is a registered voter who resides in a county served by the office being sought by the candidate; states that the contributor authorizes the candidate to use the contribution to qualify to receive campaign funds from the Fund; and is signed by the contributor and the candidate or the candidate’s representative.
In addition, the term 'qualifying contribution' includes contributions from the candidate’s own funds or those of the candidate’s spouse, parents, brothers, and sisters, in any amount up to an aggregate total of one thousand dollars ($1,000) for a statewide qualifying candidate and up to an aggregate total of five hundred dollars ($500.00) for a nonstatewide candidate, but those funds shall not be included in the number of qualifying contributions needed to be certified under G.S. 163-278.64(e).
(12)	The term 'excess qualifying contributions' means the qualifying contributions received in excess of a sum to be determined by multiplying the minimum number of qualifying contributions required for that office by the maximum dollar amount allowed for such contributions.
(13)	The term 'qualifying period' means:
a.	For participating candidates for Governor, Lieutenant Governor, and other offices in the Council of State, the period beginning 270 days before the close of the filing period for candidates for party nomination for the office and ending 30 days after the close of the filing period for candidates for party nomination for the office.
b.	For participating candidates for State Senator and State Representative, the period beginning 120 days before the close of the filing period for candidates for party nomination for the office and ending 30 days after the close of the filing period for candidates for party nomination for the office.
"§ 163-278.62.  Purpose and establishment of Voter-Owned Elections Act.
The purpose of this Article is to ensure the vitality and fairness of democratic elections in North Carolina, to the end that any eligible citizen of this State can realistically choose to seek and run for public office. It is also the purpose of this Article to protect the constitutional rights of voters and candidates from the detrimental effects of increasingly large amounts of money being raised and spent in North Carolina to influence the outcome of elections. It is essential to the public interest that the potential for corruption or the appearance of corruption is minimized, and that the equal and meaningful participation of all citizens in the democratic process is ensured. Accordingly, this Article establishes the North Carolina Democracy Fund as an alternative source of campaign financing for candidates who obtain a sufficient number of qualifying contributions from registered voters and who voluntarily accept strict fund-raising and spending limits. This Article is available to candidates for Council of State offices other than Governor and Lieutenant Governor in elections to be held in 2004 and thereafter, to candidates for the General Assembly in elections to be held in 2006 and thereafter, and to candidates for Governor and Lieutenant Governor in elections to be held in 2008 and thereafter. Candidates participating in this Article must also comply with all other applicable election and campaign laws and rules. The Board shall administer this Article and the North Carolina Democracy Fund.
"§ 163-278.63. North Carolina Democracy Fund established; sources of funding.
(a)	Establishment of Fund. – The North Carolina Democracy 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 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 the following sources must be deposited in the Fund:
(1)	Unspent Democracy Fund revenues distributed to any certified candidate who does not remain a candidate until the primary or general election for which they were distributed, or such revenues that remain unspent by a candidate following the date of the primary election or general election for which they were distributed;
(2)	Any money transferred to the Democracy Fund from the North Carolina Candidates Financing Fund;
(3)	Contributions made to the Democracy Fund by individual taxpayers pursuant to G.S. 105-269.6;
(4)	Voluntary donations made directly to the Democracy Fund; and
(5)	General Fund monies appropriated for the use of the Democracy Fund by the General Assembly pursuant to subsection (c) of this section.
(c)	Determination of Fund Amount. – By April 1, 2003, 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 the Voter-Owned Elections Act. In its report, the Board shall set out the funds received to date, the expected needs of the Fund during the next election cycle, and the amount of the appropriation from the General Assembly that will be needed for the biennium. The General Assembly shall include in its appropriations from the General Fund that year at least the amount that the Board states in its report will be needed, but no more than one-tenth of one percent (0.1%) of the total General Fund for the biennium. In addition, the General Assembly shall reserve for the first fiscal year of the biennium at least fifteen percent (15%) of the amount of funds the Board states in its report that it will need during the biennium, to be used by the Board to cover any disbursement under G.S. 163-278.64 in excess of the amount of its direct appropriation.
"§ 163-278.64.  Terms of participation.
(a)	Declaration of Intent. – Any individual choosing to participate in the Voter-Owned Elections Act 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 with the Board prior to or during the qualifying period, except as provided under subsection (m) of this section, according to forms and procedures developed by the Board. A candidate choosing to participate in the Voter-Owned Elections Act must submit a declaration of intent prior to collecting any qualifying contributions under this Article.
A candidate who files a declaration of intent shall swear or affirm that the candidate has complied with and will continue to comply with Voter-Owned Elections Act contribution and expenditure limits and will comply with all other requirements set forth in this Article or promulgated by the Board.
(b)	Restrictions on Contributions and Expenditures for Participating Candidates. – After becoming a participating candidate as defined by G.S. 163-278.61(6) and prior to certification, participating candidates shall not accept contributions, except for qualifying contributions. A participating candidate may expend only from the qualifying contributions raised and shall not use other funds. 
(c)	Number of Qualifying Contributions. – Participating candidates must obtain a minimum number of qualifying contributions in order to be certified, as follows:
(1)	For a candidate for Governor, at least 7,000 registered North Carolina voters shall have supported the candidacy by providing a qualifying contribution to that candidate. No more than a third of a candidate’s qualifying contributions submitted to the Board for purposes of certification shall come from registered voters who are residents of the same Congressional district. 
(2)	For a candidate for Lieutenant Governor or other office in the Council of State other than Governor, at least 3,000 registered North Carolina voters shall have supported the candidacy by providing a qualifying contribution to that candidate. No more than a third of a candidate’s qualifying contributions submitted to the Board for purposes of certification shall come from registered voters who are residents of the same Congressional district.
(3)	For a candidate for State Senator, at least 400 registered voters shall have supported the candidacy by providing a qualifying contribution to that candidate.
(4)	For a candidate for State Representative, at least 200 registered voters shall have supported the candidacy by providing a qualifying contribution to that candidate.
No payment, gift, or anything of value shall be given in exchange for a qualifying contribution.
(d)	Filing With the Board. – All participating candidates shall report qualifying contributions with the Board at least five business days after the end of the qualifying period in accordance with procedures developed by the Board, except as provided under subsection (m) of this section.
(e)	Certification of Candidates. – Upon receipt of a final submittal of the record of qualifying contributions by a participating candidate, the Board shall determine whether or not the candidate has:
(1)	Signed and filed a declaration of intent to participate in this Article;
(2)	Submitted copies of the appropriate number of forms described in G.S. 163-278.61(11)c. signed by contributors who are registered voters, which the Board shall verify through a random sample or other means it adopts;
(3)	Qualified as a candidate under G.S. 163-106, 163-98, 163-122, 163-123, or 163-114;
(4)	Complied with expenditure restrictions; and
(5)	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 final submittal of qualifying contributions.
Certified candidates shall comply with all requirements of this Article after certification and throughout the primary election and general election periods. Failure to do so is a violation of this Article.
(f)	Restrictions on Contributions and Expenditures for Participating and Certified Candidates. – After filing a declaration of intent, a candidate shall limit campaign expenditures and debts to the qualifying contributions and the money distributed to the candidate from the Fund, provided that a candidate may accept in-kind contributions from political party executive committees, up to an aggregate value of ten percent (10%) of a candidate’s base level of public financing as determined under subsection (h) of this section. All revenues from qualifying contributions, public funds, or in-kind contributions from a political party must be used for campaign-related purposes. The Board shall publish guidelines outlining permissible campaign-related expenditures. For accounting purposes, all qualifying contributions shall be spent before the candidate spends money received from the Fund. A candidate shall return to the Fund any amount that is unspent and uncommitted at the time that person ceases to be a candidate before a primary or general election for which the Fund money was distributed. A candidate shall return to the Fund any amount that was unspent and uncommitted after the date of the primary election or general election for which the Fund money was distributed. 
(g)	Timing of Fund Distribution. – The Board shall distribute to certified candidates revenues from the Fund in amounts determined under subsection (h) of this section, minus any excess qualifying contributions, in the following manner:
(1)	Within three business days after certification, for candidates certified before the first Monday in February of the election year, revenues from the Fund as if the candidates are in an uncontested primary election.
(2)	Within three business days after certification, for primary election candidates certified on or after the first Monday in February of the election year, revenues from the Fund according to whether the candidate is in a contested or uncontested primary election, reduced by any amounts previously distributed under subdivision (1) of this subsection.
(3)	Within the earlier of the following: within three business days after the primary election, or within three business days after the certification pursuant to G.S. 163-122, 163-123, or 163-98 of the first opposition candidate, for general election certified candidates, revenues from the Fund according to whether the candidate is in a contested general election. No funds are distributed for uncontested general elections.
Funds may be distributed to certified candidates under this section by any mechanism that is expeditious, ensures accountability, and safeguards the integrity of the Fund.
(h)	Amount of Fund Distribution. – By March 1, 2003, and no less frequently than every two or four years thereafter, as appropriate, the Board shall determine the amount of funds, rounded to the nearest one hundred dollars ($100.00), to be distributed to participating candidates based on the type of election and office as follows:
(1)	Contested primary elections. – The amount of revenues to be distributed is the median amount of campaign expenditures made by the candidates who reported campaign expenditures for all contested primary election races for the immediately preceding two primary elections for that office, provided that each of the following shall be considered a separate office for purposes of calculating the average:
a.	Governor.
b.	Lieutenant Governor and each office in the Council of State other than Governor shall be considered as a separate office.
c.	State Senate.
d.	State Representative.
(2)	Uncontested primary elections. – The amount of revenues to be distributed is the median amount of campaign expenditures made by the candidates who reported campaign expenditures for all uncontested primary election races, or for contested races if the amount is lower, for the immediately preceding two primary elections for that office as defined in subdivision (1) of this subsection.
(3)	Contested general elections. – The amount of revenues to be distributed is the median amount of campaign expenditures made by all candidates who reported campaign expenditures for contested general election races for the immediately preceding two general elections for that office as defined in subdivision (1) of this subsection.
(4)	Uncontested general elections. – No revenues shall be distributed for uncontested general elections.
The median for State Senate races shall be calculated using all the applicable Senate races in the State, rather than those in the same district. The same method shall be used for State Representative races. If the immediately preceding two election cycles do not contain sufficient data for the Board to determine the amount to be distributed for an office, the Board shall use data from the most recent applicable elections for that office. If no applicable elections for that office contain sufficient data, the Board shall set an amount based on data from elections for comparable offices.
(i)	Reporting by Noncertified Candidates. – Any noncertified candidate who has as an opponent a certified candidate shall report to the Board on the 40th and 20th days before an election a statement of the amount that the noncertified candidate intends to spend for that election, as well as the total amount raised and borrowed to date. Any entity that intends to make independent expenditures to support or oppose a certified candidate shall report to the Board on the 40th and 20th days before an election a statement of the amount that it intends to spend for that election, as well as the total amount raised and borrowed to date. Any noncertified candidate with a certified opponent, or any entity making independent expenditures in support of or opposition to a certified candidate, shall report electronically to the Board within 24 hours after the total amount of expenditures or obligations made, or funds raised or borrowed, exceeds the base level of public funding described in subsection (h) of this section. After this 24-hour filing, the noncertified candidate shall comply with an expedited reporting schedule. The schedule and forms for reports required by this subsection shall be made according to procedures developed by the Board.
(j)	Matching Funds. – When any report or group of reports shows that funds in opposition to a certified candidate as described in this subsection exceed the amount described under subsection (h) of this section, the Board shall issue immediately to that certified candidate an additional amount equivalent to the reported excess within the limits set forth in this subsection. Funds in opposition to a certified candidate are equal to the sum of the actual or estimated expenditures or obligations made, or funds raised or borrowed, whichever is greater, by any noncertified opponent of a certified candidate and by all entities making independent expenditures in opposition to the certified candidate or in support of any noncertified opponent of that certified candidate.  Total matching funds to a certified candidate in an election are limited to an amount up to two times the amount described in subdivision (1) or (3) of subsection (h), whichever is applicable.
(k)	Unaffiliated Candidates. – Unaffiliated candidates certified pursuant to G.S. 163-122 before noon on the first Monday in February of the election year shall be eligible for revenues from the Fund in the same amounts and at the same time as uncontested primary election candidates and general election candidates as specified in subsections (g) and (h) of this section. For unaffiliated candidates not certified by noon on the first Monday in February, the deadline for filing qualifying contributions is noon on the last Friday in June of the election year. Unaffiliated candidates certified after noon on the first Friday in February shall be eligible for revenues from the Fund in the same amounts as general election candidates, as specified in subsections (g) and (h).
(l)	Reporting by Participating and Certified Candidates. – Notwithstanding other provisions of law, participating and certified candidates shall report any money collected, all campaign expenditures, obligations, and related activities to the Board according to procedures developed by the Board. Upon the filing of a final report for any losing primary election, special election, or general election, each candidate who has revenues from the Fund remaining unspent shall return all revenues to the Board. In developing these procedures, the Board shall utilize existing campaign reporting procedures wherever practicable. The Board shall ensure timely public access to campaign finance data and may utilize electronic means of reporting and storing information.
(m)	Other Procedures. – For races involving special elections, recounts, vacancies, withdrawals, or replacement candidates, the Board shall establish procedures for qualification, certification, disbursement of Fund revenues, and return of unspent Fund revenues.
(n)	Appeals. – The initial decision on an issue concerning qualification, certification, or distribution under this Article shall be made by the Executive Secretary-Director of the Board. The procedure for challenging that decision is as follows:
(1)	A person aggrieved by a certification decision by the Executive Secretary-Director of the Board may appeal to the full Board within three business days of the certification decision. The appeal shall be in writing and shall set forth the reasons for the appeal.
(2)	Within five business days after an appeal is properly made, and after due notice is given to the parties, the Board shall hold a hearing. The appellant has the burden of providing evidence to demonstrate that the Board's decision was improper. The Board shall rule on the appeal within three business days after the completion of the hearing.
"§ 163-278.65.  Enforcement by the Board.
(a)	Enforcement by the Board. – The Board, with the advice of the Voter-Owned Elections Advisory Council, shall administer the provisions of this Article.
(b)	Voter-Owned Elections Advisory Council. – There is established under the State Board of Elections the Voter-Owned Elections Advisory Council. The Voter-Owned Elections Advisory Council shall advise the Board on the rules and opinions it adopts for the enforcement and administration of this Article and on the funding needs of the Democracy Fund. The Voter-Owned Elections Advisory Council shall consist of five members to be appointed by the Governor. The Governor shall take into consideration recommendations made by the public and by political and other organizations. No person shall be eligible to be a member of the Council who would be ineligible to serve on a county board of elections in accordance with G.S. 163-30. The initial members shall be appointed by September 1, 2002. Of the initial appointees, two are appointed for one-year terms, two are appointed for two-year terms, and one is appointed for a three-year term according to random lot. Thereafter, appointees are appointed to serve four-year terms. A person may not serve more than two full terms. The appointed members receive the legislative per diem pursuant to G.S. 120-3.1. One of the Council members shall be elected by the members as Chair. A vacancy during an unexpired term shall be filled in the same manner as the regular appointment for that term, but a vacancy appointment is only for the unexpired portion of the term.
"§ 163-278.66.  Board to adopt rules and issue opinions.
The Board shall adopt rules and issue opinions to ensure effective administration of this Article. Such rules shall include, but not be limited to, procedures for obtaining qualifying contributions, certification as a Voter-Owned Elections Act candidate, addressing circumstances involving special elections, vacancies, recounts, withdrawals, or replacements, collection of revenues for the Fund, distribution of Fund revenue to certified candidates, return of unspent Fund disbursements, and compliance with the Voter-Owned Elections Act. The Board shall evaluate qualification thresholds and funding formula for State Senate, State Representative, and other candidates and report those evaluations to the General Assembly by April 1, 2003, and every two years thereafter.
"§ 163-278.67.  Civil penalty.
In addition to any other penalties that may be applicable, any person who violates any provision of this Article is subject to a civil penalty of up to ten thousand dollars ($10,000) per violation. 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 person who 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 the expenditure limits of this Article, the Board may consider as a mitigating factor any circumstances out of the person’s control."
SECTION 2.  Article 22C of Chapter 163 of the General Statutes is repealed.
SECTION 3.(a)  G.S. 105‑269.6 reads as rewritten:
"§ 105‑269.6.  Contribution of individual income tax refund to  the North Carolina Democracy Fund.
An individual entitled to a refund of income taxes under Division II of Article 4 of this Chapter may elect to contribute all or part of the refund to the  North Carolina Democracy Fund created in Article 22D of Chapter 163 of the General Statutes. The Secretary  shall provide appropriate language and space on the individual income tax form in which to make the election. The election becomes irrevocable upon filing the individual's income tax return for the taxable year. The Secretary shall, on a quarterly basis, transmit the contributions made pursuant to this section to the State Treasurer for credit to the  North Carolina Democracy Fund. Any interest earned on funds so credited shall be credited to the Fund."
SECTION 3.(b)  The Secretary of Revenue shall transfer to the North Carolina Democracy Fund any funds contributed to the North Carolina Candidates Financing Fund pursuant to G.S. 105‑269.6 before its amendment by this section, but not yet transferred to that Fund.
SECTION 4.  G.S. 163‑278.13 is amended by adding a new subsection to read:
"(e2)	In order to make meaningful the provisions of the North Carolina Voter-Owned Elections Act, as set forth in Article 22D of this Chapter, no candidate for any office that is in that current election subject to the provisions of Article 22D shall accept a contribution during the period beginning 21 days before the day of the general election and ending the day after the general election. No contributor shall make a contribution to a candidate for any office that is in that current election subject to the provisions of Article 22D during the period beginning 21 days before the general election and ending the day after the general election. The prohibitions in this subsection shall also apply to a political committee the principal purpose of which is to support a candidate for those offices. Nothing in this subsection shall prohibit a candidate from making a contribution or loan secured entirely by that candidate's assets to that candidate's own campaign or to a political committee the principal purpose of which is to support that candidate's campaign. This subsection applies with respect to a candidate only if both of the following statements are true regarding that candidate:
(1)	That candidate is opposed in the general election by a certified candidate as defined in Article 22D of this Chapter.
(2)	That certified candidate has not received the maximum matching funds available under G.S. 163-278.64(j).
The recipient of a contribution that apparently violates this subsection has five days to return the contribution or file a detailed statement with the State Board of Elections explaining why the contribution does not violate this subsection."
SECTION 5.  The provisions of this act are severable.  If any provision of this act is held invalid by a court of competent jurisdiction, the invalidity does not affect other provisions of the act that can be given effect without the invalid provision.
SECTION 6.  There is appropriated from the General Fund to the State Board of Elections the sum of fifty thousand dollars ($50,000) for the 2001‑2002 fiscal year and the sum of fifty thousand dollars ($50,000) for the 2002‑2003 fiscal year for the administration of this act.
SECTION 7.  Section 4 of this act becomes effective January 1, 2004. This act applies to elections for Council of State offices other than Governor and Lieutenant Governor in 2004 and thereafter, to elections for General Assembly in 2006 and thereafter, and to elections for Governor and Lieutenant Governor in 2008 and thereafter.  The remainder of this act is effective when it becomes law.