SB778

SECTION 1. The legislature finds that the State's public funding program that was established following the 1979 constitutional convention has not adequately served its purpose, which was to establish a large neutral fund that political candidates could utilize as an alternative to direct campaign contributions. Time has shown that the amount of money available to candidates and the process of obtaining the money have undermined the stated goals of the public funding program. The purpose of this Act is to address those problems, starting with the shortage of available funds.

This Act will allow people to make direct tax deductible donations to the Hawaii election campaign fund, instead of simply opting to have three dollars from the general fund deposited through a check off on their tax return. Someone who would like to donate five hundred dollars would be allowed to make that donation. The funding, being voluntary, will not create a draw on the State's general fund or lead to objections that tax money is being used to fund political activities.

This Act improves the return to candidates and the process of obtaining funds. Instead of a one-to-one match, this Act enables the fund to increase the amount of funding per dollar raised by a candidate. To adjust for inflation, this Act increases qualified donations from one hundred dollars or less to two hundred dollars or less. This Act addresses the problem of a candidate being unable to apply funds raised during the primary period when the candidate has no primary opponent.

In addition, this Act requires that candidates applying for matching funds use only donations from Hawaii residents in the qualification computation. Finally, this Act requires candidates who receive matching funds to refuse contributions from any entity other than a natural person.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Voluntary contributions to the Hawaii election campaign fund authorized. (a) The department of taxation shall include a line item on state income tax forms that allows for voluntary contributions to the Hawaii election campaign fund made by individuals, trusts, partnerships, and corporations.

The line item shall appear after the final line for the calculation of the amount of the tax due or the amount to be refunded, accompanied by an explanation that the amount of the voluntary contributions shall be added to the amount of the tax owed or subtracted from the amount to be refunded; provided that if the amount of the voluntary contributions exceeds the amount to be refunded, the taxpayer shall be liable to pay to the State the amount by which the voluntary contributions exceed the tax owed.

(b) The department of taxation shall remit to the Hawaii election campaign fund the amount of voluntary contributions, less any amount to be refunded to the taxpayer."

SECTION 3. Section 11-421, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The fund shall consist of:

(1) All moneys collected from persons who [~~have designated a portion of their income tax liability to the fund as provided in section 235-102.5(a);~~] made a voluntary contribution to the fund under section 235- ;

(2) Any general fund appropriations; and

(3) Other moneys collected pursuant to this part."

SECTION 4. Section 11-423, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) From January 1 of the year of any primary, special, or general election, the aggregate expenditures for each election by a candidate who voluntarily agrees to limit campaign expenditures, inclusive of all expenditures made or authorized by the candidate alone, all treasurers, the candidate committee, and noncandidate committees on the candidate's behalf, shall not exceed the following amounts expressed, respectively multiplied by the number of voters in the last preceding general election registered to vote in each respective voting district:

(1) For the office of governor — $2.50;

(2) For the office of lieutenant governor — $1.40;

(3) For the office of mayor — $2.00;

(4) For the offices of state senator, state representative, county council member, and prosecuting attorney — [~~$1.40;~~] $2.10 and

(5) For all other offices — 20 cents."

SECTION 5. Section 11-425, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) The maximum amount of public funds available in each election to a candidate for the office of governor, lieutenant governor, or mayor shall not exceed [~~ten~~] twenty per cent of the expenditure limit established in section 11-423(d) for each election.

(b) The maximum amount of public funds available in each election to a candidate for the office of state senator, state representative, county council member, and prosecuting attorney shall not exceed [~~fifteen~~] sixty per cent of the expenditure limit established in section 11-423(d) for each election."

SECTION 6. Section 11-428, Hawaii Revised Statutes, is amended to read as follows:

"[[]§11-428[]] Eligibility requirements for public funds. In order to be eligible to receive public funds for an election, a candidate shall certify that the candidate will meet all the following requirements:

(1) The candidate and any candidate committee authorized by the candidate shall not incur campaign expenses in excess of the expenditure limitations imposed by section 11-423;

(2) The candidate has qualified to be on the election ballot in a primary or general election;

(3) The candidate has filed a statement of intent to seek qualifying contributions. A contribution received before the filing of a statement of intent to seek public funds shall not be considered a qualifying contribution;

(4) The candidate or candidate committee authorized by the candidate has received the minimum qualifying contribution amounts for the office sought by the candidate as set forth in section 11-429;

(5) The aggregate of contributions certified with respect to any person under paragraph (4) does not exceed [~~$100;~~] $200;

(6) The candidate agrees to obtain and furnish any evidence relating to expenditures that the commission may request;

(7) The candidate agrees to keep and furnish records, books, and other information that the commission may request;

(8) The candidate agrees to an audit and examination by the commission pursuant to section 11-434 and to pay any amounts required to be paid pursuant to that section; [~~and~~]

(9) Each candidate and candidate committee in receipt of qualifying contributions that may be taken into account for purposes of public funding shall maintain, on a form prescribed by the commission, records that show the date and amount of each qualifying contribution and the full name and mailing address of the person making the contribution. The candidate and the candidate committee authorized by the candidate shall transmit to the commission all reports with respect to these contributions that the commission may require[.];

(10) The candidate may not:

(A) Accept campaign contributions from other than a natural person;

(B) Accept money from any political action committee, corporation, partnership, or business account; provided that money from a business account may be accepted if the business account is a sole proprietorship; or

(C) Accept money from a trust other than a revocable living trust. Any money received from a trust other than a revocable living trust shall be returned to the donor within twenty days of receipt; and

(11) No contribution amount under paragraph (5) may be attributable to a person other than an individual resident of Hawaii."

SECTION 7. Section 11-429, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) A candidate shall obtain the minimum qualifying contribution amount set forth in subsection (a) once for the election period.

(1) If the candidate obtains the minimum qualifying contribution amount, the candidate is eligible to receive:

(A) The minimum payment in an amount equal to three times the minimum qualifying contribution amounts; and

(B) Payments of [$1] $3 for each $1 of qualifying contributions in excess of the minimum qualifying contribution amounts; and

(2) A candidate shall have at least one other qualified candidate as an opponent for the primary or general election to receive public funds for [~~that~~] the election[.] in which the candidate has at least one other qualified candidate as an opponent."

SECTION 8. Section 235-102.5, Hawaii Revised Statutes, is amended to read as follows:

"§235-102.5 Income check-off authorized. [(a) Any individual whose state income tax liability for any taxable year is $3 or more may designate $3 of the liability to be paid over to the Hawaii election campaign fund, any other law to the contrary notwithstanding, when submitting a state income tax return to the department. In the case of a joint return of a husband and wife having a state income tax liability of $6 or more, each spouse may designate that $3 be paid to the fund. The director of taxation shall revise the individual state income tax form to allow the designation of contributions to the fund on the face of the tax return and immediately above the signature lines. An explanation shall be included which clearly states that the check-off does not constitute an additional tax liability. If no designation was made on the original tax return when filed, a designation may be made by the individual on an amended return filed within twenty months and ten days after the due date for the original return for such taxable year. A designation once made whether by an original or amended return may not be revoked.

~~(b)~~] (a) Notwithstanding any law to the contrary, any individual whose state income tax refund for any taxable year is $2 or more may designate $2 of the refund to be deposited into the school-level minor repairs and maintenance special fund established by section 302A-1504.5, when submitting a state income tax return to the department. In the case of a joint return of a husband and wife having a state income tax refund of $4 or more, each spouse may designate that $2 be deposited into the special fund. The director of taxation shall revise the individual state income tax return form to allow the designation of contributions to the special fund on the face of the tax return and immediately above the signature lines. If no designation was made on the original tax return when filed, a designation may be made by the individual on an amended return filed within twenty months and ten days after the due date for the original return for [~~such~~] the taxable year. A designation once made, whether by an original or amended return, may not be revoked.

[~~(c)~~] (b) Notwithstanding any law to the contrary, any individual whose state income tax refund for any taxable year is $5 or more may designate $5 of the refund to be paid over to the libraries special fund established by section 312-3.6, when submitting a state income tax return to the department. In the case of a joint return of a married couple having a state income tax refund of $10 or more, each spouse may designate that $5 be deposited into the special fund. The director of taxation shall revise the individual state income tax form to allow the designation of contributions to the fund on the face of the tax return and immediately above the signature lines. If no designation was made on the original tax return when filed, a designation may be made by the individual on an amended return filed within twenty months and ten days after the due date for the original return for [~~that~~] the taxable year. A designation once made, whether by an original or amended return, may not be revoked.

[~~(d)~~] (c) Notwithstanding any law to the contrary, any individual whose state income tax refund for any taxable year is $5 or more may designate $5 of the refund to be paid over as follows:

(1) One-third to the Hawaii children's trust fund under section 350B-2; and

(2) Two-thirds to be divided equally among:

(A) The domestic violence and sexual assault special fund under the department of health in section 321-1.3;

(B) The spouse and child abuse special account under the department of human services in section 346‑7.5; and

When designated by a taxpayer submitting a state income tax return to the department, the department of budget and finance shall allocate the moneys among the several funds as provided in this subsection. In the case of a joint return of a husband and wife having a state income tax refund of $10 or more, each spouse may designate that $5 be paid over as provided in this subsection. The director of taxation shall revise the individual state income tax form to allow the designation of contributions pursuant to this subsection on the face of the tax return and immediately above the signature lines. If no designation was made on the original tax return when filed, a designation may be made by the individual on an amended return filed within twenty months and ten days after the due date for the original return for [~~such~~] the taxable year. A designation once made, whether by an original or amended return, may not be revoked."

SECTION 9. Section 302A-1504.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There is established within the state treasury a special fund to be known as the school-level minor repairs and maintenance special fund, into which shall be deposited all moneys collected pursuant to section [~~235-102.5(b),~~] 235‑102.5(a), and any other moneys received by the department in the form of grants and donations for school-level improvements and minor repairs and maintenance. The special fund shall be administered by the department and used to fund school-level minor repairs and maintenance. The department shall transfer moneys collected pursuant to section [~~235-102.5(b),~~] 235‑102.5(a), and may transfer any other moneys received in the form of grants and donations for school-level improvements and minor repairs and maintenance to the Hawaii 3R's school improvement fund established pursuant to section 302A-1502.4."

SECTION 10. Section 312-3.6, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There is established in the state treasury a libraries special fund into which shall be deposited all moneys collected pursuant to section 312-3.5, and all moneys designated to be paid to this fund pursuant to section [~~235-102.5(c).~~] 235‑102.5(b)."

SECTION 11. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 12. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 13. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2018.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	778
THIRTIETH LEGISLATURE, 2019
STATE OF HAWAII