HB2772 - 552R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 16-901, Arizona Revised Statutes, is amended to read:

START_STATUTE16-901. Definitions

In this chapter, unless the context otherwise requires:

1. "Advertisement" means information or materials, other than nonpaid social media messages, that are mailed, e-mailed emailed, posted, distributed, published, displayed, delivered, broadcasted or placed in a communication medium and that are for the purpose of influencing an election.

2. "Affiliate" means any organization that controls, is controlled by or is under common control with a corporation, limited liability company or labor organization.

3. "Agent" means any person who has actual authority, either express or implied, to represent or make decisions on behalf of another person.

4. "Ballot measure expenditure" means an expenditure made by a person that expressly advocates the support or opposition of a clearly identified ballot measure.

5. "Best effort" means that a committee treasurer or treasurer's agent makes at least one written effort, including an attempt by e-mail email, text message, private message through social media or other similar communication, or at least one oral effort that is documented in writing to identify the contributor of an incomplete contribution.

6. "Calendar quarter" means a period of three consecutive calendar months ending on March 31, June 30, September 30 or December 31.

7. "Candidate" means an individual who receives contributions or makes expenditures or who gives consent to another person to receive contributions or make expenditures on behalf of that individual in connection with the candidate's nomination, election or retention for any public office.

8. "Candidate committee" includes the candidate.

9. "Clearly identified candidate" means that the name or a description, image, photograph or drawing of the candidate appears or the identity of the candidate is otherwise apparent by unambiguous reference.

10. "Committee" means a candidate committee, a political action committee or a political party.

11. "Contribution" means any money, advance, deposit or other thing of value that is made to a person for the purpose of influencing an election. Contribution includes:

(a) A contribution that is made to retire campaign debt from a previous election cycle.

(b) Money or the fair market value of anything that is directly or indirectly provided to an elected official for the specific purpose of defraying the expense of communications with constituents.

(d) A loan that is made to a committee for the purpose of influencing an election, to the extent the loan remains outstanding.

12. "Control" means to possess, directly or indirectly, the power to direct or to cause the direction of the management or policies of another organization, whether through voting power, ownership, contract or otherwise.

13. "Coordinate", "coordinated" or "coordination" means the coordination of an expenditure as prescribed by section 16-922.

14. "Coordinated party expenditures" means expenditures that are made by a political party to directly pay for goods or services on behalf of its nominee.

15. "District office" means an elected office established or organized pursuant to title 15 or 48.

16. "Earmarked" means a designation, instruction or encumbrance between the transferor of a contribution and a transferee that requires the transferee to make a contribution to a clearly identified candidate.

17. "Election" means any election for any ballot measure in this state or any candidate election during a primary, general, recall, special or runoff election for any office in this state other than a federal office and a political party office prescribed by chapter 5, article 2 of this title.

18. "Election cycle" means the two-year period beginning on January 1 in the year after a statewide general election and ending on December 31 in the year of a statewide general election or, for cities and towns, the two-year period beginning on the first day of the calendar quarter after the calendar quarter in which the city's or town's second, runoff or general election is scheduled and ending on the last day of the calendar quarter in which the city's or town's immediately following second, runoff or general election is scheduled, however that election is designated by the city or town. For the purposes of a:

(a) Recall election, "election cycle" means the period between issuance of a recall petition serial number and the latest of the following:

(i) The date of the recall election that is called pursuant to section 19-209.

(ii) The date that a resignation is accepted pursuant to section 19-208.

(iii) The date that the receiving officer provides notice pursuant to section 19-208.01 that the number of signatures is insufficient.

(b) Special election, "election cycle" means the period between the date of issuance of a proclamation or order calling the special election and the last day of the calendar quarter in which the special election is held.

19. "Employee" means an individual who is entitled to compensation for labor or services performed for the individual's employer.

20. "Employer" means any person that pays compensation to and directs the labor or services of any individual in the course of employment.

21. "Enforcement officer" means the attorney general or the county, city or town attorney with authority to collect fines or issue penalties with respect to a given election pursuant to section 16-938.

22. "Entity" means a corporation, limited liability company, labor organization, partnership, trust, association, organization, joint venture, cooperative, unincorporated organization or association or other organized group that consists of more than one individual.

23. "Excess contribution" means a contribution that exceeds the applicable contribution limits for a particular election.

24. "Exclusive insurance contract" means an insurance producer's contract with an insurer that does either of the following:

(a) Prohibits the producer from soliciting insurance business for any other insurer.

(b) Requires a right of first refusal on all lines of insurance business written by the insurer and solicited by the producer.

25. "Expenditure" means any purchase, payment or other thing of value that is made by a person for the purpose of influencing an election.

26. "Family contribution" means any contribution that is provided to a candidate's committee by the parent, grandparent, aunt, uncle, child or sibling of the candidate or the candidate's spouse, including the spouse of any of the listed family members, regardless of whether the relation is established by marriage or adoption.

27. "Filing officer" means the secretary of state or the county, city or town officer in charge of elections for that jurisdiction who accepts statements and reports for those elections pursuant to section 16-928.

28. "Firewall" means a written policy that precludes one person from sharing information with another person.

29. "FOREIGN national":

(a) Means:

(i) a government of a foreign country and a foreign political party.

(ii) a person outside of the United States, unless it is established that such person is an individual and a citizen of and domiciled within the United States, or that such person is not an individual and is organized under or established by the laws of the United States or of any State or other place subject to the jurisdiction of the United States and has its principal place of business within the United States.

(iii) a partnership, association, corporation, organization or other combination of persons organized under the laws of or having its principal place of business in a foreign country.

(iv) An individual who is not a citizen of the United States or a national of the United States and who is not lawfully admitted for permanent residence.

(b) does not include any individual who is a citizen of the United States.

29. 30. "Identification" or "identify" means:

(a) For an individual, the individual's first and last name, residence location or street address and occupation and the name of the individual's primary employer.

(b) For any other person, the person's full name and physical location or street address.

30. 31. "Incomplete contribution" means any contribution that is received by a committee for which the contributor's complete identification has not been obtained.

31. 32. "Independent expenditure" means an expenditure by a person, other than a candidate committee, that complies with both of the following:

(a) Expressly advocates the election or defeat of a clearly identified candidate.

(b) Is not made in cooperation or consultation with or at the request or suggestion of the candidate or the candidate's agent.

32. 33. "In-kind contribution" means a contribution of goods, services or anything of value that is provided without charge or at less than the usual and normal charge.

33. 34. "Insurance producer" means a person that:

(a) Is required to be licensed to sell, solicit or negotiate insurance.

(b) Has an exclusive insurance contract with an insurer.

34. 35. "Itemized" means that each contribution received or expenditure made is set forth separately.

35. 36. "Labor organization" means any employee representation organization that exists for the purpose of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment or other conditions of employment.

36. 37. "Legislative office" means the office of representative in the state house of representatives or senator in the state senate.

37. 38. "Mega PAC status" means official recognition that a political action committee has received contributions from five hundred or more individuals in amounts of ten dollars $10 or more in the four-year period immediately before application to the secretary of state.

38. 39. "Nominee" means a candidate who prevails in a primary election for partisan office and includes the nominee's candidate committee.

39. 40. "Person" means an individual or a candidate, nominee, committee, corporation, limited liability company, labor organization, partnership, trust, association, organization, joint venture, cooperative or unincorporated organization or association.

40. 41. "Personal monies" means any of the following:

(a) Assets to which the individual or individual's spouse has either legal title or an equitable interest.

(b) Salary and other earned income from bona fide employment of the individual or individual's spouse.

(d) Bequests to the individual or individual's spouse.

(e) Income to the individual or individual's spouse from revocable trusts for which the individual or individual's spouse is a beneficiary.

(f) Gifts of a personal nature to the individual or individual's spouse that would have been given regardless of whether the individual became a candidate or accepted a contribution.

(g) The proceeds of loans obtained by the individual or individual's spouse that are secured by collateral or security provided by the individual or individual's spouse.

(h) Family contributions.

41. 42. "Political action committee" means an entity that is required to register as a political action committee pursuant to section 16-905.

42. 43. "Political party" means a committee that meets the requirements for recognition as a political party pursuant to chapter 5 of this title.

43. 44. "Primary purpose" means an entity's predominant purpose. Notwithstanding any other law or rule, an entity is not organized for the primary purpose of influencing an election if all of the following apply at the time the contribution or expenditure is made:

(a) The entity has tax exempt status under section 501(a) of the internal revenue code.

(b) Except for a religious organization, assembly or institution, the entity has properly filed a form 1023 or form 1024 with the internal revenue service or the equivalent successor form designated by the internal revenue service.

(d) The entity has properly filed a form 990 with the internal revenue service or the equivalent successor form designated by the internal revenue service in compliance with the most recent filing deadline established by internal revenue service regulations or policies.

44. 45. "Retention" means the election process by which a superior court judge, appellate court judge or supreme court justice is retained in office as prescribed by article VI, section 38 or 40, Constitution of Arizona.

45. 46. "Separate segregated fund" means a fund established by a corporation, limited liability company, labor organization or partnership that is required to register as a political action committee.

46. 47. "Social media messages" means forms of communication, including internet sites for social networking or blogging, through which users create a personal profile and participate in online communities to share information, ideas and personal messages.

47. 48. "Sponsor" means any person that establishes, administers or contributes financial support to the administration of a political action committee or that has common or overlapping membership or officers with that political action committee.

48. 49. "Standing committee" means a political action committee or political party that is active in more than one reporting jurisdiction in this state and that files a statement of organization in a format prescribed by the secretary of state.

49. 50. "Statewide office" means the office of governor, secretary of state, state treasurer, attorney general, superintendent of public instruction, corporation commissioner or mine inspector.

50. 51. "Surplus monies" means those monies of a terminating committee that remain after all of the committee's expenditures have been made, all debts have been extinguished and the committee ceases accepting contributions. END_STATUTE

Sec. 2. Section 16-907, Arizona Revised Statutes, is amended to read:

START_STATUTE16-907. Committee recordkeeping; treasurer; accounts

A. A committee treasurer is the custodian of the committee's books and accounts. A committee may not make a contribution, expenditure or disbursement without the authorization of the treasurer or the treasurer's designated agent.

B. All committee monies shall be deposited in one or more bank accounts held by the financial institutions listed in the committee's statement of organization. Committee bank accounts shall be segregated as follows:

1. Committee monies shall be segregated in different bank accounts from personal monies.

2. Contributions from individuals, partnerships, candidate committees, political action committees or political parties shall be segregated in different bank accounts from contributions from other donors.

3. Contributions to a political party to defray operating expenses or support party-building activities shall be segregated in different bank accounts from contributions used to support candidates.

4. For a committee that is a political party, the committee may commingle monies from any source in a single bank account if the account is maintained as prescribed in 11 Code of Federal Regulations section 106.7.

5. For contributions intended to influence a recall election, the committee shall segregate those contributions into bank accounts that are different from those intended to influence any other election and those recall contributions may not be used to influence any other election.

C. A committee shall exercise its best effort to obtain the required information for any incomplete contribution received that is required to be itemized and reported. The committee shall clearly ask for identification and inform the contributor that the committee is required by law to seek identification. Notwithstanding the requirements for identification prescribed by section 16-901, paragraph 29, subdivision (a), a person whose residential address is protected from public disclosure pursuant to section 16-153 is not required to disclose the person's residential address and shall instead provide an alternate mailing address. The committee shall report in an amended report any contributor identification obtained after the contribution has been disclosed on a campaign finance report.

D. A committee shall keep records of the following:

1. All contributions made or received by the committee.

2. The identification of any contributor that contributes in the aggregate at least $50 to the committee during the election cycle, the date and amount of each contribution and the date of deposit into the committee's account.

3. Cumulative totals contributed by each contributor during the election cycle.

4. The name and address of every person that receives a contribution, expenditure or disbursement from the committee, including the date and amount, and, for any expenditure or disbursement, the purpose of the expenditure or disbursement.

E. A committee may accept a cash contribution.

F. A committee may accept a contribution by written or electronic instrument, including a check, credit card, payroll deduction, online payment or electronic transfer, if the contributor is an account holder of the instrument. Unless designated as a joint contribution, a contribution shall be attributed to the account holder that signs the instrument or authorizes the transaction.

G. A committee shall preserve all records required to be kept by this section for two years following the end of the election cycle.

H. On request of the filing officer or enforcement officer, a committee that has filed a statement of organization shall produce any of the records required to be kept pursuant to this section to the filing officer or enforcement officer.

I. A person that qualifies as a committee as prescribed by section 16-905 shall report all contributions, expenditures and disbursements that occurred before qualifying as a committee and shall maintain and produce records as prescribed by this section. END_STATUTE

Sec. 3. Section 16-914, Arizona Revised Statutes, is amended to read:

START_STATUTE16-914. Political action committee contribution limits; requirements

A. A political action committee without mega PAC status may not contribute more than the following amounts per election cycle:

1. Six thousand two hundred fifty dollars $6,250 to a candidate committee for city, town, county or district office.

2. Six thousand two hundred fifty dollars $6,250 to a candidate committee for legislative office.

3. Six thousand two hundred fifty dollars $6,250 to a candidate committee for statewide office.

B. A political action committee with mega PAC status may contribute twice the amounts prescribed in subsection A of this section per election cycle if the political action committee provides the recipient candidate committee a copy of the political action committee's certification of mega PAC status.

C. A political action committee may only contribute to a candidate committee using monies contributed by an individual, a partnership, a candidate committee, a political action committee or a political party.

D. A political action committee may make unlimited contributions to persons other than candidate committees.

E. a political action committee that is formed for the purpose of supporting or opposing a ballot measure or that makes a ballot measure expenditure may not solicit or accept a contribution from a foreign national. END_STATUTE

Sec. 4. Title 16, chapter 6, article 1.2, Arizona Revised Statutes, is amended by adding section 16-919, to read:

START_STATUTE16-919. Foreign nationals; ballot measure contributions prohibited

A foreign national may not contribute to a political action committee that is formed for the purpose of supporting or opposing a ballot measure or that makes a ballot measure expenditure. END_STATUTE

Sec. 5. Section 16-926, Arizona Revised Statutes, is amended to read:

START_STATUTE16-926. Campaign finance reports; contents

A. A committee shall file campaign finance reports with the filing officer. The secretary of state's instructions and procedures manual adopted pursuant to section 16-452 shall prescribe the format for all reports and statements.

B. A campaign finance report shall set forth:

1. The amount of cash on hand at the beginning of the reporting period.

2. Total receipts during the reporting period, including:

(a) An itemized list of receipts in the following categories, including the source, amount and date of receipt, together with the total of all receipts in each category:

(i) Contributions from in-state individuals whose contributions exceed $100 for that election cycle, including identification of the contributor's occupation and employer. Notwithstanding the requirements for identification prescribed by section 16-901, paragraph 29, subdivision (a), a person whose residential address is protected from public disclosure pursuant to section 16-153 is not required to disclose the person's residential address and shall instead provide an alternate mailing address.

(ii) Contributions from out-of-state individuals, including identification of the contributor's occupation and employer.

(iii) Contributions from candidate committees.

(iv) Contributions from political action committees.

(v) Contributions from political parties.

(vi) Contributions from partnerships.

(vii) For a political action committee or political party, contributions from corporations and limited liability companies, including identification of the corporation's or limited liability company's file number issued by the corporation commission.

(viii) For a political action committee or political party, contributions from labor organizations, including identification of the labor organization's file number issued by the corporation commission.

(ix) For a candidate committee, a candidate's contribution of personal monies.

(x) All loans, including identification of any endorser or guarantor other than a candidate's spouse, and the contribution amount endorsed or guaranteed by each.

(xi) Rebates and refunds.

(xii) Interest on committee monies.

(xiii) The fair market value of in-kind contributions received.

(xiv) Extensions of credit that remain outstanding, including identification of the creditor and the purpose of the extension.

(b) The aggregate amount of contributions from all in-state individuals whose contributions do not exceed $100 for the election cycle.

3. An itemized list of all disbursements in excess of $250 during the reporting period in the following categories, including the recipient, the recipient's address, a description of the disbursement and the amount and date of the disbursement, together with the total of all disbursements in each category:

(a) Disbursements for operating expenses.

(b) Contributions to candidate committees.

(d) Contributions to political parties.

(e) Contributions to partnerships.

(f) For a political action committee or political party, contributions to corporations and limited liability companies, including identification of the corporation's or limited liability company's file number issued by the corporation commission.

(g) For a political action committee or political party, contributions to labor organizations, including identification of the labor organization's file number issued by the corporation commission.

(h) Repayment of loans.

(i) Refunds of contributions.

(j) Loans made.

(k) The value of in-kind contributions provided.

(l) Independent expenditures that are made to advocate the election or defeat of a candidate, including identification of the candidate, office sought by the candidate, election date, mode of advertising and distribution or publication date.

(m) Expenditures to advocate the passage or defeat of a ballot measure, including identification of the ballot measure, ballot measure serial number, election date, mode of advertising and distribution or publication date.

(n) Expenditures to advocate for or against the issuance of a recall election order or for the election or defeat of a candidate in a recall election, including identification of the officer to be recalled or candidate supported or opposed, mode of advertising and distribution or publication date.

(o) Any other disbursements or expenditures.

4. The total sum of all receipts and disbursements for the reporting period.

5. A certification by the committee treasurer, issued under penalty of perjury, that the contents of the report are true and correct.

C. For the purposes of reporting under subsection B of this section:

1. A contribution is deemed to be received either on the date the committee knowingly takes possession of the contribution or the date of the check or credit card payment. For an in-kind contribution of services, the contribution is deemed made either on the date the services are performed or the date the committee receives the services.

2. An expenditure or disbursement is deemed made either on the date the committee authorizes the monies to be spent or the date the monies are withdrawn from the committee's account. For a transaction by check, the expenditure or disbursement is deemed made on the date the committee signs the check. For a credit card transaction on paper, the expenditure or disbursement is deemed made on the date the committee signs the authorization to charge the credit card. For an electronic transaction, an expenditure or disbursement is deemed made on the date the committee electronically authorizes the charge. For an agreement to purchase goods or services, the expenditure or disbursement is deemed made either on the date the parties enter into the agreement or the date the purchase order is issued.

3. A committee may record its transactions using any of the methods authorized by this subsection but for each type of contribution, expenditure or disbursement made or received, the committee shall use a consistent method of recording transactions throughout the election cycle.

D. The amount of an in-kind contribution of services shall be equal to the usual and normal charges for the services on the date performed.

E. If any receipt or disbursement is earmarked, the committee shall report the identity of the person to whom the receipt or disbursement is earmarked.

F. Candidate committee reports shall be cumulative for the election cycle to which they relate. Political action committee and political party reports shall be cumulative for a two-year election cycle ending in the year of a statewide general election. If there has been no change during the reporting period in an item listed in the immediately preceding report, only the amount need be carried forward.

G. For a political action committee that receives individual contributions through a payroll deduction plan, that committee is not required to separately itemize each contribution received from the contributor during the reporting period. In lieu of itemization, the committee may report all of the following:

1. The aggregate amount of contributions received from the contributor through the payroll deduction plan during the reporting period.

2. The individual's identity.

3. The amount deducted per pay period.

H. An entity that makes independent expenditures or ballot measure expenditures in excess of $1,000 during a reporting period shall file an expenditure report with the filing officer for the applicable reporting period. Expenditure reports shall identify the candidate or ballot measure supported or opposed, office sought by the candidate, if any, election date, mode of advertising and first date of publication, display, delivery or broadcast of the advertisement. END_STATUTE