Bill Summary – FastDemocracy

HB 1350
                                  Department of Legislative Services
                                             Maryland General Assembly
                                                   2021 Session
                                         FISCAL AND POLICY NOTE
                                               Third Reader
House Bill 1350                                 (Delegate Wilkins)
Ways and Means                                             Education, Health, and Environmental Affairs
                                             Campaign Finance - Revisions
This bill allows for disbursements by a campaign finance entity to be approved rather than
made by the treasurer (or in certain instances the chairman) of the campaign finance entity.
The bill also requires campaign finance entities that become liable for specified civil
penalties related to an entity’s finances to subsequently submit bank statements with the
entity’s campaign finance reports for a specified period of time, unless waived by the
State Board of Elections (SBE) after at least one submission. The bill takes effect
June 1, 2021.
                                                      Fiscal Summary
State Effect: General fund expenditures increase by $70,100 in FY 2022; future years
reflect annualization and ongoing costs. Revenues are not expected to be materially
affected.
      (in dollars)               FY 2022                FY 2023               FY 2024               FY 2025                FY 2026
   Revenues                                $0                    $0                     $0                    $0                    $0
   GF Expenditure                      70,100                38,600                 39,600                41,100                42,600
   Net Effect                       ($70,100)             ($38,600)              ($39,600)             ($41,100)             ($42,600)
Note:() = decrease; GF = general funds; FF = federal funds; SF = special funds; - = indeterminate increase; (-) = indeterminate decrease
Local Effect: None.
Small Business Effect: None.
                                         Analysis
Bill Summary:
Approval of Disbursements
The bill changes references to disbursements being made by the treasurer, or in certain
instances the chairman, of a campaign finance entity, to instead refer to those
disbursements being approved by the treasurer, or in certain instances the chairman.
Submission of Bank Statements
The bill requires that a campaign finance entity that becomes liable for a civil penalty for
specified violations relating to the entity’s finances submit – with each subsequent
campaign finance report – bank statements that (1) document all expenditures made by or
on behalf of the campaign finance entity during the reporting period and (2) have all
personal identifying information, including bank account numbers, redacted. Unless
waived by SBE, the bank statements must continue to be submitted with the entity’s
campaign finance reports until the later of (1) the conclusion of the election cycle in which
the campaign finance entity became liable for the civil penalty or (2) the due date of the
last campaign finance report that is due within two years after the campaign finance entity
became liable for the civil penalty. If a campaign finance entity has submitted bank
statements with at least one campaign finance report, SBE may, at its discretion, waive the
requirement that a campaign finance entity submit bank statements during the remainder
of the above-mentioned period.
The violations subject to a civil penalty that can result in a campaign finance entity being
subject to the bank statement requirement are (1) making a disbursement in an unauthorized
manner or by an unauthorized method; (2) failure to maintain a campaign bank account;
(3) failure to maintain detailed and accurate account books and records; (4) fundraising
during the General Assembly session in an unauthorized manner; and (5) failure to
sufficiently report all contributions received and expenditures made on a campaign finance
report.
Current Law:
Campaign Finance Entities
Unless otherwise expressly authorized by law, all campaign finance activity for an election
under the Election Law Article of the Annotated Code must be conducted through a
campaign finance entity (defined as a political committee established under Title 13 of the
Election Law Article). An individual may not file a certificate of candidacy or a declaration
HB 1350/ Page 2
of intent until the individual establishes, or causes to be established, an authorized
candidate campaign committee (a campaign finance entity authorized by the candidate to
promote the candidate’s candidacy). For each election in which a campaign finance entity
participates, it generally must file campaign finance reports at various times prior to and
after the primary and general elections, as well as an annual report. The reports must
contain information required by SBE with respect to all contributions received and all
expenditures made by or on behalf of the campaign finance entity during a reporting period.
Responsible Officers
A campaign finance entity must have a chairman and a treasurer who are the responsible
officers of a campaign finance entity. A campaign finance entity may not receive or
disburse money or any other thing of value if there is a vacancy in the office of chairman
or the office of treasurer. The chairman and treasurer are jointly and severally responsible
for (1) filing all campaign finance reports in full and accurate detail and (2) except as
otherwise provided under State campaign finance law, all other actions of the entity.
Treasurer – Control of Contributions and Expenditures
All assets received by or on behalf of a campaign finance entity must be delivered to the
treasurer and maintained by the treasurer for the purposes of the campaign finance entity.
Assets of a campaign finance entity may be disbursed only (1) if they have passed through
the hands of the treasurer and (2) in accordance with the purposes of the entity. Subject to
certain exceptions, the treasurer must make all disbursements for the campaign finance
entity. The exceptions include:
      If the chairman of a campaign finance entity is not a candidate, the chairman may
       make a disbursement on behalf of the campaign finance entity in the same manner
       as the treasurer, if the treasurer is temporarily unable to perform the duties of the
       office.
      A campaign finance entity, or a person authorized by the campaign finance entity,
       may pay an expense of the campaign finance entity from funds other than a
       campaign account if (1) the expense is supported by a receipt that is provided to the
       campaign finance entity and (2) the campaign finance entity reimburses the person
       who paid the expense from the campaign account and reports the expense as an
       expenditure of the campaign finance entity.
      A campaign finance entity may maintain a petty cash fund of up to $250, subject to
       specified requirements.
State Fiscal Effect: General fund expenditures increase by $70,066 in fiscal 2022, which
accounts for a 120-day start-up delay. This estimate reflects the cost of (1) hiring a
part-time auditor within SBE to conduct more in-depth audits of the campaign finance
HB 1350/ Page 3
entities affected by the bill, using the submitted bank statements and (2) making
programming changes to the campaign finance reporting system to allow for bank
statements to be submitted with campaign finance reports. It includes a salary,
fringe benefits, one-time start-up costs, and ongoing operating expenses.
The bill does not require SBE to conduct more in-depth audits of the affected campaign
finance entities, using the submitted bank statements, but this estimate assumes SBE does
so under its general authority under State law to audit campaign finance reports. To the
extent that SBE does not utilize the submitted bank statements in its audits of the affected
campaign finance entities, then the additional part-time auditor is not necessary.
         Position                                                             0.5
         Salaries and Fringe Benefits                                    $29,730
         Programming Changes                                              35,000
         Operating Expenses                                                5,336
         Total FY 2022 State Expenditures                                $70,066
Future year expenditures reflect a salary with annual increases and employee turnover and
ongoing operating expenses.
                                Additional Information
Prior Introductions: HB 538 of 2020 passed the House with amendments and was
referred to the Senate Education, Health, and Environmental Affairs Committee, but no
further action was taken.
Designated Cross File: None.
Information Source(s): State Board of Elections; Department of Legislative Services
Fiscal Note History:      First Reader - March 8, 2021
rh/hlb                    Third Reader - March 18, 2021
Analysis by: Scott D. Kennedy                          Direct Inquiries to:
                                                       (410) 946-5510
                                                       (301) 970-5510
HB 1350/ Page 4
Statutes affected: 
Text - First - Campaign Finance - Revisions: 13-218 Election Law, 13-240 Election Law, 13-304 Election Law, 13-309 Election Law, 13-221 Election Law, 13-604.1 Election Law, 13-401 Election Law
Text - Third - Campaign Finance - Revisions: 13-218 Election Law, 13-240 Election Law, 13-304 Election Law, 13-309 Election Law, 13-221 Election Law, 13-604.1 Election Law, 13-401 Election Law