AO 06-02-CDNumber:AO 06-02-CD
Requested by: William A. Corbus
Commissioner of Revenue
Prepared by: Brooke Miles
Date Issued: August 2, 2006
Subject: Request for advisory opinion regarding public outreach process preliminary to fiscal interest finding for a fiscal contract under the Stranded Gas Development Act (AS 43.82)
Mr. Corbus asked whether he could enter into a professional services agreement with a gubernatorial campaign to provide issues-related services such as writing position papers, speeches, talking points, letters, and messages for the gubernatorial campaign. In our telephone conversation of August 28, 2006, you stated that your position, although untitled, would be that of “issues coordinator.” You further stated that the campaign does not have a campaign manager at this time.
The Commissioner of Revenue is not required to report to APOC expenditures made to fulfill the notice and public comment provisions of the Alaska Stranded Gas Development Act. An expenditure that is made for the purpose of informing the public about the potential fiscal impact of the gas pipeline contract as required by the Alaska Stranded Gas Development Act is not made for the purpose of influencing the gas reserves tax initiative election. Only spending “for the purpose of . . . influencing the outcome of a ballot proposition or question” is an “expenditure” subject to reporting under AS 15.13.140(b). AS 15.13.400(6). Any discussion of the gas reserves tax outside of the context of the department’s preliminary fiscal interest finding, however, would likely constitute election-related activity and related expenditures would have to be reported to APOC and paid for with funds specifically appropriated for such advocacy unless the expenditure qualified as a purely non-partisan educational activity under AS 15.13.150 and 2 AAC 50.379.
AS 15.13.140. Independent expenditures for or against ballot proposition or question.
(a) This chapter does not prohibit a person from making independent expenditures in support of or in opposition to a ballot proposition or question.
(b) An independent expenditure for or against a ballot proposition or question
(1) shall be reported in accordance with AS 15.13.040 and 15.13.100 - 15.13.110 and other requirements of this chapter; andAS 15.13.145. Money of the state and its political subdivisions.
(2) may not be made if the expenditure is prohibited by AS 15.13.145.
(a) Except as provided in (b) and (c) of this section, each of the following may not use money held by the entity to influence the outcome of the election of a candidate to a state or municipal office:
(1) the state, its agencies, and its corporations;(b) Money held by an entity identified in (a)(1) – (3) of this section may be used to influence the outcome of an election concerning a ballot proposition or question, but only if the funds have been specifically appropriated for that purpose by a state law or a municipal ordinance.
(2) the University of Alaska and its Board of Regents;
(3) municipalities, school districts, and regional educational attendance areas, or another political subdivision of the state; and
(4) an officer or employee of an entity identified in (1) – (3) of this subsection.
(c) Money held by an entity identified in (a)(1) – (3) of this section may be used
(1) to disseminate information about the time and place of an election and to hold an election;(d) When expenditure of money is authorized by (b) or (c) of this section and is used to influence the outcome of an election, the expenditures shall be reported to the commission in the same manner as an individual is required to report under AS 15.13.040.
(2) to provide the public with nonpartisan information about a ballot proposition or question . . . .
AS 15.13.400(6). Definitions.
(A) means a purchase or a transfer of money or anything of value, or promise or agreement to purchase or transfer money or anything of value, incurred or made for the purpose ofSec. 36(a) ch 82 SLA 2006
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(iv) influencing the outcome of a ballot proposition or question . . . .
Section 20(e) ch 3 FSSLA 2005, is amended to read:
(e) The sum of $7,100,000 is appropriated from the general fund to the Department of Revenue, commissioner’s office, for work related to the state gas pipeline and to bringing North Slope natural gas to market.
AS 43.82.400. Preliminary findings and determination regarding the contract.
(a) If the commissioner develops a proposed contract under AS 43.82.200 – 43.82.270, the commissioner shall
(1) make preliminary findings and a determination that the proposed contract terms are in the long-term fiscal interests of the state and further the purposes of this chapter;…(c) In conjunction with the making of preliminary findings and determination required by (a)(1) of this section, the commissioner shall describe the principal factors, including the projected price of gas, projected production rate or volume of gas, and projected recovery, development, construction, and operating costs, upon which the determination made under (a)(1) of this section is based. . . .
AS 43.82.410. Notice and comment regarding the contract.
The commissioner shall
(1) give reasonable public notice of the preliminary findings and determination made under AS 43.82.400;
(2) make copies of the proposed contract, the commissioner’s preliminary findings and determination, and, to the extent the information is not required to be kept confidential under AS 43.82.310, the supporting financial, technical, and market data, including the work papers, analyses, and recommendations of any independent contractors used under AS 43.82.240 available to the public . . .
(4) establish a period of at least 30 days for the public and members of the legislature to comment on the proposed contract and the preliminary findings and determination made under AS 43.82.400.
2 AAC 50.356. Use of public money.
(a) Funds are specifically appropriated for the purposes of AS 15.13.145(b) if the appropriating body provides notice on the public record that the funds will be used to influence the outcome of an election.
(b) In the absence of a specific appropriation, an officer or employee of an entity who is identified in AS 15.13.145(a)(4) may use money held by that entity to communicate about a ballot proposition or question if the communication is made in the usual and customary performance of the officer’s or employee’s duties.
(c) For the purposes of AS 15.13.145(c)(2), information is nonpartisan if it does not advocate a position in an election. Nonpartisan information includes the official language of a ballot question, a neutral ballot summary, if provided for all candidates seeking a particular office, the candidates’ names, contact information, or statements.
(d) If an entity or individual identified in AS 15.13.145(a)(1) – (4) uses money held by the entity to make an election-related expenditure, the expenditure must be disclosed on a report of contributions or independent expenditures under AS 15.13.040(d) and (e) unless the expenditure is made only to disseminate information about the time and place of an election or to hold an election.
2 AAC 50.379. Election educational activities.
Election-related communications and activities are educational if they
(1) do not favor particular candidates or a position on a ballot measure; orFacts
(2) provide an opportunity for the expression of views of all candidates or both sides of a ballot measure.
The Commissioner of Revenue has certain responsibilities under the Stranded Gas Development Act (AS 43.82) (SGDA). These responsibilities include making preliminary findings and determination; preparing a proposed contract; describing the principal factors upon which the determination was based; giving reasonable public notice of the findings and determination; and making available to the public copies of the proposed contract, the preliminary findings and determination, and, to the extent allowed by law, the supporting documents and materials; and allowing at least a 30-day period for public comment.
In fulfilling those responsibilities, you are holding a series of public hearings at state expense in locations around Alaska. At those hearings appointed state officials and state-hired private consultants will explain the anticipated effects of the contract. According to your letter, there will also be documents prepared for public dissemination.
You anticipate that one issue that will be raised by the public is the effect of a gas reserves tax on the feasibility of the gas line project. A gas reserves tax is currently the subject of a ballot initiative. At the public hearings, the state’s representatives will explain the rationale for including gas reserves tax provisions in the contract, and will explain “why the reserves tax would create an unfavorable investment climate for the gas line project.” 1.
The cost of the hearings and prepared documents will be paid for with already enacted legislative appropriations. Sec. 36(a) ch 82 SLA 2006. To date, the cost associated with the public outreach effort has not been reported to the Alaska Public Offices Commission.
The Alaska Public Offices Commission is responsible for administering AS 15.13, State Election Campaigns. AS 15.13.140 and AS 15.13.400(6) require the reporting of spending to influence a ballot proposition election. AS 15.13.145 further regulates how the state and its political subdivisions may spend money to influence the outcome of an election by prohibiting such spending unless money is specifically appropriated for that purpose. APOC has implemented these sections in 2 AAC 50.356 and .379. .
In your letter 2. you stated:
In order to properly educate the public as to the contents of the fiscal contract and to answer any questions that the public might have about the effect of that document, a series of public hearings will be held at state expense in various locations throughout the state.
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I believe that the administration’s remarks and documents pertaining to the reserves tax are intended to educate the public concerning the effect of the fiscal contract and are not intended to influence the outcome of the election.
Alaska law requires that money held by the state may be used to influence the outcome of a ballot proposition only if the funds were specifically appropriated for that purpose by state law. AS 15.13.145(b). Funds are specifically appropriated if the appropriating body provided notice on the public record that such funds were to be used to influence the outcome of an election. 2 AAC 50.356(a). The appropriating language of Sec. 36(a) ch 82 SLA 2006 does not on its face provide the required notice that the funds will be used to influence the outcome of an election. 3 Thus, there does not appear to be any authorization for the expenditure of public money to influence the gas reserves tax initiative election.
However, the Commissioner of Revenue is required under the SGDA to provide a period of public comment on the preliminary fiscal interest finding. Therefore, those state officials and employees who act on behalf of the commissioner by participating in the public hearings where they inform the public about the effects of the gas reserves tax proposition on the fiscal impact of the proposed gas line contract, would presumably satisfy this purpose. Presumably such actions would not be for the purpose of influencing the gas reserves tax initiative election. Similarly, providing, as part of the public hearings, copies of the proposed contract, the preliminary findings and determination, and supporting documentation and data, including that of the state’s independent contractors, would also satisfy this purpose. AS 43.82.410(2).
So long as the discussion of the gas reserves tax takes place in the context of the larger question of the fiscal impact of the proposed gas line contract, thereby fulfilling the notice and public comment provisions of the Alaska Stranded Gas Development Act, it is not for the purpose of influencing the outcome of the gas reserves tax ballot initiative and expenditures need not be reported to APOC. Comments on the gas reserves tax initiative outside the context of the gas line contract and related expenditures, however, are likely not authorized by the appropriation in section 36(a) ch 82 SLA 2006; and, only if money were appropriated elsewhere for this purpose, could such expenditures be made. Any such expenditures would have to be reported to APOC unless the expenditures satisfied the very strict requirements of AS 15.13.150 and 2 AAC 50.379 for educational activity. 4
The appropriation in section 36(a) ch 82 SLA 2006, does not appear to provide specifically for the Department of Revenue to spend the money to influence the outcome of the gas reserves tax initiative.
However, state funds can be used to pay for the costs associated with discussing the gas reserves tax in the context of the public hearings on the gas line contract preliminary fiscal interest finding if such discussion is for the purpose of informing the public of the gas pipeline contract under the Alaska Stranded Gas Development Act. Discussion of and dissemination of documents regarding the gas reserves tax outside of this context would likely constitute election-related activity, which would require a specific appropriation and reporting of expenditures to APOC.
The Commission approved the advice in this letter by an affirmative vote of 5-0 on October 31, 2006. The advice in this opinion applies only to the specific activity for which the advice was requested.
A copy of the original letter requesting the above advisory opinion is available upon request at the Alaska Public Offices Commission. 907/276-4176.
1.Letter of July 17, 2006, from Commissioner Corbus.
3. Evidence from the public record constituting the requisite notice would change this analysis.
4. State money may be used to provide the public with nonpartisan information about a ballot proposition. AS 15.13.145(c)(2). Information is nonpartisan if it does not advocate a position. 2 AAC 50.356(c). In your letter, you state that administration officials and hired consultants participating in the public hearing process will “explain why the reserves tax would create an unfavorable investment climate for the gas line project.” Such an explanation does not fall under the legal definition of nonpartisan.