Current through Register Vol. 50, No. 9, March 1, 2024
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
121.180(7) provides that if
the final statement of a candidate, campaign committee, or political issues
committee shows an unexpended balance or outstanding debt, the entity shall
continue to file supplemental reports until all debts have been settled and any
outstanding balance depleted. Except for debts incurred in campaigns prior to
January, 1989, only candidates may contribute after an election to defray
outstanding debts. As a result, obligations owed by a candidate are of
necessity assumed by the candidate personally. Regardless of whether an
outstanding debt is the result of a pre-1989 campaign or subsequent election,
the failure to settle a debt may result in a contribution, and often an illegal
corporate contribution, or a contribution in excess of the contribution limit
in effect at the time of the election. It is necessary to promulgate this
administrative regulation to establish the criteria on which the registry shall
determine if an outstanding debt has been converted to a contribution.
Section 1. Scope. This administrative
regulation shall apply only to debts incurred for elections held subsequent to
November, 1993.
Section 2.
Extensions of credit to candidates, campaign committees, or political issues
committees.
(1) For purposes of this section,
an "unsatisfied extension of credit" means an outstanding debt which has not
been satisfied within a reasonable time after the date of an election and which
has not been assumed by a candidate personally.
(2) An unsatisfied extension of credit
through deferred billing or payment for goods and services rendered to a
candidate, campaign committee, or political issues committee shall be construed
as a campaign contribution if:
(a) The
transaction was entered into with no reasonable expectation of
repayment;
(b) The transaction is
based upon terms and conditions not available to other customers served by the
creditor;
(c) The transaction is
not a transaction between two (2) unrelated parties bargaining at arm's length;
or
(d) The transaction constitutes
a significant deviation from the creditor's regular commercial
practices.
(3) An
extension of credit through deferred billing or payment for goods and services
rendered to a candidate, campaign committee, or political issues committee, may
be considered a campaign contribution if:
(a)
The creditor abandons efforts to enforce or collect the debt on grounds that
are not commercially reasonable;
(b) The creditor abandons, forgives, or
cancels the debt under conditions not generally available to other customers of
the creditor;
(c) The creditor
abandons, cancels or forgives the debt for no reasonable business purpose;
or
(d) In the case of a creditor
who is an individual or unincorporated entity, if any of the conditions in this
subsection are determined to exist, and the amount of the debt forgiven,
abandoned, or cancelled, when added to other monetary or in-kind contributions
made by the creditor exceed the contribution limits in effect at the time of
the extension of credit.
(4) An extension of credit through deferred
billing or payment for goods and services rendered by a creditor to a candidate
or campaign committee or the cancellation, forgiveness, or abandonment of such
a debt may be determined by the registry to be a campaign contribution if a
totality of the evidence indicates that the transaction is not commercially
reasonable. The mere passage of time shall not be determinative, nor shall the
finding that a transaction was merely unwise. In making the determination, the
registry shall consider:
(a) Whether owners or
controllers of the creditor are contributors to or political supporters of the
candidate;
(b) Whether the amount
of credit extended exceeds the amount of credit extended to nonpolitical
customers of the creditor; and
(c)
Whether the terms under which the credit was extended are substantially
different than the terms and conditions generally applied in transactions
between the creditor and its nonpolitical customers.
