It makes three improvements in the present law. First, it empowers the Board of Elections to conduct audits and investigations and to require submission of books and records needed for effective enforcement.

Second, the Board is authorized to enforce the law by direct application to the courts, using its own attorneys in addition to present support from the Corporation Counsel and the U.S. Attorney's Office.

Lastly, GAO itself, with its special elections staff and broad experience in monitoring and enforcing the Federal Election Campaign Act of 1971, becomes a resource of the Board of Elections to make audits and investigations as requested.

Now, Mr. Chairman, you will note that I have left blank the ceilings for expenditure for the various campaigns this Fall and for other offices under the D.C. Election Law.

I did that deliberately because I hope the hearings will bring out testimony on what size budgets can be expected in the ward elections and in the city-wide elections next fall and the kinds of ceilings which come out can be decided upon, I think, as an outgrowth of the dialogue and testimony that will take place here. I believe that ceilings will emerge that will be reasonable, but not excessive and I have full faith, Mr. Chairman, that such a reasonable ceiling will emerge from these hearings.

I admit myself that I am not in a position to make that kind of determination myself. I think it is going to represent some kind of consensus and I have full faith that such a consensus can be arrived at, particularly under your leadership, because it was that kind of consensus and that kind of leadership that was so crucial with respect to the Home Rule Bill.

As you know, the ceilings have to be high enough to permit a newcomer to get name recognition. Otherwise, incumbents are insulated from any real challenge at the polls.

But, if it is too high, the public office becomes out of reach except for candidates of economically stronger sections of our society.

In conclusion, there are two other proposals which have been suggested in other bills in Congress.

One calls for campaign donations to be matched by tax funds for financing elections in the District. That is Mr. Fauntroy's bill and that portion of his bill has been referred, as you indicated, to our Subcommittee on Revenue and Financial Affairs, chaired by the distinguished gentleman from California, Mr. Rees, and is subject to consideration after similar legislation a nationwide basis is taken up in the House, because, obviously, with a national election pending with respect to that particular provision, it would appear that it is better to see what its fate is before we get ahead of them on that particular point.

There is already a filibuster in the other body with respect to methods of financing elections, particularly public financing.

Now, the second reform is disclosure of personal finances of all candidates, of the Board of Education, and D.C. employees in grades 15 or higher in a bill which is being sponsored by Senator Mathias and which, as you indicated, has been co-sponsored in the House by the distinguished vice chairman of the Full Committee, Mr. Fraser.

I am sure that that matter will get the respectful attention from those concerned on our committee. I hope the subcommittee will be

able to spend some time on the disclosure question in connection with those hearings.

Legislation to insure fair elections in the District is certainly among the most vital work for our committee in 1974 and I am confident that this subcommittee's product is going to be looked upon with favor at the Full Committee level.

Thank you, Mr. Chairman.

Mr. ADAMS. Thank you for an excellent statement. I think you have presented the problems that face any type of campaign before and disclosure in public financing clearly before the committee.

I do hope we can move forward with it as rapidly as possible so that we can have these in place prior to the elections taking place in the fall. I am groing to ask if Mr. Fraser has any questions. I also must announce that I have a roll-back and a tax provision I have to question the Chairman of the Full Committee on Interstate Commerce about in mark-up session, so if I have to leave this meeting this morning it is because of a conflict I cannot avoid.

Mr. FRASER. I would like to say I am appreciative of the fact that our Chairman of the Full Committee would open the hearings and express the importance of this work and may I also add that I introduced Senator Mathias' bill in the House, not because I am prepared to endorse all of its provisions, but to get it before the subccmmittee in connection with its hearing.

I think that these are matters that are going to require rather careful study and I gather that there is general agreement that whatever we write here should-once we get an elected Council-be subjected to their further amendment and revision so that what we are doing is setting up a framework for the regulation of the first election, since there is no machinery and from then on the elected Council and the elected Mayor will have authority to revise or repeal, if they want to, or amend.

Mr. DIGGS. That is correct. As you know, Mr. Fraser, the City Council has full power to legislate in this particular field. It certainly would be consistent with our general thrust of delegating legislative authority to them to set up the framework, but in terms of long range plans leave room for them to legislate.

Mr. FRASER. I don't have any specific questions on the bills themselves at the moment. I think it is a matter in which we will have to go into more detail.

Mr. ADAMS. Thank you, Mr. Chairman, we hope you will be able to join us this morning in the hearings and we would very much like to have you with us if you are able to do so.

The next witness before the subcommittee has before them this morning is the Honorable Walter E. Fauntroy, Delegate of the District of Columbia, who has also introduced a bill on the subject and has been one those who has been a prime move in seeing that the matter be heard and moves forward.

He is a member of the subcommittee and we are pleased to have an opportunity to hear from him this morning.

STATEMENT OF THE HONORABLE WALTER E. FAUNTROY

Mr. FAUNTROY. Thank you, Mr. Chairman, and let me commend you for the fine work which your leadership made possible in the

shaping of the Self Government bill, which has made this hearing possible, and we look forward to the same kind of efficient and careful deliberation on our campaign reform legislation and subsequent passage thereof.

Mr. Chairman, thank you for the opportunity to testify today in support of H.R. 12638, and in favor of many of the principles expressed in H.R. 13539 (introduced by Mr. Diggs). The overwhelming need for campaign finance legislation to govern elections in the District of Columbia is pointedly obvious.

First, some general observations. The disclosure stemming from the flagrant abuses of law and political decency that have become known as "Watergate" show the terrible inadequacy of the way we have come to finance elections.

We have seen the distortions in public policy-making that occur when monied special interests are permitted to purchase access to policy-makers. We have seen governmental policies determined by the highest bidder to the detriment of the vast majority of citizens who have few resources to make their voices heard.

Special interest groups have had an undue influence in our political system since the beginning of our Republic, though the abuses have rarely been as severe or as pervasive as in the past several years. Money has spoken with a loud voice not only in the executive branch of the Federal Government, but also in Congress, in State government, and in municipal government across this land. The time for change is upon us.

The time for reform is especially ripe for the District of Columbia. The recently-passed self-government legislation places in the hands of a relatively few elected officials a legislative power in many ways equal to that possessed by state governments. While the existing campaign law applicable to local elections in the District has been barely adequate for the elections it now covers, it simply cannot shoulder the burdens placed on it by the election of a new government with substantial power to make public policy for the District of Columbia. New laws are needed to assure that this new government is the instrument of the people and not of narrow economic interests by carefully regulating the extent to which money, or lack of it, will govern the outcome of elections.

Briefly, let me outline some of the ways in which the current law leaves the way open for abuse:

There are no effective ceilings on campaign expenditures. The law does limit expenditures by a political committee to $100,000, but this applies to even relatively minor offices, and there is nothing to prevent a candidate from having multiple committees.

The current limitation on an individual contribution of $5000 is excessively high, and because of drafting errors in the Home Rule bill, is not applicable to mayor and city council races.

Labor unions and most corporations are allowed to make direct contributions to municipal elections. Federal law precludes such contributions for races for federal office.

The financial reporting standards regarding contributions and expenditures do not require sufficiently detailed disclosures.

The frequency of filing of disclosure reports-5 days before and 30 days after election does not allow for adequate monitoring by opposing candidates and responsible government agencies.

There is no independent enforcement mechanism to ensure strict compliance and vigorous enforcement.

H.R. 12638 in general provides for the following:

Comprehensive disclosure of contributions and expenditures, together with regulation of political committees in the District of Columbia. In large measure, these standards are patterned after those in Federal law.

An independent District of Columbia Political Campaign Finance Commission, given overall responsibility for the administration and enforcement of local campaign finance laws.

Strict campaign spending and contribution ceilings, and limitations on cash contributions.

A system for public financing of campaigns through matching payments.

Candidates for local office in the District of Columbia and their political committees will be required to make every aspect of their financial affairs a matter of public record. Each candidate will be required to designate in writing one committee as his central campaign committee. Though a candidate may have more than one committee operating in support of his candidacy, his central committee will be responsible for consolidating the financial reports of these other committees and monitoring the expenditures of the other committees for violations of the overall spending limitations. Every political committee will be required to register with the Commission at the point that it anticipates receiving contributions or making expenditures in excess of $100. Committees must file full disclosure reports on March 10, June 10, September 10, and 15 and 5 days before an election, as well as an annual report on January 31 of each year. Contributions in excess of $200 given within five days of an election must be reported within 48 hours. The disclosure reports, among other things, must include the name, address, and occupation of every contributor giving more than $50 in a year. Also, the report must disclose the name of every person to whom an expenditure in excess of $10 is made. A comprehensive definition of a "contribution" is set forth to include an in-kind contribution and anything else of value.

H.R. 13539, put forward by Mr. Diggs, introduces a concept not covered in my bill that I think is of significant value. It requires that a candidate or his committee designate one or more banks as central depositories and that all campaign funds be transmitted through the depository. This will provide the Commission the basis for close auditing of all campaign funds.

Under H.R. 12638, though not under H.R. 13539, candidates for the Office of Delegate are exempt from the filing requirements of this local law. The spending and contribution limits, however, would apply with full force. The filing exemption makes sense because candidates for Delegate now make filings under Federal law substantially similar to that provided by H.R. 12638. These reports are filed and available locally-with the Clerk of the House and the Mayor's office. There is a possible unfair burden should the information required under local law depart from Federal law in that separate bookkeeping and report preparation for each would be needed. I should point out that H.R. 12638 makes no change in existing law in this regard. As matters now stand, candidates for Delegate are not required to file a separate campaign financial report under local law.

I personally would have no objection to filing a copy of my Federal report with the Commission.

H.R. 12638 would also create a Political Campaign Finance Commission, an independent Commission with authority and responsibility for administrating and enforcing the campaign finance law. The Commission would be composed of five members, not more than three of whom shall be members of the same political party. Two members will be appointed by the Chairman of the Council, and three by the Mayor. The Commission would be completely independent and not subject to direction by any nonjudicial officer. The Commission will also have subpoena power, and most importantly, the power to "initiate, defend, or appeal" a court action in the name of the Commission to enforce the law. Since introducing my bill, I have reviewed the question of appointment to the Commission. I am not convinced that the appointment procedure I proposed gives sufficient independence to& Commission. The Commissioners may have some difficulty in investigating and possibly prosecuting the officials who appointed them. Consequently, I would recommend that independence be fully guaranteed by adopting an appointment procedure similar to that enacted in the Self Government bill with regard to the Judicial Nominating Commission. That is, appointment should be by disinterested institutions, such as the bar, the courts, and the Comptroller General.

The Commission will receive all campaign reports and registration statements. It shall have the duty of making such reports available for public inspection, and otherwise disseminating public information about campaign finances.

This authority is not given to the existing Board of Elections' because the regulation of campaign finance requires a separate expertise substantially unrelated to questions of administering the technical details of carrying out an election. Further, the task calls for full-time attention that can only be diluted if mixed with separate responsibility over the mechanics of running the election itself. Most important, it is unrealistic to expect one board to administer both the election and campaign finance laws. At the very moment that the Board will be involved most heavily with conducting an election-5 or 10 days before an election-the Board would be required to also exercise great diligence in reviewing campaign finance reports.

This legislation contains strict limitations with respect to the role of money in political campaigns. These limitations will make it possible to conduct broadly financed compaigns. No single contributor will have predominant influence by virtue of his contribution. Nor will candidates be able to overwhelm opposition with lavishly financed campaigns. These measures, taken together, should enable every candidate to be heard, and no serious candidates to be silenced by the din of opposing campaigns. The following contribution limits by an individual are set: $900 in a calendar year for Mayor or Delegate; $500 for Chairman of the Council; $250 for Council or Board of Education candidates at large; and $100 for ward candidates for Council or Board and party offices.

No candidate will be allowed to have spent in his behalf in a single election primary and general elections are separate elections-more than $90,000 for Mayor or Delegate; $50,000 for Chairman of the Council, $25,000 for Member of the Council or Board of Education at large; $10,000 for ward candidates and political party officials.