BILL ANALYSIS                                                                                                                                                                                                    






          SENATE COMMITTEE ON BANKING, FINANCE, AND INSURANCE
                          Senator Jackie Speier, Chair


          SB  1459  (Simitian)               Hearing Date:   April 5,  
          2006

          As Amended: March 28, 2006
          Fiscal:             Yes
          Urgency:       No
          

           SUMMARY
           
          Would amend the Political Reform Act of 1974 to provide for  
          public financing for candidates for the office of Insurance  
          Commissioner (IC), and would impose a fee on insurers for  
          that purpose
           
          DIGEST
            
          Existing law
            
           1.  Prohibits the expenditure of public funds by public  
              officers or candidates for the purpose of seeking  
              elective office;                                  

           2.  Establishes limits on the amount of campaign  
              contributions that an individual or group can make to a  
              candidate for state or local elective offices;

           3.  Allows for the Political Reform Act to be amended by  
              statute if either:

               a.     A statute that furthers the purposes of the  
                 Political Reform Act is passed by a two-thirds  
                 majority roll call vote by both houses of the  
                 legislature and signed by the Governor, and at least  
                 12 days prior to passage in each house the bill has  
                 been distributed to the FPPC for distribution to the  
                 media and any person who has requested copies of  
                 such bills, or

               b.     The statute is passed by a majority vote and  
                 becomes effective only after approval of the voters.
           





                                              SB 1459 (Simitian),  
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          This bill

           1.  Would amend the Political Reform Act of 1974 to allow  
              public financing of political campaigns for IC through  
              a fee collected from insurers;

          2.  Would enact the "Insurance Commissioner Election  
              Accountability Act of 2006" (Act) and make several  
              legislative findings including that:

               a.     The position of IC is unique among state  
                 elected officers because s/he regulates a single  
                 industry;

               b.     Candidates for IC have to raise campaign money  
                 from groups, including insurers and insurers'  
                 organizations that have specific stakes in the  
                 outcomes of decisions that will be made by the IC;

               c.     The office of the IC has suffered from the  
                 taint of at least one serious instance of corruption  
                 that led to resignation of an IC, and been subjected  
                 to frequent allegations of being unduly influenced  
                 by the insurance industry;

               d.     A mechanism for funding a publicly financed IC  
                 election does not undermine the intent of  
                 Proposition 73 of 1988 that prohibited the  
                 expenditure or acceptance of public moneys for the  
                 purpose of elective campaigns;

               e.     The fee charged to insurers under this Act is  
                 only for the purpose of financing campaigns for the  
                 office of IC, and are appropriate and no more than  
                 necessary for that purpose;

               f.     Insurers and policyholders benefit by having an  
                 IC free of the taint of selective industry  
                 contributions;

               g.     Insurance consumers will benefit from the  
                 effective and unbiased regulation of the insurance  
                 industry;

          3.  Would establish criteria for candidates who voluntarily  





                                              SB 1459 (Simitian),  
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              seek to qualify for campaign funding under this Act,  
              including:

               a.     The candidate must file a declaration with the  
                 FPPC stating that the candidate has and will comply  
                 with all provisions of this Act, including  
                 limitations on contributions from any sources not  
                 specifically allowed;

               b.     The candidate receives at least 7,500  
                 qualifying contributions of $5 from registered  
                 voters that are recorded with the FPPC, as  
                 specified;

               c.     The candidate deposits all qualifying  
                 contributions in the candidate's campaign account,  
                 and subsequently writes a check for all such funds  
                 for deposit in the Insurance Commissioner Election  
                 Accountability (ICEA) Fund that is created by this  
                 Act;

          4.  Would define candidates as participating or  
              non-participating for purposes of implementing the  
              provisions of this Act; 

          5.  Would define key election periods as follows:

               a.     The "Exploratory campaign period" runs from 18  
                 months prior to the primary election to 90 days  
                 prior to the primary, inclusive;
               b.     The "Qualifying period" runs from 270 days  
                 prior to the primary election to 90 prior to the  
                 primary, inclusive;
               c.     The "Primary election campaign period" runs  
                 from the 89th day prior to the primary to the day of  
                 the primary;
               d.     The "General election campaign period" runs  
                 from the day after the primary to the day of the  
                 general election;

          6.  Would allow a candidate in the first election cycle  
              following the effective date of this Act to be  
              certified as a participating candidate despite having  
              accepted otherwise non-allowable contributions if those  
              contributions are returned to the contributor, held in  
              an account to retire a debt from a previous campaign,  





                                              SB 1459 (Simitian),  
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              or are deposited in the ICEA Fund;

          7.  Would prohibit any candidate who becomes a qualifying  
              candidate and accepts ICEA funds in the primary from  
              accepting non-allowable private contributions in the  
              general election, whether or not the candidate takes  
              ICEA funds for the general election;

          8.  Would prohibit a participating candidate from  
              soliciting or receiving political contributions for any  
              other candidate, political party, or political  
              committee;

          9.  Would require a participating candidate to conduct all  
              campaign activities through a single campaign account,  
              but would allow the candidate to maintain another  
              account for the purposes of retiring campaign debt from  
              a previous election, but for no more than six months  
              following the date of the election;
            
          10. Would require the candidate to pay all campaign  
              expenses, except petty cash up to $100 per day to pay  
              expenses of no more than $25 each, with an ICEA debit  
              card provided by the FPPC, and would require records of  
              all expenditures be provided to the FPPC, including  
              those utilizing petty cash;

          11. Would prohibit use of ICEA funds for any purpose other  
              than direct campaign purposes, and specifically would  
              prohibit use of ICEA funds for  legal defense in any  
              campaign law enforcement proceeding, the candidate's  
              personal support, compensation to the candidate's  
              family, the candidate's personal appearance, capital  
              assets worth more than $500 and a useful life beyond  
              the current election cycle, independent expenditures,  
              contributions to other candidates, or a gift to any  
              person in excess of $25;

          12. Would allow the candidate to raise "seed money" of no  
              more than $100 per contributor prior to the end of the  
              qualifying period, but in not more than $75,000 in  
              aggregate of seed money, and would impose reporting  
              requirements on those contributions, as specified;

          13. Would require a candidate seeking qualification to  
              report all seed money contributions and expenditures to  





                                              SB 1459 (Simitian),  
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              the FPPC within 72 hours of the close of the qualifying  
              period;

          14. Would specify that seed money is to be spent only  
              during the exploratory and qualifying periods, and any  
              unspent seed money would be turned over to the FPPC for  
              deposit in the ICEA Fund;

          15. Would require the FPPC to certify that a candidate is  
              or is not eligible for ICEA funding within five days of  
              the candidate's submission of an application signed by  
              the candidate and the candidate's campaign treasurer  
              under penalty of perjury, and would provide that the  
              FPPC's decision is final, subject to judicial review  
              within 48 hours;
                 
          16. Would provide a candidate $1.5 million in ICEA funding  
              for a primary, special or special runoff election on  
              the date that the FPPC certifies the candidate as a  
              qualified participating candidate, but in the case of a  
              primary election no earlier than the beginning of the  
              primary election campaign period; if the candidate has  
              no opponent in the primary, the amount is 10% of the  
              amount provided a candidate in a contested election;

          17. Would provide an eligible qualified candidate $3  
              million in ICEA finding for the general election  
              campaign period within 24 hours after certification of  
              the primary election results;

          18. Would provide the same general election funding to  
              candidates who were not a qualified party candidate in  
              the primary but received at least 20% of the primary  
              vote or who collect valid signatures of registered  
              voters during the primary period equal in number to 5%  
              of the votes cast for IC in the last general election,  
              and who fulfill all other requirements of the Act;

          19. Would establish new expenditure reporting requirements  
              for non-participating candidates for IC, and would  
              provide that if a non-participating candidate spends  
              more than the amount of the ICEA allotment during the  
              primary or general election cycle, the FPPC shall  
              immediately release additional ICEA funding to all  
              participating candidates in an amount equal to the  
              excess spending by the non-participating candidate, up  





                                              SB 1459 (Simitian),  
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              to 500% of the initial ICEA funding, to wit, a  
              candidate could receive up to $7.5 million in public  
              funds for the primary election and $15 million for the  
              general election;

          20. Would require all independent expenditures of $1,000 or  
              more in connection with a non-participating candidate  
              for IC be reported, as specified, to the FPPC within 24  
              hours, and would allow matching public funds as  
              described in #19 above be provided to the participating  
              candidate the expenditure was intended to oppose or  
              defeat;

          21. Would allow the FPPC to fine any individual or  
              organization that fails to report independent  
              expenditures as required or provides false information  
              up to three times the amount of the independent  
              expenditure in addition to any other remedies;

          22. Would prohibit all candidates for IC, or a committee  
              controlled by a candidate for IC, from receiving any  
              contributions more than 18 months before the primary  
              election;

          23. In addition to the monies provided in #16 and #17  
              above, would allow candidates to accept monetary or  
              in-kind contributions from political parties provided  
              the total of all such contributions does not exceed 5%  
              of the original ICEA funding allotment, or $75,000 in  
              the primary and $150,000 in the general election  
              period;

          24. Would establish the ICEA Fund in the State Treasury,  
              and would continuously appropriate funds to the FPPC to  
              carry out this Act;

          25. Would fund the Act through a fee equal to .01% of the  
              amount of gross premiums, with funds deposited into the  
              ICEA Fund;

          26. Would provide that any unspent funds distributed to any  
              participating candidate who does not remain a candidate  
              for the primary or general election, or any funds not  
              spent by the candidate for the primary or general  
              election for which they were distributed would be  
              returned to the ICEA Fund;





                                              SB 1459 (Simitian),  
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          27. Would allow for voluntary donations to the ICEA Fund;

          28. Would prohibit a participating candidate and his or her  
              staff from paying campaign costs by cash, check, money  
              order, loan or any other means other than the ICEA  
              debit card or "line of debit", except for petty cash as  
              described in #10 above;

          29. Would provide that if the FPPC determines there are not  
              enough funds in the ICEA program to adequately fund all  
              eligible candidates, it shall proportionately reduce  
              the amount provided to all eligible candidates; in such  
              a case a candidate may either decide to become a  
              non-participating candidate or collect contributions  
              under the limits applicable to nonparticipating  
              candidates up to the amount the candidate would have  
              been entitled to receive if ICEA was fully funded; 

          30. Would provide that if a participating candidate spends  
              more than the ICEA funding and the FPPC determines that  
              it had no material effect on the election outcome, the  
              candidate would repay to the FPPC an amount equal to  
              the excess for deposit into the ICEA Fund, but if the  
              FPPC determines that the excess had or could have had a  
              significant impact on the outcome, the candidate would  
              repay the FPPC an amount 10 times the value of the  
              excess;

          31. Would make it a misdemeanor for a candidate to  
              knowingly accept more ICEA benefits than those to which  
              they are entitled, spend more than the ICEA funding  
              they have received, or misuse that funding; if the FPPC  
              determines that the violation significantly impacts the  
              results or conduct of the election, the candidate may  
              be fined up to $25,000 or imprisoned in county jail for  
              up to one year, or both;

          32. Would require any person found criminally guilty of a  
              misdemeanor or felony under this Act to spend at least  
              24 hours in jail or state prison;

          33. Would require the FPPC to adjust all contribution  
              limits, seed money limits, and public financing amounts  
              in every odd-numbered year to reflect any increase or  
              decrease in the Consumer Price Index and the increase  





                                              SB 1459 (Simitian),  
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              in registered voters, as specified

          34. Would specify that this Act be placed on the June 3,  
              2008 ballot;

          35. Would provide for severability if any provision of this  
              Act is held invalid.
             

           COMMENTS

           1.   Purpose of the bill  .  To provide for public financing  
              of candidates for Insurance Commissioner in order to  
              add to the credibility of that office and to ensure  
              effective and unbiased regulation of the insurance  
              industry.

          2.   Background  .  The office of the Insurance Commissioner  
              is unique among statewide elective offices in that its  
              holder directly regulates a single industry.  This  
              narrow regulatory focus leaves the office open to  
              conflicting charges.  Some have charged that an IC may  
              exchange favorable treatment of insurers for campaign  
              contributions or other items of value to the political  
              fortunes of the IC.  Others, sometimes insurers, make  
              the opposite charge:  that an IC is engaging in  
              excessive and inappropriate regulatory actions in order  
              to build up a public reputation of being "tough" that  
              will serve the IC well in future campaigns.  

              Through the IC's power to issue regulations, licenses,  
              approve rate increases, launch market conduct  
              investigations, enforce Insurance Code requirements,  
              assess penalties and myriad other actions, the IC  
              exercises tremendous power over the insurance industry.  
               However, much of this power is wielded through  
              subjective and technical enforcement activities, and  
              this can make abuses of authority difficult to  
              identify.  

              For example, the question of whether an insurer is  
              financially impaired is partially a question of math---  
              whether the ratios that are used to analyze an  
              insurer's finances are trending in an adverse  
              manner-and partially a judgment call--- can the trend  
              be reversed?  Interim IC Clark Kelso commented to this  





                                              SB 1459 (Simitian),  
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              committee that, every day, he had access to very  
              sensitive information about insurer finances.  This  
              information was valuable in the sense that it could  
              make or break a given company should it be publicly  
              reported or acted upon by others.   

              Proposition 103 of 1988 changed the job of IC from an  
              appointed to an elected position, and also required the  
              IC to approve most insurance rates in advance instead  
              of after the fact, among other provisions.  By making  
              the IC elected instead of appointed, the proponents of  
              Prop. 103 intended to make the position more  
              accountable to the people.  In practice, the high cost  
              of running a statewide election campaign now requires  
              the IC to raise significant amounts of money to finance  
              such an effort.  The insurance industry has  
              traditionally been a significant source of funding for  
              a wide variety of elective offices and political  
              activities.  

              According to the Foundation for Taxpayer and Consumer  
              Rights (FTCR), proponents of Prop. 103, as a practical  
              matter, the ability of insurance companies to elect  
              sympathetic candidates has been demonstrated in several  
              instances, including the second election of an IC in  
              1994.  According to the FTCR, to the degree that  
              insurance companies are more concerned about electing a  
              supportive candidate than is the general public, the  
              insurance companies will be more likely to successfully  
              dominate the electoral process.  
                
              The unique aspects of the office of the Insurance  
              Commissioner were brought home in 2000 with the  
              discovery of some 26 settlements between the DOI and  
              insurers between 1997 and 2000.  Although some of the  
              settlement funds went to traditional uses (such as  
              repaying the Department of Insurance for its costs of  
              enforcement), millions of dollars were diverted to fund  
              television commercials and other activities featuring  
              the IC.  The funds were not deposited in the General  
              Fund, the settlements themselves were secret and, as a  
              result, neither the Legislature, nor the public were  
              aware of how this money was generated or spent until  
              media reports drew attention to the expenditures.  

              As noted in the Overview of this committee's final  





                                              SB 1459 (Simitian),  
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              report on its investigation into the abuses of power  
              under the former IC, "The very power of the office  
              invites abuse.  Out of sight of the press, the  
              Legislature and the public, the IC may enter into  
              agreements with insurers, decide not to go forward on  
              an examination, approve rate increases or decreases, or  
              even tip off insurers about pending regulatory  
              actions."<1>  California law was subsequently amended  
              to require that settlements be made public and that  
              funds be deposited in the state treasury (SB 1805,  
              Escutia, Chapter 971, Statutes of 2000, and SB 2107,  
              Speier, Chapter 1091, Statutes of 2000).  

              During the legislative investigation into the  
              misconduct by the IC in 2000, staff of the Department  
              of Insurance (DOI) alleged that the IC had a target of  
              $3 million to be raised from title insurers accused of  
              market misconduct in order that the IC could purchase  
              advertising time to promote himself to the public.   
              There were problems in the business practices of title  
              insurers, including allegations of illegal kickbacks to  
              real estate agents, etc.  Thus, the examinations (and  
              ultimately settlements) went forward.  However, as this  
              case demonstrates, determining the  real  reason for  
              regulatory actions taken by any IC is difficult.  There  
              may be a mixture of legitimate and highly irregular  
              motivations for exercising regulatory authority when an  
              IC needs to prepare for a future election.  

               Funding based on premium  .  This bill would fund its  
              provisions through a fee on insurers based on .01% of  
              premium.  California generally levies a premium tax of  
              2.35% of premium on most forms of insurance.  The basis  
              of the premium tax is the amount of "gross premiums"  
              received upon business done in the state, less returned  
              premiums. Some insurers are taxed using different  
              formulas, such as title insurers who are taxed 2.35% of  
              income and ocean marine insurers which are taxed at a  
              rate of 5% of underwriting profits.  Surplus line  
              brokers are taxed at 3% of surplus line premiums.  A  
              lower .50% rate is applied to premiums received under  
              pension and profit sharing plan contracts. 

          -------------------------
          <1> Department of Insurance:  In Rubble After Northridge,"  
          Report of the Senate Committee on Insurance, August 28,  
          2000.




                                              SB 1459 (Simitian),  
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              There is an issue regarding whether the .01% levied by  
              this bill is a fee or a tax, and the bill is keyed a  
              majority vote bill, in part, because the initial  
              determination of Legislative Counsel was that the .01%  
              levy is a fee.  Committee staff has asked Legislative  
              Counsel to revisit this question but a clear answer was  
              not available by the time this analysis was prepared.   
              It should be noted that the Legislature may change the  
              gross premiums tax rate on a majority vote basis<2>.  A  
              majority vote is also permissible to amend the  
              Political Reform Act when the amendment is put to the  
              voters. 

              In light of the initial determination that the bill  
              imposes a fee, the bill's language states that the  
              benefit of "effective and unbiased regulation of the  
              insurance industry" will benefit both insurers and  
              insurance consumers, and the language of the findings  
              appear to assume that the cost of the levy will be  
              passed on through higher premiums.  By way of a  
              benchmark, the average auto insurance premium in  
                  California in 2003 was $821 per year.  If the .01% fee  
              were passed on to consumers, the average cost would be  
              approximately 8.21 cents per year per policy.

              The .01% levy proposed by this measure is considered  
              sufficient and necessary to fully fund the purposes of  
              this bill.  The combination of the fee and the existing  
              premium tax would effectively increase the amount paid  
              by insurers to 2.36% of gross premiums, less returned  
              premiums.  Using the .01% rate, with gross premiums  
              reported by the DOI in 2004 of approximately $85  
              billion, some $8.5 million would be raised per year  
              through the fee and deposited into the ICEA Fund,  
              resulting in a pool of approximately $34 million per  
              election cycle.  That amount would increase as premiums  
              increase over time.  In the 2002 Insurance Commissioner  
              race, the Democratic and Republican candidates spent  
              approximately $3.4 and $2.4 million respectively.   
              
               Constitutional free speech issues?   Participation in  
              public financing is voluntary under this bill, but the  
              bill may still be challenged as violating the U.S. and  
              California Constitutions' guarantee of free speech.   
              While the right to freedom speech is not absolute, when  
          -------------------------
          <2> Article XIII, Section 28




                                              SB 1459 (Simitian),  
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              a law burdens core political speech, it must be  
              "narrowly tailored to serve an overriding state  
              interest."  McIntyre v. Ohio Elections Commission   
              (1995), 514 US 334.  This bill does not propose to ban  
              all private contributions to campaigns.  A candidate  
              could choose to accept private contributions, and thus  
              be deemed a "non-participating" candidate.  

              However, this bill  would  prevent  all  candidates for IC,  
              including those who do not choose to participate in  
              public financing, from receiving any contributions more  
              than 18 months prior to the election.  This provision  
              may restrict the ability of non-participating  
              candidates to amass the resources necessary for  
              effective advocacy.  However, whether or not this  
              restriction violates a key test established by the U.S.  
              Supreme Court in  Buckley v. Valeo  (1976) 424 US 1 is  
              disputed by proponents and opponents of the bill.  As  
              noted below, objections have also been raised to this  
              bill because it may be deemed to compel speech.  It  
              should be noted that at least three other states have  
              passed laws that provide substantial public financing  
              to state candidates:  Arizona, Maine and Massachusetts.  
                    

          3.   Support  .  According to the author, the office of  
              Insurance Commissioner in California has suffered from  
              the taint of at least one serious instance of  
              corruption leading to the premature departure of an  
              incumbent, and has been subjected to frequent  
              allegations of being unduly influenced by the insurance  
              industry that it regulates. These allegations, whether  
              true or false, weaken the regulatory authority of the  
              IC and require him or her to give undue consideration  
              to special interests when making decisions.

          4.   Opposition  .  According to the National Association of  
              Insurance and Financial Advisors of California (NAIFA),  
              all Californians should be able to make a campaign  
              contribution to any candidate that they believe would  
              effectively and appropriately represent their  
              interests.  By prohibiting the insurance industry and  
              other private entities from making campaign  
              contributions to the Insurance Commissioner or to  
              candidates for that office, SB 1459 deprives the  
              insurance industry of their first amendment rights.





                                              SB 1459 (Simitian),  
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              In addition to agreeing with NAIFA, the Pacific  
              Association of Domestic Insurance Companies opposes SB  
              1459 because the funding through the premium tax would  
              result in consumers paying for the election of the IC,  
              affecting the First Amendment rights of consumers and  
              their desire to support candidates of their own  
              choosing.

              The Association of California Insurance Companies  
              (ACIC) objects to many of the "finds and declarations"  
              of SB 1459.  Specifically, ACIC disagrees that the IC  
              is unique among state officers in that the IC's role is  
              to regulate a single industry.  ACIC argues that the  
              insurance regulatory structure is no different than  
              many others in state government where single industries  
              such as utilities, financial institutions, realtors,  
              and doctors are regulated by public officials.  ACIC  
              also does not believe that insurers have "unduly  
              influenced" the DOI.  According to ACIC, the statement  
              that "the connection between the influence of regulated  
              entities and ineffective or biased regulatory oversight  
              is well documented?" is untrue.  They characterize as  
              "especially appalling" the suggestion that that every  
              other elected official is immune from bias and  
              ineffectiveness even though their campaigns for public  
              office are also funded by contributions from private  
              parties.  ACIC argues that there is no justification  
              for a measure that would unconstitutionally impose  
              private funding restrictions on a single official or  
              the single industry that is regulated.

              State Farm opposes SB 1459 because it believes the bill  
              violates the First Amendment by compelling insurance  
              companies to engage in speech, it violates the  
              California constitutional provision that imposes a  
              premium tax "in lieu" of all other taxes, and because  
              it violates the California constitutional requirement  
              that taxes be passed by a 2/3 vote of both houses of  
              the legislature.   State Farm particularly objects on  
              the basis of compelled speech because State Farm has  
              made a policy decision not to make any political  
              contributions because the costs of those are passed on  
              directly to policyholders.

          5.   Related legislation  .





                                              SB 1459 (Simitian),  
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               a.     AB 583 (Hancock) which passed the Assembly on  
                 January 30, 2006 and is currently pending before the  
                 Senate Elections, Reapportionment and Constitutional  
                 Amendments Committee would provide for voluntary  
                 public financing of all candidates for state office,  
                 including the office of IC.  There are several key  
                 differences between the bills, however, including:

                       i.            AB 583 would provide only $1  
                        million for the primary and $2 million for  
                        the general election campaigns for IC (versus  
                        $1.5 and $3 million in this bill), but would  
                        still allow for additional funds to match  
                        spending by a non-participating opponent up  
                        to 500% of the original allotment  
                        (potentially $5 million for the primary and  
                        $10 million for the general election);

                       ii.           AB 583 would provide  
                        significantly less funding to candidates who  
                        are not major party candidates;

                       iii.          AB 583 would reduce the amount  
                        of allowable contributions to any candidate  
                        for IC from the current $5,600 to $5,000 per  
                        election from individuals and from $11,100 to  
                        $10,000 from small contributor committees;

                       iv.           AB 583 would provide that  
                        campaign contributions of $500 or more would  
                        be considered income for purposes of the  
                        Political Reform Act;

                       v.            AB 583 would provide for  
                        imprisonment of up to five years for a  
                        criminal violation of the Political Reform  
                        Act;

                       vi.           AB 583 would provide for  
                        forfeiture of the office if the candidate  
                        spends or obligates to spend more than 110%  
                        of their Clean Money funding.
                       
               b.     SB 953 (Speier 2000) would have restricted  
                 campaign contributions to candidates for Insurance  





                                              SB 1459 (Simitian),  
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                 Commissioner by insurers that have proceedings  
                 pending before the Department of Insurance.

          6.   Questions  .  

               a.     This bill makes knowing and willful violation  
                 of its provisions a  misdemeanor/felony when the  
                 violation is found to have significantly impacted  
                 the outcome of the election.  The bill does not  
                 require forfeiture of the ill-begotten office.   
                 Should language be added to require a person  
                 convicted of violating this Act to forfeit office?

               b.     Although the bill specifies that the amount of  
                 the fee to be collected is to be calculated as a  
                 percentage of the gross premium collected pursuant  
                 to Revenue and Taxation Code section 12202, it does  
                 not amend that section.  Should the bill  
                 specifically designate who will collect the tax from  
                 insurers, e.g. whoever is responsible for collecting  
                 the gross premium tax pursuant to the tax code to  
                 clarify implementation and effective collection of  
                 the fee/tax?  Would specifically designating this is  
                 an increase in the gross premium tax in the tax  
                 code, as allowed by the California Constitution by a  
                 majority vote, eliminate questions regarding the  
                 legality of the majority vote designation?

               c.     Should the ban on all political contributions  
                 more than 18 months prior to the primary election be  
                 eliminated to resolve at least one of the issues  
                 regarding free speech? 

               d.     If the cost of the .01% levy were explicitly  
                 required to be passed on to policyholders as a gross  
                 premiums tax or fee, would this eliminate the  
                 argument of the insurance companies that they are in  
                 the position of being compelled into speech?    
           
           




          POSITIONS
          





                                              SB 1459 (Simitian),  
          PageP


          Support
           
          None received
           
          Oppose

           Association of California Insurance Companies
          National Association of Insurance and Financial Advisors of  
          California 
          Pacific Association of Domestic Insurance Companies
          State Farm Insurance
          Association of California Life and Health Insurance  
          Companies
          Insurance Brokers & Agents of the West
          Liberty Mutual Group
          Nationwide Insurance Company
          Personal Insurance Federation of California

          Consultant:  Erin Ryan, 651-4102