BILL ANALYSIS Ó AB 2146 Page 1 Date of Hearing: April 25, 2012 ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT Cameron Smyth, Chair AB 2146 (Cook) - As Amended: April 16, 2012 SUBJECT : Political Reform Act of 1974: County of San Bernardino. SUMMARY : Authorizes the state's Fair Political Practices Commission (Commission) and the County of San Bernardino to mutually enter into an agreement to grant the Commission primary responsibility for administering and enforcing that county's local campaign finance reform ordinance. Specifically, this bill : 1)Provides that, upon mutual agreement between the Commission and the Board of Supervisors of the County of San Bernardino, the Commission is authorized to assume primary responsibility for the impartial, effective administration, implementation, and enforcement of a local campaign finance reform ordinance passed by the Board of Supervisors of the County of San Bernardino. 2)Authorizes the Commission to be the civil prosecutor responsible for the civil enforcement of that local campaign finance reform ordinance in accordance with the Political Reform Act of 1974 (PRA). As the civil prosecutor of the County of San Bernardino's local campaign finance reform ordinance, the Commission may do both of the following: a) Investigate possible violations of the local campaign finance reform ordinance; and, b) Bring administrative actions in accordance with the PRA and Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. 1)Requires any local campaign finance reform ordinance of the County of San Bernardino enforced by the Commission pursuant to this bill to comply with the PRA. 2)Requires the Board of Supervisors of the County of San Bernardino to consult with the Commission prior to adopting and amending any local campaign finance reform ordinance that AB 2146 Page 2 is subsequently enforced by the Commission pursuant to this bill. 3)Authorizes the Board of Supervisors of the County of San Bernardino and the Commission to enter into any agreements necessary and appropriate to carry out the provisions of this bill, including agreements pertaining to any necessary reimbursement of state costs with county funds for costs incurred by the Commission in administering, implementing, or enforcing a local campaign finance reform ordinance pursuant to this bill. 4)Authorizes the Board of Supervisors of the County of San Bernardino or the Commission to, by ordinance or resolution at any time, terminate an agreement made pursuant to this bill for the Commission to administer, implement, or enforce a local campaign finance reform ordinance or any provision thereof. 5)Makes findings and declarations that a special law is necessary and that a general law cannot be made applicable because of the necessity to avoid an appearance of corruption in the County of San Bernardino's electoral process. 6)Makes findings and declarations that this bill furthers the purposes of the PRA. EXISTING LAW : 1)Creates the Commission, and makes it responsible for the impartial, effective administration and implementation of the PRA. 2)Requires local government agencies that adopt or amend local campaign finance ordinances to file a copy of the ordinance with the Commission. 3)Prohibits a local government agency from enacting a campaign finance ordinance that imposes campaign reporting requirements that are additional to or different from those set forth in the PRA for elections held in its jurisdiction unless the additional or different requirements apply only to the candidates seeking election in that jurisdiction, their controlled committees or committees formed or existing primarily to support or oppose their candidacies, and to AB 2146 Page 3 committees formed or existing primarily to support or oppose a candidate or to support or oppose the qualification or passage of a local ballot measure which is being voted on only in that jurisdiction, and to city or county general purpose committees active only in that city or county, respectively. 4)Provides that nothing in the PRA shall nullify contribution limitations or prohibitions of any local jurisdiction that apply to elections for local elective office, except that these limitations and prohibitions may not conflict with a specified provision of the PRA dealing with "member communications." 5)Provides that payments made for communications to members, employees, shareholders, or families of members, employees, or shareholders of an organization for the purpose of supporting or opposing a candidate or a ballot measure, which are referred to as "member communications," are not contributions or expenditures, if those payments are not made for general public advertising such as broadcasting, billboards, and newspaper advertisements. 6)Makes violations of the PRA subject to administrative, civil, and criminal penalties. FISCAL EFFECT : Unknown. This bill is keyed fiscal. COMMENTS : 1)This bill intends to allow the County of San Bernardino and the Commission to mutually negotiate and execute a contract for implementation and enforcement of local campaign finance ordinances. By doing so, the County hopes to secure those services with less expense than if they had to create and operate a local ethics commission, while also ensuring that enforcement is insulated from undue local influence. This measure is sponsored by the County of San Bernardino. 2)According to the author, "Ým]any counties and cities across California have enacted campaign finance rules to create a level playing field for candidates and to stem the influence of 'big money' in local politics. As a result, locally appointed ethics commissions often enforce campaign finance rules adopted by local governments. The County of San Bernardino, which has been the subject of several high-profile AB 2146 Page 4 corruption cases, is in the process of developing a campaign finance ordinance that would establish contribution limits that mirror those applied to State Senate and Assembly candidates. Rather than appointing an ethics commission, which could present financial as well as conflict-of-interest challenges, the County proposes to contract with the Fair Political Practices Commission (FPPC) to enforce the rules. AB 2146 would authorize the County of San Bernardino to contract with the Commission to enforce San Bernardino County's local campaign finance ordinance. This would only occur after a mutual agreement between the Commission and the San Bernardino County Board of Supervisors has been reached." 3)According to the author, the need for outsourcing local ethics enforcement stands on both efficiency and effectiveness grounds: "Ýc]ontracting with the Commission is an ideal solution for several reasons. Counties that have ethics commissions or other formal entities spend as much as $3.5 million annually to police ethical behavior. Contracting with the Commission is a cost effective alternative to an ethics commission and a prudent use of taxpayer resources. Additionally, contracting with the Commission provides oversight by an impartial and independent third party and eliminates potential conflicts of interest that could arise from the creation of an internal agency by the Board of Supervisors." 4)The Commission was created by the Act, a ballot initiative passed by California voters in 1974 as Proposition 9. To meet its responsibilities under the Act, the Commission adopts and amends regulations. The Commission regulates campaign financing and spending, financial conflicts of interest, lobbyist registration and reporting, post-governmental employment, mass mailings at public expense, and gifts and honoraria given to public officials and candidates. The Commission investigates alleged violations of the Political Reform Act, imposes penalties when appropriate, and assists state and local agencies in the development and enforcement of conflict-of-interest codes. In an effort to reduce these violations, the Commission educates the public and public officials on the requirements of the Act and provides written and oral advice to public agencies and officials and conducts seminars and training sessions. AB 2146 Page 5 The Commission also develops required forms, prepares manuals and instructions, aids agencies and public officials with record keeping and reporting, and maintains a central file of statements of economic interests (SEI) for certain state and local officials. It has roughly 80 employees. 5)Violations of the PRA are subject to administrative, civil, and criminal penalties. Generally, the Attorney General (AG) and district attorneys have responsibility for enforcing the criminal provisions of the PRA, though any elected city attorney of a charter city also has the authority to act as the criminal prosecutor for violations of the PRA that occur within the city. The Commission, the AG, district attorneys, and elected city attorneys of charter cities all have responsibility for enforcement of the civil penalties and remedies provided under the PRA, depending on the nature and location of the violation, while any member of the public also has the ability to file a civil action to enforce the civil provisions of the PRA, subject to certain restrictions. The Commission has the sole authority to bring administrative proceedings for enforcement of the PRA. When the Commission determines on the basis of such a proceeding that a violation of the PRA has occurred, it has the authority to impose monetary penalties of up to $5,000 per violation, in addition to ordering the violator to cease and desist violation of the PRA and to file any reports, statements, or other documents or information required by the PRA. In the case of local campaign ordinances, there is no single approach as to the types of penalties that are available for the violations of those ordinances. Many local ordinances provide for misdemeanor or civil penalties for violations, while some ordinances (including the current ordinance for San Bernardino County) do not establish any penalties for violations. In some local jurisdictions that have independent boards or commissions to enforce the local campaign finance ordinances, those boards or commissions have the authority to bring administrative enforcement proceedings, similar to the authority the Commission has under the PRA. 6)Under existing law, local government agencies have the ability to adopt campaign ordinances that apply to elections within their jurisdictions, though the PRA imposes certain limited AB 2146 Page 6 restrictions on those local ordinances. For instance, SB 726 (McCorquodale), Chapter 1456, Statutes of 1985, limited the ability of local jurisdictions to impose campaign filing requirements that differed from those in the PRA, permitting such requirements only when they applied only to candidates and committees whose activity is restricted primarily to the jurisdiction in question. This provision sought to avoid the necessity of a candidate or committee active over a wider area being required to adhere to several different campaign filing schedules. Similarly, AB 1430 (Garrick), Chapter 708, Statutes of 2007, prohibits local governments from adopting rules governing member communications that are different than the rules that govern member communications at the state level. Aside from these restrictions, however, local government agencies generally have a significant amount of latitude when developing local campaign finance ordinances that apply to elections in those agencies' jurisdiction. Any jurisdiction that adopts or amends a local campaign finance ordinance is required to file a copy of that ordinance with the Commission, and the Commission has begun posting those ordinances on its website. The Commission's website currently includes campaign finance ordinances from 17 different counties and from 130 different cities. San Bernardino County currently has a local campaign finance ordinance, though that ordinance is very limited in scope. Specifically, the ordinance merely establishes a voluntary campaign expenditure limit for candidates for local office. It does not provide any incentive for candidates to adopt or reject that voluntary limit, nor does it establish penalties for candidates who agree to abide by the voluntary limits but then subsequently make campaign expenditures in excess of those limits. Other cities and counties have adopted campaign finance ordinances that are much more extensive. In some cases, those ordinances include campaign contribution limits, reporting and disclosure requirements that supplement the requirements of the PRA, temporal restrictions on when campaign funds may be raised, and voluntary public financing of local campaigns, among other provisions. In many cases, local campaign finance ordinances are enforced AB 2146 Page 7 by the district attorney of the county or by the city attorney. In at least a few cases, however, local jurisdictions have set up independent boards or commissions to enforce the local campaign finance laws. The Commission does not currently enforce any local campaign finance ordinances as it would for San Bernardino if this bill were adopted. The Commission can and does, however, bring enforcement actions in response to violations of the PRA that occur in campaigns for local office, even in cases where the local jurisdiction brings separate enforcement actions for violations of a local campaign finance ordinance. 7)According to an April 17, 2012 article in the Press-Enterprise, a small number of California cities and counties have their own ethics commissions, such as Los Angeles, San Diego and San Francisco, although San Bernardino does not. The same article notes that in San Bernardino County, a current Supervisor and the District Attorney were among those fined by the Commission in recent years for violations of the PRA. 8)The prospect of outsourcing administration and enforcement of local campaign finance rules to the state Commission is both novel and intriguing. The Commission does not currently provide such a service to any local jurisdiction. As such, there are a number of questions that the Committee may wish to consider: a) Given the importance of the right of the public to have access to the workings of their own government, could the outsourcing of the administration and enforcement of San Bernardino County campaign finance regulations to a state-run agency in Sacramento create problems of access for locals? How often might residents want or need to visit a physical office, rather than corresponding by email, telephone or regular mail? Are the Commission's telephone advice lines well-staffed, or are there long wait times? b) Given the importance of local control and autonomy, is there any danger that a state agency would be less responsive to the needs of the local community than a local one? For example, does the Commission have the language AB 2146 Page 8 competence to adequately serve the residents of the county who do not speak English as a first language? To what extent does the Commission have discretion in its enforcement? What might be the result if that discretion were not grounded in the mores of the local community, in the way a district attorney's discretion to charge would be? Furthermore, while the statute gives both parties the power to terminate the contract at will, it does not speak to the possibility of cancellation fees or liquidated damages clauses that could apply to cancellation. Such provisions, if included in the agreement, could become a major disincentive to ending the contract if the County found that its residents would be better served by having their own local ethics commission. The Committee may wish to consider placing certain restrictions on any contract between the County and the Commission to prohibit cancellation fees, liquidated damages, or other such disincentives to cancellation, while recognizing that the County should still be obligated to pay for services rendered or other expenditures reasonably made by the Commission in anticipation of services to be rendered. c) Given the untested nature of the proposal, should the authorization include a sunset provision in order to give the County and the Commission time to figure out how best to administer the program before it is extended or expanded? How will the County or the Commission know if the program was successful? Will there be estimated cost savings? How much? How will the Legislature know? If the program works, should it be expanded to other counties? The Committee may wish to consider adding a sunset clause to the bill - perhaps expiring after five years, on January 1, 2018 - in order to allow the parties to negotiate an agreement and implement it over a couple of election cycles to see how it works. The Committee may also wish to consider requiring a report on the operation of the program, including its performance on AB 2146 Page 9 measures of economic efficiency, enforcement, and customer satisfaction, to be delivered to the relevant legislative committees in time to inform any discussion over extension or expansion of the program. Any such report should be due one year prior to the sunset date, so if the sunset date were January 2018, then the report should be due by January 2017. 9)The California State Association of Counties and Urban Counties Caucus write in support of the bill, and even advocate for its expansion: "While our organizations support the bill, we would be interested in seeing the bill expanded to allow other counties to contract with the Commission, if agreed upon by their County Board of Supervisors." 10)Amendments to the PRA that are not submitted to the voters, such as those contained in this bill, must further the purposes of the initiative and require a two-thirds vote of both houses of the Legislature. 11)Support arguments : According to the author, "Ýt]he proposed local campaign finance reform ordinance is intended to make it more difficult for candidates and influential individuals and entities to engage in quid pro quo corruption, make the financing of campaigns for elective county offices more transparent, and to make more information, especially financial information, regarding candidates and their supporters available to voters. Enforcement of the local campaign finance reform ordinance by the Commission is needed to ensure the integrity of the ordinance." Opposition arguments : This bill could theoretically take away local autonomy by outsourcing local campaign finance administration and enforcement to individuals hundreds of miles away, making it harder to physically access the bureaucracy, while taking local mores out of the equation. It also exports public sector clerical jobs out of the County. 12)This bill is double-referred to the Committee on Elections and Redistricting, where it will be heard on April 26, 2012. REGISTERED SUPPORT / OPPOSITION : AB 2146 Page 10 Support County of San Bernardino ÝSPONSOR] California State Association of Counties Fair Political Practices Commission Urban Counties Caucus Opposition None on file Analysis Prepared by : Hank Dempsey / L. GOV. / (916) 319-3958