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