BILL ANALYSIS Ó
SB 1001
Page 1
Date of Hearing: July 3, 2012
ASSEMBLY COMMITTEE ON ELECTIONS AND REDISTRICTING
Paul Fong, Chair
SB 1001 (Yee) - As Amended: June 21, 2012
SENATE VOTE : 28-9
SUBJECT : Political Reform Act of 1974: lobbyists and
committees: fees.
SUMMARY : Imposes fees on specified committees that are required
to file disclosure reports pursuant to the Political Reform Act
(PRA), increases fees on lobbying firms and lobbyist employers,
and requires the new fee revenue to be used for the online and
electronic disclosure of reports filed pursuant to the PRA.
Specifically, this bill :
1)Requires each committee that qualifies as a committee by
virtue of having received contributions totaling $1,000 or
more in a calendar year (known as a recipient committee) to
pay a fee of $50 per year to the Secretary of State (SOS)
until the committee is terminated. Requires the fee to be
paid no later than 15 days after the committee files its
statement of organization, and no later than January 15 in
subsequent years. Provides that a committee that is created
and pays its initial fee in the last three months of a
calendar year is not subject to the annual fee for the
following calendar year.
2)Provides that a committee that existed prior to January 1,
2013 shall pay the fee for the 2013 calendar year no later
than February 15, 2013, unless the committee terminates prior
to January 31, 2013, in which case it is not required to pay
the fee.
3)Provides that a recipient committee that fails to timely pay
the fee required by this bill is subject to a penalty equal to
three times the amount of the fee.
4)Increases the fee required to be paid by each lobbying firm
and lobbyist employer from a maximum of $25 per year to a set
amount of $50 per year for each lobbyist required to be listed
on the registration statement.
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5)Creates the Political Disclosure, Accountability,
Transparency, and Access Fund (PDATA Fund) in the State
Treasury. Requires the fees collected from recipient
committees and one-half of the fees collected from lobbying
firms and lobbyist employers pursuant to this bill to be
deposited into the PDATA Fund. Requires the other half of the
fees collected from lobbying firms and lobbyist employers to
be deposited in the General Fund (GF).
6)Provides that moneys deposited in the PDATA Fund are subject
to appropriation by the Legislature for the maintenance,
repair, and improvement of the online or electronic disclosure
program implemented by the SOS pursuant to existing law.
7)Permits the SOS to use moneys deposited in the PDATA Fund for
the purposes of implementing this bill.
8)Provides that any expenditure from the PDATA Fund for the
maintenance, repair, and improvement of the online or
electronic disclosure program implemented by the SOS is
subject to the project approval and oversight process
established by the California Technology Agency pursuant to
existing law.
EXISTING LAW :
1)Requires the SOS, in consultation with the Fair Political
Practices Commission (FPPC), to provide online and electronic
filing processes for use by specified political committees,
lobbyists, lobbying firms, and lobbyist employers. This
online reporting and disclosure system is commonly referred to
as the Cal-Access system.
2)Requires the SOS to make all the data filed using the online
and electronic filing process available on the Internet for
public viewing in an easily understood format.
3)Requires the SOS to provide a means or method whereby entities
that are required to file statements or reports online or
electronically with the SOS pursuant to the PRA can submit
those required filings free of charge.
4)Requires all state candidates and state political committees
that are required to file campaign reports to file those
reports online or electronically if the cumulative amount of
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contributions received, expenditures made, loans made, or
loans received is $25,000 or more.
5)Requires that lobbying firms and lobbyist employers register
with the SOS, and authorizes the SOS to charge each lobbying
firm and lobbyist employer a fee of up to $25 per year for
each lobbyist required to be listed on its registration
statement.
6)Prohibits a fee or charge from being collected by any officer
for the filing of any report or statement pursuant to the PRA
or for the forms upon which those reports or statements are
required to be prepared.
FISCAL EFFECT : According to the Senate Appropriations
Committee, total costs of approximately $80,000 annually and
approximately $490,000 in new fee revenue.
The SOS indicates the need for one additional personnel
year to administer the new filing fee imposed on political
committees at an estimated cost of $83,138 annually.
Approximately $490,000 in revenue from the increased
fees on lobbyists and the new fee imposed on committees to
the PDATA Fund.
Unknown revenue from late filing penalties collected
from committees that do not meet the filing deadlines,
deposited into the PDATA Fund.
There are approximately 7,800 recipient committees that will be
required to pay a new $50 annual fee to the SOS which will
result in potential new revenue of up to $390,000 each year.
Additionally, the bill will result in about $100,000 in revenue
from higher filing fees paid by lobbyists every two years. SB
1001 directs the money to the PDATA Fund.
COMMENTS :
1)Purpose of the Bill : According to the author:
Existing law, pursuant to the Political Reform Act of
1974, requires the Secretary of State, in consultation
with the Fair Political Practices Commission, to
provide online and electronic filing processes for use
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by specified political committees, lobbyists, lobbying
firms, and lobbyist employers. Those processes must
enable a user to comply with all relevant disclosure
requirements. The SOS must also make all the data
filed available on the Internet for public viewing in
an easily understood format. This online reporting
and disclosure system is commonly referred to as the
Cal-Access system. Cal-Access has had a slew of
technical issues recently that have resulted in a lack
of access to this information by the public. This
information is essential to ensuring transparency and
accountability in affairs that directly impact the
people of this state. While the SOS has the funding
to maintain the existing hardware and software,
because of the nature of the antiquated and uncommon
technology used, finding parts and qualified people to
do the maintenance on such outdated equipment has been
increasingly difficult. This bill seeks to raise
additional funds to be used on the maintenance,
repair, and improvement of the state's online
reporting and disclosure system website to ensure that
this information is continuously available as it was
intended to be.
2)Cal-Access Status : Created in 1999, Cal-Access is a database
and filing system the SOS has used to make much of the
lobbying and campaign finance information available online at
no cost to users. In November 2011, the Cal-Access system
went down, and the system was unavailable for most of the
month of December. In response to a letter from the chair of
this committee, the SOS provided the following information
about the status of the Cal-Access system and the challenges
to replacing that system with a new (and more robust) campaign
and lobbying disclosure database:
Cal-Access is a suite of applications developed in 13
different programming languages which, until
Ýrecently], ran the system on a server cluster and
associated components?that are more than 12 years old,
using an uncommon version of the Unix operating
system.?While the ÝSOS] has the funding to maintain
the existing hardware and software, finding parts and
qualified people to do the maintenance on such
outdated equipment has been increasingly difficult?.
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The Cal-Access system went down November 30, was
restored December 7, went down December 9, and was
restored again on December 30. The causes of the
outages were layered and complex, and no quick fix was
available?.
The recovery efforts that ÝSOS] staff and contractors
pursued in December should stabilize Cal-Access and
enable it to continue running, but the system can
never be made stronger or patched with new features.
Any attempt to upgrade or modernize Cal-Access could
be as risky, time-consuming, and expensive as
developing and deploying a new system. Even the
December work to restore Internet availability of
Cal-Access will not last forever. It is highly likely
that Cal-Access will require more robust servers in
the next three to four years simply to continue
providing access to the ever-growing volume of
information.
The cost of an entirely new system and the speed with
which it can be deployed will depend on many factors
and ultimately can only be borne out through the
state's IT procurement process, which history has
shown to be lengthy and expensive. Before the
Cal-Access outage began on November 30, my office was
looking at existing commercial off-the-shelf (COTS)
products, as well as systems used by other states to
prepare a feasibility study report (FSR) - the project
blueprint that is the required precursor for an IT
project and subject to approval by state control
agencies. Any consideration of an FSR, along with the
subsequent legislative and gubernatorial review of any
budget change proposal to conduct a procurement, would
take into account the replacement of Cal-Access in the
context of the two major IT procurements - VoteCal and
California Business Connect - that my office is
currently conducting.
3)Does This Bill Further the Purposes of the Political Reform
Act ? California voters passed an initiative, Proposition 9,
in 1974 that created the FPPC and codified significant
restrictions and prohibitions on candidates, officeholders and
lobbyists. That initiative is commonly known as the PRA.
Amendments to the PRA that are not submitted to the voters,
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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.
It could be argued that the provision of this bill that requires
the SOS to charge an annual fee to each committee that is
required to file a statement of organization does not further
the purposes of the PRA, and therefore cannot be adopted by
the Legislature without approval by the voters. Among the
provisions of Proposition 9 in 1974 was a prohibition against
any fee or charge being collected by any officer for the
filing of any report or for the forms upon which reports are
to be prepared. Because the fee that is required by this bill
appears to conflict with that provision of the PRA, it could
be argued that this change does not "further the purposes" of
the PRA.
On the other hand, one of the purposes of the PRA is to provide
for receipts and expenditures in election campaigns to be
"fully and truthfully disclosed in order that the voters may
be fully informed and improper practices may be inhibited."
To the extent that the passage of this bill leads to the
development of a new campaign disclosure system, or hastens
the development of such a system, this bill could improve the
disclosure of receipts and expenditures in campaigns, in
furtherance of the purposes of the PRA.
4)First Amendment Concerns : The provisions of this bill which
impose annual fees on certain candidates and committees and
that increase fees charged to lobbyist employers and lobbying
firms may be susceptible to a challenge on the grounds that
these fees represent an improper burden on the freedom of
speech, association, and the right to petition the government
for redress of grievances, in violation of the United States
and California Constitutions.
State and federal courts have repeatedly held that the giving
and spending of campaign money involves the exercise of free
speech, and have held that lobbying is a form of speech,
association, and petition that is protected by the First
Amendment to the United States Constitution. Courts have
suggested that regulatory fees imposed on activities protected
by the First Amendment may be permissible, but only if those
fees are used solely for the purposes of administering the law
or ordinance in question, and only if the fees do not exceed
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an amount necessary to defray the government's expenses in
regulating the activity. (See, for instance, Cox v. New
Hampshire (1941), 312 U.S. 569; Murdock v. Pennsylvania
(1943), 319 U.S. 105; Moffett v. Killian (D. Conn. 1973), 360
F.Supp. 228.)
As discussed above, the fee revenue derived from this bill is to
be used exclusively for the maintenance, repair, and
improvement of the online or electronic disclosure program
that is maintained by the SOS. It could be argued, then, that
the fees imposed by this bill are being used solely for the
purposes of administering and enforcing the state's campaign
and lobbying disclosure laws. However, to the extent that the
fee revenues generated by this bill are used for other
purposes, or exceed the costs of administering and enforcing
the law, the fees proposed by this bill could be susceptible
to challenge.
5)Should Local Campaign Committees Be Charged a Fee ? Under
existing law, candidates for local offices and other recipient
committees that participate primarily in local (i.e.,
non-state) elections do not file campaign reports with the
SOS, and therefore, the Cal-Access web site typically does not
include campaign disclosure reports from those entities.
Nonetheless, some local jurisdictions have set up their own
online campaign disclosure systems, or have posted images
online of campaign reports filed in the jurisdiction.
Additionally, as detailed below, this committee has considered
and approved legislation earlier this year to encourage the
further development of electronic disclosure systems at the
local level.
Even though these candidates and committees do not file
disclosure reports with the SOS, they are required to file a
statement of organization with the SOS within 10 days of
qualifying as a committee. As a result, those committees and
candidates would be required to pay the fees that would be
imposed by this bill, even though the disclosure reports filed
by those entities are not included in the online database
maintained by the SOS. The committee may wish to consider
whether it is equitable or appropriate to charge a fee to
local candidates and committees for the maintenance and
development of a campaign disclosure system that does not
include the disclosure reports filed by those entities.
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On the other hand, one reform that has been discussed in the
Legislature in the past to provide the public with greater
access to campaign finance documents is requiring all
candidates and committees in California to file campaign
reports online or electronically with the SOS. Such a policy
would allow the state to have a single electronic campaign
finance database that would provide "one-stop" campaign
finance information for state and local candidates and
committees. That reform has not been seriously pursued,
however, in part because the Cal-Access system does not have
the capability to accommodate the filings of local campaign
disclosure reports. To the extent that the additional fee
revenue derived from local candidates and committees allows
for a more robust system to be designed to replace the
Cal-Access system, it may be more practical to pursue the
option of requiring all candidates and committees, including
local candidates and committees, to file campaign reports
online or electronically with the SOS, thereby providing
broader access to this information.
6)Arguments in Support : In support of this bill, the California
Newspaper Publishers Association writes:
In an election year, it is essential for journalists
to have dependable, instant access to information
about candidates for public office and those who
contribute to their campaigns. Consistent access to
the Cal-Access database allows journalists to obtain
this important information quickly in order to provide
voters with accurate and complete information. Even a
slight interruption in access to this database may
impede a journalist from reporting vital information
in a breaking story.
7)Arguments in Opposition : In opposition to this bill, the
Howard Jarvis Taxpayers Association (HJTA) writes:
HJTA is certainly aware of the recent server problems
experienced by the Secretary of State's office.
However, targeting lobbyists is a punitive measure
that will hit non-profit associations especially hard
in a difficult recession. The Secretary of State has
alternative means to fund its essential functions
including business incorporation fees and notary
services. It should also try better management. The
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office, like all of government, should learn to live
within its means without banking on the prospect of
higher taxes and fees.
8)Related Legislation : AB 2452 (Ammiano), which is pending on
the Senate Floor, permits local government agencies to require
elected officials, candidates, and campaign committees to file
campaign disclosure reports online or electronically, subject
to certain conditions. AB 2452 was approved by this committee
by a 7-0 vote and was approved on the Assembly Floor by a 77-0
vote.
SB 1553 (Lowenthal), which is pending in the Assembly
Appropriations Committee, establishes a pilot project whereby
the City of Long Beach may permit the electronic filing of
campaign disclosure statements. SB 1553 was approved by this
committee by a 7-0 vote.
REGISTERED SUPPORT / OPPOSITION :
Support
California Common Cause (sponsor)
California Newspaper Publishers Association
Fair Political Practices Commission
Institute of Governmental Advocates
Sunshine Ordinance Task Force of the City and County of San
Francisco
Opposition
Howard Jarvis Taxpayers Association
Analysis Prepared by : Ethan Jones / E. & R. / (916) 319-2094