BILL ANALYSIS �
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THIRD READING
Bill No: AB 800
Author: Gordon (D), et al.
Amended: 6/13/13 in Senate
Vote: 27
SENATE ELECTIONS & CONST. AMEND. COMM, : 4-1, 7/2/13
AYES: Torres, Hancock, Padilla, Yee
NOES: Anderson
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 54-22, 5/30/13 - See last page for vote
SUBJECT : Political Reform Act
SOURCE : Author
DIGEST : This bill makes several changes relating to audits
and investigations conducted under the Political Reform Act of
1974 (PRA), and provides a 90 day timeframe before campaign
funds become designated as "surplus" funds.
ANALYSIS :
Existing law, under the PRA:
1.Prohibits an expenditure of $500 or more from being made by an
agent or independent contractor of a candidate or committee
unless it is reported by the candidate or committee as if the
expenditure were made directly by the candidate or committee.
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Requires the agent or independent contractor to make known to
the candidate or committee the information required to be
reported pursuant to this provision.
2.Provides that campaign funds under the control of a former
candidate or elected officer shall be considered surplus
campaign funds at the time the person leaves office or at the
end of the postelection reporting period following the defeat
of a candidate for elective office, whichever occurs last.
Provides that surplus campaign funds shall be used only for
specified purposes.
3.Prohibits an audit or investigation of any candidate,
controlled committee, or committee primarily supporting or
opposing a candidate or measure in connection with a report or
statement required by specified provisions of law from
beginning until after the last date for filing the first
report or statement following the general, runoff, or special
election for the office for which the candidate ran, or
following the election at which the measure was adopted or
defeated, except as specified.
4.Permits the Franchise Tax Board (FTB) and the Fair Political
Practices Commission (FPPC) to make investigations and audits
with respect to any reports or statements required by
specified provisions of the PRA.
5.Requires the FTB to complete its report of any audit conducted
on a random basis pursuant to specified provisions of law
within one year after the person or entity subject to the
audit is selected by the FPPC to be audited.
6.Prohibits a member, employee, or agent of the FTB from
divulging or making known in any manner the particulars of any
record, documents, or information that he/she receives as part
of an audit or investigation conducted pursuant to the PRA,
except in furtherance of the work of the FTB or in connection
with a court proceeding or the lawful investigation of any
agency.
This bill:
1.Requires subagents and subcontractors that make expenditures
on behalf of or for the benefit of a candidate or committee to
make known to the agent or independent contractor of the
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candidate information about those expenditures.
2.Extends, for a period of 90 days, the period of time before
campaign funds that are under the control of a former
candidate or elected officer become surplus campaign funds,
and thus subject to additional restrictions on how those funds
can be spent.
3.Repeals a provision of law that prohibits the FPPC from
beginning audits or investigations of certain entities prior
to the election.
4.Allows the FPPC and the FTB to make audits and investigations
regarding any statement or report that is required by any
provision of the PRA, instead of allowing such audits and
investigations only of specified statements or reports.
5.Extends, from one year to two years, the limit on the amount
of time that the FTB has to complete its report of any audit
that it conducts under specified provisions of the PRA.
6.Prohibits the FPPC and its staff from divulging or making
known in any manner the particulars of any information that it
receives as part of an audit or investigation conducted
pursuant to the PRA, except in furtherance of the work of the
FPPC or in connection with a court proceeding or the lawful
investigation of any agency.
7.Permits the FPPC and the FTB, at the direction of the FPPC, to
audit any record required to be maintained under the PRA to
ensure compliance with the PRA prior to an election, even if
the record or statement has not yet been filed. Permits the
FPPC, to further the purposes of this provision, to seek
injunctive relief in superior court to compel disclosure.
Permits a superior or appellate court to grant a stay of an
order granting relief pursuant to these provisions. Requires
the court to grant expedited review to an action filed
pursuant to this procedure, as specified.
Background
The Small Business Action Committee PAC, which was a primarily
formed committee that was opposing Proposition 30 and supporting
Proposition 32 at the time the contribution was received,
reported that the $11 million contribution was made by Americans
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for Responsible Leadership (ARL), an Arizona-based non-profit
organization. ARL, in turn, initially refused to disclose the
names of its contributors, arguing that it was not required to
do so under California law because it had not "solicited
earmarked contributions for any particular project" and because
"no contributors to ARL at any time specified where any of their
donations must go."
After receiving a complaint regarding the $11 million
contribution, the FPPC requested to review certain records held
by ARL to ensure compliance with state campaign disclosure laws,
and subsequently commenced a discretionary audit of ARL. When
ARL did not produce records as requested by the FPPC, the FPPC
sued ARL in Sacramento Superior Court seeking an order to compel
ARL to produce those records. ARL opposed that request on a
variety of grounds, including arguing that the FPPC was
prohibited from conducting an audit or an investigation prior to
the election. The Court ultimately granted the FPPC's request
for an order for ARL to produce the requested records, finding
that the statutory prohibition against pre-election audits and
investigations applied only to candidates and certain types of
committees, and was not applicable to ARL. After an
unsuccessful appeal, ARL and the FPPC reached a settlement in
which ARL revealed that it was not the true source of the $11
million contribution, but instead was an intermediary for that
contribution. ARL disclosed that the actual source of the $11
million was another nonprofit organization, Americans for Job
Security (AJS), and that the contribution was then passed
through a second intermediary (and another nonprofit
organization), the Center to Protect Patient Rights (CPPR).
CPPR, in turn, made the contribution to ARL. AJS has not
disclosed its donors.
Subcontractor Reporting . The PRA requires a candidate or
committee to report payments of $500 or more that are made by an
agent or independent contractor as if the candidate or committee
had made the payment directly. For example, if a candidate pays
a media buying company $50,000 to pay for advertisements
supporting that candidate, and the company arranges for the
placement of individual advertisements with numerous television
and radio stations, the candidate would be required to report
the identity of and the amount paid to any television or radio
station that received $500 or more from the media buying company
for the purpose of broadcasting those advertisements.
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In order that the candidate can comply with this requirement,
existing law also requires the agent (in this case, the media
buying company) to provide the candidate with details about the
payments that it made sufficient for the candidate to report
those payments. However, if a subagent or subcontractor makes a
subsequent payment of $500 or more on behalf of the candidate,
there is no explicit requirement for that subagent or
subcontractor to provide the relevant information to the agent
or independent contractor on a timely basis so that the agent or
independent contractor, and the candidate or committee, can
comply with their obligations under the law.
Surplus Funds . Existing law provides that campaign funds that
are held by a candidate or elected official become surplus
campaign funds once the person leaves elective office or at the
end of the postelection campaign reporting period following the
defeat of the candidate for elective office, whichever occurs
last. Once funds are considered surplus campaign funds, they
are subject to additional restrictions on how the funds may be
used, including a prohibition against the candidate using the
funds for a future election.
Because of the short period of time that a candidate or
officeholder has to determine what to do with these campaign
funds before they become surplus funds, FPPC staff indicates
that many candidates simply create new committees as
placeholders until they can decide whether they want to run for
another office in the future, and the tight timelines under
which those new committees must be created and money must be
transferred generates additional workload for the FPPC in the
form of requests for advice.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/12/13)
California Common Cause
Fair Political Practices Commission
Secretary of State
ARGUMENTS IN SUPPORT : According to the author's office, for
Californians to have confidence in their government, they must
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have faith in elections. Nearly 40 years ago, California voters
passed the PRA to ensure greater transparency, disclosure, and
accountability in elections. The Act specifically stated as one
of its purposes that "the voters may be fully informed and
improper practices may be inhibited."
Overall, AB 800 contains several distinct changes intended to
clarify the FPPC's authority to carry out the provisions of the
PRA, ensure that information is provided to the public in an
expedited manner prior to elections, and provide candidates and
campaigns clear guidance to comply with the law.
This bill makes a number of concrete changes that provide the
FPPC the tools necessary to enforce the PRA, and ensure
accountability and protect public trust in campaigns and
elections
ASSEMBLY FLOOR : 54-22, 5/30/13
AYES: Alejo, Ammiano, Atkins, Bloom, Blumenfield, Bocanegra,
Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon,
Campos, Chau, Chesbro, Cooley, Daly, Dickinson, Eggman, Fong,
Fox, Frazier, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray,
Hall, Roger Hern�ndez, Jones-Sawyer, Levine, Lowenthal,
Maienschein, Medina, Mitchell, Mullin, Muratsuchi, Nazarian,
Pan, Perea, V. Manuel P�rez, Quirk, Quirk-Silva, Rendon,
Salas, Skinner, Stone, Ting, Weber, Wieckowski, Williams,
Yamada, John A. P�rez
NOES: Achadjian, Allen, Bigelow, Ch�vez, Conway, Dahle,
Donnelly, Beth Gaines, Gorell, Grove, Hagman, Harkey, Jones,
Linder, Logue, Mansoor, Melendez, Olsen, Patterson, Wagner,
Waldron, Wilk
NO VOTE RECORDED: Holden, Morrell, Nestande, Vacancy
RM:ej 8/12/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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