Senate Bill No. 27

Introduced by Senator Correa

December 3, 2012

An act to amend Section 82015 of, and to add Sections 84222 and 84223 to, the Government Code, relating to the Political Reform Act of 1974.

LEGISLATIVE COUNSEL’S DIGEST

SB 27, as introduced, Correa. Political Reform Act of 1974.

Existing law, the Political Reform Act of 1974, provides for the comprehensive regulation of campaign financing, including requiring the reporting of campaign contributions and expenditures, as defined, and imposing other reporting and recordkeeping requirements on campaign committees, as defined. The Fair Political Practices Commission administers and enforces the act. A violation of the act’s provisions is punishable as a misdemeanor.

This bill would revise the definition of a “contribution” to include payments made by a donor who, at the time of making the payment, knows or has reason to know that the payment, or funds with which the payment will be commingled, will be used to make contributions or expenditures. The bill establishes presumptions as to whether a donor has reason to know that a payment will be used to make contributions or expenditures based on the number of years the recipient has existed and the amount of the recipient’s first contribution or expenditure, as specified.

This bill would impose reporting requirements on a multipurpose organization, as defined, that receives donations and uses those donations to make contributions or expenditures of $1,000 or more in a calendar year in this state. The bill would also authorize the Commission to perform discretionary audits of these reports, as specified.

This bill would require ballot measure committees and candidate committees that raise $1,000,000 or more for an election to maintain an accurate list of the committee’s top 10 contributors, which are to be posted on the Commission’s Internet Web site as well as the committee’s Internet Web site, if any.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

The Political Reform Act of 1974, an initiative measure, provides that the Legislature may amend the act to further the act’s purposes upon a 2⁄3 vote of each house and compliance with specified procedural requirements.

This bill would declare that it furthers the purposes of the act.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

The Legislature finds and declares all of the
following:

(a) Nonprofit and other multipurpose organizations are
increasing their political activities and some are seeking to make
contributions and expenditures in California elections without
revealing their financial backers.

(b) Certain donors attempt to obscure their identities from the
public by making donations to one organization or entity which
then makes donations to a separate organization or campaign
committee, or by routing funds through a succession of committees.
Committees themselves are in the best position to know who their
financial backers are and to provide this information to the public
in an accurate, timely, and transparent manner.

(c) Under the Political Reform Act of 1974, nonprofit and other
multipurpose organizations that make contributions or expenditures
to support or oppose California candidates or ballot measures are
subject to the same rules as those entities that raise funds
specifically for California elections - they must disclose the sources
of funds used for their political expenditures.

(d) It is therefore the intent of the Legislature to strengthen the
laws requiring the disclosure of contributions and expenditures in
California elections by nonprofit and other multipurpose
organizations and to require Internet posting of a list of the top ten
contributors to a committee primarily formed to support or oppose,
and raising or spending one million dollars ($1,000,000) or more
to support or oppose, ballot measures or candidates.

SEC. 2.  

Section 82015 of the Government Code is amended
to read:

82015.  

(a) “Contribution” means a payment, a forgiveness of
a loan, a payment of a loan by a third party, or an enforceable
promise to make a payment except to the extent that full and
adequate consideration is received, unless it is clear from the
surrounding circumstances that it is not made for political purposes.

(b) (1) A payment made at the behest of a committee as defined
in subdivision (a) of Section 82013 is a contribution to the
committee unless full and adequate consideration is received from
the committee for making the payment.

(2) A payment made at the behest of a candidate is a contribution
to the candidate unless the criteria in either subparagraph (A) or
(B) are satisfied:

(A) Full and adequate consideration is received from the
candidate.

(B) It is clear from the surrounding circumstances that the
payment was made for purposes unrelated to his or her candidacy
for elective office. The following types of payments are presumed
to be for purposes unrelated to a candidate’s candidacy for elective
office:

( begin delete i end delete begin insert I end insert ) A payment made principally for personal purposes, in which
case it may be considered a gift under the provisions of Section
82028. Payments that are otherwise subject to the limits of Section
86203 are presumed to be principally for personal purposes.

(ii) A payment made by a state, local, or federal governmental
agency or by a nonprofit organization that is exempt from taxation
under Section 501(c)(3) of the Internal Revenue Code.

(iii) A payment not covered by clause ( begin delete i end delete begin insert I end insert ), made principally for
legislative, governmental, or charitable purposes, in which case it
is neither a gift nor a contribution. However, payments of this type
that are made at the behest of a candidate who is an elected officer
shall be reported within 30 days following the date on which the
payment or payments equal or exceed five thousand dollars
($5,000) in the aggregate from the same source in the same
calendar year in which they are made. The report shall be filed by
the elected officer with the elected officer’s agency and shall be
a public record subject to inspection and copying pursuant to
subdivision (a) of Section 81008. The report shall contain the
following information: name of payor, address of payor, amount
of the payment, date or dates the payment or payments were made,
the name and address of the payee, a brief description of the goods
or services provided or purchased, if any, and a description of the
specific purpose or event for which the payment or payments were
made. Once the five-thousand-dollar ($5,000) aggregate threshold
from a single source has been reached for a calendar year, all
payments for the calendar year made by that source must be
disclosed within 30 days after the date the threshold was reached
or the payment was made, whichever occurs later. Within 30 days
after receipt of the report, state agencies shall forward a copy of
these reports to the Fair Political Practices Commission, and local
agencies shall forward a copy of these reports to the officer with
whom elected officers of that agency file their campaign
statements.

(C) For purposes of subparagraph (B), a payment is made for
purposes related to a candidate’s candidacy for elective office if
all or a portion of the payment is used for election-related activities.
For purposes of this subparagraph, “election-related activities”
shall include, but are not limited to, the following:

( begin delete i end delete begin insert I end insert ) Communications that contain express advocacy of the
nomination or election of the candidate or the defeat of his or her
opponent.

(ii) Communications that contain reference to the candidate’s
candidacy for elective office, the candidate’s election campaign,
or the candidate’s or his or her opponent’s qualifications for
elective office.

(iii) Solicitation of contributions to the candidate or to third
persons for use in support of the candidate or in opposition to his
or her opponent.

(iv) Arranging, coordinating, developing, writing, distributing,
preparing, or planning of any communication or activity described
in clause ( begin delete i end delete begin insert I end insert ), (ii), or (iii).

(v) Recruiting or coordinating campaign activities of campaign
volunteers on behalf of the candidate.

(vi) Preparing campaign budgets.

(vii) Preparing campaign finance disclosure statements.

(viii) Communications directed to voters or potential voters as
part of activities encouraging or assisting persons to vote if the
communication contains express advocacy of the nomination or
election of the candidate or the defeat of his or her opponent.

(D) A contribution made at the behest of a candidate for a
different candidate or to a committee not controlled by the
behesting candidate is not a contribution to the behesting candidate.

(3) A payment made at the behest of a member of the Public
Utilities Commission, made principally for legislative,
governmental, or charitable purposes, is not a contribution.
However, payments of this type shall be reported within 30 days
following the date on which the payment or payments equal or
exceed five thousand dollars ($5,000) in the aggregate from the
same source in the same calendar year in which they are made.
The report shall be filed by the member with the Public Utilities
Commission and shall be a public record subject to inspection and
copying pursuant to subdivision (a) of Section 81008. The report
shall contain the following information: name of payor, address
of payor, amount of the payment, date or dates the payment or
payments were made, the name and address of the payee, a brief
description of the goods or services provided or purchased, if any,
and a description of the specific purpose or event for which the
payment or payments were made. Once the five-thousand-dollar
($5,000) aggregate threshold from a single source has been reached
for a calendar year, all payments for the calendar year made by
that source must be disclosed within 30 days after the date the
threshold was reached or the payment was made, whichever occurs
later. Within 30 days after receipt of the report, the Public Utilities
Commission shall forward a copy of these reports to the Fair
Political Practices Commission.

(c) “Contribution” includes the purchase of tickets for events
such as dinners, luncheons, rallies, and similar fundraising events;
the candidate’s own money or property used on behalf of his or
her candidacy other than personal funds of the candidate used to
pay either a filing fee for a declaration of candidacy or a candidate
statement prepared pursuant to Section 13307 of the Elections
Code; the granting of discounts or rebates not extended to the
public generally or the granting of discounts or rebates by television
and radio stations and newspapers not extended on an equal basis
to all candidates for the same office; the payment of compensation
by any person for the personal services or expenses of any other
person if the services are rendered or expenses incurred on behalf
of a candidate or committee without payment of full and adequate
consideration.

(d) “Contribution” further includes any transfer of anything of
value received by a committee from another committee, unless
full and adequate consideration is received.

(e) “Contribution” does not include amounts received pursuant
to an enforceable promise to the extent those amounts have been
previously reported as a contribution. However, the fact that those
amounts have been received shall be indicated in the appropriate
campaign statement.

(f) “Contribution” does not include a payment made by an
occupant of a home or office for costs related to any meeting or
fundraising event held in the occupant’s home or office if the costs
for the meeting or fundraising event are five hundred dollars ($500)
or less.

(g) Notwithstanding the foregoing definition of “contribution,”
the term does not include volunteer personal services or payments
made by any individual for his or her own travel expenses if the
payments are made voluntarily without any understanding or
agreement that they shall be, directly or indirectly, repaid to him
or her.

(h) “Contribution” further includes the payment of public
moneys by a state or local governmental agency for a
communication to the public that satisfies both of the following:

(1) The communication expressly advocates the election or
defeat of a clearly identified candidate or the qualification, passage,
or defeat of a clearly identified measure, or, taken as a whole and
in context, unambiguously urges a particular result in an election.

(2) The communication is made at the behest of the affected
candidate or committee.

begin insert

(I) (1) “Contribution” further includes a payment made to a
person if, at the time of making the payment, the donor knows or
has reason to know that the payment, or funds with which the
payment will be commingled, will be used to make a contribution
or expenditure. If the donor knows or has reason to know that only
part of the payment will be used to make a contribution or
expenditure, the payment shall be apportioned on a reasonable
basis in order to determine the amount of the contribution.

end insert begin insert

(2) For purposes of paragraph (1), if the person receiving the
payment has been in existence for two years or more prior to
making a contribution or expenditure in this state and the person’s
first contribution or expenditure in this state is less than five
hundred thousand dollars ($500,000), there shall be a presumption
that the donor does not have reason to know that all or part of the
payment will be used to make a contribution or expenditure, unless
the person has made contributions or expenditures of one thousand
dollars ($1,000) or more in the aggregate during the calendar
year in which the payment occurs, or in any of the immediately
preceding four calendar years.

end insert begin insert

(3) For purposes of paragraph (1), if the person receiving the
payment has been in existence for less than two years prior to
making a contribution or expenditure in this state or the person’s
first contribution or expenditure in this state is five hundred
thousand dollars ($500,000) or more, there shall be a presumption
that the donor has reason to know that all or part of the payment
will be used to make a contribution or expenditure.

end insert begin insert

(4) A donor who makes a contribution described in paragraph
(1) shall be identified and reported by the person receiving the
contribution in accordance with regulations adopted by the
Commission.

end insert

SEC. 3.  

Section 84222 is added to the Government Code, to
read:

84222.  

(a) For purposes of this section, “multipurpose
organization” means a nonprofit organization, a federal or
out-of-state political action committee, or a local club focusing on
educational or social activities.

(b) A multipurpose organization that receives donations and
uses those donations to make contributions or expenditures of one
thousand dollars ($1,000) or more in a calendar year in this state
shall disclose the donors that are the sources of the donations used
to make contributions or expenditures, in accordance with
regulations adopted by the Commission.

(c) A multipurpose organization that makes contributions or
expenditures in this state is subject to discretionary audits
conducted by the Commission. An audit conducted pursuant to
this subdivision shall be limited to examining the multipurpose
organization’s contributions or expenditures in this state and the
donations that are the sources of the funds for those contributions
or expenditures. During an audit, a multipurpose organization shall
make its records of donors available for inspection by the
Commission, if requested. A multipurpose organization shall keep
copies of its fundraising solicitations and, during an audit, make
those solicitations available for inspection by the Commission, if
requested.

SEC. 4.  

Section 84223 is added to the Government Code, to
read:

84223.  

(a) A committee primarily formed to support or oppose
a ballot measure or candidate that raises one million dollars
($1,000,000) or more for an election shall maintain an accurate
and publicly available list of the committee’s top ten contributors,
as specified by Commission regulations. The list of top ten
contributors shall be posted on the Commission’s Internet Web
site and posted prominently on the committee’s Internet Web site,
if any.

(b) In listing the top ten contributors, the committee shall use
reasonable efforts to identify the actual individuals or corporations
that are the true sources of the contributions made to the committee
from other persons or committees.

SEC. 5.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

SEC. 6.  

The Legislature finds and declares that this bill furthers
the purposes of the Political Reform Act of 1974 within the
meaning of subdivision (a) of Section 81012 of the Government
Code.