Amended in Assembly September 4, 2013

Amended in Assembly August 21, 2013

Amended in Assembly August 7, 2013

Amended in Senate May 24, 2013

Amended in Senate April 18, 2013

Senate Bill No. 594

Introduced by Senator Hill

February 22, 2013

An act to add Sections 54964.5 and 54964.6 to the Government Code, relating to campaign activity.

LEGISLATIVE COUNSEL’S DIGEST

SB 594, as amended, Hill. Use of public resources.

(1) Existing law prohibits the use of public funds for campaign activities.

This bill would prohibit a nonprofit organization or an officer, employee, or agent of a nonprofit organization from using, or permitting another to begin delete use, public resources, including but not limited to, public resources received in exchange for consideration, end delete begin insert use public resources received end insert from a local agency for campaign activity, as defined begin insert , end insert and not authorized by law. This bill would define, among other terms, “public resources” to begin delete include, but not be limited to, cash, lands, buildings, funds, and facilities owned by a local agency end delete begin insert mean any property or asset owned by a local agency and funds received by a nonprofit organization which have been generated from any activities related to conduit bond financing by those entities subject to specified conduit financing and transparency and accountability provisions end insert , and “nonprofit organization” to mean an entity incorporated under the Nonprofit Corporation Law or a nonprofit organization that qualifies for exempt status under the federal Internal Revenue Code of 1986, except as specified. This bill would authorize a civil cause of action for a violation of these prohibitions and damages that include, but are not limited to, 3 times the value of the unlawful use of the public resources. This bill would authorize the Attorney General, a district attorney, and a city attorney of a city having a population in excess of 750,000 to seek these civil remedies.

(2) Existing law requires qualifying individuals and political organizations to report specified information, including, but not limited to, political contributions, in statements filed with the Fair Political Practices Commission.

This bill would require begin delete an auditable end delete begin insert a reporting end insert nonprofit organization that engages in campaign activity to deposit into a separate bank account all “specific source or sources of funds” it receives and to pay for all campaign activity from that separate bank account. This bill would define, among other terms, begin delete “auditable end delete begin insert “reporting end insert nonprofit organization” to mean a nonprofit organization for which public resources from one or more local agencies account for more than 20% of the organization’s annual gross revenue, as specified, and “specific source or sources of funds” to mean any funds received by the begin delete auditable end delete begin insert reporting end insert nonprofit organization that have been designated for campaign activity use or any other funds received by the nonprofit organization, begin delete including funds received in exchange for consideration, end delete as specified.

This bill would further require begin delete an auditable end delete begin insert a reporting end insert nonprofit organization that engages in campaign activity begin insert of specified amounts or more end insert to periodically disclose to the begin delete Attorney General end delete begin insert Franchise Tax Board end insert , and post on its Internet Web site in a certain manner, the identity and amount of each specific source or sources of funds it receives for campaign activity, a description of the campaign activity, and the identity and amount of payments the organization makes from the required separate bank account, as specified. This bill would begin delete require the Attorney General to biennially audit each auditable end delete begin insert authorize the Franchise Tax Board to conduct an audit of any reporting end insert nonprofit organization, begin insert require the board to conduct an audit of any reporting nonprofit organization that engages in campaign activity in excess of $500,000 in a calendar year, end insert issue a written audit report, and transmit the report to the begin insert Attorney General and the end insert district attorney for the county in which the begin delete auditable end delete begin insert reporting end insert nonprofit organization is domiciled. This bill would authorize the Attorney General begin insert or the district attorney for the county in which the reporting nonprofit organization is domiciled end insert to assess a monetary civil penalty of up to $10,000 against begin delete an auditable end delete begin insert a reporting end insert nonprofit organization for each violation of these disclosure requirements, as specified.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

SECTION 1.  

Section 54964.5 is added to the Government
Code, to read:

54964.5.  

(a) A nonprofit organization or an officer, employee,
or agent of a nonprofit organization shall not use, or permit another
to use, public resources, begin delete including, but not limited to, public
resources received by the nonprofit organization in exchange for
consideration, end delete begin insert received end insert from any local agency for any campaign
activity not authorized by law.

(b) As used in this section begin insert and Section 54964.6 end insert , the following
terms shall have the following meanings:

(1) “Ballot measure” means a state or local initiative,
referendum, or recall measure certified to appear on a regular or
special election ballot or other measure submitted to the voters by
the Legislature or the governing body of a local agency at a regular
or special election.

(2) “Campaign activity” means a payment that is used for
communications that expressly advocate for or against the
qualification of a clearly identified begin insert ballot end insert measure, the approval
or rejection of a clearly identified ballot measure, or the election
or defeat of a clearly identified candidate by the voters, or that
constitutes a campaign contribution.

(A)  begin delete For the purposes of this section, “campaign end delete begin insert “Campaign end insert begin insert end insert
activity” does not include the costs of begin delete an endorsement of a clearly
identified ballot measure or candidate by a nonprofit organization
through the adoption of end delete begin insert adopting a position or end insert a resolution
supporting or opposing begin delete the end delete begin insert a clearly identified end insert ballot measure or
candidate, including, but not limited to, posting the begin delete endorsement end delete
begin insert position or resolution end insert on the nonprofit organization’s Internet Web
site, communicating the begin delete endorsement end delete begin insert position or resolution end insert to
members of the nonprofit organization, or issuing a press statement.

(B)  begin delete For the purposes of this section, “campaign end delete begin insert “Campaign end insert begin insert end insert
activity” does not include incidental or minimal begin delete inadvertent end delete use
of public resources.

(C)  begin delete For purposes of this section, “campaign end delete begin insert “Campaign end insert activity”
does not include incidental costs related to the establishment or
administration of a sponsored committee as defined in Section
begin delete 82048.7, provided public resources are not used to pay for that
cost. end delete begin insert 82048.7. end insert A reasonable accounting method may be used to
determine the use of nonpublic resources to pay for that cost.
“Establishment and administration” means the cost of office space,
telephones, salaries, utilities, supplies, legal and accounting fees,
and other expenses incurred in establishing and operating a
sponsored committee.

(3) “Candidate” means an individual who has qualified to have
his or her name listed on the ballot, or who has qualified to have
write-in votes on his or her behalf counted by elections officials,
for nomination or election to an elective office at any regular or
special primary or general election, and includes any officeholder
who is the subject of a recall election.

(4) “Expenditure” means a payment used for communications
that expressly advocate the approval or rejection of a clearly
identified ballot measure, or the election or defeat of a clearly
identified candidate, by the voters or that constitutes a campaign
contribution.

(5) “Local agency” shall begin insert have the same meaning as that term
is defined in paragraph (4) of subdivision (b) of Section 54964
and shall also end insert include begin delete those entities listed in Section 54951 and end delete a
public entity created pursuant to the Joint Exercise of Powers Act
(Chapter 5 (commencing with Section 6500) of Division 7 of Title
1) by one or more entities begin delete listed in Section 54951 end delete begin insert described in
Section 54964 end insert .

(6) “Nonprofit organization” means any entity incorporated
under the Nonprofit Corporation Law (Division 2 (commencing
with Section 5000) of Title 1 of the Corporations Code) or a
nonprofit organization that qualifies for exempt status under
Section 115 or 501(c) of the Internal Revenue begin delete Code. “Nonprofit end delete
begin insert Code, provided, however, that “nonprofit end insert organization” begin delete shall end delete begin insert does end insert
not include begin delete a end delete begin insert any end insert nonprofit organization begin delete exempt end delete begin insert that qualifies for
tax-exempt status end insert under Section 501(c)(3) of the Internal Revenue
Code.

begin delete

(7) “Public resources” means any property or asset owned by
a local agency, including, but not limited to, cash, land, buildings,
facilities, funds, equipment, supplies, telephones, computers,
vehicles, travel, and local government compensated time that is
provided to a nonprofit organization.

end delete begin insert

(7) “Public resources” means the following:

end insert begin insert

(A) Any property or asset owned by a local agency, including,
but not limited to, cash, land, buildings, facilities, funds, equipment,
supplies, telephones, computers, vehicles, travel, and local
government compensated work time that is provided to a nonprofit
organization, except funds received in exchange for consideration
for goods or services.

end insert begin insert

(B) Funds received by a nonprofit organization which have been
generated from any activities related to conduit bond financing
by those entities subject to the conduit financing and transparency
and accountability provisions of Chapter 10.7 (commencing with
Section 5870) of Division 6 of Title 1, whether or not those funds
are received by the nonprofit in exchange for consideration for
goods or services.

end insert

(8) “Use” means a use of public resources from one or more
local agencies that is substantial enough to result in a gain or
advantage to the user or a loss to any local agency for which any
monetary value may be estimated.

(c) This section does not prohibit the use of public resources
for providing information to the public about the possible effects
of any ballot measure on the activities, operations, or policies of
the state or a local agency, provided that the informational activities
meet both of the following conditions:

(1) The informational activities are not otherwise prohibited by
the California Constitution or the laws of this state.

(2) The information provided constitutes an accurate, fair, and
impartial presentation of relevant facts to aid the electorate in
reaching an informed judgment regarding the ballot measure.

(d) (1) Any person who intentionally or negligently violates
this section is liable for a civil penalty not to exceed one thousand
dollars ($1,000) for each day on which a violation occurs, plus
three times the value of the unlawful use of public resources. The
penalty shall be assessed and recovered in a civil action brought
in the name of the people of the State of California by the Attorney
General or by any district attorney or any city attorney of a city
having a population in excess of 750,000. If two or more persons
are responsible for any violation, they shall be jointly and severally
liable for the penalty. If the action is brought by the Attorney
General, the moneys recovered shall be paid into the General Fund.
If the action is brought by a district attorney, the moneys recovered
shall be paid to the treasurer of the county in which the judgment
was entered. If the action is brought by a city attorney, the moneys
recovered shall be paid to the treasury of that city.

(2) A civil action alleging a violation of this section shall not
be commenced more than four years after the date of the alleged
violation.

SEC. 2.  

Section 54964.6 is added to the Government Code, to
read:

54964.6.  

(a)  begin delete An auditable end delete begin insert A reporting end insert begin insert end insert nonprofit organization
that engages in campaign activity, either directly or through the
control of another entity, shall deposit into a separate bank account
all specific source or sources of funds received and shall pay for
all campaign activity from that separate bank account.

(b) As used in this section, the following terms shall have the
following meanings:

(1)  begin delete “Auditable end delete begin insert “Reporting end insert nonprofit organization” means a
nonprofit organization for which public resources from one or
more local agencies account for more than 20 percent of the
nonprofit organization’s annual gross revenue in the current fiscal
year or either of the previous two fiscal begin delete years, including gross
revenue from public resources received by the nonprofit
organization in exchange for consideration. An auditable end delete begin insert years. A
reporting end insert nonprofit organization shall not include a nonprofit
organization that sponsors a committee, as defined in Section
82048.7 of the Government Code, if the nonprofit organization
reports all contributions it received and all expenditures it made
on campaign disclosure statements filed by the sponsored
committee and the nonprofit organization makes no payments from
its general treasury to the sponsored committee other than payments
for contributions by donors earmarked for the sponsored
committee. For purposes of this subdivision, “earmarked” means
a payment by a donor to a nonprofit organization subject to a
condition, agreement, or understanding that the payment will be
used for making contributions or independent expenditures by the
sponsored committee of the sponsoring nonprofit organization.

(2) “Specific source or sources of funds” shall mean any funds
received by the begin delete auditable end delete begin insert reporting end insert nonprofit organization that
have been designated for campaign activity use or any other funds
received by the nonprofit begin delete organization, including, but not limited
to, funds received by the nonprofit in exchange for consideration, end delete
begin insert organization end insert that are used, in whole or in part, within a two-year
period from receipt for campaign activity.

(3) Unless otherwise defined herein, the definitions found in
subdivision (b) of Section 54964.5 shall apply to this section.

(c)  begin delete Fifteen end delete begin insert Thirty end insert days after the end of each quarter, begin delete an auditable end delete
begin insert a reporting end insert nonprofit organization that engages in campaign
activity begin insert of fifty thousand dollars ($50,000) or more related to
statewide candidates or ballot measures or engages in campaign
activity of two thousand five hundred dollars ($2,500) or more
related to local candidates or ballot measures end insert , either directly or
through the control of another entity, at any point during that
quarter shall disclose the following information for that quarter:

(1) The name and amount of each specific source or sources of
funds used for campaign activity, provided that the aggregate
amount of funds received since January 1 of the most recent odd
year by begin delete an auditable end delete begin insert a reporting end insert nonprofit organization from that
specific source or sources of funds is at least two hundred fifty
dollars ($250).

(2) The name of the payee and amount of all payments
aggregating two hundred fifty dollars ($250) or more made from
the single bank account required under subdivision (a).

(3) A description of each campaign activity.

(d)  begin delete Fifteen end delete begin insert Thirty end insert days after the end of each even year, begin delete an
auditable end delete begin insert a reporting end insert nonprofit organization that engages in
campaign activity begin insert of one hundred thousand ($100,000) or more
related to statewide candidates or ballot measures or engages in
campaign activity of ten thousand dollars ($10,000) or more
related to local candidates or ballot measures end insert , either directly or
through the control of another entity, at any point during that even
year or the prior odd year shall disclose all the following
information for those two calendar years:

(1) The name and amount of any specific source or sources of
funds used for campaign activity, provided that the aggregate
amount of funds received since January 1 of the most recent odd
year by begin delete an auditable end delete begin insert a reporting end insert nonprofit organization from that
specific source or sources of funds is at least two hundred fifty
dollars ($250).

(2) The name of the payee and amount of all payments made
from the single bank account required under subdivision (a).

(3) A description of each campaign activity.

(e) Each begin delete auditable end delete begin insert reporting end insert nonprofit organization that engages
in campaign activity, either directly or through the control of
another entity, shall begin insert provide to the Franchise Tax Board and end insert
display on its Internet Web site the information it is required to
disclose under this section. The information shall be clearly
described and identified on a separate Internet Web page, which
shall be linked from the homepage of the organization’s Internet
Web site. The link to this Internet Web page from the homepage
shall be as visible as all similar links.

(f) The begin delete Attorney General shall end delete begin insert Franchise Tax Board may end insert
conduct begin delete a biennial end delete begin insert an end insert audit of begin delete each auditable end delete begin insert any reporting end insert
nonprofit organization that begin delete engages in campaign activity. Each
auditable end delete begin insert is required to provide records to the board pursuant to
this section. The Franchise Tax Board shall conduct an audit of
any reporting nonprofit organization that engages in campaign
activity in excess of five hundred thousand dollars ($500,000) in
a calendar year. The reporting end insert nonprofit organization shall provide
records to the begin delete Attorney General end delete begin insert Franchise Tax Board end insert that
substantiate the information required to be disclosed by this section.
The begin delete Attorney General end delete begin insert Franchise Tax Board end insert shall determine
whether the organization complied with the requirements of Section
54964.5 and this section, issue a written audit report, and transmit
the written audit report to begin insert the Attorney General and end insert the district
attorney for the county in which the begin delete auditable end delete begin insert reporting end insert nonprofit
organization is domiciled.

(g) If the begin delete Attorney General end delete begin insert Franchise Tax Board end insert determines at
the conclusion of an audit that begin delete an auditable end delete begin insert a reporting end insert nonprofit
organization has violated Section 54964.5 or this section, the
Attorney General begin insert or the district attorney for the county in which
the reporting nonprofit organization is domiciled end insert may impose a
civil fine upon the begin delete auditable end delete begin insert reporting end insert nonprofit organization in
an amount up to ten thousand dollars ($10,000) for each violation.