BILL NUMBER: SB 594 ENROLLED
BILL TEXT
PASSED THE SENATE SEPTEMBER 12, 2013
PASSED THE ASSEMBLY SEPTEMBER 9, 2013
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
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, 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 use public resources received from a local
agency for campaign activity, as defined, and not authorized by law.
This bill would define, among other terms, "public resources" to 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, 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 a reporting 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, "reporting 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 reporting nonprofit
organization that have been designated for campaign activity use or
any other funds received by the nonprofit organization, as specified.
This bill would further require a reporting nonprofit organization
that engages in campaign activity of specified amounts or more to
periodically disclose to the Franchise Tax Board, 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 authorize the
Franchise Tax Board to conduct an audit of any reporting nonprofit
organization, 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, issue a written audit report, and
transmit the report to the Attorney General and the district attorney
for the county in which the reporting nonprofit organization is
domiciled. This bill would authorize the Attorney General or the
district attorney for the county in which the reporting nonprofit
organization is domiciled to assess a monetary civil penalty of up to
$10,000 against a reporting nonprofit organization for each
violation of these disclosure requirements, as specified.
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, received from any local agency for any
campaign activity not authorized by law.
(b) As used in this section and Section 54964.6, 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 ballot 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) "Campaign activity" does not include the costs of adopting a
position or a resolution supporting or opposing a clearly identified
ballot measure or candidate, including, but not limited to, posting
the position or resolution on the nonprofit organization's Internet
Web site, communicating the position or resolution to members of the
nonprofit organization, or issuing a press statement.
(B) "Campaign activity" does not include incidental or minimal use
of public resources.
(C) "Campaign activity" does not include incidental costs related
to the establishment or administration of a sponsored committee as
defined in Section 82048.7. 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 have the same meaning as that term is
defined in paragraph (4) of subdivision (b) of Section 54964 and
shall also include 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 described in Section
54964.
(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 Code, provided, however, that
"nonprofit organization" does not include any nonprofit organization
that qualifies for tax-exempt status under Section 501(c)(3) of the
Internal Revenue Code.
(7) "Public resources" means the following:
(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.
(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.
(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) A reporting 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) "Reporting 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 years. A reporting 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 reporting nonprofit organization that have been
designated for campaign activity use or any other funds received by
the nonprofit organization 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) Thirty days after the end of each quarter, a reporting
nonprofit organization that engages in campaign activity 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, 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 a
reporting 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) Thirty days after the end of each even year, a reporting
nonprofit organization that engages in campaign activity 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, 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 a
reporting 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 reporting nonprofit organization that engages in campaign
activity, either directly or through the control of another entity,
shall provide to the Franchise Tax Board and 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 Franchise Tax Board may conduct an audit of any reporting
nonprofit organization that 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 nonprofit organization
shall provide records to the Franchise Tax Board that substantiate
the information required to be disclosed by this section. The
Franchise Tax Board 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 the
Attorney General and the district attorney for the county in which
the reporting nonprofit organization is domiciled.
(g) If the Franchise Tax Board determines at the conclusion of an
audit that a reporting nonprofit organization has violated Section
54964.5 or this section, the Attorney General or the district
attorney for the county in which the reporting nonprofit organization
is domiciled may impose a civil fine upon the reporting nonprofit
organization in an amount up to ten thousand dollars ($10,000) for
each violation.