BILL ANALYSIS Ó
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UNFINISHED BUSINESS
Bill No: SB 594
Author: Hill (D)
Amended: 9/4/13
Vote: 21
PRIOR SENATE VOTES NOT RELEVANT
ASSEMBLY FLOOR : 72-3, 9/9/13 - See last page for vote
SUBJECT : Use of public resources
SOURCE : Author
DIGEST : This bill prohibits nonprofit organizations and their
employees from using funds received from local agencies in
connection with conduit bond financing for campaign purposes, as
specified. This bill requires a nonprofit organization that
receives significant amounts of money from local agencies in
connection with conduit bond financing to maintain a separate
bank account for campaign activities and to disclose the sources
of the funds it receives for campaign activities, as specified.
Assembly Amendments delete the Senate version of this bill
relating to California Career Pathways Investment and instead
relates to the use of public resources and nonprofit
organizations.
ANALYSIS : Existing law makes it unlawful for an elected state
or local officer, appointee, employee, or consultant to use, or
permit others to use, public resources for a campaign activity.
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This bill:
1. Defines "public resources," for the purposes of this bill,
to include funds received by a nonprofit organization which
have been generated from any activities related to conduit
bond financing by conduit financing providers, as specified.
Provides that these funds are public resources even if they
are received in exchange for consideration.
2. Makes it unlawful for a nonprofit organization or an
officer, employee, or agent of a nonprofit organization to
use or permit others to use public resources, as defined
above, that are from any local agency for any campaign
activity not authorized by law.
3. Provides that the following are not considered to be
"campaign activity" for the purposes of this bill:
A. The costs of a resolution supporting or opposing a
clearly identified ballot measure or candidate, as
specified;
B. Incidental or minimal use of public resources; or,
C. Incidental costs related to the establishment or
administration of a sponsored committee, as specified.
4. Provides that this bill does not apply to specified
nonprofit organizations.
5. Provides that for the purposes of this bill, the term "local
agency" includes a public entity created pursuant to the
Joint Exercise of Powers Act, but does not include a county
superintendent of schools, a school district, or a community
college district.
6. Provides that the prohibitions on the use of public
resources described above do not prohibit the use of public
resources for providing impartial information to the public
about the possible effects of a state or local ballot
measure, as specified.
7. Provides that an unauthorized use of public resources
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pursuant to this bill is punishable by civil penalties of up
to $1,000 for each day on which a violation occurs, plus
three times the value of the unlawful use of public
resources, as specified.
8. Requires a "reporting nonprofit organization," defined as a
nonprofit organization for which public resources from local
agencies, as defined, account for more than 20% of the
organization's gross revenues in the current fiscal year or
either of the previous two fiscal years, to deposit funds
designated for campaign use into a separate account and to
prepare quarterly reports disclosing their campaign
activities.
9. Requires a reporting nonprofit organization that engages in
campaign activity to deposit all funds that are designated or
used for campaign activity into a separate bank account, and
to pay for all campaign activity from that separate bank
account.
10.Requires a reporting nonprofit organization to disclose the
following information if it engages in campaign activity of
$50,000 or more related to statewide candidates or ballot
measures, or $2,500 or more related to local candidates or
ballot measures at any point during a calendar quarter; or if
it engages in campaign activity of $100,000 or more related
to statewide candidates or ballot measures, or $10,000 or
more related to local candidates or ballot measures, at any
point during a two-year period, as specified:
A. The name and amount of the 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 the nonprofit organization from that specific source or
sources of funds is at least $250;
B. The name of the payee and amount of all payments
aggregating $250 or more made from the single bank account
required pursuant to this bill; and,
C. A description of each campaign activity.
1. Requires each reporting nonprofit organization that engages
in campaign activity to display the information required to
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be disclosed by this bill on its Web site and provide that
information to the Franchise Tax Board (FTB), as specified.
2. Permits the FTB to audit a reporting nonprofit organization
that provides records to the FTB pursuant to this bill, and
requires the FTB to audit any reporting nonprofit
organization that engages in campaign activity in excess of
$500,000 in a calendar year. Requires a nonprofit
organization that is being audited to provide records to the
FTB that substantiate the information required to be
disclosed under this bill.
3. Provides that if an audit by the FTB of a nonprofit
organization determines that the organization violated the
provisions of this bill, the Attorney General (AG) or the
district attorney for the county in which organization is
domiciled may impose a civil fine on the organization in an
amount up to $10,000 for each violation.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Assembly Appropriations Committee:
The AG estimates that around 40,000 non-profits would be
subject to the prohibitions on campaign spending proposed in
this bill. The number of these organizations whose campaign
activity and spending levels would be reportable and subject
to FTB audits is unknown, but would likely be a small subset
of all the nonprofits and would be at FTB's discretion except
for those reporting entities with campaign spending exceeding
$500,000. The FTB's costs will be determined by this
workload. Each additional audit position would cost about
$110,000 annually. These costs could be partially offset by
revenues from fines.
The AG and local prosecutors may incur unknown costs to
prosecute violations of this bill's spending prohibitions,
which would be partially offset by penalty revenues.
SUPPORT : (Verified 9/9/13)
California Clean Money Campaign
California Labor Federation
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California Nurses Association
California Professional Firefighters
California State Association of Counties
Consumer Federation of California
Howard Jarvis Taxpayers Association
Peace Officers Research Association of California
Planned Parenthood
State Building and Construction Trades Council, AFL-CIO
ARGUMENTS IN SUPPORT : According to the author's office, this
bill improves transparency with respect to the campaign activity
of nonprofit organizations that receive at least 20% of their
gross revenue from taxpayer dollars and that engage in political
activity through contributions from their general treasury.
This bill requires those organizations to deposit into a
separate bank account and disclose on their websites and to the
FTB, all source(s) of non-public funds they receive and spend on
electioneering. This bill further requires those nonprofits to
provide a description of the campaign activity they engage in
and the identity and amount of payments made from the separate
bank account for that campaign activity.
Additionally, this bill clarifies that the organization cannot
use, or permit others to use, public resources it receives for
campaign activities including funds generated from activities
related to tax-exempt bond financing. Tax-exempt bonds are the
same as taxpayer-subsidized debt. Taxpayers are subsidizing the
debt issued by public agencies and so the fees generated from
such a transaction belong to the public. This bill
affirmatively declares those revenues to be public resources,
keeping them out of campaign activity
Finally, this bill authorizes the FTB to perform audits and when
nonprofit organizations reach campaign contribution amounts of
$500,000 in a year, the FTB audits are mandatory.
Publically-funded nonprofit organizations have a duty to be
above reproach given that taxpayers foot the bill for the vast
majority of their operating expenses. These nonprofits, in many
cases, provide many valuable public services and this bill does
not seek to change the way these agencies operate in any way.
But rather only insists upon appropriate disclosures and clear
protections when it comes to campaign activity.
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The courts have made it clear that the public has a compelling
interest in making sure their tax dollars are not used for
politics. This bill simply creates a means by which the public
can be assured that their tax dollars are not being spent on
political campaigns and when these nonprofits engage in
political activity, proper disclosure will tell the whole story
that is otherwise obfuscated today. This bill guarantees that
taxpayer-financed organizations are held to the same standards
of accountability and transparency as any other political action
committee.
ASSEMBLY FLOOR : 72-3, 9/9/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Cooley, Dahle, Daly,
Dickinson, Eggman, Fong, Fox, Frazier, Beth Gaines, Garcia,
Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Grove, Hall,
Harkey, Roger Hernández, Holden, Jones-Sawyer, Linder, Logue,
Lowenthal, Maienschein, Mansoor, Medina, Melendez, Mitchell,
Morrell, Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan,
Patterson, Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon,
Salas, Skinner, Stone, Ting, Wagner, Waldron, Weber,
Wieckowski, Wilk, Williams, Yamada, John A. Pérez
NOES: Conway, Hagman, Jones
NO VOTE RECORDED: Chesbro, Donnelly, Levine, Vacancy, Vacancy
RM:k:n 9/9/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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