BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair SB 1226 (Correa) - Local Campaign Finance Reform Amended: April 7, 2014 Policy Vote: E&CA 5-0 Urgency: No Mandate: No Hearing Date: May 5, 2014 Consultant: Maureen Ortiz This bill does not meet the criteria for referral to the Suspense file. Bill Summary: SB 1226 will authorize the Fair Political Practices Commission (FPPC) to administer and enforce a local campaign finance ordinance upon mutual agreement between the Commission and the city or county. Fiscal Impact: All costs to the FPPC will be reimbursed by the city or county that opts to enter into the mutual agreement. (Local Fund) Background: Under existing law, the Fair Political Practices Commission is charged with enforcing the Political Reform Act of 1974 (PRA) and has the primary responsibility for the impartial, effective administration and implementation of the PRA. Local governments are prohibited from enacting a campaign finance ordinance that imposes reporting requirements that are different from those set forth in the PRA unless the different requirements apply only to the candidates seeking election in that jurisdiction, their controlled committees or committees formed primarily to support or oppose their candidacies, and to committees formed to support or oppose the qualification or passage of a local ballot measure which is being voted on only in that jurisdiction. Any jurisdiction that adopts or amends a local campaign finance ordinance is required to file a copy of that ordinance with the FPPC. The FPPC posts those ordinances on its Internet Web site. Some cities and counties have adopted extensive campaign finance ordinances which include campaign contribution limits, reporting, and disclosure requirements that supplement the SB 1226 (Correa) Page 1 requirements of the PRA. In many cases, local campaign finance ordinances are enforced by the district attorney of the county or by the city attorney. In a few instances, local jurisdictions have set up independent boards or commissions to enforce the local campaign finance laws. Existing law, Chapter 169 Statutes of 2012, authorizes the Fair Political Practices Commission, upon mutual agreement with the San Bernardino County Board of Supervisors, to have primary responsibility for the administration, implementation, and enforcement of a local San Bernardino County campaign finance reform ordinance. Current law requires the FPPC to report to the Legislature by January 1, 2017 regarding the performance of any agreement that was entered into with the County of San Bernardino. The report is to include the following: a) The status of the agreement; b) The estimated annual cost savings, if any, for the County of San Bernardino; c) A summary of relevant annual performance metrics, including measures of utilization, enforcement, and customer satisfaction; d) Any public comments submitted to the Commission or to the County of San Bernardino relative to the operation of the agreement; and e) Any legislative recommendations. Violations of the PRA are subject to administrative, civil, and criminal penalties. Generally, the Attorney General (AG) and district attorneys have responsibility for enforcing the criminal provisions of the PRA, though any elected city attorney of a charter city also has the authority to act as the criminal prosecutor for violations of the PRA that occur within the city. The FPPC, the AG, district attorneys, and elected city attorneys of charter cities all have responsibility for enforcement of the civil penalties and remedies provided under the PRA, depending on the nature and location of the violation, while any member of the public also has the ability to file a civil action to enforce the civil provisions of the PRA, subject to certain restrictions. The FPPC has the sole authority to bring administrative proceedings for enforcement of the PRA. When the FPPC determines on the basis of such a proceeding that SB 1226 (Correa) Page 2 a violation of the PRA has occurred, it can impose monetary penalties of up to $5,000 per violation, in addition to ordering the violator to cease-and-desist, and to file any reports, statements, or other documents or information required by the PRA. In the case of local campaign ordinances, there is no single approach as to the types of penalties that are available for the violations of those ordinances. Many local ordinances provide for misdemeanor or civil penalties for violations, while some ordinances do not establish any penalties for violations. In some local jurisdictions that have independent boards or commissions to enforce the local campaign finance ordinances, those boards or commissions have the authority to bring administrative enforcement proceedings, similar to the authority the FPPC has under the PRA. Proposed Law: SB 1226 will authorize the Fair Political Practices Commission (FPPC) to administer and enforce a local campaign finance ordinance upon mutual agreement between the Commission and the city or county. SB 1226 will authorize the FPPC to do all of the following: a) Provide advice and guidance regarding the local campaign finance ordinance; b) Investigate possible violations of the local campaign finance ordinance; c) To bring administrative actions to enforce the local campaign finance ordinance; and c) Bring civil actions to enforce the civil penalties and remedies of the local campaign finance ordinance. SB 1226 requires a city council or board of supervisors to consult with the Commission prior to adopting or amending any local campaign finance ordinance that is subsequently enforce by the commission. In entering into a mutual agreement, the city council or board of supervisors of the participating city or county will include agreements pertaining to any necessary reimbursement of state costs with county funds for costs incurred by the Commission in administering, implementing, or enforcing a local campaign SB 1226 (Correa) Page 3 finance ordinance. The agreement will be prohibited from including a cancellation fee, a liquidated damages provisions, or other financial disincentive to terminating the agreement, and will instead allow for cancellation at any time. Additionally, SB 1226 eliminates the original sunset of January 1, 2018 on the San Bernardino County authorization to enter into agreement with the FPPC. Related Legislation: AB 2146 (Cook), Chapter 169, Statutes of 2012, authorized the County of San Bernardino to contract with the FPPC to enforce its campaign finance laws. Staff Comments: San Bernardino County was the first local entity to enter into an agreement to authorize the FPPC to enforce its local campaign finance laws. The ordinance that San Bernardino had was very limited in scope and merely established a voluntary campaign expenditure limit for candidates for local office. It did not provide any incentive for candidates to adopt that voluntary limit, nor did it establish penalties for candidates who agreed to abide by limits but then who made campaign expenditures in excess of that limit. SB 1226 will extend that authorization to any participating city or county. It will modify the existing provisions by requiring the FPPC to be the civil prosecutor responsible for the civil enforcement of the local campaign finance ordinances and authorize the Commission to provide advice and guidance regarding the ordinances. While the FPPC currently does not enforce any local campaign finance ordinances other than San Bernardino County's, it can and does bring enforcement actions in response to violations of the PRA that occur in campaigns for local office. In order to address concerns of local campaign finance violations, a report by the Orange County Grand Jury recommended that the Board of Supervisors establish a County Ethics Commission to oversee its local campaign finance ordinance. However, establishing a County Ethics Commission and policing behavior could cost local governments millions of dollars. For comparison, the current contract established by the FPPC and San Bernardino County after the enactment of AB 2146 (Cook), costs SB 1226 (Correa) Page 4 the County approximately $250,000 a year. SB 1226 enables cities and counties to contract with the FPPC for the administration and enforcement of local campaign finance ordinances. This gives cities and counties the ability to bring in an experienced, independent, and impartial entity to investigate possible local campaign finance violations and bring administrative action against these violators. SB 1226 contains findings and declarations that its provisions further the purposes of the Political Reform Act of 1974.