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  








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          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  








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          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  








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          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  








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          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.