BILL ANALYSIS Ó
SENATE COMMITTEE ON ELECTIONS
AND CONSTITUTIONAL AMENDMENTS
Senator Alex Padilla, Chair
BILL NO: SB 1379 HEARING DATE: 6/24/14
AUTHOR: HUFF ANALYSIS BY: Darren Chesin
AMENDED: 6/16/14
FISCAL: YES
SUBJECT
Political Reform
DESCRIPTION
This bill makes numerous changes to the Political Reform Act
(PRA) and the Penal Code, as follows:
Campaign Reporting
Existing law , pursuant to the Political Reform Act (PRA),
requires candidates, political committees, and slate mail
organizations to file specified periodic and activity-based
campaign finance reports, including semiannual statements,
pre-election statements, supplemental pre-election statements,
and late contribution/expenditure reports that include specified
campaign finance information.
Existing law requires these campaign statements to disclose,
among other things, specified information about contributors who
have made aggregate contributions, as defined, of $100 or more
as well as similar information about expenditures of $100 or
more.
Existing law also requires candidates for elective state office
and committees primarily formed to support or oppose a state
ballot measure, if the candidate or committee has reportable
contributions or expenditures of $25,000 or more, to file the
following reports online or electronically with the Secretary of
State (SOS):
Disclosing the receipt of a contribution of $1,000 or more
during the last 90 days prior to an election (an election
cycle), within 24 hours of receiving the contribution.
Disclosing the receipt of a contribution of $5,000 or more
during all times other than during an election cycle within 10
business days of receipt of the contribution.
This bill would additionally require a Member of the Legislature
or a candidate for the Legislature who is subject to the online
or electronic filing requirements to report to the SOS online or
electronically contributions of $1,000 or greater within three
business days of receipt of the contribution.
Candidate-controlled Ballot Measure Committees
Existing law defines "controlled committee" as a committee
that's controlled directly or indirectly by a candidate or state
measure proponent or that acts jointly with a candidate,
controlled committee, or state measure proponent in connection
with the making of expenditures. A candidate or state measure
proponent controls a committee if he or she, his or her agent,
or any other committee he or she controls has a significant
influence on the actions or decisions of the committee.
Existing law , pursuant to Proposition 34 of 2000, limits
campaign contributions to candidates for elective state office
as follows, subject to biannual adjustment for inflation:
To a candidate for elective state office other than a
candidate for statewide elective office, no person may
contribute more than $4,100 per election and no small
contributor committee may contribute more than $8,200 per
election;
To a candidate for elective statewide office other than a
candidate for Governor, no person may contribute more than
$6,800 per election and no small contributor committee may
contribute more than $13,600 per election;
To a candidate for Governor, no person or small contributor
committee may contribute more than $27,200 per election.
This bill would provide for each period between statewide
general elections, a person shall not make to a
candidate-controlled ballot measure committee a contribution in
excess of the applicable contribution limits discussed above.
These contribution limits shall be the aggregate amount of
contributions that a candidate may accept per contributor for
SB 1379 (HUFF)
Page 2
his or her controlled committees that are primarily formed to
support or oppose one or more ballot measures, regardless of the
number of such committees controlled by that candidate.
Existing law also provides that a candidate for elective state
office or a committee controlled by that candidate may not make
any contribution to any other candidate for elective state
office in excess of the above limits.
This bill would prohibit a candidate for any elective office, or
the candidate's controlled committees, from making a
contribution to another candidate's controlled ballot measure
committees in excess of the same applicable limits.
Existing law , pursuant to regulations promulgated by the Fair
Political Practices Commission (FPPC), provides that
candidate-controlled ballot measure committee funds shall be
used only to make expenditures related to a state or local
measure or potential measure anticipated by the committee, or to
qualification or pre-qualification activities relating to such
measures.
This bill would, in statute, prohibit a candidate-controlled
ballot measure committee from expending campaign funds to make a
contribution or other transfer of campaign funds to a committee
for a purpose other than supporting or opposing a ballot measure
that the controlled committee was primarily formed to support or
oppose.
Lobbyists and Lobbyist Employers
Existing law prohibits a lobbyist or lobbying firm from making
gifts aggregating more than $10 in a calendar month to a state
candidate, elected state officer, or legislative official, or to
an agency official of any agency required to be listed on the
registration statement of the lobbying firm or the lobbyist
employer of the lobbyist.
This bill provides that a lobbyist or lobbyist employer shall
not provide any compensation to a spouse or dependent of a
Member of the Legislature or a candidate for the Legislature,
unless the compensation is for services performed in the
ordinary course of business or employment that is unrelated to
an election, campaign activity, or services provided for either
SB 1379 (HUFF)
Page 3
house of the Legislature.
Legal Defense Expenses
Existing law permits the expenditure of campaign funds for
attorney's fees and other costs in connection with
administrative, civil, or criminal litigation, as specified.
Existing law also authorizes a candidate or an elected officer
to establish a separate legal defense account to defray
attorney's fees and other related legal costs incurred for the
officer's legal defense in an administrative, civil, or criminal
proceeding arising directly out of the conduct of an election
campaign, the electoral process, or the performance of the
officer's governmental activities or duties. A candidate or
elected officer may receive contributions to this account that
are not subject to applicable state contribution limits.
However, all contributions must be reported in a manner
prescribed by the FPPC.
Existing law , pursuant to FPPC regulations, provide that legal
defense funds may not be raised in connection with a proceeding
until the following has occurred:
In a proceeding brought by a government agency, when the
candidate or officer reasonably concludes the agency has
commenced an investigation or the agency formally commences
the proceeding, whichever is earlier.
In a civil proceeding brought by a private person, after the
person files the civil action.
This bill would prohibit the use of campaign funds for
attorney's fees and other costs in connection with criminal
litigation but would maintain the option of using a legal
defense account for such expenses.
This bill would also provide that a committee that is not a
legal defense committee shall not make an expenditure of
campaign funds to a legal defense account.
Compensating Spouses and Dependents
SB 1379 (HUFF)
Page 4
Existing law prohibits a spouse or domestic partner of an
elected officer or a candidate for elective office from
receiving compensation from campaign funds held by a controlled
committee of the elected officer or candidate for elective
office for services rendered in connection with fundraising for
the benefit of the elected officer or candidate for elective
office.
This bill prohibits a spouse or a dependent of an elected
officer or a candidate for elective office from receiving, in
exchange for any services rendered, compensation from campaign
funds held by a controlled committee of the elected officer or
candidate for elective office.
Bribery
Existing law subjects any member of the Legislature or any
member of the legislative body of a city, county, city and
county, school district, or other special district, and every
executive or ministerial officer, employee, or appointee of the
state, a county or city, or political subdivision, who asks for
or receives a bribe in exchange for influence over his or her
official action to imprisonment in a state prison for 2, 3, or 4
years, and imposes prescribed restitution fines based on whether
a bribe has actually been received.
This bill would increase the punishment to 4, 6, or 8 years in
state prison and would increase the restitution fines to twice
the original amount.
Urgency
This bill contains an urgency clause.
BACKGROUND
Periodic and Activity-Based Campaign Reports . Under the PRA,
there are two general types of reporting requirements. The
first type of report is referred to as a periodic report.
Periodic reports must be filed according to a specified time
schedule for all similarly-situated candidates and committees,
regardless of the amount of campaign activity during the period
of time covered by the report. These reports generally include
SB 1379 (HUFF)
Page 5
all campaign activity (contributions, loans, expenditures, etc.)
that occurred over a specified period of time. Semi-annual
reports and pre-election reports are two examples of periodic
reports that are required under the PRA.
The second type of report that the PRA requires is an
activity-based report. An activity-based report is triggered
when a candidate or committee has campaign activity that meets
or exceeds a specific dollar threshold. Election cycle 24-hour
reports for contributions of $1,000 or more and non-election
cycle 10-business day reports of contributions of $5,000 or more
are examples of activity-based reports.
As a general rule, the thresholds for campaign activities that
trigger an activity-based report under the PRA are significantly
higher than the thresholds for campaign activities that are
required to be reported on a periodic report. For instance,
while the PRA generally requires contributions of $100 or more
to be itemized on a periodic report, activity-based reporting
requirements for contributions received by committees do not
kick in for contributions of less than $1,000, and for some
activity-based reports, the threshold is much higher.
There are two primary reasons for this distinction in reporting
thresholds. First, the fact that activity-based reports target
higher-dollar transactions acknowledges that there may be a
public interest for requiring higher-dollar activity to be
reported more promptly than lower-dollar activity.
Second, the distinction in thresholds reflects the fact that
activity-based reporting can be more burdensome than periodic
reports. There are a number of reasons why this may be the
case. First, activity-based reports generally must be prepared
in a much shorter period of time than periodic reports (often
within 24 hours of the time the activity occurs). Second,
activity-based reports can be triggered by activity that is
unpredictable to, or otherwise outside the control of, the
candidate or the committee (for instance, if a person made a
contribution to a candidate through his or her website on
Christmas Day, that contribution could trigger an activity-based
reporting requirement even if the candidate did not know in
advance that the person planned to make that contribution).
Finally, activity-based reporting can significantly increase the
SB 1379 (HUFF)
Page 6
volume of reports that are required to be filed in order to
disclose the same amount of activity (for instance, a committee
that received contributions from 50 different donors in a
specified time period might be able to report all of those
contributions on a single periodic report, whereas an
activity-based reporting requirement could require a separate
report for each of those contributions, resulting in the need to
file 50 different reports).
Limits on Contributions to Candidate-Controlled Ballot Measure
Committees . The U.S. Supreme Court has made a distinction
between limits on campaign contributions made to candidates and
limits on campaign contributions made to ballot measure
committees. In Buckley v. Valeo (1976), the Supreme Court
upheld contribution limits placed upon candidates, acknowledging
the state interest of preventing corruption or its appearance.
However, in Citizens Against Rent Control v. City of Berkeley
(1981), the Court found no such risk of corruption exists when
contributions are given to ballot measure committees.
Accordingly, the Court struck down a City of Berkeley ordinance
that placed a $250 contribution limit on ballot measures
committees.
The ballot measure committee at issue in Citizens Against Rent
Control wasn't candidate-controlled, however. This bill seeks
to regulate contributions made to candidate-controlled ballot
measure committees, and doesn't restrict contributions made to
non-candidate controlled committees similar to the one in
Citizens Against Rent Control .
On June 25, 2004, the FPPC adopted regulations governing
contributions to ballot measure committees controlled by elected
state officers and candidates for state elective office. Under
those regulations, contributions to a ballot measure committee
that is controlled by a candidate for elective state office are
limited to the contribution limits that applied to the
individual's candidate committee at the time the candidate took
control of the ballot measure committee.
On February 8, 2005, Citizens to Save California and former
Assemblymember Keith Richman filed suit against the FPPC
challenging those regulations. The plaintiffs claimed the
regulation adopted by the FPPC was illegal for several reasons,
including that the FPPC lacked the authority to adopt the
SB 1379 (HUFF)
Page 7
regulation and that the regulation violated the First Amendment
to the United States Constitution per Citizens Against Rent
Control .
In 2006 the regulation was invalidated by the Court of Appeal,
Third Appellate District, which, without reaching the
constitutional issue , held that the Commission lacked the
statutory authority to impose contribution limits on candidate
controlled ballot measure committees. ( Citizens to Save
California v. California Fair Political Practices Commission
(2006)).
This bill essentially codifies the FPPC regulations that were
struck down by the court in Citizens to Save California .
It is unclear whether a court would uphold the provisions of
this bill given a similar regulation was struck down in court.
In the Citizens to Save California decision, the court indicated
its ruling was based on the determination that the FPPC didn't
have the statutory authority to adopt a regulation limiting
contributions to ballot measure committees that are controlled
by candidates for elective state office. However, the trial
court judge also expressed concerns about the constitutionality
of the regulation, concerns that presumably would be equally
applicable to a statutory limit on contributions to ballot
measure committees that are controlled by candidates for
elective state office.
Compensating Spouses . Candidates and officeholders both within
and outside of California often find themselves the subject of
scrutiny and controversy for paying a spouse or other family
member for professional services rendered to, and paid by, their
campaign committees.
Consequently, in 2009 the Legislature passed and the Governor
signed SB 739 (Strickland), Ch. 360, Statutes of 2009, which
prohibits a spouse or domestic partner of an elected officer or
a candidate for elective office from receiving compensation from
campaign funds held by a controlled committee of the elected
officer or candidate for services rendered in connection with
fundraising for the benefit of the officeholder or candidate.
However, ethical concerns continue to come up because existing
law allows a candidate or officeholder to pay a spouse for
SB 1379 (HUFF)
Page 8
services other than fundraising services that are rendered to,
and paid by, the campaign. Under California's community
property laws, any income earned by a married person while
living with his or her spouse generally is considered to be
community property, which is jointly held by both spouses. As a
result, when a candidate pays his or her spouse for professional
services rendered to the candidate's campaign committee, the
campaign committee's payment indirectly becomes the candidate's
personal property. These arrangements are controversial because
they allow candidates to personally benefit from the
contributions that their campaigns seek and accept. Under such
circumstances, a candidate or officeholder can personally
benefit financially from contributions received by his or her
campaign.
COMMENTS
1.According to the Author : Given recent events surrounding
improper conduct of several members of the Senate and the blow
that this has been to the public's trust in the Legislature,
it is incumbent upon this House to do everything that it can
to restore public confidence in this institution. To this
end, Senate Republicans introduced SB 1379, which we believe
will better rebuild the public's trust in the Legislature by
striking closer to the heart of the bad behavior which led to
the suspension of three Members of the Senate. SB 1379 is a
serious reform effort that would close campaign finance
loopholes, prevent legislative members from paying family
members from campaign monies, strengthen campaign reporting
requirements, increase penalties for lawmakers who accept
bribes and prevent using campaign funds for purposes that may
have been unknown to the contributor, specifically, criminal
legal defense.
While there have been other ethics and campaign finance reform
measures introduced, many of which I have supported, I believe
the Legislative Reform & Transparency Act of 2014 goes much
further and comes closer to addressing the heart of political
corruption - the behavior of elected officials after they get
into office. The public trust has been sorely compromised.
The following reforms will discourage illegal conduct while in
office. SB 1379 is a decisive measure and a critical first
step in restoring the public trust.
SB 1379 (HUFF)
Page 9
There are five parts to the Legislative Reform and Transparency
Act:
Doubles the sentence and restitution fines for criminal
bribery by a legislator. Right now it's punishable by
imprisonment in the state prison for two, three or four
years. This bill increases imprisonment to four, six or
eight years.
Prevents the use of campaign funds for criminal legal
defense, which legislators are allowed to do under current
law. Donors who contribute to a campaign account need to
be aware of how it will be used, and should be asked before
donating to a legislative member's criminal defense.
Prohibits payments to the spouse or immediate family
member of a member of the Legislature for work associated
with elections or service in the Legislature. Members who
pay their spouses and/or children from their campaign
accounts are basically paying themselves. This will
prevent some who haves business before the Legislature from
being able to influence legislation by hiring spouses
and/or children for fake employment.
Eliminates unlimited contributions to
candidate-controlled ballot measure committees and
restricts expenditures from candidate controlled ballot
measure committees to the ballot measure or measures for
which the committee was established. Existing limits of
$4100 ought to be applied to all types of campaign accounts
controlled by legislative members. Otherwise, the spirit
of the existing contribution limitations is undermined.
Further, donors should expect that their contributions will
only be used for the ballot measure in question, and not be
used later for some other purpose.
Requires 72-hour campaign reporting. Members of the
Legislature would report within three business days any
campaign contribution of $1000 or more during periods other
than the 90 days before an election. In the interest of
transparency, the public ought to be aware of who is giving
SB 1379 (HUFF)
Page 10
what and how much as soon as practically possible
throughout the entire year and not just close to elections.
1.Is This Bill Too Burdensome ? As stated above, this bill
would, in addition to all existing reporting obligations,
require a Member of the Legislature or a candidate for the
Legislature who is subject to the online or electronic filing
requirements to report to the SOS online or electronically
contributions of $1,000 or greater within three business days
of receipt of the contribution. In light of this provision
should these filers still be subjected to the requirement to
disclose the receipt of a contribution of $5,000 or more
during all times other than during an election cycle within 10
business days of receipt of the contribution?
2.Is this Bill Constitutional ? Given the U.S. Supreme Court's
decision in Citizens Against Rent Control v. City of Berkeley
and the trial court judge's decision in Citizens to Save
California v. California Fair Political Practices Commission ,
as discussed in the Background section above, the provisions
of this bill limiting contributions to candidate-controlled
ballot measure committees will be vulnerable to a
constitutional challenge. In a brief filed on behalf of
Citizens to Save California respondent Governor Arnold
Schwarzenegger, attorney Charles H. Bell, Jr. argues this
position by stating the following:
"Despite the warnings of those Amici Curiae regarding the
alleged unique threat of candidate-controlled ballot measure
committees, the United States Supreme Court pronounced a
blanket ruling for all ballot measure committees. Nowhere in
CARC does the high court hint that the subset of
candidate-controlled ballot measure committees may be subject
to a different analysis."
3.Include Domestic Partners ? This bill prohibits an elected
officer or a candidate from using campaign funds to hire a
spouse or a dependent but does not extend this prohibition to
domestic partners.
4.Related and Prior Legislation . This bill contains provisions
which are addressed in several other pending bills, including
SB 831 (Hill), SB 1102 (Padilla), SB 1442 (Lara), AB 1666
(Garcia), and AB 2320 (Fong).
SB 1379 (HUFF)
Page 11
AB 709 (Wolk) of 2006 and AB 1980 (Wolk) of 2004 was
substantially similar to the provisions in this bill which
seek to enact contribution limits for candidate-controlled
ballot measure committees. AB 709 failed passage in this
committee while the Conference Committee Report for AB 1980
was adopted in the Senate but failed in the Assembly.
POSITIONS
Sponsor: Author
Support: None received
Oppose: None received
SB 1379 (HUFF)
Page 12