BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 594| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 594 Author: Gordon (D) Amended: 8/17/15 in Senate Vote: 27 SENATE ELECTIONS & C.A. COMMITTEE: 4-0, 7/7/15 AYES: Allen, Hancock, Hertzberg, Liu NO VOTE RECORDED: Anderson SENATE APPROPRIATION COMMITTEE: Senate Rule 28.8 ASSEMBLY FLOOR: 77-0, 5/7/15 - See last page for vote SUBJECT: Political Reform Act of 1974: campaign statements SOURCE: Author DIGEST: This bill eliminates certain campaign reporting requirements and makes other changes to thresholds and reporting requirements pursuant to the Political Reform Act of 1974 (PRA). ANALYSIS: Existing law: 1)Provides that any person or combination of persons who directly or indirectly does any of the following is considered a "committee" for the purposes of the PRA: a) Receives contributions of $1,000 or more in a calendar year (these committees are commonly known as "recipient AB 594 Page 2 committees"); b) Makes independent expenditures of $1,000 or more in a calendar year (these committees are commonly known as "independent expenditure committees"); or, c) Makes contributions totaling $10,000 or more per year to, or at the behest of, candidates or committees (these committees are commonly known as "major donor committees"). 1)Requires the Fair Political Practices Commission (FPPC) to provide a short form for filing specified campaign finance reports for candidates or officeholders who receive contributions of less than $1,000, and who make expenditures of less than $1,000, in a calendar year. 2)Provides that an elected member of, or a candidate for election to, a county central committee of a qualified political party who receives contributions of less than $1,000 and who makes expenditures of less than $1,000 in a calendar year shall not be required to file any campaign statements. 3)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/independent expenditure reports that include specified campaign finance information. 4)Defines "late contribution" as either of the following: a) A contribution, including a loan, that totals $1,000 or more in the aggregate and that is made to or received by a candidate, controlled committee, or committee primarily formed or existing primarily to support or oppose a candidate or measure within 90 days before the date of the election at which the candidate or measure is to be voted on; or, b) A contribution, including a loan, that totals $1,000 or more in the aggregate and that is made to or received by a political party committee within 90 days before a state election. AB 594 Page 3 1)Defines "late independent expenditure" as an independent expenditure that totals $1,000 or more in the aggregate and that is made for or against a specific candidate or measure involved in an election within 90 days before the date of the election. 2)Requires a "late contribution" or a "late independent expenditure," as defined, to be publicly reported within 24 hours of the time that it is made or received, as specified. This bill: 1)Revises the definition of recipient committee by increasing the qualifying monetary threshold from $1,000 to $2,000 for contributions received by a person or combination of persons. 2)Clarifies that a contribution or an independent expenditure of $1,000 or more that is received or made on Election Day is a "late contribution" or a "late independent expenditure" that is required to be reported within 24 hours of having been received or made. 3)Eliminates supplemental pre-election and supplemental independent expenditure reporting requirements. 4)Requires all pre-election reports to be filed pursuant to the same schedule, instead of having a slightly different schedule for pre-election reports that are filed in connection with statewide elections held in June and November of even-numbered years. 5)Eliminates the requirement for city general purpose committees to file pre-election reports if they do not receive contributions of $1,000 or more. AB 594 Page 4 6)Requires the FPPC to instead provide a short form for filing specified campaign finance reports for candidates or officeholders who receive contributions of less than $2,000, and who make expenditures of less than $2,000, in a calendar year. 7)Provides instead that an elected member of, or a candidate for election to, a county central committee of a qualified political party who receives contributions of less than $2,000 and who makes expenditures of less than $2,000 in a calendar year shall not be required to file any campaign statements. 8)Makes other corresponding and technical changes. Background Periodic and Activity Based Reports. Under the PRA, there are two general types of reporting requirements. The first type of report is commonly 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 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. Late contribution reports and late independent expenditure reports are examples of activity-based reports. This bill seeks to eliminate two types of special activity-based reports in an effort to streamline the campaign reporting process. The reports that would be eliminated are supplemental pre-election statements and supplemental independent expenditure reports. Due to modifications made to campaign limits and disclosure requirements after these reporting requirements were established, these special activity-based reporting requirements no longer serve their original purposes. AB 594 Page 5 Supplemental Pre-election Statements. Existing law requires a recipient committee to file a supplemental pre-election statement if it makes contributions of $10,000 or more in connection with an election for which the committee otherwise would not be required to file pre-election statements. This reporting requirement, which was created in 1985, was designed to ensure that a committee that is making significant contributions in an election is required to disclose its donors prior to the election. For example, if an individual made a $50,000 contribution to a state general purpose committee a month before a legislative special election, and the state general purpose committee then used those funds to make a $50,000 contribution to a candidate who was running in that special election, the supplemental pre-election statement ensured that the state general purpose committee was required to disclose the $50,000 contribution it received from the individual prior to the special election. At the time the supplemental pre-election statement requirements were put into law, there were no contribution limits for elections for state office. As a result, the requirement to file supplemental pre-election statements was an important tool to ensure that the true source of significant campaign contributions to candidates was disclosed prior to the election. Since that time, however, Proposition 34 of 2000 imposed contribution limits for elections for state office, and many local jurisdictions have enacted local contribution limits. As a result, it has become relatively uncommon for committees to meet the $10,000 threshold that requires filing a supplemental pre-election statement. Supplemental Independent Expenditure Reports. Existing law requires a candidate or committee that makes independent expenditures of $1,000 or more in a calendar year in connection with an election to file a supplemental independent expenditure report at the same times and in the same places as the committee would be required to file campaign statements if it were primarily formed to support or oppose the candidate or measure that it supported or opposed with the independent expenditure. This reporting requirement, which was created in 1985, was designed to ensure that a committee that is making significant independent expenditures in an election is required to disclose AB 594 Page 6 its donors prior to the election. Since the requirement for supplemental independent expenditure reports was enacted into law, however, disclosure laws have been amended to require similar information to be reported within 24 hours whenever a committee makes independent expenditures of $1,000 or more in the last 90 days before an election. Since it is rare for independent expenditures to be made more than 90 days before the election, supplemental independent expenditure reports largely have become duplicative of other reports that are filed in a timelier manner. Date Changes. Under existing law, pre-election reports are filed on a slightly different timeline for elections held on the first Tuesday after the first Monday in June or November of even-numbered years than for elections held at other times. The deadline for the first pre-election report for an election held on the first Tuesday after the first Monday in June is always March 22, and the report is required to cover campaign activity through March 17. For elections held on the first Tuesday after the first Monday in November, the deadline for the first pre-election report is always October 5, covering all activity through September 30. For elections held at other times, the deadline for the first pre-election report is the 40th day before the election, covering all activity through the 45th day before the election. The second pre-election report is always due on the 12th day before the election, covering all activity through the 17th day before the election, regardless of when the election is held. This bill standardizes the schedule for filing pre-election reports so that the first pre-election report is always due by the 40th day before the election, covering all activity through the 45th day before the election, regardless of when the election is held. As a result, the first pre-election report for elections on the first Tuesday after the first Monday in June of even-numbered years will be due between April 23-29 (depending on the exact date of the election) instead of on March 22, and the first pre-election report for elections on the first Tuesday after the first Monday in November of even-numbered years will be due between September 23-29 (depending on the exact date of the election), instead of on September 30. AB 594 Page 7 City General Purpose Committees. This bill eliminates the requirement for city general purpose committees to file pre-election reports in connection with an election if the committees are not recipient committees (that is, if they do not receive contributions of $1,000 or more). Generally, state and county general purpose committees are required to file pre-election reports only if they are recipient committees. The pre-election report is intended to ensure that a committee must report the donations that it receives prior to an election, if the committee is making contributions or independent expenditures in connection with that election. State and county general purpose committees that are not recipient committees -- that is, committees that make independent expenditures or contributions, but that do not receive contributions -- are not required to file pre-election reports. Those committees' pre-election activities typically will be disclosed on other reports (including through late independent expenditure reports and late contribution reports). This bill extends the same policy to city general purpose committees. Comments 1)According to the author, "I have long believed in the purposes of California's Political Reform Act and its goal of enabling a knowledgeable electorate. This includes helping voters become fully informed as they make decisions that will impact the governance of this state. For this reason, it is essential that there is a fair, efficient, and effective means of holding entities involved with campaigns accountable for violations of the law. AB 594 would streamline some provisions of the Political Reform Act to reduce redundancy and improve accountability. It would also modernize a reporting threshold in line with the original thresholds. Overall, the bill would make small, but meaningful reforms to the Political Reform Act, while maintaining the highest ethical standards." This bill adjusts some of the thresholds to file and remove redundant filings. Specifically, AB 594: a) Eliminates duplicative reports. AB 594 Page 8 This bill repeals provisions that currently require "supplemental pre-election statements" and "supplemental independent expenditure reports." These statements were intended to disclose contributions received and independent expenditures made shortly before the election. However, when AB 481 (Gordon, Chapter 496, Statutes of 2012) extended the 24-hour reporting period from 16 days to 90 days, supplemental pre-election statements and supplemental independent expenditure reports became duplicative and can be eliminated without sacrificing disclosure or transparency. b) Provides updated and relevant monetary threshold for triggering as a "committee" subject to registration and reporting. This bill increases the recipient committee qualification threshold from $1,000 to $2,000. This threshold has not been updated since 1987. Adjusting for inflation, the threshold change proposed in the bill is in line with what the original qualification thresholds. This change will update the outdated threshold in a manner that balances the ability of a candidate to run a grassroots campaign with the burdens imposed once he or she qualifies as a committee. Moreover, should a local government believe that the new qualification thresholds are higher than they wish; nothing in the bill impacts the ability of a local government to apply a lower threshold. c) Clarifies and simplifies reporting requirements for 24-hour reports filed 90 days before the election. This bill clarifies that reports required to be filed within 24-hours during the 90-day period prior to the election includes the election date itself. d) Clarifies and simplifies requirements for reports filed before the election, while still maintaining relevant and timely disclosure. This bill makes the law easier to understand and comply with, and tie reporting requirements to the relevant upcoming election. AB 594 Page 9 FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: Yes SUPPORT: (Verified8/17/15) California Forward Action Fund California Special Districts Association Fair Political Practices Commission Santa Clara Valley Water District OPPOSITION: (Verified8/17/15) None received ASSEMBLY FLOOR: 77-0, 5/7/15 AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins NO VOTE RECORDED: Campos, Roger Hernández, Steinorth Prepared by:Darren Chesin / E. & C.A. / (916) 651-4106 8/20/15 16:34:50 **** END **** AB 594 Page 10