BILL ANALYSIS Ó
AB 1494
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Date of Hearing: April 29, 2015
ASSEMBLY COMMITTEE ON ELECTIONS AND REDISTRICTING
Sebastian Ridley-Thomas, Chair
AB 1494
(Levine) - As Amended April 22, 2015
SUBJECT: Political Reform Act of 1974: independent expenditure
report annual fee.
SUMMARY: Imposes a fee on specified independent expenditures
made in connection with candidates for elective state office or
state measures. Specifically, this bill:
1)Requires any committee that is required to file campaign
reports online or electronically, and that makes independent
expenditures of $1,000 or more in the last 90 days before an
election in connection with a candidate for elective state
office or a state ballot measure, to pay an annual reporting
fee to the Secretary of State (SOS). Requires the fee to be
charged as follows:
a) $100 for a committee filing a report and declaring that
it will spend less than $100,000 per two-year election
cycle;
b) $1,000 for a committee filing a report and declaring
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that it will spend less than $250,000 per two-year election
cycle;
c) $2,000 for a committee filing a report and declaring
that it will spend less than $500,000 per two-year election
cycle;
d) $10,000 for a committee filing a report and declaring
that it will spend less than $1 million per two-year
election cycle; and,
e) $50,000 for a committee filing a report and declaring
that it will spend less than $10 million per two-year
election cycle.
2)Requires the annual reporting fee to be paid within five days
of filing the report disclosing the expenditure.
3)Provides that if a committee expends more than the declared
amount, in the report filed in which the committee discloses
that fact, it shall make a new declaration and pay the
increased fee less the amount of the fee or fees already paid.
4)Provides that for the purposes of this bill, the term
"two-year election cycle" means the period of time between the
immediately preceding statewide general election and the next
statewide general election.
5)Creates the Civic Engagement Fund (Fund) in the State
Treasury. Provides that the purpose of the Fund is to provide
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oversight of committees filing the independent expenditure
reports detailed above and to increase transparency in
political campaigns, civic engagement, and voter registration
and turnout. Requires the SOS to deposit the revenues
received under this bill into the Fund. Requires the SOS,
upon appropriation by the Legislature, to allocate those funds
for the costs of oversight of committees filing independent
expenditure reports, as specified, to the Fair Political
Practices Commission (FPPC) for the purposes of increasing
transparency in political campaigns, and to local elections
offices, through a competitive grant program, to increase
voter registration and turnout. Requires the SOS to report to
the Legislature and the Department of Finance by March 31 of
every year on the allocation and use of these funds, and
requires the SOS to post that information on his or her
website.
EXISTING LAW:
1)Creates the FPPC, and makes it responsible for the impartial,
effective administration and implementation of the Political
Reform Act (PRA).
2)Defines the term "committee," for the purposes of the PRA, to
include any person or combination of persons who directly or
indirectly makes independent expenditures totaling $1,000 or
more in a calendar year.
3)Defines the term "independent expenditure," for the purposes
of the PRA, as an expenditure made by any person in connection
with a communication which expressly advocates the election or
defeat of a clearly identified candidate, or the
qualification, passage, or defeat of a clearly identified
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measure, or taken as a whole and in context, unambiguously
urges a particular result in an election, but which is not
made to or at the behest of the affected candidate or
committee.
4)Requires all candidates and committees who are required to
file campaign reports in connection with a state elective
office or state measure to file those reports online or
electronically if the cumulative amount of contributions
received, expenditures made, loans made, or loans received is
$25,000 or more.
5)Requires general purpose committees, including political party
committees and small contributor committees, that cumulatively
receive contributions or make expenditures of $25,000 or more
to support or oppose candidates for any elective state office
or state measures, to file campaign reports online or
electronically.
6)Allows any committee or other person who is required to file a
campaign report to file that report online or electronically,
even if he or she is not required to do so. Provides that once
a person or entity files a campaign report or lobbying
disclosure report online or electronically, that person or
entity shall file all subsequent reports online or
electronically.
FISCAL EFFECT: Unknown. State-mandated local program; contains
a crimes and infractions disclaimer.
COMMENTS:
1)Purpose of the Bill: According to the author:
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This bill is intended to create a regulatory fee for
independent expenditure committees for the purpose of
regulatory oversight of these committees and to fund
programs that will increase civic engagement, voter
registration, and voter turnout. Fees collected
under this bill will help ensure that adequate
enforcement mechanisms will be provided to public
officials and private citizens so that the Political
Reform Act will be vigorously enforced. These fees
will help to fully inform voters and inhibit improper
practices.
The turnout of eligible voters in the 2014 General
Election was the lowest in California's history.
According to the United States Elections Project,
California had the fourth lowest turnout in the
nation. California has 24.4 million eligible voters,
yet only 7.5 million Californians cast a ballot.
Approximately 7 million eligible California voters are
not even registered.
There are several reasons for this. One is the
dramatic increase in independent expenditure committee
spending. Several reports from regulatory agencies,
academic researchers, and nonprofit watchdogs have
been highly critical of independent expenditure
committees.
According to California Common Sense, independent
expenditure committees spent more than $220 million on
candidate races in California between 2000 and 2012.
Additionally, in just the top 20 2014 legislative
races, independent expenditure committees spent a
staggering $44 million.
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This has resulted in a deluge of mail that voters
receive from independent expenditure committees.
Additionally, much of the mail is negative and there
is no doubt that independent expenditure committee
mailers often disenfranchise voters. This bill will
require that the committees pay some of the cost of
reengaging voters.
2)Constitutional Issues: This measure could be interpreted as a
violation of the United States and California Constitutions'
guarantees to free speech. While the right to freedom of
speech is not absolute, when a law burdens core political
speech, the restrictions on speech generally must be "narrowly
tailored to serve an overriding state interest," McIntyre v.
Ohio Elections Commission (1995), 514 US 334.
State and federal courts have repeatedly held that the giving
and spending of campaign money involves the exercise of free
speech. The United States Supreme Court found in Buckley v.
Valeo (1976), 424 US 1, that any "restriction on the amount of
money a person or group can spend on political communication
during a campaign necessarily reduces the quantity of
expression by restricting the number of issues discussed, the
depth of their exploration, and the size of the audience
reached." The Supreme Court in Buckley ruled that expenditure
limits during a campaign were unconstitutional for this
reason. In the same case, however, the court upheld campaign
contribution limits, noting that "[b]y contrast with a
limitation on expenditures for political expression, a
limitation upon the amount that any one person or group may
contribute to a candidate or political committee entails only
a marginal restriction upon the contributor's ability to
engage in free communication."
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One of the restrictions considered by the Buckley court was a
provision that prohibited any person from making expenditures
exceeding $1,000 relative to a clearly identified candidate in
a calendar year. The court noted that the effect of the
provision was to "prohibit all individuals, who are neither
candidates nor owners of institutional press facilities, and
all groups, except political parties and campaign
organizations, from voicing their views 'relative to a clearly
identified candidate' through means that entail aggregate
expenditures of more than $1,000 during a calendar year." The
court found that restriction to be unconstitutional, finding
that the restriction on independent expenditures "fails to
serve any substantial governmental interest in stemming the
reality or appearance of corruption in the electoral process,"
while "heavily burden[ing] core First Amendment expression."
This bill does not prohibit independent expenditures, nor does
it limit the amount of money that a person or committee can
spend on independent expenditures. Nonetheless, by imposing a
fee on certain independent expenditures, this bill burdens
First Amendment rights, and thus may be susceptible to a
constitutional challenge.
3)Proposition 34 and the Growth of Independent Expenditures: In
2000, the Legislature passed and Governor Davis signed SB 1223
(Burton), Chapter 102, Statutes of 2000, which became
Proposition 34 on the November 2000 general election ballot.
The proposition, which passed with 60 percent of the vote,
made numerous substantive changes to the PRA, including
enacting new campaign disclosure requirements and establishing
new campaign contribution limits, limiting the amount that
individuals could contribute to state campaigns (ranging from
$3,000 to $20,000 per election at the time, depending on the
office).
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A study done by this committee in 2006 and a subsequent report
by the FPPC in 2010 found that since campaign contribution
limits went into effect in California with the passage of
Proposition 34, the amount of campaign spending done through
independent expenditures increased by more than 6,000 percent
in Legislative elections, and more than 5,500 percent in
statewide elections. In hotly contested campaigns for seats
in the Legislature, it is not uncommon for spending through
independent expenditures to exceed the total amount of
spending by all candidates in the race. On the other hand,
prior to the enactment of contribution limits as a part of
Proposition 34, independent expenditures were relatively rare.
In the March 2000 and November 2000 elections, the last two
elections that were not subject to the Proposition 34 campaign
contribution limits, the total amount of money spent on
independent expenditures for all legislative races was less
than $500,000. By comparison, more than $47 million was spent
on independent expenditures for legislative races in 2014.
4)Independent Expenditures and Turnout: The author of this bill
contends that the increase in independent expenditures in
California elections is partially responsible for low voter
turnout in recent elections. The degree to which independent
expenditures affect voter turnout, however, is unclear. While
some academic research has suggested that negative campaign
advertising can depress turnout, other research has found that
negative advertising has no effect, or even a positive effect,
on voter turnout. Furthermore, not all independent
expenditures are negative, and some academic research has
found that messages designed to mobilize voters can have a
positive effect on voter turnout.
5)Fee Applies to Certain Independent Expenditures Only: The fee
imposed by this bill would not apply to all independent
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expenditures, but instead applies only to independent
expenditures that are required to be reported pursuant to a
specified provision of law. That disclosure requirement
applies only to independent expenditures of $1,000 or more
that are made (1) in connection with a candidate for state
office or a state ballot measure, (2) in the last 90 days
before the election, and (3) by a committee that is required
to file campaign reports online or electronically. Independent
expenditures of less than $1,000, that are made in connection
with local candidates or ballot measures, that are made more
than 90 days before the election, or that are made by
committee that is not required to file campaign reports online
or electronically would not be subject to the fee imposed by
this bill.
6)Technical Issues: There are a number of technical issues with
this bill that should be addressed if this bill moves forward.
Specifically, committee staff has identified the following
technical issues with the current version of this bill:
a) This bill does not currently specify the amount of the
fee to be paid by a committee that declares that it will
spend $10 million or more on independent expenditures per
two-year election cycle. This bill should be amended to
specify the fee that is applicable to committees declaring
that they will spend $10 million or more on independent
expenditures per two-year election cycle.
b) The categories that specify the amount of the fee to be
imposed are described as applying to committees declaring
that they will spend less than a specified amount (for
example, spending less than $100,000, or spending less than
$250,000). However, if a committee declares that it is
spending less than $100,000, then that committee has also
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effectively declared that it is spending less than
$250,000, so the categories are somewhat unclear. For the
sake of clarity, committee staff recommends that the
categories be described by ranges of amounts that the
committee declares that it will spend (e.g., less than
$100,000; $100,000 or more, but less than $250,000;
$250,000 or more, but less than $500,000; etc.).
c) The fee imposed by this bill is based on the amount that
a committee "declares that it will spend" on an independent
expenditure report that is filed pursuant to existing law.
Committees do not, however, declare the amount of money
that they will spend on those reports-instead, committees
report the actual amount of money that they have spent on
an independent expenditure when filing those reports. The
bill should be amended to clarify this language.
7)Arguments in Opposition: All opposition received to this bill
was to the prior version of the bill, which proposed a tax,
rather than a fee, on specified independent expenditures.
Nonetheless, the arguments made in opposition to the prior
version of the bill appear to be applicable to the current
version of the bill as well.
Among the arguments made in opposition to the prior version of
this bill, the American Federation of State, County and
Municipal Employees (AFSCME), AFL-CIO, wrote:
AFSCME appreciates Assembly Member Levine's endeavor
to engage the electorate given the abysmal voter
turnout in the past few elections. However, we oppose
AB 1494. Though this bill is a creative attempt to
engage the electorate, it does not address voter
turnout because it limits the resources of those who
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communicate with voters in marginalized and
disadvantaged communities while unintentionally,
giving an advantage to the business interests and
billionaires who have the resources to pay a tax on
the money they spend in independent expenditure
campaigns. AB 1494 would establish a regressive tax
that will harm the organizations, like organized
labor, who advocate for greater participation in
low-income and minority communities, and would
continue to shift political power away from average
working men and women to the business elites.
8)Political Reform Act of 1974: California voters passed an
initiative, Proposition 9, in 1974 that created the FPPC and
codified significant restrictions and prohibitions on
candidates, officeholders and lobbyists. That initiative is
commonly known as the PRA. Amendments to the PRA that are not
submitted to the voters, such as those contained in this bill,
must further the purposes of the initiative and require a
two-thirds vote of both houses of the Legislature.
9)Double-Referral: At the time this bill was originally
referred to policy committee, it was double-referred to the
Assembly Revenue & Taxation Committee. Subsequent to that
referral, this bill was amended to impose an independent
expenditure report fee, instead of an independent expenditure
tax. Based on those amendments, the Assembly Rules Committee
has indicated that the bill no longer needs to be
double-referred to the Revenue & Taxation Committee, but
instead should be reported out to the Assembly Appropriations
Committee if it is approved by this committee.
REGISTERED SUPPORT / OPPOSITION:
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Support
None on file.
Opposition
American Federation of State, County and Municipal Employees,
AFL-CIO (prior version)
California Labor Federation (prior version)
California School Employees Association, AFL-CIO (prior version)
California Taxpayers Association (prior version)
Howard Jarvis Taxpayers Association (prior version)
Service Employees International Union, California State Council
(prior version)
Analysis Prepared by:Ethan Jones / E. & R. / (916) 319-2094
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