BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2318


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          ASSEMBLY THIRD READING


          AB  
          2318 (Low)


          As Amended  May 18, 2016


          2/3 vote


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Elections       |7-0  |Weber, Harper, Travis |                    |
          |                |     |Allen, Gordon, Low,   |                    |
          |                |     |Mullin, Nazarian      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Judiciary       |10-0 |Mark Stone, Wagner,   |                    |
          |                |     |Alejo, Chau, Chiu,    |                    |
          |                |     |Gallagher,            |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Cristina Garcia,      |                    |
          |                |     |Holden, Maienschein,  |                    |
          |                |     |Ting                  |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |20-0 |Gonzalez, Bigelow,    |                    |
          |                |     |Bloom, Bonilla,       |                    |
          |                |     |Bonta, Calderon,      |                    |
          |                |     |Chang, Daly, Eggman,  |                    |
          |                |     |Gallagher, Eduardo    |                    |








                                                                    AB 2318


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          |                |     |Garcia, Roger         |                    |
          |                |     |Hernández, Holden,    |                    |
          |                |     |Jones, Obernolte,     |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Wagner, Weber, Wood   |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
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          SUMMARY:  Gives the Fair Political Practices Commission (FPPC)  
          jurisdiction over specified state laws that restrict nonprofit  
          organizations from using certain resources for campaign purposes  
          and that require specified nonprofit organizations to disclose  
          the sources of funds used for campaign activity.  Specifically,  
          this bill:  


          1)Allows the FPPC to enforce a state law that prohibits a  
            nonprofit organization, as defined, or an officer, employee,  
            or agent of such an organization, from using public resources  
            that are received from a local agency, as specified, for  
            campaign activity not authorized by law.  Provides that  
            enforcement by the FPPC may be brought as a civil action or  
            through an administrative action.  Eliminates the potential  
            for enforcement by city attorneys or by any district attorney  
            other than the district attorney of the county in which the  
            organization is domiciled.  Recodifies this law so that it is  
            part of the Political Reform Act (PRA).


          2)Allows the FPPC to enforce a state law that requires a  
            nonprofit organization that receives more than 20% of its  
            revenues from one or more local agencies to use a separate  
            bank account for campaign activity and to publicly report  
            campaign activity, including disclosing the sources of funds  
            used for that activity, if certain thresholds are met.   
            Transfers the responsibility for administering this law from  
            the Franchise Tax Board (FTB) to the FPPC.  Conforms this law  








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            to another law within the PRA that regulates political  
            spending by specified nonprofit organizations.  Recodifies  
            this law so that it is part of the PRA. 


             a)   Requires disclosures made under this law to be made in  
               the same manner as reports filed by multipurpose  
               organizations (MPOs) that are subject to another provision  
               of the PRA that establishes the conditions under which MPOs  
               are required to disclose their donors. 


             b)   Transfers the following responsibilities under this law  
               from the FTB to the FPPC:


               i)     Deciding whether to require an audit of reports  
                 filed by nonprofit organizations; and,


               ii)    Determining, as part of an audit or at the  
                 conclusion of an audit, whether a nonprofit organization  
                 has complied with specified provisions of state law.


          3)Makes minor, technical, and corresponding changes.


          EXISTING LAW:  


          1)Makes it unlawful for a nonprofit organization or an officer,  
            employee, or agent of a nonprofit organization to use or  
            permit others to use public resources from a local agency for  
            any campaign activity not authorized by law, as specified.   
            Defines "public resources," for the purposes of this  
            restriction, to include funds received by a nonprofit  
            organization which were generated from activities related to  
            conduit bond financing, as specified.








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          2)Requires a nonprofit organization for which public resources  
            from local agencies (including funds generated from activities  
            related to conduit bond financing) accounts for more than 20%  
            of the organization's gross revenues in the current fiscal  
            year or either of the previous two fiscal years, to deposit  
            funds designated for campaign use into a separate account and  
            to prepare periodic reports disclosing its campaign  
            activities.


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee analysis, ongoing General Fund costs to the FPPC of  
          $110,000 for one position for enforcement.

          COMMENTS:  According to the author, "AB 2318 modifies the  
          definition of a reporting nonprofit organization and shifts the  
          current enforcement authority from the [FTB] to the [FPPC].   
          This bill improves upon the existing accountability and  
          transparency provisions by providing enforcement authority to  
          the FPPC.  The FPPC is the appropriate oversight body to promote  
          and foster the public's trust in our state's political system.   
          As such, AB 2318 is necessary to streamline the disclosure and  
          reporting rules, while also synchronizing their reporting  
          threshold requirements in an effort to reduce redundancy and  
          maximize transparency."

          SB 594 (Hill), Chapter 773, Statutes of 2013, was enacted in  
          response to concerns that public resources were being used  
          indirectly for campaign purposes.  In particular, the author of  
          SB 594 expressed concern that revenues from a Joint Powers  
          Authority that provides bond financing were potentially being  
          used for campaign purposes.  Subsequent to the passage of SB  
          594, SB 27 (Correa), Chapter 16, Statutes of 2014, established  
          conditions under which an MPO that makes campaign contributions  
          or expenditures is required to disclose names of its donors.   
          Although SB 594 and SB 27 were intended to address different  
          perceived problems, both bills regulate political activity by  
          certain nonprofit organizations.  This bill changes the  
          reporting requirements of SB 594 to be more consistent with  








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          reports filed pursuant to SB 27, moves the provisions of SB 594  
          into the PRA, and makes the FPPC responsible for administering  
          and enforcing SB 594. 

          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.

          Please see the policy committee analysis for a full discussion  
          of this bill.



          Analysis Prepared by:                                             
                          Ethan Jones / E. & R. / (916) 319-2094  FN:  
          0003125