BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 2318 (Low) - Political Reform Act of 1974: Fair Political
Practices Commission: enforcement: use of public resources
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|Version: May 18, 2016 |Policy Vote: E. & C.A. 5 - 0 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: August 1, 2016 |Consultant: Robert Ingenito |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 2318 would shift 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.
Fiscal
Impact: The Fair Political Practices Commission (FPPC) indicates
that it would incur first-year costs of $330,000, and ongoing
annual costs of $309,000 to implement the provisions of the bill
(General Fund).
Background: SB 594 (Hill, Chapter 773, Statutes of 2013), was enacted in
response to concerns that public resources were being used
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indirectly for campaign purposes. Specifically, the author of
SB 594 expressed concern about the possibility that revenues
from a Joint Powers Authority (JPA) that provides tax-exempt
bond financing were being used for campaign purposes. The
author of SB 594 argued that because the JPA is a public entity,
and because the bonds it issues are tax exempt, any profits
earned as a result of bond sales belong to the taxpayers, and
should not be used for campaign purposes.
SB 594 contained three key provisions. First, even though
California law already contained strict prohibitions against the
use of public resources for campaign activity, the bill expanded
the provisions by providing that funds received by a nonprofit
organization that were generated from activities related to
conduit bond financing were considered public resources "whether
or not those funds [were] received by the nonprofit in exchange
for consideration for goods or services." Accordingly, SB 594
prohibited funds generated from conduit bond financing from
being used for campaign purposes. This bill would give FPPC the
authority to enforce that provision and codifies it within the
PRA, but otherwise generally does not change the restriction on
the use of resources derived from conduit bond financing.
Additionally, SB 594 also contained two provisions that were
targeted at nonprofit organizations that receive more than 20
percent of their revenues from local agencies. One provision
required those organizations -- to the extent that they engage
in campaign activity -- to have a separate bank account for all
campaign activities. The other provision required the nonprofit
organizations to publicly report their campaign activities and
the sources of their campaign funds if certain thresholds were
met.
Subsequent to the passage of SB 594, SB 27 (Correa, Chapter 16,
Statutes of 2014), established conditions under which an
multipurpose organizations (MPOs), as defined, that makes
campaign contributions or expenditures is required to disclose
names of its donors. SB 27 was enacted in response to
situations where nonprofit organizations made significant
campaign contributions and expenditures, but were not required
to disclose the source of their donors. Although SB 594 and SB
27 were intended to address two different situations, both bills
regulate political activity by certain nonprofit organizations
AB 2318 (Low) Page 2 of
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and, as a result, nonprofit organizations can be required to
comply with the requirements of both bills under certain
circumstances.
This bill would change the reporting requirements of SB 594 so
that the same rules and standards generally apply as to reports
filed pursuant to SB 27. Additionally, this bill moves the
reporting and separate bank account rules from SB 594 into the
PRA and gives the FPPC the authority to enforce and the
responsibility to administer those rules.
Proposed Law:
This bill would do all of the following:
Allow FPPC to enforce the 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, (2)
provide that enforcement by the FPPC may be brought as a
civil action or through an administrative action, (3)
eliminate 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, and (4) recodify this law so that it is part of
the PRA.
Allow FPPC to enforce the state law that requires a
nonprofit organization that receives more than 20 percent
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. The bill would (1) transfers the responsibility for
administering this law from the FTB to the FPPC, (2)
conform this law to another law within the PRA that
regulates political spending by specified nonprofit
organizations, and (3) recodifies this law so that it is
part of the PRA.
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Require disclosures made under this law to be made in
the same manner as reports filed by MPOs that are subject
to another provision of the PRA that establishes the
conditions under which MPOs are required to disclose their
donors.
Transfer the following responsibilities under this law
from the FTB to the FPPC: (1) deciding whether to require
an audit of reports filed by nonprofit organizations, and
(2) 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.
Staff
Comments: FPPC indicates annual costs of about $330,000 for
three positions: legal, investigations, and program specialist.
The Secretary of State is usually the filing officer for nearly
all campaign related forms; under this bill, the FPPC would to
accept, retain, and respond to disclosure requests for these
paper filings and respond to advice requests from nonprofits
uncertain whether they need to file pursuant to this bill. FPPC
would also have to draft regulations and conduct audits.
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