BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2558


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          Date of Hearing:  April 6, 2016 


                       ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT


                           Susan Talamantes Eggman, Chair


          AB 2558  
          (Steinorth) - As Introduced February 19, 2016


          SUBJECT:  Political Reform Act of 1974:  San Bernardino County.


          SUMMARY:  Deletes the sunset date on the authority of the Fair  
          Political Practices Commission to administer, implement, and  
          enforce San Bernardino County's campaign finance reform  
          ordinance, thereby extending this authority indefinitely.  


          EXISTING LAW:  


          1)Creates the Fair Political Practices Commission (FPPC) and  
            makes it responsible for the impartial, effective  
            administration and implementation of the Political Reform Act  
            (PRA).

          2)Requires local government agencies that adopt or amend local  
            campaign finance ordinances to file a copy of the ordinance  
            with the FPPC.

          3)Prohibits a local government agency from enacting a campaign  
            finance ordinance that imposes campaign reporting requirements  
            that are additional to or different from those set forth in  
            the PRA for elections held in its jurisdiction, unless the  
            additional or different requirements apply only to the  








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            candidates seeking election in that jurisdiction, their  
            controlled committees or committees formed or existing  
            primarily to support or oppose their candidacies, and to  
            committees formed or existing primarily to support or oppose a  
            candidate or to support or oppose the qualification or passage  
            of a local ballot measure being voted on only in that  
            jurisdiction, and to city or county general purpose committees  
            active only in that city or county.

          4)Provides that nothing in the PRA shall nullify contribution  
            limitations or prohibitions of any local jurisdiction that  
            apply to elections for local elective office, except that  
            these limitations and prohibitions may not conflict with a  
            specified provision of the PRA dealing with "member  
            communications."

          5)Provides that payments made for communications to members,  
            employees, shareholders, or families of members, employees, or  
            shareholders of an organization for the purpose of supporting  
            or opposing a candidate or a ballot measure, which are  
            referred to as "member communications," are not contributions  
            or expenditures, if those payments are not made for general  
            public advertising such as broadcasting, billboards, and  
            newspaper advertisements.

          6)Makes violations of the PRA subject to administrative, civil,  
            and criminal penalties.

          7)Allows the FPPC, upon mutual agreement between the FPPC and  
            the San Bernardino County (County) Board of Supervisors  
            (Board), to have primary responsibility for the impartial,  
            effective administration, implementation, and enforcement of a  
            local San Bernardino County campaign finance reform ordinance.  
             The County Board must consult with the FPPC prior to adopting  
            or amending any local campaign finance reform ordinance that  
            is subsequently enforced by the FPPC.
          8)Allows the FPPC, pursuant to 7), above, to investigate  
            possible violations of the County campaign finance reform  
            ordinance and bring administrative actions against persons who  








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            violate the ordinance, as specified.  

          9)Allows the County Board and the FPPC to enter into any  
            agreements necessary and appropriate for the operation of 7),  
            above, including agreements for reimbursement of state costs  
            with County funds, as specified.  The County Board or the FPPC  
            may, at any time, by ordinance or resolution, terminate any  
            agreement for the FPPC to administer, implement, or enforce  
            the local campaign finance reform ordinance or any provision  
            thereof.

          10)Requires, if the FPPC enters into such an agreement with the  
            County Board, the FPPC to report to the Legislature by January  
            1, 2017, the following information:

             a)   The status of the agreement;

             b)   The estimated annual cost savings, if any, for San  
               Bernardino County;

             c)   A summary of relevant annual performance metrics,  
               including measures of utilization, enforcement, and  
               customer satisfaction;

             d)   Any public comments submitted to the FPPC or San  
               Bernardino County relative to the operation of the  
               agreement; and,

             e)   Any legislative recommendations.

          11)Sunsets the provisions of 7) through 10), above, on January  
            1, 2018.

          12)Authorizes a similar arrangement between the FPPC and the  
            City of Stockton, until 
          January 1, 2020.

          FISCAL EFFECT:  This bill is keyed fiscal.









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          COMMENTS:  


          1)Bill Summary.  This bill eliminates the sunset date on the  
            authority of the FPPC to administer, implement, and enforce  
            the County's campaign finance reform ordinance, thereby  
            extending this authority indefinitely.  This bill is sponsored  
            by the County.



          2)Author's Statement.  According to the author, "By removing the  
            2018 sunset date from statute, AB 2558 will continue the  
            existing, effective partnership between San Bernardino County  
            and the FPPC for enforcement of local campaign finance  
            ordinances.  In 2012, the County established a campaign  
            finance ordinance with contribution limits mirroring those  
            applied to State Senate and Assembly candidates.  However,  
            appointing an ethics commission to enforce the ordinance could  
            have created financial and conflict-of-interest challenges to  
            the County, which had suffered various levels of corruption in  
            its local governments over recent years. 






            "Instead, AB 2146 (Cook, 2012) allowed the County to contract  
            with the FPPC for enforcement of their local ordinance.  The  
            FPPC willingly took on responsibility for this enforcement in  
            2012.  This partnership has been successful, cost-effective,  
            and mutually beneficial to the two entities.  AB 2558 seeks to  
            continue this arrangement by removing the 2018 sunset date  
            from statute."











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          3)Background.  Current law, pursuant to AB 2146 (Cook), Chapter  
            169, Statutes of 2012, allows the County and the FPPC to enter  
            into a mutual agreement that permits the FPPC to enforce the  
            County's local campaign finance reform ordinance.  AB 2146 was  
            prompted by several high-profile campaign finance corruption  
            cases in the County, which subsequently developed and enacted  
            a campaign finance reform ordinance.  



            The County asked for legislative authority to contract with  
            the FPPC to administer and enforce its campaign finance  
            ordinance instead of creating an ethics commission as a means  
            to avoid financial and conflict-of-interest challenges.  The  
            County also wished to retain the services of the FPPC to  
            provide for the enforcement and interpretation of the County's  
            local campaign finance ordinance because the FPPC has special  
            skills, knowledge, experience, and expertise in the area of  
            enforcement and interpretation of campaign laws necessary to  
            effectively advise, assist, litigate, and otherwise represent  
            the County on such matters.  


            The FPPC and the County entered into a mutual agreement on  
            January 1, 2013.  Prior to 
            AB 2146, the FPPC did not enforce any local campaign finance  
            ordinances.  



          4)FPPC Report.  Current law requires the FPPC to report to the  
            Legislature by January 1, 2017, the following information:



             a)   The status of the agreement;









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             b)   The estimated annual cost savings, if any, for the  
               County;



             c)   A summary of relevant annual performance metrics,  
               including measures of utilization, enforcement, and  
               customer satisfaction;



             d)   Any public comments submitted to the FPPC or the County  
               relative to the operation of the agreement; and,



             e)   Any legislative recommendations.



            The FPPC submitted its report to the Legislature on March 24,  
            2016, ahead of its January 1, 2017, deadline due to the  
            Legislature's pending consideration of this bill.  The report  
            includes:





             a)   The status of the agreement.  The agreement began with  
               an original contract for calendar years 2013 and 2014 and  
               continued with a subsequent, current contract for calendar  
               years 2015 and 2016.



             b)   The estimated annual cost savings, if any, for the  








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               County.  The estimated annual cost savings could not be  
               directly calculated, because the FPPC is the only entity  
               that has administered the County's ordinance.  However, the  
               report compared the County's annual payments to the FPPC  
               (the highest of which has been $55,000) to the biennial  
               budgets of three ethics commissions (which ranged from $1  
               million to $2.6 million).  Based on these figures, the  
               report concluded that the agreement "has resulted in  
               substantial savings to the County."



             c)   A summary of relevant annual performance metrics,  
               including measures of utilization, enforcement, and  
               customer satisfaction.  While the report does not include  
               traditional "performance metrics," it does summarize a  
               number of activities undertaken by the FPPC in executing  
               its contract with the County, including, but not limited  
               to:



               i)     Advising candidates for elected County offices and  
                 potential contributors in County elections regarding the  
                 County's campaign finance reform ordinance and the PRA;



               ii)    Proposing revisions to the County's original  
                 ordinance to align the ordinance more closely with the  
                 PRA;



               iii)   Providing training and developing educational  
                 materials to assist candidates and campaign treasurers in  
                 County elections; 










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               iv)    Conducting audits of 22 candidates and campaign  
                 committees; and,



               v)     Resolving 23 cases involving committees, candidates,  
                 and donors involved in County elections (of those 23  
                 cases, the FPPC prosecuted nine cases resulting in fines,  
                 issued warning letters in four cases, and closed 10 cases  
                 with no violation found).



             d)   Any public comments submitted to the FPPC or San  
               Bernardino County relative to the operation of the  
               agreement.  The report states that the FPPC and the County  
               are unware of any formal public comments regarding the  
               operation of the agreement, but did refer to positive  
               public comments made by County supervisors and those  
               regulated by the County's ordinance.



             e)   Any legislative recommendations.  The report states that  
               the FPPC and the County believe no changes need to be made  
               to current law other than eliminating the sunset date.   
               "The statute is sufficient to allow the County to adopt  
               and, if necessary, amend its Campaign Finance Reform  
               Ordinance, in consultation with the FPPC, and for the  
               County and the FPPC to enter into an agreement for the  
               enforcement and interpretation of the ordinance."



          5)Related Legislation.  AB 2070 (Harper) authorizes the FPPC,  
            upon mutual agreement between the FPPC and the Board of  
            Supervisors of the County of Orange, to administer and enforce  
            a local campaign finance ordinance passed by the Orange County  








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            Board of Supervisors, as specified.  



          6)Previous Legislation.  AB 1083 (Eggman), Chapter 186, Statutes  
            of 2015, allowed the City of Stockton to enter into an  
            agreement with the FPPC for the FPPC to administer and enforce  
            the City's local campaign finance ordinance.  



            AB 910 (Harper) of 2015 would have allowed any city or county  
            to enter into an agreement with the FPPC for the FPPC to  
            administer and enforce a local campaign finance ordinance.  AB  
            910 was held in the Assembly Elections and Redistricting  
            Committee.  


            SB 1226 (Correa) of 2014 would have allowed any city or county  
            to enter into an agreement with the FPPC for the FPPC to  
            administer and enforce a local campaign finance ordinance.  SB  
            1226 was amended to address an unrelated issue.





            AB 2146 (Cook), Chapter 169, Statutes of 2012, allowed the  
            County and the FPPC to enter into an agreement for the FPPC to  
            enforce the County's local campaign finance ordinance.





          7)Arguments in Support.  The County of San Bernardino, sponsor  
            of this measure, writes, "Through the mutual agreement with  
            the FPPC, the County has benefitted in the following areas:









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                 Conflict of Interest Elimination - The FPPC is an  
               impartial and independent third party which eliminates  
               potential conflict of interest that could arise from the  
               creation of internal ethics commission by the Board of  
               Supervisors.



                 Cost Savings - Counties that have ethics commissions or  
               other formal entities spend upward of $3.5 million or more  
               annually to police ethical behavior.  Contracting with the  
               FPPC has proven to be a cost effective alternative to an  
               ethics commission and a prudent use of taxpayers'  
               resources.



            "By removing the 2018 sunset date from statute, AB 2558 will  
            continue the existing, effective partnership between San  
            Bernardino County and the FPPC for enforcement of local  
            campaign finance ordinances.





          1)Arguments in Opposition.  None on file.
           


           2)Two-thirds Vote.  California voters in 1974 passed Proposition  
            9, commonly known as the PRA, which created the FPPC and  
            codified significant restrictions and prohibitions on  
            candidates, officeholders, and lobbyists.  Amendments to the  
            PRA that are not submitted to the voters, such as those  
            contained in this bill, must further the purposes of the PRA  
            and require a two-thirds vote of each house of the  








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            Legislature. 



          3)Double-Referral.  This bill was heard in the Elections and  
            Redistricting Committee on March 30, 2016, where it passed  
            with a 7-0 vote.



          REGISTERED SUPPORT / OPPOSITION:




          Support


          County of San Bernardino [SPONSOR]


          California State Association of Counties


          Fair Political Practices Commission


          Urban Counties of California




          Opposition


          None on file











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          Analysis Prepared by:Angela Mapp / L. GOV. / (916) 319-3958