BILL ANALYSIS Ó
SENATE COMMITTEE ON
ELECTIONS AND CONSTITUTIONAL AMENDMENTS
Senator Ben Allen, Chair
2015 - 2016 Regular
Bill No: SB 1107 Hearing Date: 4/19/16
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|Author: |Allen |
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|Version: |3/28/16 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Darren Chesin |
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Subject: Political Reform Act of 1974: public moneys:
definition
DIGEST
This bill provides, within the Political Reform Act (PRA), an
exception to the existing ban on use of public moneys for the
purpose of seeking public office, a prohibition on foreign
contributions to candidates, and a requirement that an
officeholder who is convicted of specified crimes to forfeit any
remaining campaign funds to the general fund.
ANALYSIS
Existing law:
1)Provides, pursuant to the PRA as amended by Proposition 73 of
1988, that no public officer shall expend and no candidate
shall accept any public moneys for the purpose of seeking
elective office.
2)Provides, pursuant to the California Constitution, that every
person shall be disqualified from holding any office of profit
in this state who has been convicted of having given or
offered a bribe to procure personal election or appointment
and that laws shall be made to exclude persons convicted of
bribery, perjury, forgery, malfeasance in office, or other
high crimes from office or serving on juries.
3)Provides that a person shall not be considered a candidate
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for, and is not eligible to be elected to, any state or local
elective office if the person has been convicted of a felony
involving accepting or giving, or offering to give, any bribe,
the embezzlement of public money, extortion or theft of public
money, perjury, or conspiracy to commit any of those crimes.
4)Provides that campaign funds under the control of a former
candidate or elected officer are considered "surplus campaign
funds" on the 90th day after the person leaves office, or on
the 90th day following the end of the postelection reporting
period following the defeat of the candidate, whichever occurs
last.
5)Permits surplus campaign funds to be used only for the
following purposes:
a) The payment of outstanding campaign debts or elected
officer's expenses.
b) The repayment of contributions.
c) Donations to a bona fide charitable, educational, civic,
religious, or similar tax-exempt, nonprofit organization,
where no substantial part of the proceeds will have a
material financial effect on the former candidate or
elected officer, any member of his or her immediate family,
or his or her campaign treasurer.
d) Contributions to a political party committee, provided
that the campaign funds are not used to support or oppose a
candidate for elective office. However, contributions made
pursuant to this provision may be used by a political party
committee to conduct partisan voter registration, partisan
get-out-the-vote activities, and slate-mailers.
e) Contributions to support or oppose a candidate for
federal office, a candidate for elective office in a state
other than California, or a ballot measure.
f) The payment for professional services reasonably
required by the committee to assist in the performance of
its administrative functions, including payment for
attorney's fees and other costs for litigation that arises
directly out of a candidate's or elected officer's
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activities, duties, or status as a candidate or elected
officer.
1)Prohibits a foreign government or foreign principal from
making, directly or through any other person, a contribution,
expenditure, or independent expenditure in connection with the
qualification or support of, or opposition to, a state or
local ballot measure. Prohibits a person or a committee from
soliciting or accepting a contribution from a foreign
government or a foreign principal in connection with the
qualification or support of, or opposition to, any state or
local ballot measure. These restrictions do not prohibit a
contribution, expenditure, or independent expenditure made by
a lawfully admitted permanent resident. A person who violates
these provisions is guilty of a misdemeanor and shall be fined
an amount equal to the amount contributed or expended. A
"foreign principal," for the purposes of these restrictions,
includes the following:
a) A foreign political party.
b) A person outside the U.S., unless the person is an
individual and a citizen of the U.S. or the person is not
an individual, and is organized under or created by the
laws of the U.S. or of any state or other place subject to
the jurisdiction of the U.S. and has its principal place of
business within the U.S.
c) A partnership, association, corporation, organization,
or other combination of persons organized under the laws of
or having its principal place of business in a foreign
country.
d) A domestic subsidiary of a foreign corporation if the
decision to contribute or expend funds is made by an
officer, director, or management employee of the foreign
corporation who is neither a citizen of the U.S. nor a
lawfully admitted permanent resident of the U.S.
1)Prohibits, pursuant to federal law, a foreign national,
directly or indirectly, from making a campaign contribution,
expenditure, independent expenditure, or disbursement for an
electioneering communication in connection with a federal,
state, or local election and prohibits a person from
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soliciting, accepting, or receiving a contribution or donation
made by a foreign national in connection with a federal,
state, or local election. These federal prohibitions only
apply to elections for candidates and do not therefore, apply
to elections for ballot measures.
2)Establishes, pursuant to federal law, the Federal Election
Commission (FEC), and makes it responsible for the
administration and enforcement of the Federal Election
Campaign Act (FECA), including the restrictions on
contributions and expenditures by foreign nationals described
above.
3)Permits the Fair Political Practices Commission (FPPC) to
impose administrative penalties of up to $5,000 per violation
of the PRA and provides for specified civil penalties.
4)Provides that any person who violates any provision of the PRA
for which no specific civil penalty is provided, shall be
liable in a civil action brought by the FPPC or the district
attorney or the elected city attorney for an amount up to
$5,000 per violation.
5)Provides that any person who violates the PRA's prohibition on
foreign contributions for ballot measure campaigns shall be
guilty of a misdemeanor and shall be fined an amount equal to
the amount contributed or expended.
6)Provides that the PRA may only be amended or repealed in the
following manner:
a) Amended to further its purposes by a statute passed in
each house of the Legislature by a two-thirds vote and
signed by the Governor.
b) Amended or repealed by a statute that becomes effective
only when approved by the electors. The Legislature may
place a PRA amendment on the ballot by majority vote in
each house and signed by the Governor.
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This bill:
1)Permits a public officer or candidate to expend or accept
public moneys for the purpose of seeking elective office if
the state or a local governmental entity establishes a
dedicated fund for this purpose, and both of the following are
true:
a) Public moneys held in the fund are available to all
qualified, voluntarily participating candidates for the
same office without regard to incumbency or political party
preference.
b) The state or local governmental entity has established
criteria for determining a candidate's qualification by
statute, ordinance, resolution, or charter.
1)Provides that a state or local officeholder who is convicted
of a felony involving accepting or giving, or offering to
give, any bribe, the embezzlement of public money, extortion
or theft of public money, perjury, or conspiracy to commit any
of those crimes, and whose conviction has become final, may
only use funds held by the officeholder's candidate controlled
committee only for the payment of outstanding campaign debts
or expenses and the repayment of contributions.
2)Requires that six months after conviction for one of the
aforementioned felonies becomes final, the officeholder shall
forfeit any remaining funds and these funds shall be deposited
in the general fund. This provision does not apply to funds
held by a ballot measure committee or in a legal defense fund.
3)Expands the scope of the PRA's prohibitions relating to
contributions by foreign governments and principals in
relation to ballot measures by also prohibiting a foreign
government or principal from making a contribution in support
of, or opposition to, a state or local candidate.
4)Provides that a person who violates the PRA's foreign
contribution ban is guilty of a misdemeanor and shall be fined
the greater of $10,000 or an amount equal to the amount
contributed or expended. Alternatively provides that a person
who violates this prohibition can be held liable in a civil
action brought by the civil prosecutor, for each violation,
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for the greater of $10,000 or an amount equal to the amount
contributed or expended. The civil prosecutor may not bring a
civil action against a person who is being criminally
prosecuted for violation of same prohibition.
Requires the Secretary of State (SOS) to submit this bill to the
voters for approval at a statewide election occurring at least
131 days after the adoption of the proposal by the Legislature.
BACKGROUND
Where Does the Public Funding Ban Apply ? The state itself and
most California local governments do not have the option to
offer any public funding to electoral campaigns, under the
existing statewide ban. While charter cities are exempt under
autonomy granted by the state Constitution, general law cities,
counties, districts, and the state government are covered by the
current state ban. In fact, after voters in Sacramento County
enacted public financing several years ago, the courts struck it
down under Prop. 73. Currently, six charter cities provide
limited public funding to match small campaign contributions
(Los Angeles, Long Beach, Oakland, Richmond, Sacramento, and San
Francisco). Proponents of these programs describe them as
intended to provide candidates with an alternative to relying on
large campaign contributions and amplify the voices of
Californians who make small donations. Other local governments
are prohibited from offering public campaign funding, due to a
provision of Proposition 73 of 1988.
Foreign Campaign Spending, Federal Law, and Previous
Legislation . As detailed above, federal law prohibits foreign
nationals from making contributions in connection with federal,
state, and local candidate elections. According to information
from the FEC, the ban on political contributions and
expenditures by foreign nationals was first enacted in 1966 as
part of the amendments to the Foreign Agents Registration Act
(FARA), an 'internal security' statute. The goal of the FARA
was to minimize foreign intervention in U.S. elections by
establishing a series of limitations on foreign nationals.
These included registration requirements for the agents of
foreign principals and a general prohibition on political
contributions by foreign nationals. In 1974, the prohibition
was incorporated into FECA, giving the FEC jurisdiction over its
enforcement and interpretation.
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Until 2002, the restriction on contributions by foreign
nationals specifically applied to contributions made "in
connection with an election to any political office." Because
that language was limited to elections for office, it was the
position of the FEC that contributions from foreign nationals
relating exclusively to ballot measures were not restricted by
federal law. In 2002, the restriction on foreign contributions
was amended to make it applicable to any contribution made "in
connection with a Federal, State, or local election," though it
is unclear whether that change was intended to cover ballot
measure elections.
In 1997, the Legislature approved and Governor Wilson signed SB
109 (Kopp, Ch. 67, of 1997), to prohibit foreign governments or
foreign principals from making contributions, expenditures, or
independent expenditures in connection with state or local
ballot measures. The legislative history suggests that SB 109
did not seek to regulate foreign contributions made in
connection with elections for office because such contributions
were already restricted by federal law. Instead, SB 109 was
limited to foreign spending in connection with ballot measure
elections, thereby restricting foreign spending that was not
covered by federal law.
Aside from the fact that state law is limited to foreign
spending made in connection with ballot measures, state and
federal law differ in one other important respect. While
federal law restricts contributions and expenditures by foreign
nationals, state law does not restrict contributions or
expenditures by a foreign national who is an individual and who
is legally present in the U.S. The initial version of SB 109
(and an unsuccessful bill from the prior legislative session)
would have restricted contributions by foreign nationals who
were legally present in the U.S., but that restriction was
amended out of the bill to address opposition.
Recent Enforcement Action Related to Foreign Contributions . The
FPPC recently brought an enforcement action for the first time
in a case involving foreign contributions made in connection
with a ballot measure. That enforcement action was initiated
after the FEC considered an enforcement action of its own, and
declined to take action in that case.
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Measure B was a Los Angeles County initiative dealing with adult
film production that appeared on the ballot at the November 2012
Statewide General Election. In October 2012, one of the
proponents of Measure B filed a complaint with the FEC alleging
that the committee opposing Measure B had received contributions
made by a foreign national, and further alleging that those
contributions violated FECA. In August 2014, the Associate
General Counsel of the FEC recommended dismissing the complaint
due in part to a "lack of clear legal guidance" on whether
federal law restricts contributions made by foreign nationals in
connection with ballot measures. The FEC was equally divided on
whether to dismiss the complaint, and in March 2015, it
ultimately closed the file on the complaint without taking
further action.
In July 2015, after the FEC's action to close its file, the FPPC
received a sworn complaint in connection with the same matter.
Last December, the FPPC reached a stipulated settlement in that
case. As detailed in that settlement, Manwin USA, a
Delaware-based subsidiary of Manwin International, a
Luxembourg-based corporation, made contributions totaling more
than $268,000 to the committee opposing Measure B. In addition,
Froytal, a Cyprus-based subsidiary of Manwin International, made
a contribution of $75,000 to the committee opposing Measure B,
although that contribution subsequently was returned by the
committee. Even though Manwin USA was incorporated under
Delaware-law, its contributions violated California law because
it was a subsidiary of a foreign corporation and the decision to
contribute funds was made by an officer of the foreign
corporation who was neither a U.S. citizen nor a lawfully
admitted permanent resident of the U.S.
The FPPC fined Manwin USA a total of $20,000 for the unlawful
contributions that it made, fined Froytal $5,000 for the
unlawful contribution that it made, and fined the committee
opposing Measure B and its treasurer a total of $20,000 for
accepting unlawful contributions made by foreign principals.
The FPPC also imposed an additional $16,500 in fines for
violations of reporting and disclosure laws that occurred in
connection with the unlawful foreign contributions.
COMMENTS
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1)According to the author : SB 1107 would restore control to
local governments and the state to enact new options for
election campaign funding. Voters are increasingly concerned
about political mega-donors in our elections. Most Americans
think that money has too much influence in our political
campaigns today and they believe that campaign finance should
be reformed so that the influence of special interest money is
reduced.
To address voters' concerns, governments are increasingly
considering new approaches to campaign financing. In November
2015, voters in Maine and Seattle approved ballot measures
that put power back into the hands of voters and small donors.
In Maine, 55% of voters approved strengthening that state's
Clean Elections Act, which provides public funds to candidates
for state office. In Seattle, 63% of voters approved creating
a program to offer public financing for local candidates
through a voucher system that empowers voters to decide which
candidates receive public money that the voters themselves
control.
Six California cities already had laws similar to those recently
approved by voters in Maine and Seattle. Los Angeles, San
Francisco, Sacramento, Long Beach, Oakland, and Richmond offer
limited public funds to match small campaign donations. These
laws amplify the voices of everyday Californians who make
small contributions and provide candidates with an alternative
to relying on large contributors.
Unfortunately, such programs are currently prohibited in other
California jurisdictions. Unlike charter cities, state law
bans counties, districts, general law cities, and the state
itself from offering public campaign funds, under a provision
enacted by Proposition 73, a 1988 initiative that had
virtually all of its other provisions invalidated in federal
court.
Much has changed since 1988 when it comes to campaign finance.
Voters in 1988 could have not envisioned the multi-million
dollar Super PACs that exist in 2016. It is time for the
Legislature and voters to bring our campaign finance laws into
the 21st Century.
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SB 1107 would remove the ban on voluntary public campaign
financing programs. Because the ban was originally instituted
by ballot initiative, the bill would refer the issue to the
ballot for voters' approval. SB 1107 would not create a public
financing program or require any government to offer public
financing. It would not spend any public funds or raise any
taxes or fees. It would simply amend the ban to permit local
governments or the state, if they so choose, to enact laws that
create public financing programs. Local governments would have
the flexibility to tailor policies to local concerns and
conditions, while requiring basic protections for fairness and
accountability.
SB 1107 also includes two other common sense reforms to increase
the accountability of our elections. Currently, foreign
corporations and governments may not donate to ballot measure
campaigns, but current law does not ban contributions to
candidates. SB 1107 would extend the ban to prohibit foreign
corporations and governments from donating to state or local
candidates, enforceable by the state FPPC. Given the FEC's
recent history of deadlocking on enforcement matters, the FPPC
is in a better position to enforce this prohibition in
California.
Lastly, when an elected official is convicted of a felony that
includes the abuse of their office, such as bribery or
embezzlement, they are disqualified from running for office
again. In these rare but serious cases, SB 1107 would require
the convicted official to return any unused campaign funds to
donors or pay past debts, and forfeit any surplus funds after
six months to the state's general fund. (Legal defense funds
would not be affected.)
RELATED/PRIOR LEGISLATION
AB 2250 (Ridley-Thomas), which is pending in the Assembly
Appropriations Committee, is similar to the section of this bill
that would prohibit, under state law, contributions,
expenditures, and independent expenditures from foreign
governments and foreign principals in connection with candidate
elections.
POSITIONS
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Sponsor: California Common Cause
Support: Alliance of Californians for Community Empowerment
American Civil Liberties Union of California
American Sustainable Business Council
Asian Americans Advancing Justice - California
Brennan Center for Justice at New York University
School of Law
California Voices for Progress
California Church IMPACT
California Clean Money Campaign
California League of Conservation Voters
California Public Interest Research Group
California School Employees Association
Campaign Legal Center
Courage Campaign
League of Women Voters of California
MapLight
Money Out, Voters In (MOVI)
Represent.Us and Represent California
Sierra Club California
Southwest Voter Registration Education Project
UFCW Western Stats Council
Oppose: None received
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