BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 1107 (Allen) - Political Reform Act of 1974:  public moneys:   
          definition
          
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          |Version: March 28, 2016         |Policy Vote: E. & C.A. 4 - 1    |
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          |Urgency: No                     |Mandate: Yes                    |
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          |Hearing Date: May 2, 2016       |Consultant: Robert Ingenito     |
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          This bill meets the criteria for referral to the Suspense File.


          


          Bill  
          Summary: SB 1107 would (1) provide, within the Political Reform  
          Act (PRA), an exception to the existing ban on use of public  
          moneys for the purpose of seeking public office, (2) prohibit  
          foreign contributions to candidates, and (3) require that an  
          officeholder who is convicted of specified crimes to forfeit any  
          remaining campaign funds to the General Fund.


          Fiscal  
          Impact: 
                 The Fair Political Practices Committee (FPPC) indicates  
               that it would incur first-year costs of $167,000 and  
               ongoing annual costs of $160,000 to implement the  
               provisions of the bill (General Fund). 

                 One-time costs in the range of $414,000 to $552,000 to  







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               the Secretary of State (SOS) for printing and mailing costs  
               to place the measure on the ballot in the next statewide  
               election. (General Fund)


          



          Background: Under current law, pursuant to the PRA as amended by  
          Proposition 73 (1988), no public officer shall expend and no  
          candidate shall accept any public moneys for the purpose of  
          seeking elective office. The PRA may only be amended or repealed  
          in the following manner: (1) 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, or (2) 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.

          Pursuant to the California Constitution, current law provides  
          that every person shall be disqualified from holding any office  
          in the 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. Additionally, a person shall not be  
          considered a candidate 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.

          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. Surplus  
          campaign funds to be used only for the following purposes: 

                 The payment of outstanding campaign debts or elected  
               officer's expenses.








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                 The repayment of contributions.

                 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.

                 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.

                 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.

                 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  
               activities, duties, or status as a candidate or elected  
               officer. 


          Current law 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.  A person or a committee is  
          prohibited from soliciting or accepting a contribution from a  
          foreign government or a foreign principal, as defined, 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. 








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          The FPPC recently brought an enforcement action for the first  
          time in a case involving foreign contributions made in  
          connection with a November 2012 Los Angeles County ballot  
          measure (Measure B) dealing with adult film production.  
          Ultimately, FPPC fined subsidiaries of Manwin International, (a  
          Luxembourg-based corporation) for unlawful contributions to the  
          committee opposing Measure B, as well as the committee itself.




          Proposed Law:  
          This bill would do all of the following:
                 Permit 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: (1) 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, and (2) the state or local governmental  
               entity has established criteria for determining a  
               candidate's qualification by statute, ordinance,  
               resolution, or charter.


                 Provide 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.


                 Require 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.








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                 Expand 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.


                 Provide 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, 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.


                 Require 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.







          Related  
          Legislation: AB 2250 (Ridley-Thomas), which is pending on the  
          Assembly Floor, 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.


          Staff  
          Comments: 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  








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          under autonomy granted by the state Constitution, general law  
          cities, counties, districts, and the state government are  
          covered by the current state ban. After voters in Sacramento  
          County enacted public financing several years ago, the courts  
          struck it down as a violation of Proposition 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. The bill would remove the ban on voluntary  
          public financing campaigns. 


          Additionally, it also would make two other changes. Currently,  
          foreign corporations and governments may not donate to ballot  
          measure campaigns, but current law does not ban contributions to  
          candidates. The bill would extend the ban to prohibit foreign  
          corporations and governments from donating to state or local  
          candidates, enforceable by FPPC.


          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 such instances, the bill 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 General Fund. 


          FPPC indicates that it would incur first-year costs of $167,000  
          and ongoing annual costs of $160,000 to implement the provisions  
          of the bill. Increased workload under the bill would include:  
          (1) further developing subject matter expertise and compiling  
          legal research on public financing so to advise local  
          jurisdictions and the State regarding best practices and legal  
          parameters for public financing systems, (2) repealing  
          Regulation 18530 and issuing new regulations, which are likely  
          to be substantial, and (3) compliance activities to ensure any  
          public financing systems comply with the requirements in the  
          legislation.









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          SOS indicates that printing and mailing costs associated with  
          placing a measure on the statewide ballot are approximately  
          $69,000 per page, depending on the length of the ballot.  The  
          fiscal estimates noted above reflect the addition of 6-8 pages  
          in the Voter Information Guide.  Actual costs would depend upon  
          the length of the title and summary, analysis by the Legislative  
          Analyst's Office, proponent and opponent arguments, and text of  
          the proposal.




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