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 ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: March 28, 2016 |Policy Vote: E. & C.A. 4 - 1 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 2, 2016 |Consultant: Robert Ingenito | | | | ----------------------------------------------------------------- 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 SB 1107 (Allen) Page 1 of ? 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 The PRA may only be amended or repealed in the following manner: (1) amended to further its purposes by a statute passed in each house of the Legislature by a two-thirds vote and signed by the Governor, or (2) amended or repealed by a statute that becomes effective only when approved by the electors.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. SB 1107 (Allen) Page 2 of ? 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. SB 1107 (Allen) Page 3 of ? 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. SB 1107 (Allen) Page 4 of ? 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 SB 1107 (Allen) Page 5 of ? 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. SB 1107 (Allen) Page 6 of ? 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. -- END --