BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       SB 1107|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
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                                   THIRD READING 


          Bill No:  SB 1107
          Author:   Allen (D), et al.
          Amended:  3/28/16  
          Vote:     21 

           SENATE ELECTIONS & C.A. COMMITTEE:  4-1, 4/19/16
           AYES:  Allen, Hancock, Hertzberg, Liu
           NOES:  Anderson

           SENATE APPROPRIATIONS COMMITTEE:  5-2, 5/27/16
           AYES:  Lara, Beall, Hill, McGuire, Mendoza
           NOES:  Bates, Nielsen

           SUBJECT:   Political Reform Act of 1974:  public moneys:   
                     definition


          SOURCE:    California Clean Money Campaign 
                     California Common Cause
                               
          
          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:








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           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  
             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.







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


           6) 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  







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             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.


           7) 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  
             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.


           8) Establishes, pursuant to federal law, the Federal Election  
             Commission (FEC), and makes it responsible for the  
             administration and enforcement of the Federal Election  







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             Campaign Act (FECA), including the restrictions on  
             contributions and expenditures by foreign nationals described  
             above.


           9) 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.  


           10)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.


           11)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.


           12)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.


          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  







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             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.





           2) 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.


           3) 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.


           4) 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.









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           5) 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, 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.


           6) 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  







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          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.


          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, Chapter 67, Statutes 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  







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          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.


          Comments


          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.


            Los Angeles, San Francisco, Sacramento, Long Beach, Oakland,  
            and Richmond offer limited public funds to match small  
            campaign donations.  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.


            SB 1107 would remove the ban on voluntary public campaign  
            financing programs.  Because the ban was originally instituted  
            by ballot initiative, this bill refers 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.







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            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 extends 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 requires 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 Legislation


          AB 2250 (Ridley-Thomas, 2016), which is pending in the Assembly  
          Floor, is similar to the section of this bill that prohibits,  
          under state law, contributions, expenditures, and independent  
          expenditures from foreign governments and foreign principals in  
          connection with candidate elections. 




          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   Yes


          According to the Senate Appropriations Committee:


           The FPPC indicates that it would incur first-year costs of  







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            $167,000 and ongoing annual costs of $160,000 to implement the  
            provisions of this bill (General Fund). 

           One-time costs in the range of $414,000 to $552,000 to the SOS  
            for printing and mailing costs to place the measure on the  
            ballot in the next statewide election. (General Fund)


          SUPPORT:   (Verified5/27/16)


          California Clean Money Campaign (co-source)
          California Common Cause (co-source)
          Alliance of Californians for Community Empowerment 
          American Association of Retired Persons
          American Civil Liberties Union of California
          American Sustainable Business Council
          Asian Americans Advancing Justice - California 
          Bay Area Rapid Transit
          Brennan Center for Justice at New York University School of Law
          California Alliance for Retired Americans
          California Church IMPACT 
          California Forward Action Fund
          California League of Conservation Voters 
          California Public Interest Research Group
          California School Employees Association
          California Voices for Progress
          Campaign Legal Center 
          Courage Campaign 
          Franciscan Action Network
          League of Women Voters of California 
          Los Angeles County Federation of Labor
          MapLight
          Money Out Voters In 
          National Council of Jewish Women-California
          Represent California  
          Represent.Us 
          Sierra Club California 
          Southwest Voter Registration Education Project
          UFCW Western Stats Council


          OPPOSITION:   (Verified5/27/16)








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          None received


          Prepared by:Darren Chesin / E. & C.A. / (916) 651-4106
          5/28/16 16:57:30


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