BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 1169|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 445-6614 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: SB 1169
Author: Bowen (D)
Amended: 5/13/99
Vote: 21
SENATE ELECTIONS & REAP. COMMITTEE : 3-2, 4/21/99
AYES: Perata, Polanco, Murray
NOES: Poochigian, Lewis
SENATE PUBLIC SAFETY COMMITTEE : 4-1, 5/11/99
AYES: Vasconcellos, Burton, Johnston, Polanco
NOES: Rainey
NOT VOTING: McPherson
SENATE APPROPRIATIONS COMMITTEE : 7-6, 6/8/99
AYES: Alpert, Bowen, Burton, Escutia, Karnette, Perata,
Vasconcellos
NOES: Johnston, Johnson, Kelley, Leslie, McPherson,
Mountjoy
SUBJECT : Campaign Financing Reform Act of 2000
SOURCE : Author
DIGEST : This bill deletes the prohibitions on the
expenditure of public funds to finance election campaigns
in the Political Reform Act of 1974, and enacts the
Campaign Financing Reform Act of 2000, which imposes
various limitations on contributions that may be made to
candidates for legislative office at regularly scheduled
primary and general elections and special primary and
CONTINUED
SB 1169
Page
2
general elections, as specified. Imposes expenditure
limitations on candidates for legislative office at regular
elections, as specified. Establishes a Legislative
Election Fund. Eligible nominees, as defined, for
legislative office would be allowed to obtain public funds
from that fund for qualified campaign expenditures,
provided certain thresholds were attained. Imposes
limitations on independent expenditures under certain
conditions.
Provides for the enforcement, as sets forth remedies and
sanctions regarding violations, of the provisions of this
bill. Imposes specified responsibility for the
administration of the provisions of the bill on the Fair
Political Practices Commission, the Secretary of State, and
the Attorney General.
Allows taxpayers to designate on their personal income tax
returns filed for the 1999 taxable year and thereafter that
up to $5, or up to $10 in the case of married individuals
filing a joint return, shall be transferred to the
Legislative Election Fund to be distributed among the
eligible nominees, as defined.
Provides that the monies in the fund are available to make
grants to eligible nominees and to fund all administrative
costs of the bill if the Campaign Financing Reform Act of
2000 is approved by the voters. The bill makes these
provisions inoperative if the voters reject the Campaign
Financing Reform Act at the March 7, 2000, election.
This bill requires the State Controller, on July 1, 2000,
and periodically thereafter, to determine whether the
amount in the Legislative Election Fund is $20 million or
more. On the date the State Controller makes that
determination, the Campaign Financing Reform Act of 2000,
as added by this bill, becomes operative if approved by the
votes.
Requires the Secretary of State to submit the provisions
that amend the Political Reform Act of 1974 to the voters
for approval at the March 7, 2000 statewide direct primary
election.
SB 1169
Page
3
ANALYSIS : In 1988 voters approved two separate campaign
finance reform initiatives, Proposition 68, and Proposition
73. The California State Supreme Court eventually ruled in
Taxpayers to Limit Campaign Spending v. FPPC that because
the two measures contained conflicting comprehensive
regulatory schemes they could not be merged and only one
could be implemented. Since Proposition 73 received more
affirmative votes than Proposition 68, the Court ordered
the implementation of Proposition 73 and proclaimed all the
provisions of Proposition 68 invalid. In 1990, all state
and local elections were conducted under the Proposition 73
limits.
Proposition 73 prohibited the use of public monies for
campaign purposes and limited the amount of contributions
candidates, committees, and political parties could accept
from all persons on a fiscal year basis ($1,000, $2,500, or
$5,000, depending on the source). It also prohibited the
transfer of campaign funds between candidates. These same
provisions also applied to special elections but were based
on election cycles rather than fiscal years.
Many of the provisions of Proposition 73, however, were
ultimately found unconstitutional by the federal courts.
The fiscal-year based contribution limits were deemed to
discriminate against challengers. The federal case ended
in 1993 when the United States Supreme Court denied
certiorari in Service Employees International Union v.
FPPC . The proponents of Proposition 73 then petitioned the
California State Supreme Court to rewrite the
unconstitutional portions of the measure so that it may
again become enforceable. The Court narrowly rejected that
request even though they previously alluded such a
rewriting would be possible.
The only provisions of Proposition 73 that survived legal
challenge were the contribution limits for special
elections, some restrictions on the type of mass mailings
officeholders may send out at public expense, and the
prohibition on the use of public money for campaign
purposes.
Proposition 208
SB 1169
Page
4
Another initiative, Proposition 208, was approved by the
voters in 1996. This measure enacted a campaign finance
reform plan consisting of variable contribution limits
(i.e., candidates who agree to abide by voluntary
expenditure cap would be subject to contribution limits
higher than the limits imposed on candidates who refuse the
expenditure cap). Transfers of campaign funds between
different candidates were prohibited. Additionally,
candidates for statewide office were prohibited from
accepting contributions more than 12 months prior to the
primary election while all other candidates were prohibited
from accepting contributions more than six months prior to
any primary election.
Proposition 208 was also challenged in federal court
subsequent to passage. It was invalidated (technically
"enjoined from enforcement") by Federal District Court
Judge Lawrence Karlton on January 6, 1998. The court
concluded that the contribution limits were so low that
they precluded candidates from raising sufficient funds to
conduct a meaningful campaign and thereby infringed on a
candidates First Amendment rights (legislative candidates
could not accept contributions in excess of $250, or $500
if they accepted the expenditure cap). The court also
found fault with the notion of variable contribution
limits.
An appeal of Karlton's decision was filed with the 9th U.S.
Circuit Court of Appeals. Originally Judge Karlton had
ordered the FPPC to seek a ruling from the California
Supreme Court on issues of severability (whether any
sections of Proposition 208 could stand on its own give his
ruling), and reformation (the possibility that the Court
could rewrite Proposition 208 to make it constitutional).
However, Judge Karlton agreed to allow the defendants to
postpone going to the California Supreme Court until the
9th Circuit ruled.
On January 5, 1999, the U.S. 9th Circuit Court of Appeals
affirmed the preliminary injunction that enjoined
enforcement of Proposition 208. As a result, Proposition
208 continues to remain unenforced pending further legal
action.
SB 1169
Page
5
The Court further directed the district court to "proceed
to the merits of this case expeditiously?" and to consider,
"?all relevant aspects of the contribution and expenditure
limits contained in the Proposition?" Essentially, Judge
Karlton will have to issue a new ruling on the entirety of
Proposition 208 as opposed to the more narrow issue of the
preliminary injunction.
Current Guidelines
As a result of all the aforementioned court proceedings,
existing state law imposes campaign contribution limits and
a ban on candidate-to-candidate transfers for special
elections only (pursuant to Proposition 73). Some local
jurisdictions however, continue to impose their own
contribution limits for regular elections. The prohibition
on the use of public moneys for campaign purposes is also
intact. The state of existing law could change
dramatically however, pending further legal action on
Proposition 208.
Proposed Law
This bill amends the Political Reform Act of 1974 (PRA) to:
1.Limit contributions to candidates for legislative office.
2.Provide partial public funding of general election
nominees for legislative office.
3.Limit general election campaign expenditures of
candidates for legislative office who accept public
funds.
4.Regulate independent expenditures.
5.Allow taxpayers to designate part of their tax liability
to a "Legislative Election Fund."
The provisions of this bill would appear on the March 7,
2000 Statewide Primary Ballot for voter approval. If
approved, it could be in effect for the 2000 General
Election provided at least $20 million has been collected
in the Legislative Election Fund. The tax check-off will
SB 1169
Page
6
appear on the forms for the 1999 tax year.
Specifically, this bill does the following:
Contribution Limits
A candidate for the State Legislature would be subject to
the following contribution limits:
Primary Election $5,000 per qualified organization.
Cycle
$2,000 per any contributor other
than a
qualified organization.
General Election $5,000 per qualified organization.
Cycle
$2,000 per any contributor other
than a
qualified organization.
Aggregate limit of no more than
1/3 of
expenditure limit in contributions
from
qualified organizations and no
more than 1/3
combined from either political
parties or
legislative caucus committees.
''Primary election cycle'' means the period commencing on
the day after the statewide general election and ending on
the day of the statewide direct primary election at which
candidates for the office are nominated.
''General election cycle'' means the period commencing on
the day after the statewide direct primary at which
candidates for the office are nominated and ending on the
day of the statewide general election at which a candidate
for the office is elected.
SB 1169
Page
7
''Qualified organization'' means an organization that has
been registered with the Secretary of State for a period of
not less than six months, has received contributions from
at least 25 contributors, and contributes to five or more
candidates.
''Legislative caucus committee'' means a committee
controlled by the caucus of each political party of each
house of the Legislature. Each party of each house may
establish one of these committees. These committees are
not considered to be candidate-controlled committees.
A candidates' contributions of personal funds to their own
committees are not subject to the limits. However, if
candidates elect to accept public financing, they may not
contribute personal funds that would exceed the
contribution limitation for individuals.
Any group or committee making independent expenditures
would be subject to the contribution limits.
Transfers
Direct transfers between legislative candidates would be
prohibited. Transfers from a legislator or legislative
candidate to a legislative caucus committee or political
party is permitted and not subject to the contribution
limits.
A candidate may transfer funds from their non-legislative
campaign to their legislative campaign committee so long as
it is done within the applicable limits.
Special Elections
This bill maintains the current contribution limits for
special elections which were imposed by Proposition 73
(i.e., $1,000, $2,500, or $5,000 depending on the source)
per special election or per special run-off election.
Public Financing
To qualify for partial public financing in the general
election, a candidate would have to:
SB 1169
Page
8
1.Meet all the legal requirements to appear on the general
election ballot as a nominee for the State Legislature.
2.Raise a threshold of $45,000 for Senate nominees and
$30,000 for Assembly nominees in matchable contributions.
3.Have an opponent whose name would appear on the general
election ballot and who has raised, between the dates of
the primary and general elections, $20,000 as an Assembly
candidate or $30,000 as a Senate candidate.
Candidates who violate the contribution limits for primary
or general elections would be ineligible to receive public
funds.
Contributions, excluding loans and contributions from
political parties, legislative caucus or candidate
controlled committees, would be matched on the following
ratio:
5:1 for the first $100
3:1 for any amount between $101 and $500
2:1 for any amount between $501 and $1,000
(A matchable contribution of $1,000 would therefore qualify
the candidate for $2,700 in public funds.)
The maximum amount of public funds available to a candidate
cannot exceed two-thirds of the candidate's expenditure
limit.
A publicly financed candidate whose opponent exceeds the
expenditure limit would be eligible to receive additional
public financing on the basis of $1 for every $1 the
opponent spends over the limit. However, this additional
public financing would be limited to an amount equal to the
spending limit.
Public funds may only be used for qualified campaign
expenditures. All surplus public funds would have to be
returned to the state.
SB 1169
Page
9
Expenditure Limits
This bill imposes expenditure limits on candidates for
legislative office who accept public financing based on the
following formula:
Senate General: $2.25 X total registered voters in
the
state divided by 40 ($821,569 in
1998)
Assembly General: $3.15 X total registered voters in
the state
divided by 80 ($575,098 in 1998)
The formula would be adjusted each election year to reflect
changes in the Consumer Price Index. In districts with
total registration at least 14 percent above the state
average the expenditure limitations would be increased by
an amount equal to the number of registered voters in the
district that exceed the statewide average multiplied by
two dollars.
Independent Expenditures
Any group or committee making independent expenditures
would be subject to the aforementioned contribution limits.
This bill prohibits independent expenditures on behalf of a
candidate for partisan office made by:
1.An elected state official or candidate to the same party.
2.A controlled committee of the candidate.
3.A political party or legislative caucus committee except
for party slate mailers on behalf of all party nominees
and paid for by the party.
4.Any individual or committee who contributed more than
$100 per calendar year to the candidate.
All material prepared, paid or distributed by an
SB 1169
Page
10
independent expenditure would have to contain a disclosure
statement in at least 10-point type clearly identifying who
financed it and that it is independent and unauthorized by
a party, candidate or elected official.
Specific Penalty Provisions of the Bill
This bill contains both civil and criminal penalties,
including the following (language and penalties generally
track existing penalties in the existing Political Reform
Act):
1.Any person who knowingly or willfully violates any
provision of this chapter is guilty of a misdemeanor.
2.Any candidate for legislative office, who, after
certifying a decision to receive public funds, knowingly
or willfully exceeds any of the expenditure limits
calculated by the commission pursuant to Section 84753
shall be personally liable for the entire amount of
public funds he or she received and shall pay that amount
to the Legislative Election Fund.
3.In addition to other penalties provided by law, a fine of
up to the greater $10,000, or three times the amount the
person knowingly or willfully failed to report properly
or unlawfully contributed, expended, gave, or received
may be imposed upon conviction for each violation.
4.Any candidate, treasurer, campaign manager, or other
person who knowingly or willfully solicits or promotes an
expenditure, purporting it to be an independent
expenditure and not an in-kind contribution, is guilty of
a misdemeanor.
5.No person convicted of a misdemeanor or felony under this
chapter shall be a candidate for any elective office for
a period of four years following the date of conviction
unless the court at the time of sentencing specifically
determines that this provision shall not be applicable.
Miscellaneous
This bill allows taxpayers to designate $5 ($10 for joint
SB 1169
Page
11
return) to the "Legislative Election Fund" for the purpose
of funding the public financing of campaigns. This tax
check-off will appear on the forms for the 1999 tax year.
The State Controller would be responsible for administering
the Legislative Election Fund and disbursing matching
payment to eligible candidates but the Secretary of State
will determine the procedures for applying for the funds.
The provisions of the bill would not go into effect until
$20 million has been collected in the fund.
Comments
The Presidential Election Campaign Fund which provides
public matching funds to qualifying presidential candidates
relies on a tax check-off similar to the one in this bill.
According to an April 15, 1999 article in the Boston Globe,
fewer taxpayers than ever are agreeing to earmark the $3
each for the presidential campaign fund -- the federal
government may have only one-third of the needed $60
million in matching funds next January.
In 1976, 27.5 percent of taxpayers agreed to the federal
contribution, which then was $1. By 1997, 12.6 percent of
taxpayers made the check-off. A sampling of 1998 tax
returns conducted earlier this month showed that only 10
percent of taxpayers supported the fund, the lowest ever,
according to the Internal Revenue Service.
If California taxpayers participate in the Legislative
Election Fund established by this bill at a rate similar to
that of the federal check-off, it may take several more
years than anticipated to reach the $20 million threshold
needed before it goes into effect.
Prior Legislation
This bill is similar to SB 588 (Lockyer - 1993-94 Session).
SB 588 was vetoed by then Governor Wilson. In his veto
message, Governor Wilson cited opposition to the use of
public money for campaigns, felt there were serious
loopholes in the bill, and influence of special interests
on the electoral process would be increased.
SB 1169
Page
12
SB 2106 (Watson - 1997-98 Session), which would have
enacted the Campaign Financing Reform Act of 200 and
authorized voluntary contributions to the Legislative
Election Fund, remained in the Senate Elections and
Reapportionment Committee. SB 717 (Karnette - 1997-98
Session), which would have extended the check-off for the
California Election Campaign Fund from 1997 through 2002,
was vetoed.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
Fiscal Impact (in thousands)
Major Provisions 1999-2000 2000-01
2001-02 Fund
Election Fund 9,000 11,000
12,000 General
Secretary of State -- up to $1 million
annually -- General
FPPC -- up to $1 million annually
-- General
The Senate Appropriations Committee analysis states:
"According to both the Secretary of State's Office and the
Fair Political Practices Commission, enactment of SB 1169
would impose significant new administrative and enforcement
burdens on their offices. The Secretary of State
anticipates that the Political Reform Division's annual
$1.4 million budget wold have to double.
"The estimates noted above from the Franchise Tax Board are
based on 15% of all taxable individual state returns making
the designation.
"SB 1169 provides that the Fund must collect at least $20
million. It is anticipated that it may take several years
to reach the $20 million threshold before the provision of
public financing campaigns goes into effect."
SB 1169
Page
13
SUPPORT : (Verified 1/19/00)
Your Voices Count
OPPOSITION : (Verified 1/19/00)
Department of Finance
Secretary of State
ARGUMENTS IN SUPPORT : According to the author:
"After authoring five campaign finance reform proposals
since 1993 and being a co-author of Proposition 208, I've
come to believe that public financing is a necessary
ingredient to true campaign finance reform, in part because
it's an investment that people make in their government and
in part because spending limits might be more important
than contribution limits.
"California is one of six states that places no
restrictions on campaign contributions and partially as a
result of that, an estimated $500 million was spend during
the 1997-98 election cycle (including Propositions) - up
from $297 million in 1995-96 and $262 million in 1993-94.
"Legislative campaign spending is growing as well,
increasing from $16 million in 1975-76 to $21 million
during the next cycle, following by $36 million, $46
million, $50 million, $60 million, and $79 million in
1987-88. During the 1989-90 cycle, when the limits imposed
by Proposition 73 were intact, spending dropped to $52
million. When Proposition 73 was thrown out, spending on
legislative races went to $78 million in 1991-92, $89
million in the following cycle, and $122 million in
1995-96. (Final figures for the 1997-98 cycle have not
been released.)
"Twelve states currently allow taxpayers to designate part
of their liability for campaign financing -- in three of
those states, only gubernatorial candidates are eligible
for funding, while in six others, the money goes only to
political parties.
SB 1169
Page
14
"While it's hard to predict how much this will raise, in
other states, the average participation rate among
taxpayers has been about 16 percent, ranging from a low of
5.2 percent (Kentucky) to a high of 31.8 percent (New
Jersey).
"The analysis of SB 588 (Lockyer) from 1994 shows that in
California, with an average participation rate of 16
percent, $21 million would be raised for every $1
contributed to the election fund. FTB estimated in 1994
that if participation was high (32 percent, raising $4.1
million for every $1 contributed) the fund would take in
about $15 million a year.
"The voters have consistently supported campaign finance
reform proposals on the ballot because they don't believe
they're being well-served by the current system - or
non-system - of financing legislative campaigns. The goal
of SB 1169 is to create a comprehensive campaign finance
reform framework in California and place it before the
voters in March 2000 for their approval."
ARGUMENTS IN OPPOSITION : The Department of Finance is
opposed to this bill because it could result in a
significant redirection of revenue to the General Fund.
Such a redirection would restrict the ability of the
Legislature and the Administration to meet other state
expenditure needs.
DLW:cm 1/19/00 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****