BILL ANALYSIS �
SENATE COMMITTEE ON ELECTIONS
AND CONSTITUTIONAL AMENDMENTS
Senator Lou Correa, Chair
BILL NO: AB 1146 HEARING DATE: 7/03/12
AUTHOR: NORBY ANALYSIS BY: DARREN CHESIN
AMENDED: 6/27/12
FISCAL: YES
SUBJECT
Political Reform Act of 1974
DESCRIPTION
Contribution Limits
Existing law limits campaign contributions to candidates
for elective state office as follows:
To a candidate for elective state office other than a
candidate for statewide elective office, no person may
contribute more than $3,900 per election and no small
contributor committee may contribute more than $7,800 per
election.
To a candidate for elective statewide office other than a
candidate for Governor, no person may contribute more
than $6,500 per election and no small contributor
committee may contribute more than $13,000 per election.
To a candidate for Governor, no person or small
contributor committee may contribute more than $26,000
per election.
Existing law provides that contributions made to a
candidate from another candidate are subject to all
applicable contribution limits.
Existing law prohibits a person from making to a committee
other than a political party committee, and prohibits such
a committee from accepting, any contribution totaling more
than $6,500 per calendar year for the purpose of making
contributions to candidates for elective state office.
Existing law prohibits a person from making to a political
party committee, and prohibits such a committee from
accepting, any contribution totaling more than $32,500 per
calendar year for the purpose of making contributions for
the support or defeat of candidates for elective state
office.
Existing law requires the Fair Political Practices
Commission (FPPC) to adjust these contribution limits
biannually to reflect any increase or decrease in the
Consumer Price Index.
This bill would repeal these contribution limits and make
other conforming changes to related statutes.
Campaign Reporting
Existing law r equires elected officers, candidates,
committees, and slate mailer organizations to file periodic
campaign reports, with certain exceptions and requires
these entities to file activity-based campaign statements
in certain situations, as specified. These campaigns are
required to disclose campaign contributions and
expenditures, as specified.
This bill would repeal the requirements to file most of
these reports, including semiannual statements and
supplemental pre-election statements.
This bill would instead require candidates and committees
who make or receive a contribution of $200 or more report
those individual contributions within 24 hours of receiving
the contribution regardless of when the contribution is
received. This bill would also retain the requirement to
file pre-election statements, as specified.
This bill would also require candidates and committees who
make an expenditure of $200 or more to report the
individual expenditures within 24 hours.
This bill would require a candidate or committee who is
required to report a contribution or expenditure to the
Secretary of State (SOS) to file that report online or by
electronic transmission only, and would also require that a
copy of the report be filed with the FPPC by online or
electronic transmission.
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Existing law requires persons or committees who make
independent expenditures, as defined, to file specified
reports disclosing those expenditures.
This bill would instead require independent expenditure
reports to be filed at times prescribed by FPPC.
Existing law prohibits any contribution or expenditure of
$100 or more from being made in cash and prohibits
anonymous contributions of $100 or more to a candidate or
committee. Existing law also establishes $100 as the
threshold for reporting certain contributions and
expenditures in campaign reports.
This bill would increase the threshold to $200 for cash
contributions and expenditures, anonymous contributions,
and the reporting of contributions and expenditures.
Other
Existing law prohibits an officer of specified government
agencies from accepting, soliciting or directing a campaign
contribution of more than $250 from a party or participant
with a matter pending before the agency involving a
license, permit, or other entitlement for use while the
matter is pending before the agency and for three months
following the date a final decision is rendered in the
matter.
This bill would repeal this prohibition.
Existing law requires that amendments to the Political
Reform Act by the Legislature must further the purposes of
the Act and requires a two-thirds vote of each house of the
Legislature. However, the Legislature may propose
amendments to the Act that do not further its purposes by a
majority vote, but such amendments must be approved by the
voters to take effect.
This bill would require the SOS to submit the provisions of
this bill that would amend the Political Reform Act to the
voters for approval at a statewide election, as specified.
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BACKGROUND
Proposition 34 and Growth of Independent Expenditures : In
2000, the Legislature passed and the Governor signed SB
1223 (Burton), Chapter 102, Statutes of 2000, which became
Proposition 34 on the November, 2000 General Election
ballot. The proposition, which passed with 60 percent of
the vote, made numerous substantive changes to the PRA,
including enacting new campaign disclosure requirements and
establishing new campaign contribution limits, limiting the
amount that individuals could contribute to state campaigns
(ranging from $3,000 to $20,000 per election at the time,
depending on the office).
A study done by the Assembly Elections and Redistricting
Committee in 2006 and a subsequent report by the FPPC found
that since campaign contribution limits went into effect in
California with the passage of Proposition 34, the amount
of campaign spending done through independent expenditures
increased by more than 6,000 percent in legislative
elections, and more than 5,500 percent in statewide
elections. In hotly contested campaigns for seats in the
Legislature, it is not uncommon for spending through
independent expenditures to exceed the total amount of
spending by all candidates in the race. On the other hand,
prior to the enactment of contribution limits as a part of
Proposition 34, independent expenditures were relatively
rare. In the March, 2000 and November, 2000 elections, the
last two elections that were not subject to the Proposition
34 campaign contribution limits, the total amount of money
spent on independent expenditures for all legislative races
was less than $500,000.
Political Reform Act of 1974 and Proposition 34 :
California voters passed an initiative, Proposition 9, in
1974 that created the FPPC and codified significant
restrictions and prohibitions on candidates, officeholders,
and lobbyists. That initiative is commonly known as the
PRA. As noted above, Proposition 34 amended the PRA by,
among other provisions, enacting limits on campaign
contributions to candidates for elective state office.
Amendments to the PRA by the Legislature must further the
purposes of the proposition and require a two-thirds vote
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of each house of the Legislature, or the Legislature may
propose amendments to the proposition that do not further
the purposes of the act by a majority vote, but such
amendments must be approved by the voters to take effect.
Because Proposition 34, which is now part of the PRA,
enacted contribution limits in an attempt to "minimize the
potentially corrupting influence and appearance of
corruption caused by large contributions," amending the PRA
to repeal those contribution limits does not appear to
further the purposes of the PRA. As noted above, to the
extent that this bill does not further the purposes of the
PRA, the Legislature has no authority to enact its policies
without submitting it to the voters. In light of that
fact, this bill provides for its provisions to be submitted
to the voters at the next statewide election occurring at
least 131 days after the approval of this bill. This bill
would only take effect if approved by the voters.
COMMENTS
1.According to the author , a major unintended consequence
of Proposition 34 is a 6,000% explosion of unaccountable
independent expenditure committees (IEs), or California
Supers PACs. California Super PACs are overtaking the
role of candidate committees, creating less transparency
and less accountability for candidates.
AB 1146 will increase transparency by requiring all
candidates for elective office to report, within 24
hours, all contributions and expenses. Furthermore,
elimination of campaign contribution limits for
candidates will forestall the need for California Super
PACs to supplement candidate campaigns in a manner where
disclosure is far less explicit.
Proposition 34 creates an uneven playing field between
corporate/union special interests and individual
citizens. Proposition 34 has fortified the pervasive
influence of these special interests at the expense of
transparency. Current individual contribution limits
also result in incumbent officeholders and candidate
spending more time raising money not less, as proponents
promised. The capacity of officeholders to attend to
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their professional duties is diminished by the dedication
of more and more personal time to fundraising.
2.Elimination of Contribution Limits and the Potential for
Corruption or the Appearance Thereof . One of the
findings contained in Proposition 34 was that, by
enacting contribution limits, the measure would "minimize
the potentially corrupting influence and appearance of
corruption caused by large contributions." Prior to the
enactment of contribution limits under Proposition 34,
candidates for elective state office sometimes received
campaign contributions from a single source totaling
$100,000 or more, and in at least one case, a single
donor made contributions totaling more than $950,000 to a
candidate for Governor in one election. The committee
may wish to consider whether the large amounts of money
that could be contributed to candidates for elective
office under this bill could increase the possibility for
corrupting influence and appearance of corruption caused
by large contributions. On the other hand, by ensuring
the full and prompt disclosure of campaign contributions
and expenditures, it could be argued that voters will
have the information that they need to decide whether a
candidate for elective state office is likely to be
unduly influenced by large campaign contributions.
3.Burden on Candidates and Committees . Under the PRA,
there are two general types of reporting requirements.
The first type of report is referred to as a periodic
report. Periodic reports must be filed according to a
specified time schedule for all similarly-situated
candidates and committees, regardless of the amount of
campaign activity during the period of time covered by
the report. These reports generally include all campaign
activity (contributions, loans, expenditures, etc.) that
occurred over a specified period of time. Semi-annual
reports and pre-election reports are two examples of
periodic reports that are required under the PRA.
The second type of report that the PRA requires is an
activity-based report. An activity-based report is
triggered when a candidate or committee has campaign
activity that meets or exceeds a specific dollar
threshold. Late contribution reports and late
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independent expenditure reports are examples of
activity-based reports.
As a general rule, the thresholds for campaign activities
that trigger an activity-based report under the PRA are
significantly higher than the thresholds for campaign
activities that are required to be reported on a periodic
report. For instance, while the PRA generally requires
contributions of $100 or more to be itemized on a
periodic report, activity-based reporting requirements
for contributions received by committees do not kick in
for contributions of less than $1,000, and for some
activity-based reports, the threshold is much higher.
There are two primary reasons for this distinction in
reporting thresholds. First, the fact that
activity-based reports target higher-dollar transactions
acknowledges that there may be a public interest for
requiring higher-dollar activity to be reported more
promptly than lower-dollar activity.
Second, the distinction in thresholds reflects the fact
that activity-based reporting can be more burdensome than
periodic reports. There are a number of reasons why this
may be the case. First, activity-based reports generally
must be prepared in a much shorter period of time than
periodic reports (often within 24 hours of the time the
activity occurs). Second, activity-based reports can be
triggered by activity that is unpredictable to, or
otherwise outside the control of, the candidate or the
committee (for instance, if a person made a contribution
to a candidate through his or her website on Christmas
Day, that contribution could trigger an activity-based
reporting requirement even if the candidate did not know
in advance that the person planned to make that
contribution). Finally, activity-based reporting can
significantly increase the volume of reports that are
required to be filed in order to disclose the same amount
of activity (for instance, a committee that received
contributions from 50 different donors in a specified
time period might be able to report all of those
contributions on a single periodic report, whereas an
activity-based reporting requirement could require a
separate report for each of those contributions,
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resulting in the need to file 50 different reports).
This bill would create an activity-based reporting
requirement every time a candidate or committee made or
received a contribution of $200 or more, and every time a
candidate or committee made an expenditure of $200 or
more. All of these reports would be required to be filed
within 24 hours of the contribution or expenditure being
received or made. Such requirements could be incredibly
burdensome for candidates and committees with large
amounts of campaign activity. For instance, the largest
committees in support of, and in opposition to,
Proposition 8 at the November, 2008 Statewide General
Election received thousands of contributions of $200 or
more, and made hundreds of expenditures of $200 or more.
Every one of these transactions would have been required
to be reported within 24 hours under this bill. While it
is likely that many transactions could have been included
on a single report that was filed daily, the reporting
system envisioned by this bill nonetheless would have
significantly increased the number of reports that these
committees would have had to file, and would have
significantly reduced the amount of time that these
committees had to prepare those reports.
In addition to potentially significantly increasing the
burden on candidates and committees that are required to
file reports pursuant to this bill, the increased volume
of reports being filed could actually make it harder for
the public to analyze and understand the information that
is being reported. Under the provisions of this bill, it
would be likely that thousands of campaign disclosure
reports would be filed every day during certain times of
the election cycle. Could the number of reports (many of
which are disclosing relatively low levels of campaign
activity) overwhelm members of the public who are
interested in finding information about larger campaign
contributions?
Finally, the increased volume of campaign reports likely
would create a significant burden for the public
officials with which those reports are filed. While all
reports filed with the SOS under this bill would be filed
online or electronically, reports filed with county
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elections officials or city clerks would, in some cases,
be filed by fax, personal delivery, or overnight
delivery. It would be essential for local filing
officers to log and file those reports promptly to ensure
that the public had access to information about campaign
spending in a particular contest. The increased volume
of reports, however, could make it incredibly difficult
(if not impossible) for local filing officers to keep
campaign reporting files up to date.
In light of the foregoing, the committee may wish to
consider whether a campaign disclosure system that
requires the reporting of all contributions and
expenditures of $200 or more within 24 hours can
realistically be implemented.
PRIOR ACTION
Assembly Elections and Redistricting Committee: 6-0
Assembly Floor: 54-16
Senate E&CA Committee 3-2
(These votes do not reflect the current version of this
bill.)
POSITIONS
Sponsor: Author
Support: None received
Oppose: California Common Cause
Fair Political Practices Commission
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