BILL ANALYSIS �
AB 2239
Page 1
Date of Hearing: April 17, 2012
ASSEMBLY COMMITTEE ON ELECTIONS AND REDISTRICTING
Paul Fong, Chair
AB 2239 (Norby) - As Amended: March 22, 2012
AS PROPOSED TO BE AMENDED
SUBJECT : Political Reform Act of 1974.
SUMMARY : Repeals all limits on contributions to candidates for
elective state office. Requires campaigns to disclose all
campaign contributions and expenditures of $100 or more within
24 hours. Specifically, this bill :
1)Repeals all limits on the amount of money that a person or a
small contributor committee can contribute to a candidate for
elective state office. Repeals all limits on the amount of
money that a person can contribute to a committee for the
purpose of making contributions to candidates for elective
state office.
2)Requires candidates and committees to file a report disclosing
making or receiving any contribution of $100 or more within 24
hours of the time the contribution is made or received.
Provides that a contribution does not need to be reported, nor
is it deemed accepted, if it is not cashed, negotiated, or
deposited, and is returned to the contributor within 24 hours
of its receipt.
3)Requires candidates and committees to file a report disclosing
an expenditure of $100 or more within 24 hours of the time the
expenditure is made.
4)Provides that any contribution or expenditure that is required
to be reported within 24 hours of being made or received must
be reported by facsimile transmission, guaranteed overnight
delivery, or personal delivery. Provides that if the
contribution is required to be reported to the Secretary of
State (SOS), the report to the SOS shall be by online or
electronic transmission only.
5)Requires the Fair Political Practices Commission (FPPC) to
prescribe the times at which independent expenditure reports
must be filed.
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6)Eliminates a provision of law that allows the FPPC, by
regulation or written advice, to permit candidates and
committees to file campaign statements combining statements
and reports required under the Political Reform Act (PRA).
7)Repeals a provision of law that allows a candidate or state
measure proponent and a committee or committees which the
candidate or proponent controls to file consolidated campaign
statements.
8)Requires a candidate or committee that makes an in-kind
contribution to notify the recipient in writing of the value
of that contribution within 24 hours, regardless of when the
contribution is made. Increases the threshold at which a
person is required to report the value of an in-kind
contribution to the recipient from $100 to $200.
9)Eliminates a prohibition against any officer of an agency, as
defined, from accepting, soliciting or directing a
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 during the time the
matter is pending before the agency and for three months
following the date a final decision is rendered in the matter.
10)Repeals the $100,000 limit on the amount of money that a
candidate for elective state office can personally loan his or
her campaign, and eliminates a provision of law that prohibits
a candidate from charging interest on any loan he or she made
to his or her campaign.
11)Eliminates a prohibition against the controlled committees of
candidates contributing funds to another committee for the
purposes of making an independent expenditure.
12)Eliminates a requirement that a committee report an
expenditure that is made to pay or reimburse a candidate,
elected officer, his or her representative, or a member of the
candidate's household for travel expenses and necessary
accommodations.
13)Eliminates reporting requirements that would be duplicative
of reports that are required by this bill.
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14)Requires the SOS to submit the provisions of this bill that
amend the PRA to the voters at the next statewide election
occurring at least 131 days after the adoption of this bill.
Provides that the provisions of this bill that amend portions
of law not in the PRA shall not become operative unless and
until the voters approve the PRA provisions of this bill.
15)Makes various technical and corresponding changes.
EXISTING LAW :
1)Creates the FPPC, and makes it responsible for the impartial,
effective administration and implementation of the PRA.
2)Limits campaign contributions to candidates for elective state
office as follows:
a) 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;
b) 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;
c) To a candidate for Governor, no person or small
contributor committee may contribute more than $26,000 per
election.
3)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.
4)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.
5)Requires the FPPC to adjust these contribution limits
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biannually to reflect any increase or decrease in the Consumer
Price Index.
6)Requires elected officers, candidates, committees, and slate
mailer organizations to file periodic campaign statements,
with certain exceptions. Requires these entities to file
activity-based campaign statements in certain situations, as
specified.
7)Provides for administrative, civil, and criminal penalties for
violations of the PRA.
FISCAL EFFECT : Unknown. State-mandated local program;
contains a no new duties (voter approved) disclaimer.
COMMENTS :
1)Author's Amendments : In response to questions raised by
committee staff, along with issues raised by the SOS and the
FPPC, the author has proposed a number of substantive
amendments to this bill. Those amendments reinstate many of
the periodic campaign reporting requirements (such as
semiannual reports and preelection reports) that were
eliminated in the current version of the bill. In addition,
the author's amendments also do the following:
a) Reinstate a provision of existing law that prohibits the
use of public moneys for the purpose of seeking elective
office.
b) Reinstate a provision of existing law that allows a
local government to limit the amount of money that a person
may contribute to the legal defense fund of a candidate for
an elective office other than elective state office.
c) Reinstate the existing limits on the amount of money
that an elected state officer can raise into an
officeholder account in a calendar year, and that an
elected state officer can receive in such an account from
any person in a calendar year.
d) Reinstate a provision of existing law that prohibits
foreign governments and principals from making
contributions, expenditures, or independent expenditures in
connection with a state or local ballot measure.
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e) Reinstate a provision of existing law that requires a
candidate or committee that receives certain contributions
in violation of existing law to pay those contributions
into the General Fund.
f) Reinstate a prohibition against lobbyists making
contributions to candidates for elective state office and
elected state officers if the lobbyist is registered to
lobby the governmental agency for which the candidate is
seeking election or the governmental agency of the elected
state officer.
g) Reinstate reporting requirements for contributions that
are made through intermediaries.
h) Reinstate reporting requirements for reimbursements that
are made by a candidate's controlled committee to the
candidate for officeholder expenses that the candidate made
using personal funds.
i) Reinstate the requirement that a loan of campaign funds
be reported on periodic campaign reports.
j) Reinstate a prohibition on cash contributions of $100 or
more.
2)Purpose of the Bill : According to the author:
Prop. 34 unintended consequences is a 6,000% explosion
of unaccountable Independent Expenditure committees.
The IE committees are overtaking the role of candidate
committees and this creates less transparency and less
accountability for candidates.
AB 2239 would increase transparency by requiring all
candidates for elective office to report, within 24
hours, all contributions and expenses. Furthermore,
by eliminating campaign contribution limits for
candidates, this would prevent the need for IEs to
supplement candidate campaigns.
3)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
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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 this 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
at the November 2000 statewide general election, 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.
4)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
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whether a candidate for elective state office is likely to be
unduly influenced by large campaign contributions.
5)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 preelection 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 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
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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, 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 $100 or more, and every time a candidate or
committee made an expenditure of $100 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 committee in support of Proposition 8 at
the November 2008 statewide general election received more
than 38,000 contributions of $100 or more, and made more than
700 expenditures of $100 or more. The largest committee in
opposition of Proposition 8 received more than 50,000
contributions of $100 or more, and made more than 1,400
expenditures of $100 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
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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 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 $100 or
more within 24 hours can realistically be implemented.
6)Online and Electronic Filing : Under existing law, specified
candidates and committees that are required to file campaign
reports with the SOS are required to file those reports online
or electronically when the total amount of contributions
received or expenditures made by those entities exceeds
$25,000. Under the provisions of this bill, any report that
is required to be filed with the SOS must be filed by online
or electronic transmission only. As a practical matter, this
means that every candidate or committee that must file reports
with the SOS will have to have the capability to file reports
online or electronically, regardless of the amount of campaign
activity. This requirement could prove particularly
burdensome for candidates and committees that have little or
no campaign activity, by forcing these entities to have access
to a computer and an Internet connection. Additionally, while
existing law requires the SOS to make a free filing method
available for entities that are required to file campaign
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reports online or electronically, the free filing method that
is available is not terribly user-friendly, and entities who
have little campaign activity to be reported could find that
filing method to be burdensome.
7)Levine Act of 1982 : Among other provisions, the Levine Act of
1982 (Act), named after its author Assemblymember Mel Levine,
restricts campaign contributions made to officers of most
state and local agencies by parties to a proceeding pending
before those agencies. Enacted in 1982, the Act was a
response to reports that members of a state agency sought to
raise money from individuals and entities that had permit
requests pending before the agency. The Act is unique among
the provisions of the PRA in that it is the only area in which
a campaign contribution can be the basis for a disqualifying
conflict of interest. The PRA otherwise does not treat
campaign contributions as a potential basis for conflicts of
interest.
The Act is narrowly drafted to apply only to proceedings
involving licenses, permits, or other entitlements for use.
Proceedings of a more general nature and with broader
applicability are not covered by the Act.
This bill proposes to eliminate a key provision of the Act,
specifically, a provision that prohibits an officer of an
agency from accepting, soliciting or directing a 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 during the time the matter is
pending before the agency and for three months following the
date a final decision is rendered in the matter. This bill
does not affect a provision of the Act that prohibits an
officer from participating in making a decision involving a
license, permit, or other entitlement involving a party from
which the officer received a contribution of $250 in the 12
months prior to the proceeding. Nonetheless, it would permit
agency officials to solicit contributions from individuals and
entities that have licenses, permits, or other entitlements
pending before the agency.
8)Technical Errors : This bill contains various technical errors
and ambiguities that should be corrected if this bill moves
forward.
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9)Related Legislation : AB 1146 (Norby), increases, from $100 to
$200, the threshold at which candidates or committees are
required to itemize campaign contributions and expenditures on
campaign statements, among other provisions. AB 1146 is
pending on the inactive file on the Senate Floor.
AB 1241 (Norby), exempts officials who are elected to local and
state agencies from provisions of state law limiting
contributions to those officials from entities with business
before the agency involving a license, permit, or other
entitlement for use. AB 1241 is pending on the inactive file
on the Senate Floor.
AB 1881 (Donnelly), which is also being heard in this committee
today, increases the threshold, from $100 to $5,000, at which
the names and addresses must be publicly disclosed for
campaign donors who contributed to committees that are not
candidate controlled committees.
AB 2191 (Norby), which is also being heard in this committee
today, excludes candidates for political party central
committees from the requirements to file campaign disclosure
reports under the PRA.
10)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 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
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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.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Ethan Jones / E. & R. / (916) 319-2094