BILL ANALYSIS �
SB 27
Page 1
SENATE THIRD READING
SB 27 (Correa)
As Amended April 10, 2014
2/3 vote. Urgency
SENATE VOTE : 28-8
ELECTIONS 5-1 APPROPRIATIONS 12-5
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|Ayes:|Fong, Bocanegra, Bonta, |Ayes:|Gatto, Bocanegra, |
| |Hall, Perea | |Bradford, |
| | | |Ian Calderon, Campos, |
| | | |Eggman, Gomez, Hall, |
| | | |Holden, Pan, Quirk, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Donnelly |Nays:|Harkey, Bigelow, |
| | | |Donnelly, Linder, Wagner |
| | | | |
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SUMMARY : Establishes conditions under which a multipurpose
organization (MPO) that makes campaign contributions or
expenditures is required to disclose names of its donors.
Requires the Fair Political Practices Commission's (FPPC) Web
site to include a list of the largest contributors to committees
that support or oppose state ballot measures or candidates, as
specified. Specifically, this bill :
1)Requires MPOs that make contributions or expenditures in
California campaigns to file campaign disclosure reports
pursuant to the following:
a) Defines an MPO as an organization described in Sections
501(c)(3) through (10) of the Internal Revenue Code that is
exempt from taxation under Section 501(a) of the Internal
Revenue Code; a federal or out-of-state political
organization, as specified; a trade or professional
association; a civic or religious organization; a fraternal
society; an educational institution; or any other
association or group of persons acting in concert; that is
operating for purposes other than making contributions or
expenditures.
b) Provides that an MPO is a recipient committee, for the
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purposes of the Political Reform Act (PRA), only under one
or more of the following circumstances:
i) The MPO is a political committee registered with
another state or with the Federal Elections Commission
(FEC), except as specified, and it makes contributions or
expenditures in this state of at least $1,000;
ii) The MPO solicits and receives payments from donors
totaling $1,000 or more for the purpose of making
contributions or expenditures, or subject to an
understanding that the payments may be used for making
contributions or expenditures;
iii) The MPO has funds from a donor and a subsequent
understanding is reached that the funds may be used for
making contributions or expenditures of $1,000 or more;
or,
iv) The MPO makes contributions or expenditures totaling
more than $50,000 in 12 months, or more than $100,000 in
four consecutive years. Provides that such an MPO is not
a recipient committee if it uses only nondonor funds to
make contributions and expenditures, and it identifies
the source of the nondonor funds.
c) Provides that an MPO that is a recipient committee and a
federal or out-of-state political committee is not required
to itemize federal or out-of-state contributions and
expenditures. Provides that a committee registered with
the FEC is not required to provide detailed information
about contributors of $100 or more.
d) Provides that an MPO that is a recipient committee must
disclose donors as follows:
i) The committee must provide detailed information
about donors of $100 or more where those donations were
solicited for the purposes of making contributions or
expenditures in California, or where there was an
understanding or agreement that the donations may be used
for making contributions or expenditures in California;
ii) The total amount of contributions received that are
disclosed by the MPO on its campaign disclosure reports
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must equal the total amount of contributions and
expenditures made by the MPO in California; and,
iii) If the total contributions disclosed pursuant to i)
is not sufficient to account for all the contributions
and expenditures made by the MPO during the reporting
period, the MPO must disclose the identities of other
donors of $1,000 or more, using a last-in, first-out
accounting method, until the MPO has disclosed a total
amount of contributions received to equal the total
amount of contributions and expenditures made by the MPO
in California. Provides that a donor is not subject to
disclosure if the donor prohibits the MPO from using the
donation for contributions or expenditures, or if the
donation is a grant from a private foundation, as
specified.
e) Provides that an MPO that is a recipient committee by
virtue of making contributions or expenditures totaling
more than $50,000 in 12 months or more than $100,000 in a
four year period is not required to disclose donor
information for a donation received prior to July 1, 2014
unless the donor knew that the MPO would use the donation
to support or oppose a candidate or ballot measure in the
state, and is not required to disclose the donors for
contributions and expenditures made in a prior calendar
year in which the MPO did not qualify as a committee.
f) Permits an MPO that is a membership organization, is a
sponsor of a committee, and makes all of its contributions
and expenditures from funds derived from dues, assessments,
fees, and similar payments that do not exceed $10,000 per
calendar year from a single source, to report contributions
or expenditures made from the sponsor's treasury funds on
the campaign statements of the sponsored committee, as
specified.
2)Requires a committee that is primarily formed to support or
oppose a state ballot measure or candidate, and that raises $1
million or more for an election, to maintain an accurate list
of the committee's top 10 contributors of $10,000 or more, as
specified by the FPPC. Requires a current list of the top 10
contributors to be disclosed on the FPPC's Web site, as
specified. Requires the committee to update the top 10
contributor list whenever it changes. Requires the FPPC to
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post or update the top contributor list within five business
days, or within 48 hours during the last 16 days before the
election.
3)Requires a committee to use reasonable efforts to identify the
individuals or corporations that are the true source of
contributions made to the committee when listing the top
contributors.
4)Requires the FPPC to compile, maintain, and display on its Web
site a current list of the top contributors supporting and
opposing each state ballot measure.
5)Requires the state ballot pamphlet to contain a written
explanation of the top contributor lists described above,
including a description of the Web sites where the lists are
available.
6)Contains an urgency clause and provides that this bill shall
become operative on July 1, 2014.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Any costs to the FPPC will be minor and absorbable. No
additional penalty revenues, as the penalty provisions are
consistent with existing commission regulations.
2)Annual general fund printing costs of $55,000 to the Secretary
of State for one additional page in the state ballot pamphlet
to include a written explanation of the top 10 contributor
lists, as specified.
COMMENTS : According to the author, "Everyone is aware of the
now-infamous $11 million contribution from an Arizona non-profit
organization to a committee that was opposing Proposition 30 and
supporting Proposition 32 last November. After a court battle
with the FPPC, this nonprofit group revealed that it was not the
true source of the $11 million contribution but merely an
intermediary. They disclosed that the actual source of the $11
million was another nonprofit organization who had received it
from yet another nonprofit organization. The true, original
source of this campaign money is still unknown to the public?
"In light of this, I introduced SB 27 which is a simple measure
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that will accomplish two important goals. First, it will enact a
series of tests and presumptions in the law so that campaign
funds can no longer be laundered through nonprofit corporations
without them disclosing the true source of the money. Second, it
will require ballot measure committees that raise one million
dollars or more to give the FPPC a current list of the
committee's top ten contributors of ten thousand dollars or
more. The FPPC and the committee will be required to post the
list on their Internet web sites."
This bill is intended to address some of the challenges with
ensuring thorough campaign disclosure by specifying
circumstances in which an MPO is required to disclose its donors
when it makes contributions or expenditures. Some of these
provisions are similar to regulations adopted by the FPPC. This
bill also establishes a new situation in which an MPO is
required to disclose the identities of donors when it makes
contributions or expenditures of more than $50,000 in a 12 month
period, or more than $100,000 in a four year period.
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 Political Reform Act (PRA).
Amendments to the PRA that are not submitted to the voters, such
as those contained in this bill, must further the purposes of
the initiative and require a two-thirds vote of both houses of
the Legislature.
Please see the policy committee analysis for a full discussion
of this bill.
Analysis Prepared by : Ethan Jones / E. & R. / (916) 319-2094
FN: 0003145