Proposition 34: Changes to California Campaign Finance Law

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Proposition 34:

Changes to California

Campaign Finance Law

State of California

Fair Political Practices Commission

Liane Randolph, Chair

Sheridan Downey III, Thomas S. Knox,

 and Gordana Swanson, Commissioners

428 J Street

Suite 800

Sacramento, CA 95814

1-866-ASK-FPPC

www.fppc.ca.gov

February 2003

Proposition 34: Changes to California Campaign Finance Law

Provision

Law Prior to Proposition 34

Proposition 34 Including SB 34 Changes and 2002 Amendments

Contribution Limits

Contributions to Candidates

No state contribution limits in regular primary or general elections.

(For special elections only, the following limits apply:  $1,000 for persons; $2,500 for political committees; and $5,000 for broad-based political committees.)

Per election limits on contributions from persons:

$  3,200 – Legislature

$  5,300 – Lt. Gov, Atty Gen., Ins Cmm’r, Controller, Secty of State, Treasurer, Sup. of Public Instr., Board of Equalization

$21,200 – Governor  (85301)

The initial limits were in effect for Legislative candidates on January 1, 2001; for statewide and gubernatorial candidates on November 6, 2002.  (Sec. 83)

NOTE REGARDING THE ADJUSTED CONTRIBUTION AND VOLUNTARY EXPENDITURE LIMITS:

Proposition 34 added section 83124 to the Political Reform Act, requiring that the contribution and expenditure limits be adjusted according to changes in the Consumer Price Index in January of every odd-numbered  year.  At its meeting on December 13, 2002, the Commission adopted regulations 18535 and 18545, which establish the increases in the contribution and voluntary expenditure limits as shown above.  The new limits became effective January 1, 2003, for future elections.  They are not applicable to contributions raised for the purpose of paying debt  in connection with a 2002 election. 

Small Contributor Committees

No limit; small contributor committees are not distinguished from other PACs.

Per election limits on contributions from small contributor committees (SCCs):

$  6,400 – Legislature

$ 10,600 – Lt. Gov, Atty Gen., Ins Cmm’r, Controller, Secty of State, Treasurer, Sup. of Public Instr., Board of Equalization

$21,200 – Governor  (85302) 

A SCC must have been in existence 6 months; receive contributions from 100 or more persons; receive contributions of no more than $200 per person per calendar year; and make contributions to five or more candidates.  (85203)  

Contributions to PACs

No limit.

$ 5,300 per calendar year for the purpose of making contributions to candidates for elective state office.  (85303a) SEE NOTE REGARDING THE ADJUSTED CONTRIBUTION AND EXPENDITURE LIMITS ABOVE.

Candidate Contributions to Own Campaign

No limit.

No limit.  (85301d)

Candidate Loans to Own Campaign

No limit.

A state candidate may not have loans to his or her own campaign of more than $100,000 outstanding at any one time.  (85307b)

Lobbyist Contributions

No limit.

Lobbyists may not contribute to state candidates or officeholders if registered to lobby the candidate’s or officeholder’s agency.  (85702)


Aggregation of Contributions Made by Affiliated Entities

Under the Commission’s Lumsdon (No. 75-205) and Kahn (No. 75-185) Opinions, the following contributions are aggregated for reporting purposes:

- Contributions from an individual and the business or corporation he or she controls.

- Contributions from entities if the same person (or a majority of the same persons) directs and controls the contribution each entity makes.

- Contributions from parents and subsidiaries, and from business entities with the same controlling owner, unless the entities act completely independently in their decisions to make contributions.

Codifies the Lumsdon and Kahn “direction and control” standards.  Requires aggregation of the following contributions for purposes of the contribution limits of Chapter 5:

- Contributions of an individual and any entit(ies) whose contributions are directed and controlled by that individual.

- Contributions of two or more entities that are directed and controlled by a majority of the same persons.

-Contributions made by entities that are majority-owned by any person and contributions of the majority owner, unless those entities act independently in their decisions to make contributions.  (85311)

Spending Limits

Spending Limits

No limit.

Voluntary Spending Limits  (85400)

                                  Primary             General

Governor                $6,374,000      $10,624,000

Other statewide        4,249,000          6,374,000

BOE                          1,062,000         1,594,000

Senate                          637,000             956,000

Assembly                     425,000             744,000

The initial limits went in effect for Legislative candidates on January 1, 2001; for statewide and gubernatorial candidates on November 6, 2002.  (Sec. 83) SEE NOTE REGARDING THE ADJUSTED CONTRIBUTION AND EXPENDITURE LIMITS ABOVE.

For purposes of the spending limits, “campaign expenditures” has the same meaning as “election-related activities” as defined in clauses (i) to (vi) and (viii) of section 82015(b)(2)(C).

A campaign expenditure made by a political party on behalf of a candidate is not attributed to these spending limits.  (85400c)

Administrative and civil penalties apply if a candidate who accepts the spending limits exceeds them.  (85403)

Acceptance of Spending Limits

Not applicable.

State candidates must file a statement accepting or rejecting the spending limits at the same time they file their statement of intention to run for office.  (85401a)  A candidate who declined the voluntary spending limits in the primary but did not exceed the limits, may accept them for the general election.  (85401b)


Protection Against Self-financed Candidates

Not applicable.

A candidate who has accepted the voluntary spending limits is not bound by the limits if an opposing candidate contributes personal funds to his or her own campaign in excess of the spending limits.  (85402a)

By regulation, Commission shall require timely notification by state candidates of personal contributions to their own campaign.  (85402b; Regs. 18421.4 and 18542)

Incentives to Abide by Spending Limits

Not applicable.

Candidates for statewide elective office accepting the voluntary spending limits are designated in the ballot pamphlet as having done so. Such candidates may purchase space for a statement in the state ballot pamphlet.  The statement may be up to 250 words and may not refer to opponents.  The Secretary of State may not include in the state ballot pamphlet a statement from a candidate who has not voluntarily agreed to the spending limits.

State Senate and Assembly candidates who accept voluntary expenditure limits may purchase space for a statement in the sample ballot.  The statement may be up to 250 words and may not refer to opponents.  Local elections officers shall designate in the voter information portion of the sample ballot those candidates for Senate and Assembly who voluntarily agreed to the spending limits.  (85600, 85601)

Political Party Provisions

Limits on Contributions to Political Parties

No limit. 

Limit of $26,600 per calendar year for purpose of making contributions for the support or defeat of candidates for elective state office. This contribution limit applies to contributions made to a political party used for the purpose of making expenditures at the behest of a candidate for elective state office for communications to party members related to the candidate’s candidacy for elective state office.(85303b)  No limit on contributions to political parties for purposes other than making contributions to state candidates. (85303c) SEE NOTE REGARDING THE ADJUSTED CONTRIBUTION AND EXPENDITURE LIMITS ABOVE.

Limits on Contributions from Political Parties to Candidates

No limit.

No limit.  Prop. 34 states that it is designed to strengthen the role of political parties in financing political campaigns.  (Sec. 1(a)(3),(7))

Prohibition on Earmarking

Act requires disclosure of contributions made through intermediaries, but does not have a specific prohibition on earmarking.  (84302)

A person may not make a contribution to a committee with the agreement that it will be contributed to any particular candidate unless the contribution is fully disclosed under the Act’s intermediary rules.  (85704)

Membership Communications

 

Payments for communications to members, employees, or shareholders of an organization, or their families, for purposes of supporting or opposing  a candidate or ballot measure, are not contributions or expenditures. However, such payments made by a political party for communications to its members who are registered with that party which would otherwise qualify as contributions or expenditures shall be reported under the Act’s campaign reporting provisions.  (85312) Payments reportable by recipient committees. (Reg. 18531.7)


Fundraising

Pre-Election Fundraising

Not applicable.

State candidates may raise funds for the general election before the date of the primary.  Candidates must set aside funds raised for the general election for use in that election.

A candidate who loses in the primary or withdraws from the general must refund general election funds to contributors on a pro rata basis, less fundraising expenses.  (85318)

Post-Election Fundraising/Campaign Debt

No limit.

State candidates may accept contributions after an election only to the extent the candidate has debts outstanding from that election, and the contribution does not exceed applicable contribution limits.  (85316)  Section 85316 does not apply to a pre-2001 committee of a candidate for elective state office established for  an election held prior to January 1, 2001.  (Reg. 18531.6)

Post-Election Fundraising/Campaign Debt/Pre-January 1, 2001 Elections

No limit.

If a state candidate had net debts resulting from an election held prior to January 1, 2001, contributions to that candidate for that election are not subject to the contribution limits of Sections 85301 and 85302. (85321)

Surplus Funds

Campaign funds are considered “surplus” for an incumbent upon leaving elected office, and for a defeated candidate at the end of the first post-election report period following his or her defeat.  (89519)

Surplus funds may be used for:  payment of outstanding campaign debts; pro rata repayment of contributors; donations to nonprofit tax-exempt organizations; contributions to a political party or committee (funds cannot be used for contributions supporting or opposing candidates); contributions to candidates in federal and out-of-state elections; the payment of certain professional services for the committee; and purchasing a home or office security system if the official has received threats.  (89519)

Definition of when funds become “surplus” is the same as current law.

Repayment of contributions from surplus funds need not be pro rata.  Surplus funds contributed to a political party committee may not be used to support or oppose candidates, but may be used for partisan voter registration, get-out-the-vote activities, and slate mailers.

Special Elections

For special elections only, the following contribution limits apply:  $1,000 for persons; $2,500 for political committees; and $5,000 for broad-based political committees.  (85305)  (Prop. 73’s contribution limits were not invalidated as to special elections.)

Prop. 34’s contribution limits apply to state special elections and special runoff elections.  Specials and runoffs are considered separate elections for purposes of the contribution and expenditure limits.  (85314)

Separate Campaign Accounts

See 85318

Candidates for elective state office may establish separate campaign contribution accounts for the primary and general elections or special primary and special general elections.

Recalls

No limit.

Elected state officers may form a committee to oppose a recall measure.  Contribution and expenditure limits do not apply.  After the failure of a recall petition, or the recall election, remaining funds are treated as surplus.  (85315) 


Legal Defense Fund

Not applicable.

State candidate or officeholder may establish a separate legal defense fund account if the candidate or officeholder is subject to civil, criminal, or administrative proceedings arising directly out of the conduct of an election campaign, or the performance of the officer’s governmental activities.  Funds are not subject to contribution limits but must be reported.  Funds may only be used for attorneys’ fees and legal costs, and leftover funds must be disposed of under surplus funds rules.  (85304, Reg. 18530.4) 

Transfers and Carryover

Transfers from One Candidate to Another

No restrictions on transfers of funds from one candidate to another, except in special or local elections where contribution limits apply.

A state candidate or his or her committee may make a contribution to another state candidate only up to the $3,000 limit of 85301(a).  (85305 and Reg. 18535) Amount adjusted to $3,200. (Regs. 18544 and 18545)

Carryover of Funds Raised Before the Limits Were in Effect

Not applicable.

Existing campaign funds held by Legislative candidates on January 1, 2001 (the date the limits take effect for them) may be used to seek office without attribution to specific contributors.  (85306b, Reg. 18536 and Emergency Reg. 18530.2)  Existing campaign funds held by candidates for statewide office on November 6, 2002 (the date the limits take effect for them) may be used to seek office without attribution to specific contributors.  (85306c, Reg. 18536 and Emergency Reg. 18530.2)

Carryover of Funds When Running for Next Term of the Same State Office

Not applicable.

A candidate for state office may carryover contributions raised in connection with one election for state office to a subsequent term of the same office without restrictions.  (85317, Reg. 18537.1)

Attribution

Funds transferred into special elections are required to be attributed to specific contributors to stay within the contribution limits of 85305. 

A candidate may transfer funds from one controlled committee (for local office, for example) to his or her committee for state office.  The candidate must attribute the transferred contributions to specific contributors using a LIFO or FIFO accounting method to ensure that the transferred contributions do not exceed state contribution limits.  (85306a)

New Disclosure Requirements

24 Hour Reporting










Contributions
and Independent Expenditures of $1,000 or More









Reporting Within 10 Business Days Contributions of $5,000 or More

Candidates/committees that make or receive contributions or make independent expenditures in the late period (16 days before an election) must report them on late contribution reports or late independent expenditure reports within 24 hours.  (84203, 82036, 84204, 82036.5)  Candidates who are required to file electronically with the SOS must file late reports electronically. 

State candidates and ballot measure committees that are required to file electronically must file within 24 hours electronic reports for contributions of $1,000 or more received during the 90 day period before an election.  (85309(a), (b), 85204))  This section applies to all candidates for elective state office as of January 1, 2001.

Committees, including political party committees, that are required to file electronically and that make independent expenditures of $1,000 or more during the 90 day period before an election, must disclose the independent expenditures electronically within 24 hours of the time they are made.  (85500a)  The independent expenditure reports must include itemized information about contributions received since the last report filed.  (84204b)

State candidates and ballot measure committees that are required to file electronically must file within 10 business days electronic reports for contributions of $5,000 or more received outside the election cycle.  (85309(c), (d))  These requirements apply to all candidates for elective state office as of January 1, 2001.

Issue Advocacy Disclosure

None required.

Disclosure – A person who pays $50,000 or more for a communication that clearly identifies a state candidate but does not expressly advocate the election or defeat of that candidate, and is disseminated within 45 days of an election, must file an electronic report with the SOS within 48 hours of the payment.  (85310a)

The report must disclose any person who has paid $5,000 or more for the communication, except those in the business of providing goods and services (i.e., consultants and vendors).  (85310b; Reg. 18539.2)

Limit – Any payment received by a person who makes an issue advocacy communication is limited to $25,000 per calendar year if the communication is made at the behest of the clearly identified candidate.  (85310c)

Paid Spokespersons for Ballot Measures

Not applicable.

A committee that makes an expenditure of $5,000 or more to an individual for his/her appearance supporting or opposing ballot measures must file a report within 10 days of the expenditure specifying certain information.  The printed or spoken disclaimer must include the statement that the spokesperson is being paid by this campaign or its donors.  (84511, Reg. 18450.11)

Disclosure in Ballot Measure Advertisements

Sender identification required on unsolicited mailings of more than 200 pieces.  A sponsored committee must identify its sponsor. 

Does not repeal provisions of Proposition 208 requiring advertisements for or against a ballot measure to identify the top donors.  However, Section 84503 requiring that advertisements identify contributors who give $50,000 or more to ballot measures is not applicable to slate mailers.  (Prop. 208 84501-84510)  Current sender identification rules continue to apply.  (Regs. 18450.1-18450.5)

Slate Mailer Requirements

Among other things, requires slate mailers to designate with asterisks those candidates and measures that paid to appear in the mailers.

Also requires a disclaimer concerning the official party position by slate mailer organizations about candidates.   

Although Prop. 34 did not repeal Prop. 208 provision requiring slate mailers to designate with dollar signs those candidates and measures that paid to appear in the mailers (Prop. 208 84305.5), that provision of Prop. 208 was declared unconstitutional by the federal court, requiring reversion to the pre-Prop. 208 requirement of asterisk designations.

If a SMO or ballot measure committee sends out a slate mailer recommending support or opposition of a ballot measure or candidate that is different from the official recommendation of the political party that the mailer appears to be from, the mailer must contain a disclaimer stating “THIS IS NOT THE OFFICIAL POSITION OF THE (political party that the mailer appears to represent) PARTY.”  (84305.6)

Other Contribution Requirements – Applicable to All Candidates as of January 1, 2001.

Contributor Information

Committees may deposit contributions and use “best efforts” to obtain occupation and employer information for contributors.

Committee shall return, not later than 60 days after receipt, any contribution of $100 or more if the committee does not have the contributor’s name, address, occupation and employer on file. A candidate or committee may return a contribution pursuant to subdivision (a) after date that candidate or committee has reported the contribution under any provision of this title. (85700, Reg. 18570)

Return of Contributions

 

State candidate may return all or part of any contribution at any time.  (85319) This section applies to statewide election officers as of January 1, 2001. As amended, does not apply to return of state candidate’s own contributions.

Disgorgement of Laundered Contributions

Not applicable.

Committee that receives a contribution in violation of the Act’s prohibition on money laundering shall pay the full amount of the contribution to the General Fund.  (85701)

Contributions by Spouse or Child

Contributions by spouses are not aggregated.

Contributions by spouses are not aggregated for purposes of limits.  (85305a)  Contributions made by children under 18 are presumed to be made by the parent.  (85305b)

Definitions

   

“Political Party Committee”

Defined in Reg. 18539 (repealed and reenacted for other purposes).

Defined as the “state central committee or county central committee of an organization that meets the requirements for recognition as a political party pursuant to section 5100 of the Elections Code. (85205)

“Controlled committee”

Reg. 18539b states that a political party is not a controlled committee (repealed and reenacted for other purposes).

Codifies current rule that a political party committee is not a controlled committee.  (82016)

“Statewide elective office”

Defined to include Gov., Lt. Gov., Atty General, Insurance Comm’r, Controller, Secretary of State, Treasurer, and Supt. of Public Instruction.  (82053)

Adds State Board of Equalization to definition of statewide elective office.  (82053)

“Lobbyist”

Any individual who is employed for economic consideration on a substantial or regular basis to communicate directly or through agents with any state official for the purpose of influencing legislative or administrative action.  (82039)

Does not repeal provisions of Proposition 208 defining a lobbyist as any individual who receives $2,000 or more in economic consideration in a calendar month or whose principal duties as an employee are to communicate directly through his or her agents with any state official for the purpose of influencing legislative or administrative action.  (Prop. 208 82039)

“Independent Expenditure”

Current law defines independent expenditure in 82031 and Reg. 18225.7 – made at the behest of.

Prop. 34 adds that an expenditure will not be considered independent if it is made in cooperation, concert, or coordination with the candidate or his or her committee or agent, on whose behalf, or for whose benefit the expenditure is made.  (85500b)

A controlled committee of a candidate may not make independent expenditures and may not contribute to another committee for the purpose of making independent expenditures to support or oppose other candidates.  (85501)

Miscellaneous

   

Enforcement – Administrative Fines

Any person who violates any provision of the Political Reform Act may be liable in an administrative proceeding for an amount up to $2,000 per violation. 

Increases administrative fines for a violation of the Act to $5,000 per violation.  (83116c)

Effect on Local Laws

Localities may impose additional campaign finance requirements if they do not conflict with provisions of the Political Reform Act.  (81013)

Nothing in Prop. 34 nullifies local contribution limits or prohibitions, but local limits may not conflict with Prop. 34 re membership communications. (85703).  Prop. 34’s contribution and spending limits apply only to state candidates, not candidates in local jurisdictions.  However, other provisions apply to locals, including:  return of contributions for which information is not on file (85700); membership communications (85312); amplified definition of independent expenditure (85500b) and 85501; minor changes to surplus funds statute (89519); additional disclosure on late independent expenditure reports re contributions received and expenditures made since the last report filed (84204b); additional slate mailer disclosure (84305.6); additional ballot measure advertisement disclosure re paid spokespersons (84511) and top donors (Prop 208 84501-84510); increase in administrative fines under the Act (91005.5); and disgorgement of laundered contributions (85701).

Effect of Prop. 34 on Prop. 208

Not applicable.

Repeals all of Proposition 208’s provisions except:

82039 – definition of lobbyist

84305.5 – slate mailer requirements.  However, although not repealed, this provision was held unconstitutional by the federal court, causing a reversion to law in effect prior to Prop. 208.

84501-84510 – advertisement disclosure requirements (except as to slate mailers).

85802 – appropriation to FPPC

Effective Date

Not applicable.

This act shall become operative on January 1, 2001.  However, Article 3 (commencing with Section 85300), except subdivisions (a) and (c) of Section 85309, Section 85319, Article 4 (commencing with Section 85400), and Article 6 (commencing with Section 85600), of Chapter 5 of Title 9 of the Government Code shall apply to candidates for statewide elective office beginning on and after November 6, 2002.

Note:  This chart provides a summary of the major provisions of Proposition 34.  The text of Prop. 34 is available on the FPPC’s website (www.fppc.ca.gov) (Revised 02/14/03)

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