SUPPORTS Proposition 89--Political Campaigns. Public Financing. Corporate Tax Increase. Campaign Contributions and Expenditure Limits. Initiative Statute BACKGROUND |PROPOSAL |FISCAL EFFECTS | SUPPORTERS/OPPONENTS RESOURCES | SUMMARY POINTS | GET INVOLVED | PRINT FLYER --> READ NEXT (90)

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Current Limits on Political Contributions

Candidates for state office, that is, for governor and other statewide officials and the 120 members of the state Legislature, now collect private donations from individuals, corporations, political parties, and other organizations such as labor unions and nonprofit organizations, to pay for the costs of their political campaigns. State law determines the maximum amount of money that each person or group can give to a candidate. The limits were last set by Prop. 34 in November 2000 and are adjusted for inflation every two years. Limits depend on the office being sought and the donor. For example, an individual can give a candidate for state Assembly a donation of up to $3,300. A political party can give that same candidate as much money as it chooses. A candidate can accept donations any time before an election and can spend without limit any money that is collected.

Role of Committees and Independent Expenditures

Rather than make donations directly to candidates, some individuals and groups choose to make political donations to "committees." These committees take donations and then decide which candidates to give money to. For example, one type of committee--a small contributor committee--accepts donations of up to $200 from more than 100 individuals and then distributes the funds to candidates.

Other individuals, groups, and committees choose to spend money on political campaigns without giving money directly to candidates. Instead, they make "independent expenditures" without coordinating with the candidate. These independent expenditures, such as television commercials or newspaper advertisements, may encourage voters to support or oppose a candidate. There are no limits on the amount of money that can be donated for or spent on independent expenditures.

Ballot measures

There are no limits on the amount of money that can be collected or spent for and against state ballot measures (propositions).

State Government's Responsibilities

The state's campaign finance laws are administered by the Secretary of State and the Fair Political Practices Commission (FPPC). Under state law, individuals and groups must report to the Secretary of State how much money has been given, received, and spent on political campaigns. This information is available to the public at http://cal-access.ss.ca.gov/Campaign/Candidates/

The FPPC is in charge of enforcing the laws to make sure candidates, committees, and donors obey the rules. The FPPC can assess fines on candidates violating the election laws.

Campaign Finance Reform in California

In June 1988, voters approved two separate campaign finance reform initiatives, Proposition 68 and Proposition 73. Proposition 68 proposed a system of public funding and expenditure limits for state legislative races, and passed with 53 percent of the vote. Proposition 73 prohibited public funding of campaigns and set contribution limits for state and local elections, and passed with 58 percent of the vote. Since Proposition 73 received more affirmative votes than Proposition 68, it became state law. In 1990, state and local elections were conducted under the Proposition 73 limits. Proposition 73 was challenged in court and the only provisions to survive were contribution limits for special elections, restrictions on certain mass mailings by officeholders, and the prohibition on the use of public money for campaign purposes.

In 1996 Proposition 208 was approved by the voters. It was sponsored by many of the same people and groups who had supported Proposition 68. Proposition 208 enacted a campaign finance reform plan consisting of variable contribution limits; that is, candidates who agree to a voluntary spending cap are rewarded with contribution limits higher than those imposed on candidates who refused the spending cap.

Proposition 208 was almost immediately challenged in court and was enjoined from enforcement. The proponents of Proposition 208 were still pursuing the case in federal court when Proposition 34, a legislative ballot measure approved by the voters in November 2000, largely repealed it. Proposition 34 imposed contribution limits, limited candidate-to-candidate transfers, prohibited certain lobbyist contributions, provided for voluntary spending limits in exchange for candidate access to ballot pamphlets, and enhanced on-line reporting of large contributions. The provisions of Proposition 34 remain intact today.

This measure makes significant changes to state laws on campaign financing for elected statewide officials and state ballot measures. The provisions for candidates generally affect only state elected officials.

Requirements to Receive Money

In order to receive public funding for a campaign, a candidate has to meet these requirements:

• $5 Donations and Signatures. A candidate must collect a number of $5 donations ("qualifying contributions") and signatures from residents prior to a primary election. As shown in the chart below, the required number of donations would range from $750 to $25,000 depending on the office sought. The measure requires that these donations be paid to the state.

• Private Contributions. To receive public funding, a candidate could not receive private campaign funding, with two main exceptions. First, beginning up to 18 months prior to a primary election, the measure allows candidates to collect and spend start-up contributions, or "seed money." These funds could be used to pay costs for collecting the qualifying contributions and signatures. The measure restricts this kind of donations to $100 each with a total limited to between $10,000 and $250,000 depending on the office (see chart above). These funds could only be spent within 90 days before a primary election.

  Second, candidates would continue to be able to receive donations from political parties. Donations from political parties would be subject to the same limits as for candidates choosing not to receive public funds (described below).

• Other Requirements. By accepting public funding, a candidate would be subject to some additional requirements. For example, candidates would be required to participate in public debates before each election. In addition, candidates could not use their personal funds to pay for campaign costs.

Public Funding Provided

Those candidates meeting the requirements described above would become eligible to receive public funds. As shown in the chart above, the amount of funding would vary based on: (1) the office sought; and (2) whether it is a primary or general election. Thus a candidate for Assembly could receive $250,000 for a primary election and additional $400,000 for the general election (if successful in the primary election). A candidate for Governor could receive $10 million for the primary election and an additional $15 million for the general election. The FPPC would administer the funds and make disbursements using a debit card system.

• Additional Public Funds. In cases where a candidate's opponent chose not to participate in the public financing system, the measure allows a participating candidate to receive additional funds in some cases. Specifically, if an opponent spent more in private funds than the amount of public funds available, additional public funds would be provided to the candidate on a dollar-for-dollar basis. Similarly, a participating candidate would receive additional public funds if independent expenditures were made in support of an opponent. The maximum amount of additional public funds that a candidate could receive is capped under the measure (generally five times the original amount provided to a candidate and four times the amount for a candidate for Governor). Thus the maximum an Assembly candidate could get in a primary election would be $1.25 million.
• Funds for Expenses While in Office. Under current law, state elected officials generally may use leftover campaign funds to pay for some expenses while in office. Under the measure, those candidates who accept public financing and win their election would be eligible to receive annual payments to cover similar expenses. Members of the Legislature would receive $50,000 a year while in office and other state officials would receive $100,000 each year.

Minor Party and Independent Candidates

The amounts shown in Figure 3 are for candidates representing major parties (generally, parties whose nominee for Governor in the last election received at least 10 percent of the vote). Under the measure, candidates from minor parties and independent candidates are eligible to receive smaller amounts of public funds. Depending on the situation, a minor party or independent candidate could receive as much as one-half of the amount that a major party candidate receives.

Lower Contribution Amounts for Privately Funded Candidates

• Lower Campaign Contributions. For those candidates who choose not to participate in public financing of campaigns, the measure imposes new limits for campaign donations to candidates. The measure's limits generally are much more restricting than is now the case. Individuals, corporations, and other groups who can now donate $3,300 per candidate for the Legislature would be restricted to $500 for legislative candidates. Political parties who now can give any amount would be restricted to $20,000 for a privately funded candidate for Assembly in a general election. The new limits are summarized in Figure 4.
  

• Other Restrictions on Campaign Contributions. The measure also adds other types of restrictions on campaign contributions related to privately funded candidates, which are summarized in Figure 5.

  

• Independent Expenditure Contribution Limit. The measure restricts donations to $1,000 each year to a committee for independent expenditures. As under current law, individuals could make unlimited independent expenditures if they spent their own money on their own, without the use of a committee.

• Overall Donation Limit. The measure adds new limits on the overall amount of political contributions that a person or group can make to candidates and committees in a year. The total amount that could be donated to all types of committees to support or oppose state candidates would be limited to $15,000. Of this total, however, any contributions over $7,500 would be required to go for independent expenditures.

• Lower Political Party Contribution Limit. The measure lowers an existing limit on annual contributions to political parties from $27,900 to $7,500.

• Lobbyist Restrictions. Under existing law, lobbyists are prohibited from making contributions to candidates. The measure also forbids lobbyists from making donations to political parties and committees.

• State Contractor Restrictions. Under existing law, those individuals and entities receiving state contracts are not subject to any special restrictions on political contributions. The measure forbids, in some instance, those receiving state contracts from making donations to candidates, political parties, and committees.

Contribution Restrictions for State Ballot Measures

Unlike donations for candidates, the amount of money donated by entities to support or oppose state ballot measures currently is not subject to contribution limits. This measure places two new restrictions on donations for ballot measures:

1. When a candidate for state office is significantly involved with a committee that supports or opposes a ballot measure, individuals, corporations, and other groups could be limited to a $10,000 contribution to that committee.
2. Corporations would be prohibited from making contributions or spending more than $10,000 to support or oppose a ballot measure. (Nonprofit corporations meeting certain requirements would not be subject to this restriction.) Corporations, however, could establish special committees to collect voluntary donations from employees for additional expenditures.

Fiscal Provisions

Higher Corporate Taxes. In order to pay for the measure's provisions for the public financing of campaigns, the measure increases taxes on corporations and financial institutions by 0.2 percent. Corporation taxes would go from 8.84 percent to 9.04 percent. Taxes on financial institutions would go from 10.84 percent to 11.04 percent.

Other Revenues. In addition, the measure would result in other, small sources of revenues: the candidates' $5 contributions and fines on candidates violating election laws.

Total Amount of Funds. The total amount of funds that could be held by the state at any time for the measure's purposes would be limited to about $900 million by means of a formula adjusted for inflation every two years. Any amount over this limit would be transferred to the state's General Fund. If there were not enough money to fund the measure's provisions, the measure authorizes the FPPC to reduce proportionately the amount of funds available to each candidate.

Administration Costs. The measure provides that a minimum of $3 million, adjusted for inflation every two years, go to the FPPC to administer the public financing program. The Secretary of State would be required to use some of the funds for a voter education campaign.

More About Corporate Taxes

In 2003, 589,310 California corporations filed tax returns. Only 1.7 percent of them had taxable incomes of $1 million or more. These firms paid 82 percent of the corporation tax. Most small businesses are organized in a way which exempts them from the corporation tax, e.g., sole proprietorships (2.4 million firms), partnerships (183,000 firms), and limited liability corporations (135,000 firms).

Over the past two decades state revenue has shifted from corporate to personal income taxpayers. According to the California Budget Project, the personal income tax is expected to provide 53.2 percent of General Fund revenues in 2006-07, up from 35.4 percent in 1980-81. Corporate tax is expected to provide 10.9 percent of General Fund revenues in 2006-07, down from 14.6 percent in 1980-81.

New revenues. The Legislative Analyst estimates that the measure would raise over $200 million each year, almost all of it coming from the new 0.2 percent tax on corporations and financial institutions.

New spending. The new funds would pay for costs to administer the measure including one-time startup costs. The remaining funds would be available for candidates who choose to receive public funds for their political campaigns. The amount spent would depend on factors that would vary from election to election.

These factors include:

• The number of candidates accepting public funds.
• The amount of money spent by candidates not receiving public financing, which would determine the level of any additional public funds.

Adequacy of revenues. The Legislative Analyst believes that, assuming that the number of candidates in each election does not increase significantly from current levels, there probably would be sufficient funds available to provide all candidates with the amounts allowed under the measure.

The rebuttal to the opponents' argument was signed by Jacqueline Jacobberger, President, League of Women Voters of California; Richard L. Hasen, JD, Ph.D., Constitutional Election Law Professor; and Kathay Feng , Executive Director, California Common Cause.

Other organizations supporting Proposition 89 include California Alliance for Retired Americans, California Black Chamber of Commerce, California Church IMPACT, Consumer Federation of California, Courage Campaign, California Democratic Council, CALPIRG, Code Pink, Congress of California Seniors, Equal Justice Society, Global Exchange, Greenlining Institute, Public Campaign, Senior Action Network, Sierra Club California, SpeakOut CA, TakeBackCA.org, TheRestOfUs.org, William C. Velasquez Institute, and Working Assets.

Donna Chipps, LWVC Program Director for Campaign Financing, cf@lwvc.org

Chris Carson, LWVC Government Director, govt@lwvc.org

Jack Sullivan, LWVC Legislation Director, legislation@lwvc.org

Trudy Schafer, LWVC Program Director/Advocate, 801 12th Street, Suite 220, Sacramento 95814, 916-442-9210, Fax 916-442-7362, advocacy@lwvc.org

Clean Money Now--Yes on 89, 310-481-0816, 877-UVOTE89 (877-886-8389), www.89now.org. Committee formed primarily to support grassroots activities for the campaign. The LWVC is one of the sponsoring organizations. Visit the Web site to download reference and campaign materials, volunteer for speakers bureau, participate in a phone bank, host house parties and donate to the campaign. See also www.buckthesystemnow.org.

Californians for Clean Elections--Yes on 89, major funding provided by the California Nurses Association, 800-440-6877, www.yeson89.org. Committee formed by the original sponsor of the proposition to support the media campaign and other campaign activities.

There are many Prop 89 Web sites! Visit www.channel89.org and www.proposition89.blogspot.com, then follow their links to more.

YES on Proposition 89
The Clean Money and Fair Elections Act of 2006

• It's time for the people of California to clean up the corrupting influence of money in California. Proposition 89 makes elected officials responsive to voters rather than to special interests.
• Proposition 89 helps level the playing field so candidates with the best ideas can get elected, even if they are not wealthy and do not have connections to special interests.
• Proposition 89 increases voter turnout and participation by helping candidates run for office if they have shown a broad base of public support and agree to limit their spending.
• Proposition 89 reduces the power of big oil companies, drug companies, HMOs, big unions and other special interests who get their way in Sacramento. It's not fair for them to use their money to elect people who will owe them favors and do their bidding.
• Proposition 89 puts voluntary limits on campaign expenditures to help control excessive spending and reduce the amount of negative advertising.
• Candidates of all major parties receive enough money to run competitive campaigns so that wealthy candidates and outside groups can't buy elections. Matching funds are provided when a candidate is outspent by nonparticipating candidates or independent expenditure campaigns.
• Corporations, unions and individuals may only make $500 contributions to candidates for the state legislature, and $1000 to candidates for statewide office. They have a $7500 aggregate limit for each election.
• Proposition 89 stops legislative giveaways like the $3.3 billion in corporate tax loopholes that cost the average California household $275 per year.
• Contributions from corporate treasuries to ballot measure campaigns are limited to $10,000, but individuals can make unlimited contributions to ballot measure committees and PACs.
• Prop 89 is based on clean money elections laws now in place in Arizona, Maine and other states and cities that have increased voter participation, made elections more competitive, inspired greater diversity of candidates, and reduced the influence of money over ideas.

Note: Please adapt this letter to your own community and check your local paper's word limit for published letters.

Editor:

Proposition 89 on the November ballot, the Clean Money and Fair Elections Act, is an opportunity to put voters back in charge of elections.

Special interests and the wealthy now fund the bulk of elections in California. There is a better way, public financing. Arizona and Maine have had a similar system since 2000 and have seen an increase in the number of candidates who run for office and in voter turnout. Candidates can spend time talking to their constituents rather than "dialing for dollars" and attending fundraisers.

Campaigns will become about ideas, not who can raise the most money. By reducing excessive campaign spending, Proposition 89 will help put the brakes on the negative advertising that has left voters more and more disillusioned with the current system.

Candidates who do not wish to participate in public financing will still be funded through donations from individuals, corporations and unions but must adhere to strict contribution limits of $500 to $1000, depending on the office. There will be no more $22,300 contributions to the gubernatorial candidates by wealthy individuals and special interests.

Proposition 89 will help level the playing field. Candidates will have the chance to run and win elections without personal wealth or connections to special interests, and our elections will become focused on the issues that matter to you and me. After the election, office holders will be accountable to the voters, not to big money contributors.

Vote YES on Proposition 89 and let the people take back elections.

Sincerely,

(your name)

The Background, Proposal, and Fiscal Effect sections are from the League of Women Voters of California Eduation Fund In Depth: Analysis of Proposition 89. Numbered figures are taken from the Legislative Analyst's Office (LAO) Voter Information Guide analysis.