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LEAGUE OF WOMEN VOTERS OF CALIFORNIA EDUCATION FUND Nonpartisan In Depth Analysis of PROPOSITION 25 ELECTION CAMPAIGNS. CONTRIBUTIONS AND SPENDING LIMITS. PUBLIC FINANCING. DISCLOSURES.

Initiative Statute

THE QUESTION

Should additional campaign finance disclosure requirements, limits on political contributions, and partial public financing of campaign advertising for state candidates and ballot initiative committees that limit spending, be instituted for California elections?

PROVISIONS

Proposition 25 would establish campaign contribution limits, campaign fundraising periods, voluntary spending limits, additional reporting requirements, limited public financing for qualified state candidates and ballot initiative committees for advertising and voter information packets, and a campaign disclosure website.

• Limits campaign contributions to candidates for state and local offices (see chart below, adapted from the Legislative Analyst's Office)

LIMITS ON CONTRIBUTIONS TO CANDIDATES

• treats all locals of a union or all subsidiaries of a business as one donor for contribution limit purposes

• treats loans from others as contributions, subject to the above limits. Prohibits candidates for Governor from lending their own campaigns more than $100,000, or candidates for other offices more than $50,000.
• Limits contributions to committees and political parties
• $5,000 per year limit on contributions to PACs and independent expenditure committees
• $25,000 per year limit on contributions to parties for use in supporting or opposing specific candidates or for electronic media advertising
• Restricts time periods when contributions can be received
• no more than 12 months before a primary election for statewide candidates
• no more than six months before a primary election for other state offices
• no more than 90 days after a candidate withdraws, is defeated, or elected to office

• Establishes voluntary limits on state candidate/ballot campaign spending

• requires that candidates and ballot initiative committees declare at the beginning of the campaign whether they will abide by voluntary spending limits, and that wealthy candidates indicate if they plan to spend in excess of one-half the spending limit from their own funds

• specifies the following spending limits for candidates, or initiative proponents or opponents, who voluntarily accept them:

  SPENDING LIMITS
  Position or Contest	Primary Election	General Election
  Assembly candidates	$300,000	$400,000
  Senate or Board of Equalization	$500,000	$800,000
  Statewide candidates other than governor	$1,500,000	$2,000,000
  Governor	$6,000,000	$10,000,000
  State ballot initiatives	$6,000,000 per election

• mandates that candidates and ballot committees that accept spending limits also agree to accept no more than $100,000 or 10% of the spending limits, whichever is greater, from themselves or in the case of ballot measures, from others other than from political parties

• increases spending limits for a candidate or ballot measure committee accepting them by two and one-half times if opposing candidates or committees exceed certain fundraising or spending levels

• requires that the ballot pamphlet, sample ballot, and voter information packet prominently indicate the candidates and ballot initiative committees that have accepted voluntary spending limits

• provides that major candidates⁽¹⁾ for statewide office and state ballot initiative committees that agree to abide by voluntary spending limits are eligible to receive public media credits to buy television or radio broadcast time in the following amounts:
  • for the office of Governor or state initiative measures, up to $1,000,000 per election
  • for other statewide office, up to $300,000 per election

• allocates public media credits by matching contributions received by the candidate or ballot initiative committee, using formulas that favor small contributions

• specifies that the public funding for candidates/committees not exceed $1 per California taxpayer per year

• Establishes a voter information packet program
• provides that four times prior to an election, the Secretary of State will distribute voter information packets to all households with registered voters

• allows state candidates and state ballot initiative committees to produce a single sheet campaign advertisement to be inserted in each packet

• allows candidates and committees complying with spending limits to participate without charge, and those not complying to pay their pro rata share of the cost if they wish to participate

• Increases campaign disclosure/reporting requirements
• requires state candidates and ballot measure committees to report contributions of $1,000 or more within 24 hours for posting on the internet

• requires that the top five contributors of $25,000 or more to state ballot committees be listed in the ballot pamphlet

• mandates that advertisements for or against a state or local ballot measure identify the top two contributors

• requires that mailing advertisements regarding a candidate, paid for by persons acting independently of the candidate's campaign, disclose the top two donors making contributions in excess of $25,000

• stipulates that campaign advertisements using spokespersons who receive $5,000 or more reveal in the ads that these advocates are being paid

• requires certain candidates and ballot measure committees to disclose in each electronic media advertisement a reasonable estimate of the total expenditures made by the campaign to date

• orders that $PAID$ be placed next to the name of any candidate or ballot measure endorsement listed in a slate mailer if the candidate or ballot measure committee has paid to be included, and that the statement "THIS IS A PAID POLITICAL ADVERTISEMENT" be printed on each page

• phases in increased disclosure and reporting requirements for local campaigns that raise and spend more than specified thresholds

• Requires the Secretary of State to establish a "Campaign Website" including a grid for each candidate and each state ballot measure

• for each state candidate and ballot measure, contains links to the online disclosure of contributions and expenditures, as well as to copies of all advertisements used by the campaign or by independent expenditure committees within 24 hours of their release

• Defines payments for mass communications that refer to a clearly identified candidate or ballot measure within 45 days of an election as expenditures or in-kind contributions subject to this Act, if any reasonable person would conclude they are done to influence the election

• Bars giving or receiving any type of consideration in exchange for voting or not voting

• Requires that petitions for ballot measures circulated by paid signature gatherers contain the statement "THIS PETITION IS BEING CIRCULATED BY A PAID CIRCULATOR" at the top of each sheet

• Provides that if any provision of this Act is held invalid by the courts, the remainder of the law will remain in effect

• States that, if Proposition 208 passed by the voters in 1996 is reinstated by the courts, its contribution limits shall prevail over conflicting provisions of this Act

• Takes effect on January 1, 2001.

BACKGROUND

The Political Reform Act (PRA) of 1974 requires disclosure of receipts and expenditures in elections, regulates lobbyist activities, and requires that public officials reveal assets that might be affected by their official decisions. The state Fair Political Practices Commission is primarily responsible for enforcing the PRA. Contribution and expenditure reports are filed with local officials, the Secretary of State's office, or both. The Secretary of State serves as the state's chief elections officer.

Proposition 25 would expand the duties of both the Fair Political Practices Commission and the Secretary of State in an effort to reduce the role of big money in elections. As the following chart indicates, that role is a growing one, with campaign expenditures in legislative races increasing seven-fold since 1976.

TOTAL CAMPAIGN EXPENDITURES BY CANDIDATES FOR THE CALIFORNIA STATE LEGISLATURE⁽²⁾

Efforts by California voters to rein in collecting and spending have so far been thwarted by the courts. In November 1996, the voters passed Proposition 208 which would have limited campaign contributions and expenditures and increased disclosure of donors to ballot measure campaigns. However, the initiative was challenged and is awaiting a final court decision on its constitutionality. As a result, there are currently no California laws limiting campaign contributions, although the federal government and some local jurisdictions have established some limits on contributions. Additionally, neither the state nor the federal government has mandatory limits on campaign spending as a result of U.S. Supreme Court actions.

Constitutional constraints

Any laws regulating the conduct of campaigns are subject to the constraints imposed by Buckley v. Valeo in 1976 and other cases.  Buckley held that campaign contributions may be limited to avoid corruption or its appearance, but that any other-than-voluntary limits on candidate spending are disallowed in the interest of free speech. Limits on expenditures are permissible only if a candidate agrees to them in exchange for meaningful incentives. Also on free speech grounds, expenditures on behalf of a candidate made independently of his or her campaign, or the right of a candidate to spend unlimited amounts of his or her own money to get elected, cannot be abridged.

FISCAL EFFECT

The Legislative Analyst's Office estimates costs to the state of more than $55 million annually for publicly funded campaign assistance and added administrative costs. The annual state cost of the broadcast media advertising credits is estimated to be $17 million. Coordinating, producing, and mailing the voter information packets is expected to cost about $35 million annually, and other administrative costs could total a few million dollars. Those costs would be offset to an unknown extent by revenue from candidates and ballot measure campaigns that pay to be included in the voter information packet mailings. Costs to local governments could potentially be several million dollars per year for implementation of the local campaign websites.

IMPACT OF YES OR NO VOTE

A YES vote means that candidates and certain ballot measure committees would be limited in the amounts they could accept from contributors; that candidates, ballot measure committees, and political advertisers would have additional campaign financing disclosure requirements; and that state candidates and ballot measure committees accepting voluntary spending limits would receive limited public funding for media advertising and mailings. However, if Proposition 208 is upheld by the courts, its more restrictive campaign contribution limits would take effect.

A NO vote means that contribution limitations and additional campaign financing disclosure requirements would not be imposed by this measure, and that state candidates and ballot measure committees would not receive limited public funding for media advertising and mailings.

SUPPORTERS SAY

• California is one of only six states with absolutely no limit on the source or size of political contributions. Big money has corrupted our government.
• The initiative limits public funding to just $1 each year per California taxpayer. It's worth paying a dollar a year to buy back our government from the special interests that control it.
• Prop 25 increases disclosure of special interest funding of advertisements. It takes advantage of new internet technology to make required disclosures of campaign contributions and expenditures available to voters immediately--before the election, not after.

• Proposition 25 restricts "soft money" by limiting contributions given to political parties for electronic media advertising and advertisements for or against specific candidates.

OPPONENTS SAY

• Californians should not have to pay $55 million in annual tax increases to foot the bill for political advertising with which they may disagree.

• Proposition 25 is not the way to stop political corruption; it has too many loopholes and provisions that add to the abuses. Under protection of state law, special interests could make huge "soft money" contributions to political parties for purposes not limited by this measure.
• Self-funded wealthy candidates will have a huge advantage over challengers because they can ignore contribution limits and spend as much as they want.
• Prop 25 contains provisions that have been found unconstitutional elsewhere, and is sure to end up in the courts.

SUPPORTERS AND OPPOSITION

The official ballot arguments in support are signed by James K. Knox, Executive Director, California Common Cause; Ron Unz, Chairman, Voters Rights 2000 -- Yes on 25; Tony Miller, Former Acting Secretary of State. Additional supporters include: March Fong Eu, former California Secretary of State; Thomas K. Houston, Former Chair, California Fair Political Practices Commission; and Donald Kennedy, Former President, Stanford University.

Other supporters mentioned in the ballot arguments include Arizona Senator John McCain.

The official ballot arguments in opposition are signed by Daniel Lowenstein, Former Chair, California Fair Political Practices Commission; Peter J. Kanelos, President, Responsible Voters for Lower Taxes; Lois Wellington, President, Congress of California Seniors; Larry McCarthy, President, California Taxpayers' Association; Wayne Johnson, President, California Teachers Association; and Allan Zaremberg, President, California Chamber of Commerce.

Other opponents mentioned in the ballot arguments include the League of Women Voters.

For more information:

Supporters: Voters Rights 2000, 916-447-7418, email info@VotersRights2000.org, www.VotersRights2000.org

Opponents: Taxpayers for Fair Elections, 650-340-0470, email NoProp25@aol.com, www.NoProp25.com

1. * Major candidates eligible for the media credit program and the voter information packet program are designated as such by the Secretary of State if they collect a requisite number of valid signatures prior to the primary, or receive at least 12% of primary votes prior to the general election. Candidates receiving between 2% and 12% of the votes in the primary are eligible for partial benefits for the general election.

2. Proposition 73's contribution limits reduced spending to $54,470,521 in 1989-90 before it was overturned in court.

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