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LEAGUE OF WOMEN VOTERS OF CALIFORNIA EDUCATION FUND Nonpartisan In Depth Analysis of PROPOSITION 34 CAMPAIGN CONTRIBUTIONS AND SPENDING. LIMITS. DISCLOSURES.
	Legislative Initiative Amendment

THE QUESTION

Should campaign finance reform provisions, approved by California voters in 1996 in Proposition 208, be replaced with increases in campaign contribution and spending limits enacted by the legislature?             

PROVISIONS

Looking forward to the possibility that, following its judicial test, Proposition 208 will be reinstated, the legislature has placed a substitute measure on the ballot. Proposition 34 would repeal a majority of the provisions established by proposition 208. It would substitute increased limits on the amounts that state candidates can receive from contributors and through loans from the candidates' own funds, and on the amounts they can spend if they accept spending limits. It would not impose campaign contribution and spending rules on local governments for their own elections. Unlike Proposition 208, it would allow unlimited spending by political parties on campaigns. The measure adds provisions to require increased disclosures in slate mailers and other voter communications. It expands electronic filing requirements regarding the receipt of certain contributions and the making of certain independent expenditures. It would go into effect on January 1, 2001, except that provisions relating to contribution and expenditure limits for statewide candidates would take effect on November 6, 2002.

Specific provisions are as follows:

Campaign contributions

• establishes contribution limits (see details in comparison chart)
  

• requires that candidates return within 60 days any contribution of $100 or more that does not disclose the occupation and employer of the contributor
• provides that a candidate may carry over contributions from one election to another, and may raise contributions for a general election prior to the primary election
• provides that contributions from entities controlled by an individual or a majority of the same persons (such as businesses owned by the same corporation) shall be aggregated, i.e., considered as a contribution from one source, whereas contributions from local, independent units of a state or national organization (such as local branches of unions) will not be aggregated
• designates that contributions made by husbands and wives are not to be aggregated, and that contributions by children under the age of 18 will be assigned to one of the parents
• states that communications supporting or opposing a candidate or measure sent within an organization (including a political party) to its members are not considered campaign contributions or independent expenditures
• states that contribution and voluntary spending limits do not apply to money received by a state officer to be used to oppose a recall measure
• prohibits a state official or candidate from accepting a contribution from a lobbyist if that lobbyist is registered to lobby the government agency of the official or for which the candidate is seeking election; repeals a provision of Proposition 208 that prohibits lobbyists from arranging contributions
• requires that surplus campaign contributions be used in one of the following ways:
• to pay outstanding campaign debts or elected officer's expenses
• be returned to the contributors
• be donated to a nonprofit group
• be donated to a political party for voter registration or get-out-the-vote efforts or for slate mailers
• be contributed to federal or out-of-state candidates or to ballot measure committees
• to pay for professional services, including attorney's fees for litigation arising out of candidate's or elected officer's activities as a candidate or elected officer
• to pay a maximum of $5000 for installing an electronic security system in the home and/or office of a candidate or elected officer who has received threats arising from activities as a candidate or elected officer (must be reimbursed within two years after the closing of the surplus funds account)
• prohibits candidates from loaning their own campaigns more than $100,000
• provides that candidates may take out unlimited loans from commercial institutions at rates available to the general public

Disclosure Rules

• requires that candidates and ballot measure committees file a report with the Secretary of State on-line within 24 hours regarding the receipt of a contribution of $1000 or more during an election cycle (the period beginning with 90 days before an election and ending the day of the election)

• requires that committees, including political party committees, which make independent expenditures of $1000 or more in an election cycle supporting or opposing a candidate, file a report online within 24 hours of the time the expenditure is made
• mandates that any person (including corporations and unions) contributing $50,000 or more for a voter communication or advertisement within 45 days of an election file a report online within 48 hours
• requires that, if a spokesperson appearing in a political ad has received $5000 or more, the ad reveal that the person has been paid
• requires that slate mailers using the name of a political party, but endorsing candidates or measures not officially endorsed by that party, include the following notice: THIS IS NOT THE OFFICIAL POSITION OF THE _______ PARTY.

Voluntary Expenditure Ceilings

• provides that a candidate who voluntarily accepts campaign spending limits may not make expenditures exceeding certain limits (see details in comparison chart)
• provides that expenditures made by a political party on behalf of a candidate do not count towards that candidate's spending limit
• directs the Secretary of State to designate in the ballot pamphlet those candidates who have voluntarily agreed to observe the prescribed spending limits
• provides that a candidate who agrees to the spending limits may pay to place a 250-word statement in the ballot pamphlet.

Independent expenditures

• provides that expenditures may not be considered independent if there is any:
  • cooperation or consultation with, or suggestion from the candidate
  • arrangement, coordination, or direction involving the candidate or his agent and the person making the expenditure.

Penalties

• provides that when the Fair Political Practices Commission determines, after a hearing, that a violation has occurred it may require the violator to do all or any of the following:
• cease and desist the violation
• file any required reports
• pay a fine of up to $5000
• provides that any person who violates a provision is liable for civil penalties equal to any amount improperly reported or up to $5000
• provides that any person who knowingly or willfully violates any provision is guilty of a criminal misdemeanor, and that, in addition to any other penalties provided by law, he/she may be fined up to $10,000 or three times the amount the individual failed to report or unlawfully contributed or expended, whichever is greater.
  

Miscellaneous

• provides that candidates may transfer contributions they have received to a political party committee

• provides that candidates or elected officers subject to civil or criminal proceedings may establish a separate account to defray legal expenses, not subject to contribution limits
• provides that the provisions of the act are severable
• requires that contribution and voluntary expenditure limits be adjusted in January of every odd-numbered year in accordance with changes in the Consumer Price Index.

BACKGROUND AND ANALYSIS

Although candidates must report contributions received and expenditures made to the state Fair Political Practices Commission (FPPC), California remains one of six states having no currently enforced ceilings on campaign contributions and expenditures in regular elections. Three times during the past quarter century California voters have attempted to impose limits on what candidates for state offices could collect and spend for their campaigns.

The latest of the voters' three attempts was the passage, by 61 percent, of Proposition 208 in 1996. Proposition 208 remains in judicial limbo, but a recent U.S. Supreme Court decision in a Missouri case, upholding limits similar to those of 208, increases its chances of ultimate reinstatement. The present Proposition 34, placed on the ballot by the legislature, substitutes its own rules and limits for those that will go into effect if Prop 208 gains judicial acceptance.

COMPARISON OF PROPOSITIONS 34 AND 208

There are two different types of groups opposing Proposition 34. The group chosen by legislative leaders to present the opposition arguments in the state ballot pamphlet is opposed to any type of campaign financing rules; the other group is supportive of Proposition 208 and is opposing Proposition 34 because it would replace most of the campaign reform measures in Proposition 208. Below is a comparison of the two measures.

The most obvious difference between the two measures is their level of permissible collecting and spending. For example, Prop 208 sets $250 as the ceiling on contributions for legislative candidates who do not accept spending limits and $500 for those who do. Prop 34 sets $3000 as the contribution ceiling for both groups. For the governor's race Prop 208's $500 ceiling ($1000 if the candidate accepts spending limits) contrasts with 34's $20,000. Regarding voluntary spending limits, Prop 34's limits would quadruple those of Prop 208 for a number of races. The two measures' provisions also differ on soft money (i.e., unlimited funds given to political parties to be used for any campaign activity other than explicit candidate advocacy). Prop 208 outlaws soft money; Prop 34 codifies soft money contributing as a right.  

Proposition 34 adds some on-line disclosure requirements not contained in Proposition 208. It also increases penalties for campaign law violations to the same levels as Prop 208's. Unlike Prop 208 however, it narrows the scope of alleged campaign law violations subject to penalty, and does not give the Fair Political Practices Commission authority to initiate criminal prosecutions.

FISCAL EFFECT

Implementation and enforcement of various provisions of this measure would result in added costs to the state, offset to an unknown amount by payment of fines by violators of the act. Net costs could be as much as several million dollars annually.  Local governments would probably incur modest costs.   

IMPACT OF YES OR NO VOTE

A YES vote means the major provisions of Proposition 208 will be replaced with less control on campaigning, including higher candidate contribution and spending limits.

A NO vote means Proposition 208's reforms will go into effect if the courts approve. If the court does not approve, the present campaign rules having no contribution and spending limits will remain in effect.

SUPPORTERS SAY

• Proposition 34 insures that individuals and interest groups have a fair and equitable opportunity to participate in the elective process.

• The campaign contribution and spending limits established by this proposition are realistic for a state the size of California.

• The measure will strengthen the role of political parties in financing campaigns, helping to insulate candidates from the possible corrupting influence of large contributions.

• Increased disclosure requirements, including those for immediate on-line reporting of certain contributions and expenditures, will provide voters with the information they need in a timely fashion.

• No taxpayer money will be given to candidates for use in their campaigns.

OPPONENTS SAY

• Proposition 34 was placed on the ballot with record speed, completely bypassing the normal legislative process, in order to forestall reinstatement of a campaign finance reform measure already approved by the voters.

• The excessively high contribution and expenditure limits, along with a provision for a massive soft money loophole and no limits on political party contributions to candidates, will not bring about genuine reform.

• Incumbents will be able to amass huge war chests through non-stop fundraising and carrying over funds from one election to another.

• Proposition 34 was written so that the contribution limits for statewide candidates won't take effect until after the 2002 elections, when important races will be decided.

• Certain legislators who voted against putting Proposition 34 on the ballot argue that establishing any limits on campaign contributions or spending stifles free speech and prevents voters from getting full information.

SUPPORTERS AND OPPONENTS

The official ballot arguments in support are signed by Dan Stanford, former Chair, California Fair Political Practices Commission; Eileen Padberg, member, Bipartisan Commission on the Political Reform Act; and Howard L. Owens, Director of Region IX, National Council of Senior Citizens.

The official ballot arguments in opposition are signed by Brett Granlund, Assemblymember, 65th Assembly District, and Bill Morrow, Senator, 38th District.

Also in opposition: Californians Against Phony "Reform" -- No on 34, A Committee Sponsored by the League of Women Voters of California, American Association of Retired Persons - California (AARP) and California Common Cause.

For more information:

Supporters: Tom Knox, Committee for Constitutional Campaign Reform, 916-443-3354; website www.CAyeson34.org

Opponents: Lonni Granlund, Western Group, 909-795-9722; email address: westerngrp@aol.com

Tony Miller, Californians Against Phony "Reform" -- No on 34, 916-443-1792; email address: NoPhonyReform@VoteNOon34.org; website: www.VoteNOon34.org

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Last updated: September 18, 2000
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