Existing law, the Political Reform Act of 1974, prohibits a public officer from expending, and a candidate from accepting, public moneys for the purpose of seeking elective office.

This bill would permit a public officer or candidate to expend or accept public moneys funds, as defined, for the purpose of seeking elective office if the state or a local governmental entity established a dedicated fund for this purpose, as specified. The bill would prohibit the public moneys for this dedicated fund from being taken from public moneys that are earmarked for education, transportation, or public safety. This restriction would not apply to charter cities. unless the funds are earmarked by a state or local entity for education, transportation, or public safety. The bill would require candidates to abide by specified expenditure limits and meet strict criteria, as defined, to qualify for public funds, and it also would prohibit public funds from being used to pay legal defense fees or fines. The bill would prohibit a candidate receiving public funds from using those funds to repay personal loans to their campaign at any time. The bill would permit a statute, ordinance, or charter to establish standards to increase the expenditure limits for each qualified, voluntarily participating candidate pursuant to a specified formula. The bill would provide that the Fair Political Practices Commission is not responsible for administering or enforcing a system of public funding of candidates established by a local governmental agency.

The Political Reform Act of 1974, an initiative measure, provides that the act may be amended by a statute that becomes effective upon approval of the voters.

This bill would require the Secretary of State to submit the provisions of the bill to the voters for approval at the November 5, 2024, 3, 2026, statewide election, as specified.

Existing law, the Political Reform Act of 1974, prohibits a public officer from expending, and a candidate from accepting, public moneys for the purpose of seeking elective office.

This bill would permit a public officer or candidate to expend or accept public moneys for the purpose of seeking elective office if the state or a local governmental entity established a dedicated fund for this purpose, as specified. The bill would prohibit the public moneys for this dedicated fund from being taken from public moneys that are earmarked for education, transportation, or public safety. This restriction would not apply to charter cities.

The Political Reform Act of 1974, an initiative measure, provides that the act may be amended by a statute that becomes effective upon approval of the voters.

This bill would require the Secretary of State to submit the provisions of the bill to the voters for approval at the November 5, 2024, statewide election, as specified.

Existing law, the Political Reform Act of 1974, provides for the comprehensive regulation of campaign financing for state and local elections, including requiring the reporting of, and specifying limits on, campaign contributions. The act prohibits a public officer from expending, and a candidate from accepting, public moneys for the purpose of seeking elective office.

This bill would declare the intent of the Legislature to enact legislation that would provide for public financing for election campaigns in this state.

SENATE COMMITTEE ON

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

AB 270 (Lee) - Political Reform Act of 1974: public campaign financing

Bill Summary:

AB 270 would permit the use of public funds for candidates seeking elective office if certain conditions are met.

Fiscal Impact:

• This bill would result in one-time General Fund costs to the Secretary of State (SOS), likely in 2026-27, in the range of $738,000 to $984,000, for printing and mailing costs to place a measure on the ballot in a statewide election. Actual costs may be higher or lower, depending on the length of required elements and the overall size of the ballot.
• The Fair Political Practices Commission (FPPC) indicates that it could incur potential costs related to enforcing the bill against a local jurisdiction. The magnitude of these costs is unknown (General Fund). The Commission notes that, though the bill provides that it would not administer or enforce any public financing system established by a local governmental agency, it is possible that there could be an instance where a local agency itself could be subject to enforcement under the Political Reform Act for improperly running its public financing system.

Background:

In 1974, California voters passed Proposition 9 (the Political Reform Act, or PRA) which created FPPC, and codified significant restrictions and prohibitions on candidates, officeholders, and lobbyists. The Legislature is permitted to amend the PRA, but the amendments must further the purposes of the Act and require a two-thirds vote of both houses of the Legislature. The PRA also permits amendments by submitting them to voters for approval.

In 2016, the Legislature passed SB 1107 (Allen). Among its provisions, the bill permitted a public officer or candidate to expend or accept public moneys for the purpose of seeking elective office if the state or a local governmental entity established a dedicated fund for that purpose. However, courts ruled that the question must be put before the voters, because Proposition 73 (1988) placed into the PRA the prohibition on the use of public money for campaign purposes.

Under current law, a foreign government or foreign principal is prohibited from making a contribution, expenditure, or independent expenditure in connection with a state or local ballot measure or the election of a candidate to state or local office. A person or a committee is also prohibited from soliciting or accepting a contribution from a foreign government or foreign principal in connection with any state or local ballot measure or the election of a candidate to state or local office.

Proposed Law:

This bill would, among other things, do the following:

• Permit a public officer or candidate to expend or accept public funds, as defined, for the purpose of seeking elective office unless the funds are earmarked by a state or local entity for education, transportation, or public safety.
• Require candidates to abide by specified expenditure limits and meet strict criteria, as defined, to qualify for public funds, and prohibit public funds from being used to pay legal defense fees or fines.
• Prohibit a candidate receiving public funds from using those funds to repay personal loans to their campaign at any time.
• Permit a statute, ordinance, or charter to establish standards to increase the expenditure limits for each qualified, voluntarily participating candidate pursuant to a specified formula.
• Provide that FPPC is not responsible for administering or enforcing a system of public funding of candidates established by a local governmental agency.
• Existing law prohibits a foreign government or foreign principal, as defined, to make a contribution, expenditure, or independent expenditure in connection with the qualification or support of, or opposition to, any state or local ballot measure or in connection with the election of a candidate to state or local office. Under existing law, a person who violates this prohibition is guilty of a misdemeanor and subject to a fine equal to the amount contributed or expended. This bill would specify that a person who violates this prohibition is guilty of a misdemeanor and must be fined an amount at least equal to the amount contributed or expended but not exceeding a maximum amount of 3 times the amount contributed or expended.

Related Legislation:

• SB 24 (Umberg, 2023) is similar to this bill and is pending in the Assembly Appropriations Committee.
• SB 1107 (Allen, Chapter 837, Statutes of 2016) permitted a public officer or candidate to spend or accept public moneys to seek elective office if the state or a local governmental entity established a dedicated fund for that purpose. Courts ruled such a question must be put before the voters.

Staff Comments:

The Office of the Legislative Counsel has keyed this bill “non-fiscal.” However, the purview of this Committee, pursuant to Joint Rule 10.5, is to review and analyze bills that would, among other things, result in a substantial expenditure of state money. Thus, even though the bill was keyed “non-fiscal,” the Committee requested the bill to examine the extent to which it might potentially increase costs to the State.

SOS indicates that printing and mailing costs associated with placing a measure on the statewide ballot are approximately $123,000 per page, depending on the length of the ballot. The fiscal estimates noted above reflect the addition of 6-8 pages in the Voter Information Guide. Actual costs would depend upon the length of the title and summary, analysis by the LAO, proponent and opponent arguments, and text of the proposal.

-- END --

SENATE COMMITTEE ON

ELECTIONS AND CONSTITUTIONAL AMENDMENTS

Senator Catherine Blakespear, Chair

2023 - 2024 Regular

Bill No: AB Hearing Date: 7/2/24

Subject: Political Reform Act of 1974: public campaign financing

DIGEST

This bill permits the use of public funds for candidates seeking elective office if certain conditions are met.

ANALYSIS

Existing law:

1. Provides, pursuant to the Political Reform Act of 1974 (PRA) as amended by Proposition 73 of 1988, that no public officer shall spend and no candidate shall accept any public moneys for the purpose of seeking elective office.
2. Provides the PRA may be amended to further its purposes by statute if the measure is passed with a two-thirds vote in each house of the Legislature and signed by the Governor. The PRA may also be amended or repealed by a statute if the Legislature places a measure on the ballot for voter approval.

1. Prohibits a foreign government or foreign principal from making a contribution, expenditure, or independent expenditure in connection with a state or local ballot measure or the election of a candidate to state or local office.
2. Prohibits a person or a committee from soliciting or accepting a contribution from a foreign government or foreign principal and prohibits a foreign government or foreign principal from making a contribution in connection with any state or local ballot measure or the election of a candidate to state or local office. Any person found in violation of is guilty of a misdemeanor and fined an amount equal to the amount contributed or expended.

This bill as proposed to be amended:

1. Permits the use of public funds for candidates seeking elective office if:
   1. Funds for candidates are not otherwise earmarked for education, transportation, or public safety;
   2. Candidates abide by expenditure limits and meet a specified criteria to qualify for public funds where the candidate demonstrates broad-based support;
   3. Funds received by candidates are not used for legal defense, fines, or for repaying personal loans to their campaign; and
   4. Public funds do not discriminate based on party preference or incumbency.
2. Increases the maximum amount of the fine for accepting a contribution from a foreign government or foreign principal and for a foreign government or foreign principal that makes a contribution to three times the amount contributed or expended.
3. Requires the Secretary of State (SOS) to submit the bill’s proposed changes to the PRA to the voters for approval at the November 3, 2026, statewide general election.

BACKGROUND

Proposition 68 and Proposition 73. Prior to 1988, there was no limit on the amount of money candidates for California state office could accept or spend. In June 1988 however, voters approved two separate campaign finance reform initiatives: Proposition 68 and Proposition 73. Proposition 73 prohibited the use of public moneys for campaign purposes and limited the amount of contributions candidates, committees, and political parties could accept from all entities on a fiscal year basis ($1,000, $2,500, or $5,000, depending on the source), and also prohibited the transfer of campaign funds between candidates. These same provisions also applied to special elections, but were based on election cycles rather than fiscal years. The competing Proposition 68 was a more comprehensive measure consisting not only of contribution limits, but partial public financing of campaigns for candidates who agreed to an overall limit on campaign spending.

The California State Supreme Court eventually ruled that because the two measures contained conflicting comprehensive regulatory schemes, they could not be merged and only one could be implemented. Since Proposition 73 received more votes than Proposition 68, the Court ordered Proposition 73 to be implemented and invalidated all the provisions of Proposition 68. In 1990, all state and local elections were conducted under the Proposition 73 limits.

Many of the provisions of Proposition 73 however, were ultimately found unconstitutional by the federal courts. The fiscal-year based contribution limits were deemed to discriminate against non-incumbents. The only provisions of Proposition 73 that survived legal challenge were the contribution limits for special elections, some restrictions on the types of mass mailings officeholders may send out at public expense, and the prohibition on the use of public money for campaign purposes.

Proposition 131 of 1990. Proposition 131, an initiative measure which garnered 37.75% of the vote in November 1990 would have, among other numerous provisions, provided partial public campaign financing to candidates for state office who agree to specified campaign expenditure limits. However, this measure also contained a term limits proposal that received opposition from organizations because it was less restrictive than the competing Proposition 140, which was approved by voters.

Proposition 25 of 2000. Proposition 25, an initiative measure which received 34.7% of the vote in March 2000 would have, among other numerous provisions, provided public financing of campaign media advertisements and voter information packets for qualifying candidates and ballot measure committees.

Proposition 89 of 2006. Proposition 89, which appeared on the November 7, 2006, General Election ballot, was rejected by the 74.27% of the vote. Proposition 89 would have enacted a “clean money” system of campaign financing. Under “clean money,” participating candidates would qualify for large amounts of public funds to spend on their campaigns once they collect a threshold amount of small ($5) qualifying contributions. Once qualified, candidates could not raise or spend campaign funds from any other source other than the “clean money” (with limited exceptions). Proposition 89 also lowered the current limit on contributions that non-participating candidates could accept and placed restrictions on direct corporate contributions to initiative campaigns. Proposition 89 would have funded the “clean money” system by raising roughly $200 million per year through an increase in the current income tax on corporations and specified financial institutions.

Proposition 15 of 2010. AB 583 (Hancock), Chapter 735, Statutes of 2008, which was often described as a pared down version of Proposition 89, was signed by Governor Schwarzenegger and appeared on the June 2010 Primary Election ballot as Proposition 15. While it fared better than Proposition 89, it was nevertheless defeated 57.3% to 42.7%. Proposition 15 would have created a pilot project whereby qualifying candidates for Secretary of State could have received public campaign funds for the 2014 and 2018 elections if they agreed not to accept most private contributions. Funding would have come from a hefty increase in the filing fees paid by lobbyists and their employers. State courts in Arizona and Vermont had invalidated lobbyist fees used to fund public financing programs similar to this one. Prior to the election, lawyers for many lobbying organizations filed suit in both state and federal court, but in both instances, the courts ruled the issue was not ripe for review since Proposition 15 had yet to be approved by the voters. With the defeat at the polls, the lawsuit was dropped.

The Current Ban. California and most the state’s local governments do not have the option to offer any public funding to campaigns under the existing statewide ban. While charter cities are exempt under autonomy granted by the state Constitution, general law cities, counties, districts, and the state governments are covered by the current state ban. Additionally, after voters in Sacramento County enacted public financing several years ago, the courts struck it down, ruling it was not permitted under Proposition 73.

Recent Legislation. In 2016, the Legislature passed and Governor Brown signed SB 1107 (Allen), Chapter 837, Statutes of 2016. Among the provisions of SB 1107, the bill permitted a public officer or candidate to spend or accept public moneys to seek elective office if the state or a local governmental entity established a dedicated fund for that purpose. However, courts ruled the question must be put before the voters because an initiative, Proposition 73, put those provisions into the PRA.

Foreign Contributions. Under current law, a foreign government or foreign principal is prohibited from making a contribution, expenditure, or independent expenditure in connection with a state or local ballot measure or the election of a candidate to state or local office. A person or a committee is also prohibited from soliciting or accepting a contribution from a foreign government or foreign principal in connection with any state or local ballot measure or the election of a candidate to state or local office.

Any person found in violation of this law is guilty of a misdemeanor and fined an amount equal to the amount contributed or expended. AB 270, if approved by voters, keeps the misdemeanor provisions, but increases the maximum fine to up to three times the amount contributed or expended.

COMMENTS

1. According to the Author: “Californians are rightly concerned that they lack a full voice in elections and government because their small campaign contributions can’t compete with large contributions and expenditures from wealthy donors and special interests. Candidates themselves have to spend more time fundraising instead of engaging with voters who can’t afford to make substantial contributions.

“Five charter cities have implemented public funding of campaigns that address these issues and amplify the voices of everyday voters. Unfortunately, general law cities, counties, districts, and the state are banned from providing public funding. Bipartisan supermajorities of the legislature passed SB 1107 in 2016 to repeal the ban, but the courts ruled that the question must be put before the voters.”

“AB 270 will put a measure on the November 2026 ballot allowing voters to choose whether to repeal the ban on public funding of campaigns. The measure does not institute public funding of campaigns anywhere, but it permits any jurisdiction to implement such a system as long as it adheres to specified requirements.”

1. Majority Vote by the Legislature and Voters. As previously mentioned, the Legislature can amend the PRA by passing a bill with a two-thirds vote in each house. An alternative way is to submit proposed PRA changes directly to the voters, which is what this bill proposes to do. In this case, since the matter will go on the ballot for the voters to approve or reject, it only requires a majority vote in each house of the Legislature and a Governor’s signature on the bill.

RELATED/PRIOR LEGISLATION

SB 24 (Umberg) of 2023 is similar to this bill and was approved by this committee on a 6-1 vote. SB 24 is currently awaiting consideration in the Assembly Committee on Appropriations.

SB 1107 (Allen), Chapter 837, Statutes of 2016, permitted a public officer or candidate to spend or accept public moneys to seek elective office if the state or a local governmental entity established a dedicated fund for that purpose. Courts ruled such a question must be put before the voters.

PRIOR ACTION

POSITIONS

Positions listed reflect a prior version of the bill.

Sponsor: California Clean Money Campaign

Support: American Federation of State, County, and Municipal Employees

California Church Impact

California Democratic Party

California Public Interest Research Group

Consumer Watchdog

Courage California

Democracy Policy Network

Endangered Habitats League

Fix Democracy First

Indivisible CA: StateStrong

Initiate Justice

League of California Cities

League of Women Voters in California

MapLight

Money Out Voters In

Northern California Recycling Association

Public Citizen

South Bay Progressive Alliance

Voices for Progress

Voters Right to Know

Oppose: California Taxpayers Association

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 270

Author:(Lee)

As Amended Ver:April 11, 2023

Majority vote

SUMMARY

Allows, if approved by the voters, the state and local governments to offer public campaign financing programs.

Major Provisions

1. Allows a public officer or candidate to expend or accept public money for use in seeking elective office if the state or a local government entity establishes, by statute, ordinance, resolution, or charter, a dedicated fund for this purpose, as specified.
2. Prohibits funds for public campaign financing programs from being taken from public moneys that are earmarked for education, transportation, or public safety. Provides that this restriction does not apply to charter cities.
3. Requires the Secretary of State (SOS) to submit this bill's provisions to the voters for approval at the November 5, 2024, statewide general election.

COMMENTS

In June 1974, California voters passed an initiative—Proposition 9—that created the Fair Political Practices Commission (FPPC) and codified significant restrictions and prohibitions on candidates, officeholders and lobbyists. That initiative is commonly known as the Political Reform Act (PRA). The California Constitution permits the Legislature to amend an initiative statute by another statute that becomes effective only when approved by the voters, unless the initiative statute provides otherwise. The PRA allows its provisions to be amended without voter approval if certain conditions are met, including a requirement that the proposed amendments must "further the purposes" of the PRA.

In 1988, voters approved Proposition 73, which amended the PRA to prohibit public campaign financing programs, among other provisions. While the California Supreme Court ruled that the public financing ban does not apply to charter cities, a state appellate court has held that the public financing ban does apply to charter counties. As a result, while charter cities in California can enact public campaign financing programs, and at least six (Los Angeles, Long Beach, Oakland, Richmond, Sacramento, and San Francisco) have enacted such programs, general law cities, all counties, all districts, and the state government are covered by the current public campaign financing ban.

SB 1107 (Allen), Chapter 837, Statutes of 2016, sought to authorize the creation of public campaign financing programs by state or local governmental entities through separate actions by those entities. Because SB 1107 sought to amend a provision of Proposition 73, which itself amended and became part of the PRA, the provisions of SB 1107 were subject to rules governing legislation that seeks to amend the PRA. SB 1107 contained legislative findings and declarations that the bill furthered the purposes of the PRA, and was enacted in a manner that complied with procedural requirements for bills that seek to amend the PRA without the approval of voters.

Following the enactment of SB 1107, former-Senator Quentin Kopp (one of the proponents of Proposition 73) and the Howard Jarvis Taxpayers Association challenged the provisions of SB 1107 related to public campaign financing programs in court, alleging that those changes did not further the purposes of the PRA, and therefore could not be enacted without being approved by voters. In Howard Jarvis Taxpayers Assn. v. Newsom (2019) 39 Cal.App.5th 158, the Third District Court of Appeal agreed, finding that SB 1107 "directly conflicts with a primary purpose and mandate of the [PRA], as amended by subsequent voter initiatives, to prohibit public funding of political campaigns." In its decision, the court affirmed a judgment by the Sacramento County Superior Court that enjoined the FPPC from enforcing the public financing related provisions of SB 1107.

This bill proposes to repeal the provisions of SB 1107 that sought to authorize public campaign financing programs, and proposes to reenact similar provisions in a new code section that would be part of the PRA, subject to voter approval at the November 5, 2024, statewide election.

According to the Author

"Public financing of campaigns is the best way to empower voters, increase diversity of candidates running for office, and give voters confidence that Big Money can't just buy their elections."

Arguments in Support

In a joint letter of support submitted by the California Clean Money Campaign and joined by many other organizations in support of this bill, the organizations write, "Voters are increasingly concerned about the problem of money in politics. A recent Gallup poll found that only 20% said they were satisfied with the nation's campaign finance laws. In a poll conducted by the California Clean Money Campaign, 79% of likely California voters said Big Money campaign contributors have too much influence over elected officials in California, and 68% said that ordinary voters have too little influence. Public financing of campaigns addresses these concerns by increasing the power of small donors and ordinary voters to participate in campaigns and have their voices heard."

Arguments in Opposition

In opposition to this bill, the California Taxpayers Association writes, "This measure raises several First Amendment issues by creating a scenario in which taxpayers would be forced to support political speech that they do not wish to support. AB 270 sets vague parameters for the authority that local governments would have to determine which candidates qualify for public financing…At a time when the state is facing a $22.5 billion deficit – and many municipalities are experiencing significant budget pressure due to inflation – the government should prioritize prudent fiscal policies to make the most of the revenue received from taxpayers. For these reasons, the voters have repeatedly rejected public financing of elections (most recently with Proposition 89 of 2006 and Proposition 15 of 2010)."

FISCAL COMMENTS

According to the Assembly Appropriations Committee:

1. One-time costs in the hundreds of thousands of dollars to the SOS for printing and mailing expenses associated with placing the measure on the ballot at the next statewide election (General Fund (GF)). The SOS estimated such costs to be approximately $91,000 per page in 2021, and the magnitude of costs for this bill depends on the length of the title and summary, analysis by the Legislative Analyst's Office, proponent and opponent arguments, and text of the proposal for publication in the Voter Information Guide.
2. This bill requires the redirection of public funds, except those earmarked for education, transportation, or public safety, for public campaign financing, which is, in itself, a significant fiscal effect resulting in GF cost pressures. However, any administrative costs to the FPPC, such as costs to provide advice or modify regulations, should be absorbable. Additionally, since local entities can decide whether to adopt a public campaign financing program, this bill would not constitute a state reimbursable mandate.

VOTES

ASM ELECTIONS: 5-2-1

YES: Bryan, Bennett, Lee, Pellerin, Blanca Rubio

NO: Lackey, Essayli

ABS, ABST OR NV: Low

ASM APPROPRIATIONS: 11-4-1

YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Weber, Ortega

NO: Megan Dahle, Dixon, Mathis, Sanchez

ABS, ABST OR NV: Robert Rivas

UPDATED

VERSION: April 11, 2023

CONSULTANT: Ethan Jones / ELECTIONS / (916) 319-2094 FN: 0000728

Date of Hearing: May 3, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 270

Author:(Lee) – As Amended Ver:April 11, 2023

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill allows, if approved by the voters, state and local governments to offer public campaign financing programs.

Specifically, this bill:

1. Allows a public officer or candidate to expend or accept public money for use in seeking elective office if the state or a local government entity establishes, by statute, ordinance, resolution, or charter, a dedicated fund for this purpose.
2. Prohibits, except for a charter city, such fund money being taken from public money earmarked for education, transportation, or public safety.
3. Requires the Secretary of State (SOS) to submit this bill’s provisions to voters for approval at the November 5, 2024, statewide election.

FISCAL EFFECT:

1. One-time costs in the hundreds of thousands of dollars to the SOS for printing and mailing expenses associated with placing the measure on the ballot at the next statewide election (General Fund (GF)). The SOS estimated such costs to be approximately $91,000 per page in 2021, and the magnitude of costs for this bill depends on the length of the title and summary, analysis by the Legislative Analyst’s Office, proponent and opponent arguments, and text of the proposal for publication in the Voter Information Guide.
2. This bill requires the redirection of public funds, except those earmarked for education, transportation, or public safety, for public campaign financing, which is, in itself, a significant fiscal effect resulting in GF cost pressures. However, any administrative costs to the Fair Political Practices Commission, such as costs to provide advice or modify regulations, should be absorbable. Additionally, since local entities can decide whether to adopt a public campaign financing program, this bill would not constitute a state reimbursable mandate.

COMMENTS:

1. Purpose. According to the author, “Public financing of campaigns is the best way to empower voters, increase diversity of candidates running for office, and give voters confidence that Big Money can’t just buy their elections.”
2. Support and Opposition. This bill is supported by various campaign finance reform groups, including the California Clean Money Campaign, which argues “[15] states and 19 municipalities have adopted public financing systems to empower voters and help candidates run campaigns that are more focused on the people they are running to represent.” This bill is also supported by a large coalition of progressive advocacy organizations.

This bill is opposed by the Election Integrity Project California and taxpayer groups such as the Howard Jarvis Taxpayers Association (HJTA), which argues “HJTA v. Newsom successfully challenged SB 1107 (2016), a bill that amended the Political Reform Act [PRA] to reverse its ban on public funding of political campaigns” as an unconstitutional amendment of a voter initiative. HJTA also notes a previous measure sent to voters on this issue as Proposition 15 (2010) “was defeated 57.29 to 42.71 percent.”

1. Many Attempts at Public Financing. Because of the public funding ban contained in Proposition 73 (1988), the state and most local governments in California do not have the option to offer public financing programs for electoral campaigns. While the California Supreme Court ruled that the public financing ban does not apply to charter cities, a state appellate court has held that the public financing ban does apply to charter counties. As a result, while charter cities in California can enact public campaign financing programs, and at least six (Los Angeles, Long Beach, Oakland, Richmond, Sacramento, and San Francisco) have enacted such programs, general law cities, all counties, all districts, and the state government are covered by the current ban.

SB 1107 (Allen), Chapter 837, Statutes of 2016, authorized the creation of public financing programs by the state or local government entities. Because SB 1107 sought to amend a provision of Proposition 73, which itself amended and became part of the PRA, SB 1107 was subject to rules governing legislation seeking to amend the PRA – notably, findings and declarations the bill furthered the purposes of the PRA and approval by a two-thirds vote of the Legislature. However, former-Senator Quentin Kopp (a proponent of Proposition 73) and HJTA successfully challenged SB 1107 in court, alleging the measure did not further the purposes of the PRA, and therefore could not be enacted without voter approval. This bill repeals the invalidated provisions of SB 1107 and proposes to reenact similar provisions in a new code section, subject to voter approval at the November 5, 2024, statewide election.

1. Related Legislation. SB 24 (Umberg) is virtually identical to this bill. SB 24 is pending in the Senate Committee on Appropriations.

SB 888 (Committee on Elections and Constitutional Amendments) repeals the provisions of SB 1107 enjoined from enforcement by HJTA, amongst other provisions. SB 888 is pending hearing in the Senate Committee on Appropriations.

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: April 19, 2023

ASSEMBLY COMMITTEE ON ELECTIONS

Isaac G. Bryan, Chair

ABPCA Bill Id:AB 270 (

Author:Lee) – As Amended Ver:April 11, 2023

SUBJECT: Public campaign financing.

SUMMARY: Allows, if approved by the voters, the state and local governments to offer public campaign financing programs. Specifically, this bill:

1. Permits state and local governmental entities to establish programs that provide for public campaign financing for candidates for elective office, if all of the following criteria have been met:
   
   1. The state or local governmental entity has established a dedicated fund by statute, ordinance, resolution, or charter for the purpose of providing public campaign financing for candidates for elective office;
      
   2. Public moneys held in the fund are available to all qualified, voluntarily participating candidates of the same office without regard to incumbency or political party preference; and,
      
   3. The state or local governmental entity has established criteria for determining a candidate's qualification by statute, ordinance, resolution, or charter.
      
2. Prohibits public moneys for the dedicated fund described above in 1) from being taken from public moneys that are earmarked for education, transportation, or public safety. Provides that this restriction does not apply to charter cities.
   
3. Makes various findings and declarations, including the following:
   
   1. The increasing costs of political campaigns can force candidates to rely on large contributions from wealthy donors and special interests, which can give those wealthy donors and special interests disproportionate influence over governmental decisions.
      
   2. Such disproportionate influence can undermine the public’s trust that public officials are performing their duties in an impartial manner and that government is serving the needs and responding to the wishes of all citizens equally, without regard to their wealth.
      
   3. Citizen-funded election programs, in which qualified candidates can receive public funds for the purpose of communicating with voters rather than relying exclusively on private donors, have been enacted in six charter cities in California, as well as numerous other local and state jurisdictions.
      
   4. Citizen-funded election programs encourage competition by reducing the financial advantages of incumbency and making it possible for citizens from all walks of life, not only those with connections to wealthy donors or special interests, to run for office.
      
   5. By reducing reliance on wealthy donors and special interests, citizen-funded election programs inhibit improper practices, protect against corruption or the appearance of corruption, and protect the political integrity of our governmental institutions.
      
   6. The absolute prohibition on public campaign financing allows special interests to gain disproportionate influence and unfairly favors incumbents. An exception should be created to permit citizen-funded election programs so that elections may be conducted more fairly.
      
4. Requires the Secretary of State (SOS) to submit the provisions of this bill to the voters for approval at the November 5, 2024 statewide general election.
5. Contains a severability clause.
   

EXISTING LAW:

1. Creates the Fair Political Practices Commission (FPPC), and makes it responsible for the impartial, effective administration and implementation of the Political Reform Act (PRA). (Government Code §§83100, 83111)
   
2. Prohibits public officers from expending, and candidates from accepting, public moneys for the purpose of seeking elective office. (Government Code §85300)
3. Permits the Legislature to amend or repeal an initiative statute by another statute that becomes effective only when approved by the electors unless the initiative statute permits amendment or repeal without the electors’ approval. (California Constitution, Article II, §10(c))
   
4. Permits the PRA to be amended or repealed only through one of the following procedures:
   
   1. Amendments to the PRA that further its purposes may be enacted by statute that is passed by a two-thirds vote in each house and signed by the Governor, if at least 12 days prior to passage in each house the bill in its final form has been delivered to the FPPC for distribution, as specified; or,
   2. The PRA may be amended or repealed by a statute that becomes effective only when approved by the electors. (Government Code §81012)
5. Requires every constitutional amendment, bond measure, or other legislative measure submitted to the people by the Legislature to appear on the ballot of the first statewide election occurring at least 131 days after the adoption of the proposal by the Legislature. (Elections Code §9040)

FISCAL EFFECT: Unknown. Although this bill is keyed non-fiscal, it has been double referred to the Assembly Appropriations Committee.

COMMENTS:

1. Purpose of the Bill: According to the author, “Public financing of campaigns is the best way to empower voters, increase diversity of candidates running for office, and give voters confidence that Big Money can’t just buy their elections.”
2. Public Campaign Financing Programs and Previous Legislation: In June 1974, California voters passed an initiative—Proposition 9—that created the FPPC and codified significant restrictions and prohibitions on candidates, officeholders and lobbyists. That initiative is commonly known as the PRA.
   
   In 1988, voters approved two separate initiatives that sought to regulate campaign financing by amending the PRA: Proposition 68 and Proposition 73. Proposition 68 proposed a system of public funding and expenditure limits for state legislative races, and passed with 53% of the vote. Proposition 73 prohibited public funding of campaigns and set contribution limits for state and local elections, and passed with 58% of the vote. The California Supreme Court subsequently ruled in Taxpayers to Limit Campaign Spending v. FPPC (1990) 51 Cal. 3d 744, that because the two measures contained conflicting comprehensive regulatory schemes they could not be merged and only one could be implemented. As such, since Proposition 73 received more affirmative votes than Proposition 68, the Court ordered the implementation of Proposition 73 and declared all provisions of Proposition 68 invalid.
   
   In 1990, all state and local elections were conducted under the provisions of Proposition 73. Many of the provisions of Proposition 73 were ultimately ruled unconstitutional by the federal courts. The only provisions of Proposition 73 to survive legal challenge 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. The contribution limits for special elections that were included in Proposition 73 subsequently were repealed and replaced in another ballot measure.
   
   As detailed above, the California Constitution permits the Legislature to amend an initiative statute by another statute that becomes effective only when approved by the voters, unless the initiative statute provides otherwise. The PRA allows its provisions to be amended without voter approval if certain conditions are met, including a requirement that the proposed amendments must “further the purposes” of the PRA.
   
   In an effort to authorize public campaign financing programs subject to certain conditions, in 2016, the Legislature approved and Governor Brown signed SB 1107 (Allen), Chapter 837, Statutes of 2016. SB 1107 did not create any public financing programs, but instead authorized the creation of such programs by state or local governmental entities through separate actions by those entities. Because SB 1107 sought to amend a provision of Proposition 73, which itself amended and became part of the PRA, the provisions of SB 1107 were subject to rules governing legislation that seeks to amend the PRA. SB 1107 contained legislative findings and declarations that the bill furthered the purposes of the PRA, and was enacted in a manner that complied with various procedural requirements for bills that seek to amend the PRA without the approval of voters.
   
   Following the enactment of SB 1107, former-Senator Quentin Kopp (who was one of the proponents of Proposition 73) and the Howard Jarvis Taxpayers Association challenged the provisions of SB 1107 related to public campaign financing programs in court, alleging that those changes did not further the purposes of the PRA, and therefore could not be enacted without being approved by voters. In Howard Jarvis Taxpayers Assn. v. Newsom (2019) 39 Cal.App.5th 158, the Third District Court of Appeal agreed, finding that SB 1107 “directly conflicts with a primary purpose and mandate of the [PRA], as amended by subsequent voter initiatives, to prohibit public funding of political campaigns.” In its decision, the court affirmed a judgment by the Sacramento County Superior Court that enjoined the FPPC from enforcing the public financing related provisions of SB 1107.
   
   The provisions of SB 1107 that authorized public financing programs have not been repealed since the court’s decision in Howard Jarvis Taxpayers Assn. Nonetheless, while those provisions remain in statute, and appear to authorize public campaign financing programs, the PRA as enforced by the FPPC continues to prohibit public officers from expending, and candidates from accepting, public moneys for the purpose of seeking elective office.
   
   This bill proposes to repeal the provisions of SB 1107 that sought to authorize public campaign financing programs, and proposes to reenact similar provisions in a new code section that would be part of the PRA. This bill would prohibit public moneys used for such public campaign financing programs from being taken from moneys earmarked for education, transportation, or public safety purposes, a restriction that was not included in SB 1107. Furthermore, unlike SB 1107, this bill provides that it would become effective only upon approval of the voters.
3. Charter Cities and Counties: Notwithstanding the PRA’s general prohibition on the use of public money for campaign purposes, the California Supreme Court ruled that the prohibition does not apply to charter cities (Johnson v. Bradley (1992) 4 Cal. 4th 389). On the other hand, a state appellate court has held that the public financing ban does apply to charter counties (County of Sacramento v. Fair Political Practices Commission (1990) 222 Cal. App. 3d 687). The California Constitution generally grants charter cities greater autonomy over local affairs than charter counties have, particularly with respect to local elections.
   
   As a result, while charter cities in California can enact public campaign financing programs, general law cities, all counties, all districts, and the state government are covered by the current ban. At least six charter cities in California (Los Angeles, Long Beach, Oakland, Richmond, Sacramento, and San Francisco) have enacted public campaign funding programs, though the program is not funded and thus is no longer available in one of those cities (Sacramento).
4. Previous Measures to Permit Public Campaign Financing: On three previous occasions, California voters have rejected ballot measures that would have repealed the prohibition against public funding of campaigns that was included in Proposition 73. In all three cases, however, the ballot measures also proposed to enact specific public campaign financing programs for state elections—something that this bill does not propose.
   
   Proposition 25—an initiative measure that appeared on the March 2000 statewide primary election ballot—would have provided for public financing of campaign media advertisements and voter information packets for qualifying candidates and ballot measure committees that agreed to abide by spending limits and would have repealed the PRA's prohibition against public financing systems, among other provisions. Proposition 25 failed passage, receiving 34.7% of the vote statewide.
   
   Proposition 89—an initiative measure that appeared on the November 2006 statewide general election ballot—would have created a public campaign financing system for candidates for elective state office, and would have repealed the PRA's prohibition against public financing systems. Proposition 89 was defeated by the voters, receiving 25.7% of the vote statewide.
   
   Proposition 15—a measure that was placed on the June 2010 statewide primary election ballot by the Legislature—would have created a public campaign financing pilot project for candidates for SOS, and would have repealed the PRA's prohibition against public financing systems. Proposition 15 was defeated by the voters, receiving 42.7% of the vote statewide.
5. Arguments in Support: In a joint letter of support submitted by the California Clean Money Campaign and joined by many of the organizations listed below in support of this bill, the organizations write:

Voters are increasingly concerned about the problem of money in politics. A recent Gallup poll found that only 20% said they were satisfied with the nation’s campaign finance laws. In a poll conducted by the California Clean Money Campaign, 79% of likely California voters said Big Money campaign contributors have too much influence over elected officials in California, and 68% said that ordinary voters have too little influence.

Public financing of campaigns addresses these concerns by increasing the power of small donors and ordinary voters to participate in campaigns and have their voices heard. Also, it reduces the barriers to entry for running for office which diversifies the candidate pool by helping qualified candidates from all walks of life represent their communities.

Fifteen states and 19 municipalities have adopted public financing systems to empower voters and help candidates run campaigns that are more focused on the people they are running to represent. A study by Maplight found that during the first cycle of the matching funds program in Berkeley (in 2018), participating campaigns’ donors were spread across more of the city. In addition, the size of the average contribution fell 60% from the previous election. A 2020 study from Georgetown University found that since Seattle began Democracy Vouchers in 2017 the donor pool has become increasingly diverse.

1. Arguments in Opposition: In opposition to this bill, the California Taxpayers Association writes:

This measure raises several First Amendment issues by creating a scenario in which taxpayers would be forced to support political speech that they do not wish to support. AB 270 sets vague parameters for the authority that local governments would have to determine which candidates qualify for public financing. It is possible that local governments would be able to arbitrarily prohibit certain candidates from receiving funding to limit the speech of some candidates for the political benefit of others.

At a time when the state is facing a $22.5 billion deficit – and many municipalities are experiencing significant budget pressure due to inflation – the government should prioritize prudent fiscal policies to make the most of the revenue received from taxpayers.

For these reasons, the voters have repeatedly rejected public financing of elections (most recently with Proposition 89 of 2006 and Proposition 15 of 2010).

1. Related Legislation: SB 24 (Umberg), which is pending in the Senate Elections & Constitutional Amendments Committee, is substantively identical to this bill.
   
   SB 888 (Elections & Constitutional Amendments Committee), which is pending in the Senate Elections & Constitutional Amendments Committee, proposes to repeal the provisions of SB 1107 that were enjoined from enforcement in Howard Jarvis Taxpayers Assn. as described above, among other provisions.
2. Double Referral: Although this bill has been keyed non-fiscal by the Legislative Counsel, it has been double referred to the Assembly Appropriations Committee. Historically, non-fiscal measures that propose placing a measure on the ballot for voter approval have been referred to the Assembly Appropriations Committee because the state can incur costs to add additional pages to the state ballot pamphlet whenever it places a measure on the ballot.
3. Political Reform Act of 1974: 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 PRA. Amendments to the PRA by the Legislature must further the purposes of the proposition and require a two-thirds vote of each house of the Legislature, or the Legislature may propose amendments to the proposition that do not further the purposes of the act by a majority vote, but such amendments must be approved by the voters to take effect. This bill would only take effect if approved by the voters.

REGISTERED SUPPORT / OPPOSITION:

Support

California Clean Money Campaign (Sponsor)
All Rise Alameda
Building the Base Face to Face
California Church Impact
CalPIRG, California Public Interest Research Group
Change Begins With Me (INDIVISIBLE)
Cloverdale Indivisible
Consumer Watchdog
Contra Costa Moveon
Courage California
Defending Our Future: Indivisible in CA
East Valley Indivisibles
El Cerrito Progressives
Endangered Habitats League
Feminists in Action (formerly Indivisible CA 34 Womens)
Hillcrest Indivisible
Indi Squared
Indivisible 30/Keep Sherman Accountable
Indivisible 36
Indivisible 41
Indivisible Auburn CA
Indivisible Beach Cities
Indivisible CA-25 Simi Valley Porter Ranch
Indivisible CA-29
Indivisible CA-3
Indivisible CA-33
Indivisible CA-37
Indivisible CA-39
Indivisible CA-43
Indivisible CA-7
Indivisible CA: Statestrong
Indivisible Claremont/Inland Valley
Indivisible Colusa County
Indivisible East Bay
Indivisible El Dorado Hills
Indivisible Elmwood
Indivisible Euclid
Indivisible Lorin
Indivisible Los Angeles
Indivisible Manteca
Indivisible Marin
Indivisible Media City Burbank
Indivisible Mendocino
Indivisible Normal Heights
Indivisible North Oakland Resistance
Indivisible North San Diego County
Indivisible OC 46
Indivisible OC 48
Indivisible Petaluma
Indivisible Sacramento
Indivisible San Bernardino
Indivisible San Jose
Indivisible San Pedro
Indivisible Santa Barbara
Indivisible Santa Cruz County
Indivisible Sausalito
Indivisible Sebastopol
Indivisible SF
Indivisible SF Peninsula and CA-14
Indivisible Sonoma County
Indivisible South Bay LA
Indivisible Stanislaus
Indivisible Suffragists
Indivisible Ventura
Indivisible Windsor
Indivisible Yolo
Indivisible: San Diego Central
Indivisibles of Sherman Oaks
Livermore Indivisible
Maplight
Mill Valley Community Action Network
Money Out Voters in
Mountain Progressives
Nothing Rhymes With Orange
Orchard City Indivisible
Orinda Progressive Action Alliance
Our Revolution Long Beach
Public Citizen, Inc
Riseup
Rooted in Resistance
San Diego Indivisible Downtown
SFV Indivisible
Tehama Indivisible
The Resistance Northridge-Indivisible
Together We Will Contra Costa
Together We Will/Indivisible - Los Gatos
Vallejo-Benicia Indivisible
Venice Resistance
Voices for Progress
Women's Alliance Los Angeles
Yalla Indivisible

Opposition

California Taxpayers Association

Howard Jarvis Taxpayers Association

Analysis Prepared by: Ethan Jones / ELECTIONS / (916) 319-2094