Senate Standing Committee on Elections and Constitutional Amendments

[Roll Call]

Okay, we have a quorum. We have two bills on our agenda today. SB 986 by Senator Seyarto and SB 1027 by Senator Menjivar. And I'm happy to see that Senator Seyarto is here, so we will hand It over to you .

because I can be two places at once, right?

Exactly.

All right, thank you. Thank you, honorable chair. I'm here to present SB 968. In short, SB 986. Sorry, would require a voter's ballot label to include an estimate of the amount of interest due on the bond. And to be clear, California used to do this, and voters appreciated the clear explanation of the cost associated with a bond. Recently, however, this practice has been arbitrarily changed at the discretion of those responsible for writing the fiscal impact statement on a voter's ballot label.

The new practice has been to admit any mention of interest on the ballot label and instead only include the annual payment amount. This annual payment amount obscures the actual cost of borrowing money, and when anyone is deciding whether to take out a loan, their decision is informed by two things, the cost of the item that they want to buy and the cost of the loan itself.

If you know these two things, you can decide whether it is worth paying the cost of a loan to have something now, or if it is better to keep saving up money to have it later. The way the ballot label is currently drafted makes it so that you do not know the cost of the loan itself. Instead, you have to comb through the voter information guide and do your own calculations.

And in our current bond, I believe the voter information guide language was 75 pages long of legal speak. It shouldn't be that way. We should make this basic information as accessible as possible to voters. And you may hear some opposition groups today claim that the format prescribed by this Bill is confusing. That's simply not true. Evidently, it was not deemed confusing when, for example, we use the same format for Prop 51 in 2016.

What's confusing to me is that the state wants to ask voters to borrow money only two years after a $98 billion surplus, and then declines to clearly tell voters the cost of the project they want to Fund or the cost of the loan itself. Our voters deserve more transparency, and this Bill gives that to them I understand that there are some interests out there that are concerned about this impacting their ability to get funding.

My response to this is that if you need bond money, you can have it. You just need to persuade the voters. And all this Bill does is make sure that they have an honest and transparent way of knowing how much it's going to cost them. I respectfully ask for your aye vote.

Thank you, Senator Seyarto. We will now move on to lead witnesses in support .

And I did not bring any lead witnesses.

Okay. Do we have any other support witnesses who are here in room 2100? Okay. I don't see any. So we will now move on to lead witnesses in opposition.

Good morning, Madam Chair and Members. Rebekah Kalleen, on behalf of the Coalition for Adequate School Housing, which represents school districts on state and local facility funding issues, local bonds are critical to meeting school infrastructure needs and providing the educational services and opportunities to which our children are entitled. 75 words is simply not a lot of space to communicate complicated concepts about a proposed bond measure. A new law in 2017 required local bonds to provide specific fiscal information on the ballot label, which we already provide.

That includes the rate of a proposed tax, how long we expect to collect that tax, and the amount that we expect to receive annually, all within those 75 words. This information has proven confusing to voters and has made it more difficult to place a bond on the ballot and to pass a bond. We know that when voters are confused, they default to a no vote. We see a drop of about five to 15% support for all local bond measures.

Specifically, due to this confusion, SB 986 would add an additional 27 word fiscal statement to the existing words to the ballot label to identify annual principal and interest payments. This information is already provided in the voter information guide, which allows space to explain complicated fiscal details. Under SB 986, approximately two thirds of the words on the ballot label would now be dedicated to fiscal impact, rather than explaining to voters how that measure would improve and benefit their community.

If schools are not able to pass local bonds, they won't be able to leverage state funds in the school facility program, making that hole even bigger for state bonds. So those comments were about local bonds. For state bonds, SB 986 would greatly limit the discretion of the AG and the LAO to determine the most relevant fiscal information for each unique bond measure.

SB 986 would make it harder to raise local and state funds for the vital infrastructure projects that support priorities like education, housing, transportation, health, disaster recovery, water quality and more. For these reasons, we urge your no vote. Thank you.

Thank you. Do we have any other opposition witnesses here at 2100. Yes, you may come up to the microphone.

Hello, my name is Seamus Garrity. I'm with Lighthouse Public Affairs. On behalf of our client SPUR, we urge a no vote on this as well.

Thank you. Anybody else support our opposition in the room? Okay, so we will now bring the discussion back to the Members. Is there anybody who has a question or comment they'd like to make? Senator Nguyen, make a comment?

Yes, Senator, I appreciate the Bill. And I just look at it as if any of us were to go buy a car, a house, we would like to see how much it costs, what would be monthly and what that principal at the end would be. I think every one of us in our own household, we do that. And so I think allowing the voters this information is not, I mean, voters are very intelligent. It's not very confusing or difficult.

And I don't think that the local bonds reduction of 5% to 15% has to do with just because you added the impact, fiscal impact. I think there's a lot more. Every jurisdiction, most of the school bonds in my district, and sales tax for the last, I guess, several years now. I don't remember one that hasn't passed. I had a city that's passed it three times in the last eight years. They're now the highest sales tax in Orange County.

So I don't think it has to do with just because you add a fiscal impact information in it that forces voters to vote no, and that's confusing. So I appreciate this information. I think voters should have it and they can do what they want to do, what they can read it or they don't. But I think it's to allow those who would want to read it or would know about it that opportunity. So with that, I will move the item when the time comes. Madam Chair.

Okay, thank you. Any other Members comments or questions? Okay, seeing none, we will go to Senator Seyarto. Would you like to close?

Sure, I would. So I have a couple of comments regarding the necessity to start reincorporating things like this that actually build trust with the voting public out there. Because the problem with bonds lately is not. That is the problem with trust that has been eroded over the last 20 years because we've had bond after bond with certain promises tied to those bonds that people are happy to pass, and then somehow we fall short on delivering on those promises.

And as voters perceive that we are trying to hide information or kind of make it tough for them to get so that they cannot make an informed decision on something that's when they start voting no. And that's what has happened. We have a bond measure right now that is something that everybody wants to get behind as far as helping mental health.

It is struggling mightily and it's struggling because people don't believe that bond is going to deliver what we say, and there's a good reason for that. But what they don't know is how much the $6.7 billion quickly turns into $13 billion of cost when that bond is done and what they would rather see us do.

Most people, when I look at that, when I'm evaluating whether I should support a bond or not, what most people will do is say we should just pay for that up front. We should pay for that with some of the $98 billion surplus we had, which is a suggestion that was made two years ago, but we passed on that.

And so now we're coming to them with one bond because we have $86 billion more of bonds coming up in November that we have to figure out between now and then what's going on and what's not. And the more bonds you pile on to the public and the more information you keep hidden from them, the less they're going to trust that that's what you're seeing.

It's not because they're confused by knowing how much a bond is going to cost right up on the front page where they can see it. Because for a lot of people, that's how we evaluate whether we're going to support something or not.

If I have to go digging through 75 pages of legal fine print to decide whether I'm going to support a measure or not, I am likely not to, even though I am probably more informed than a lot of voters are because we're exposed to it every day. So with that, the 75 word description of the measure can easily accommodate five words that say what this bond costs, what the interest is, and what it'll cost at the end and how many years it's going to be for.

That's information that people appreciate, and that's the information that when they get it, they trust it, and they have more of a tendency to pass these bonds as opposed to when they start seeing that, oh, wait a minute, here's the hidden stuff. They wouldn't tell us this.

That's why I wrote this Bill, and that's the intent of this Bill, is to regain that trust so that we do pass bonds when they make sense and they don't have to struggle like our mental health bond is doing right now. So with that I ask for an aye vote. And thank you very much for allowing me to present my Bill today.

Thank you, Senator Seyarto. The measure has been moved by Senator Nguyen. The motion is do passed to the Committee on Appropriations and assistant. Please call the roll.

[Roll Call]

It is one to zero on call.

Okay, well, that doesn't sound very promising. So anyway, thank you very much for hearing the Bill.

Thank you. Next we have Senator Menjivar's Bill, SB 1027. Welcome, Senator Menjivar.

Fellow Committee Members, I'm here to talk to you about SB 1027, a Bill that, in fact, this Committee is very familiar with. And in fact, one of the Committee Members, Senator Umberg, is also very familiar with. It's looking to ensure what happened to me about four times doesn't happen to other elected officials or candidates. But before I go into it, I want to thank the Committee for working with my team on this. I will be taking the amendments.

So SB 1027 will allow candidates and candidates to omit the bank statements, the bank account numbers from the statement of organization, better known as Form 410. Form 410 is a disclosure form that provides the public with information about the purpose of a political Committee and identifies the Committee's treasurer and principal officers. When a Committee files a Form 410 of the required fields is the Committee's bank account number.

When the local filing officer, or the SOS, makes a Form 410 available on the Internet, they do, in fact, redact the bank account. However, when the Member of the public requests a copy of that, the hard copy does not have that information redacted, and the bank account is then made available to whoever requests that information. This leaves a lot of candidates and elected officials vulnerable to identity theft.

The threats of identity theft, we all know, and check fraud have grown exponentially and become more sophisticated over the past few years. For example, suspicious activity reports for check fraud at depository institutions more than tripled across the nation between 2018 and 2022. That is up 201% between those years. I mentioned to you I'm presenting this Bill because this personally has happened to me in the past two years, close to four times.

I believe it's four already, and I want to make sure that, again, that doesn't continue to happen. So, Madam Chair, with your permission, I'd like to now turn to my lead witness, Lindsey Nakano, who is the Senior Legislative Counsel for FPPC.

Good morning, Madam Chair Members. Lindsey Nakano from the Fair Political Practices Commission. As Senator Menjivar described in her remarks statements of organization filed by campaign committees must include certain bank account information, including Committee Bank account numbers and the names of persons authorized to obtain bank account records. Candidates, elected officers, and Committee and bank representatives have expressed strong concerns that public access to Committee Bank account information on these statements increases the risk of fraud.

In public comment letters submitted to the FPPC at a Commission meeting last year relating to these statements, bank representatives stated that the risk of fraud attacks on Committee bank accounts, as well as other kinds of accounts, is at an all time high. To address this concern, SB 1027 would require the Secretary of State to redact the Committee bank account number and the names of persons authorized to obtain bank account records from all copies of statements of organization provided to the public.

The Bill would also permit committees to omit this information from copies of the statements filed with the local filing officer. Thank you to Senator Menjivar for your leadership, your collaboration on this Bill, and thank you to the Committee for your consideration today.

That is the only witness I have.

Okay. Thank you. If there are other support witnesses here in Room 2100 or comments metoos, feel free to step forward. Okay. Lead witnesses in opposition. Any other witnesses in opposition? Okay. We will now bring the discussion back to Members. Yes. Okay. Thank you. Any other comments from Members? Questions? Yes. No, go ahead.

I just want to say, dang, it's amazing that we haven't done this long time ago, and I clearly am not keeping enough money in my accounts. I haven't been hacked yet. You've been four times, but glad to support the Bill. I mean, these are the kind of things that. They're so self evident. It's wild that it takes legislation to do this, but condolences for your loss, but also happy to support it.

Thank you, Senator.

I do agree with Senator Newman. It does seem self evident. Could you just, if you don't mind sharing, have you really had fraud four times on your bank?

Definitely not lying on the stand.

And that was related to the form?

Well, in talking with my treasurer, she does believe so, because it's out in the public. So my identity has been stolen, people have gone to my bank, checks have been stolen. So we're attributing that to the fact that my bank account numbers are made public.

Yeah. Wow. Okay. Well, the Bill has been moved by Senator Umberg, and just to note that the amendments have been accepted. I just want to confirm that the amendments have been accepted.

Yes, ma'am. Chair.

Okay, thank you. So we have a motion on SB 1027 by Senator Umberg, and the motion is do pass as amended, to the Committee on Judiciary. Assistant, please call the roll.

[Roll Call]

Okay. It is seven to zero, and it is now out.

Thank you, Members.

Thank you. So thank you to the individuals who participated today. oh, right. Okay. Yes. Would you like to make a comment?

I wanted to also for Senator Seyarto's SB 986, if we can also add in a reconsideration.

Okay.

Thank you.

So we need to call the Members who were not here. So let's go ahead and do that consideration. Lift the call. Yes, lift the call. Yeah. Lift the call. Blakespear, not voting one. So what we're doing right now is SB 986. Yeah. Just so that everybody who's sitting here knows which Bill we're talking about. It's say, arto, SB 986 and we're lifting the call.

[Roll Call]

Okay. It's one to zero, and the Bill has failed. Yes. And we will grant reconsideration. Okay. Thank you to all the individuals who participated today. If you are not able to testify today, please submit your comments or suggestions in writing to the Senate Committee on elections and constitutional amendments and visit our website. Your comments and suggestions are important to us, and we want to include your testimony in the official hearing records. Thank you, and we appreciate your participation. The Senate Committee on Elections and constitutional amendments is adjourned.