Follow the Money: New Bill Would Double CA Campaign Reporting Threshold

It could soon be harder to follow the money in California politics.

A state lawmaker wants to double the reporting threshold for political campaigns in California — allowing major donors to contribute more money and campaigns to spend more money before filing a disclosure report.

Under the Political Reform Act of 1974, as modified by later laws, candidate and independent expenditure committees must file disclosure reports after accepting $1,000 or more in a calendar year. Similarly, the state requires major donors to file campaign reports after contributing $10,000 or more in a calendar year.

Assemblyman Richard Gordon, D-Menlo Park, believes it’s time to increase those disclosure limits. Assembly Bill 594 would require candidate and independent expenditure committees to file a disclosure report after spending $2,000 or more in a calendar year. The reporting threshold for major donors would increase from $10,000 to $20,000 or more.

Political amateurs punished by campaign finance laws

Since his election to the state Assembly in 2010, Gordon has carved out a special niche in campaign finance legislation with bills to increase regulation and disclosure requirements. In 2012, Gordon authored Assembly Bill 481, which added new reporting requirements for independent expenditure and major donor committees. Last year, Gov. Jerry Brown signed Gordon’s bill,Assembly Bill 800, to give the Fair Political Practices Commission “the authority to conduct immediate audits when political campaigns are suspected of illegal activity and requires subcontractors and sub-vendors to disclose their donations.”

State-level political campaigns continue to be big budget blockbusters. According to the Sacramento Bee’s analysis of campaign finance reports, “candidates and independent groups collectively spent at least $150 million on Assembly and Senate contests statewide over the two-year election cycle.”

Why would a Democratic politician with a record of authoring campaign finance laws seemingly aid money in politics? Like his previous campaign finance proposals, Gordon’s current legislation has support from the state’s campaign watchdog, which argued that low campaign spending limits reduce political participation.

In a memo obtained by the Los Angeles Times, Erin Peth, executive director of the FPPC, said that the current campaign finance rules “can be a barrier for those individuals who wish to participate, but who will not be raising or spending large amounts of money in connection with an election.” Peth also argued, “Committee qualification thresholds have not been updated since at least 1987 and the proposed increases in the bill are intended to adjust the thresholds with the rate of inflation.”

According to the Inflation Calculator of the U.S. Bureau of Labor Statistics, when adjusted for the rising in the cost of living, $1,000 in 1987 is the equivalent of $2,066 today.

The rationale for higher limits is supported by pro-freedom campaign finance experts, who strongly defend political contributions as a protected form of political speech. Complex campaign finance laws force average citizens to seek legal counsel before engaging in political organizing.

“While serving on the FEC from 2000 to 2005, I kept a file of letters from political amateurs caught in the maw of campaign-finance laws,” Bradley Smith, a law professor and former chairman of the Federal Election Commission, wrote in 2007. “Many of these people had no lawyers; none had the least intent to corrupt any officeholder; and all thought that they were fulfilling their civic duty by their involvement in campaigns.”

Top Two Primary could lead to more low-budget upsets

A higher campaign reporting threshold also increases the chances that those amateurs turn pro. Aided by California’s Top Two primary, which was passed by state voters in 2010, unknown candidates have been able to exceed political expectations, even achieve remarkable upsets, with low-budget campaigns. With higher reporting levels, these candidates will be able to operate in the dark for longer without tipping off incumbents.

dollar.CALast November, unknown community activist Patty Lopez failed to report any expenditures in the primary campaign, despite spending a few thousands dollars. That failure to report resulted in a $400 fine by the FPPC. In the general election, she went on to upset fellow Democrat, Asm. Raul Bocanegra.

“I made a few mistakes, and I paid the price for that,” Lopez said after the election. “Most of the people on my team, we’re not in the political arena.”

Lopez’s campaign finances weren’t managed by a campaign professional, just a family friend who was willing to serve as treasurer. That’s exactly the type of grassroots campaign political watchdogs hope to encourage with relaxed campaign finance regulations.

Her victory is proof that low-budget long-shots have the potential to win. Although it’s unlikely that Bocanegra would have been intimidated by a few thousands dollars of campaign spending, some political observers believe the lack of campaign finance disclosure contributed to the perception that she wasn’t a serious threat.

Opportunity for political professionals to exploit

Steve GlazerBy aiding political amateurs with higher reporting levels, state regulators also could empower creative political professionals to exploit the outcome of primary races. In multi-candidate primary elections, political professionals could spend just under $2,000 in online ads or automated calls backing a decoy candidate.

Such a scenario has already played out in this year’s special election for the 7th State Senate District. A Democrat-led political action committee, the Asian American Small Business PAC, spent $46,380 on behalf of Michaela Hertle, a Republican candidate who had dropped out of the race.

By backing the lone Republican candidate, the political action committee hoped to thwart moderate Democrat Steve Glazer, who had built his campaign strategy on appealing to Republicans and independent voters. Glazer ultimately advanced to the May run-off against fellow Democrat, Assemblywoman Susan Bonilla. But Hertle had an impact, garnering 15 percent of the vote.

Originally published by

Don’t Tax Independent Expenditures, Eliminate Candidate Donor Limits

The bill authored by Assemblyman Marc Levine (D-San Rafael) to tax independent expenditure campaign spending has a point, although the measure itself is likely to find resistance in both the halls of the legislature and in the courts. Levine’s goal is to see campaigns conducted by candidates who would be accountable for the political messages delivered during a campaign.

With independent expenditures, which legally cannot consult or inform a candidate’s campaign of its activity, messages sent out on behalf of a candidate may not represent the candidate’s view, or his or her opinion of an opponent. Yet, the candidate often has to answer for this unsolicited “help.”

Assembly Bill 1494 would try to discourage use of independent expenditures (IE) by taxing the money spent in an IE campaign. Such a tax is probably unconstitutional. As election law expert Rick Hasen of UC Irvine told the Los Angeles Times, “You can’t design a tax with the purpose of trying to suppress speech. …The clear import of something like this would be to discourage people from making independent expenditures.”

Before such a law would face a legal challenge it would have to maneuver through a field of obstacles in the legislature. Well-off groups such as labor and business with sway under the capitol dome want to keep their ability to influence elections. Legislators themselves are likely to be concerned that the tax will limit the money that would be spent in their future campaigns.

Independent expenditure spending on campaigns has greatly increased since a 2000 ballot measure limited the amount of money that can be given directly to a candidate.

One goal of that measure was to increase the influence of political parties, according to supporters. However, independent expenditures arose and as Sacramento Bee columnist Dan Walters wrote there was a more cynical reason politicians supported the ballot measure:“(l)aundering campaign money to disguise its source is exactly what state legislators intended when they wrote Proposition 34 a decade ago. Its “strict limits” were designed to give the appearance of reform while encouraging money-laundering and so-called “independent expenditures” so that candidates wouldn’t be accountable to voters for their sources of campaign funds.”

A solution to the problem of beefing up candidate-controlled committees is to end the donation limits. Let candidates receive as much as a donor wants to give, report the donations immediately so that the public is aware of the donors, and let the candidate and his or her consultants fashion the campaign messages and be accountable for any promises or outrageous claims made during the campaign.

Joel Fox is Editor of Fox & Hounds and President of the Small Business Action Committee

Originally published by Fox and Hounds Daily

Grabbing a Piece of CA

Out of state donors


Wolverton, Cagle Cartoons

What incumbent candidates conveniently leave out of campaign ads

Humorist Will Rogers observed, “This country has come to feel the same when Congress is in session as when the baby gets hold of a hammer.” If Rogers were a Californian today, he would say the same thing about the state Legislature.

Fortunately, for average citizens, the Legislature adjourned a few weeks ago so its ability to inflict more harm on taxpayers, property owners and businesses is on hold until the first of the year.

Lawmakers are no longer in Sacramento listening to high-powered lobbyists for special interests that back more taxes and spending. Most have returned to their home districts to beg for votes. They are likely to be attending local events and some will actually be walking in neighborhoods to convince voters they deserve to be returned to the Capitol. And, of course, they will be invading your mail box, television and radio with their political ads.

The majority of candidates for reelection will be bragging that they and their colleagues have achieved a balanced, on time budget and the state is on the right track. Their accomplishments, they will claim, entitle them to continue in office.

However, here are some things that most will not mention. California continues to have one of the highest unemployment rates in all 50 states. Our state ranks first in marginal income tax rates, state sales tax and gasoline tax. Businesses, and the jobs they provide, continue to flee the state. Even firms like Tesla and SpaceX that have been provided massive tax subsidies by Sacramento, have chosen to expand their facilities outside of California – Tesla to Nevada and SpaceX to Texas. And the Legislature continues to support subsidies to Governor Brown’s bullet train that may end up costing taxpayers nearly $100 billion.

Another topic that most incumbent lawmakers will not want to discuss is their efforts to pass ACA 8, an amendment to the California Constitution that would make it much easier to increase property taxes to pay for infrastructure bonds. Passage of this, and other proposals that fell just short of approval this year, could have resulted in increased property taxes totaling billions of dollars, once again putting homeownership in jeopardy as it was prior to Proposition 13, when there were no limits on annual increases in the tax bill.

It is also unlikely they will want to discuss their rejection of legislation that would have slowed the implementation of carbon fees, fees that are likely to add somewhere between 15 and 40 cents to the cost of a gallon of gas after the first of the year. This is no less than a war on the poor, who already can barely afford to put fuel in their cars due not only to high prices, but also to the highest gas tax in the nation. And California has plenty of poor. We lead all 50 states in the percentage of those living in poverty.

Voters who have the opportunity to meet candidates for office, whether they are incumbents or aspiring challengers, should be prepared to ask a few questions.

Here is a good question for all candidates, “Do you believe it is fair that Californians pay the highest tax rates in nearly every category?” An excellent follow-up question would be, “Where do you stand on an extension of the Proposition 30 income and sales tax increase, set to expire in the next several years?” And, of course it is always revealing to get answers to this question, “Do you support the governor’s bullet train that could cost taxpayers a hundreds billion dollars or more?”

Honest answers to these questions would provide a good gauge of how well a candidate understands that their actions have real consequences for average Californians. Some may show that they genuinely respect those they serve, while others, who are likely to equivocate when responding, will reveal that they are motivated by self-interest.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.