BILL NUMBER: AB 2318 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 15, 2016
AMENDED IN ASSEMBLY MAY 18, 2016
AMENDED IN ASSEMBLY MARCH 28, 2016
INTRODUCED BY Assembly Member Low
FEBRUARY 18, 2016
An act to amend Section 54964.5 of, to add
Sections 84222.1 and 84222.2 Section 84222.5 to,
and to repeal Sections 54964.5 and Section
54964.6 of, the Government Code, relating to the
Political Reform Act of 1974. nonprofit organizations.
LEGISLATIVE COUNSEL'S DIGEST
AB 2318, as amended, Low. Political Reform Act of 1974:
Fair Political Practices Commission: enforcement:
Nonprofit organizations: use of public resources.
(1) Existing law prohibits a nonprofit organization or an officer,
employee, or agent of a nonprofit organization from using, or
permitting another to use, public resources received from a local
agency for any campaign activity not authorized by law. Existing law
authorizes the Attorney General, any district attorney, or any city
attorney of a city with a population over 750,000 to bring a civil
action to recover a civil penalty against any person who
intentionally or negligently violates that prohibition.
The Political Reform Act of 1974 regulates contributions to public
officials and also regulates conflicts of interests on the part of
public officials while carrying out their respective duties. The act
establishes the Fair Political Practices Commission as the agency
responsible for administering and enforcing the act. The act
authorizes the Commission to seek and impose administrative and civil
penalties against persons who violate the act, as prescribed. The
act makes a willful violation of its provisions a misdemeanor subject
to specified penalties.
This bill would recast and relocate the prohibition on
the use of public resources described above within the Political
Reform Act of 1974 and would also authorize the Commission, in
addition to the Attorney General or district attorney, to bring a
civil action to recover the civil penalty, as described above. The
bill would authorize the Commission to investigate, hold an
administrative hearing on, and issue an order against a violator of
the prohibition on the use of public resources for campaign activity,
instead of commencing a civil action. clarify that
the prohibition applies to making contributions or expenditures not
authorized by law, and would specify certain expenditures authorized
by law that are not subject to the prohibition.
(2) Existing law requires qualifying individuals and
political organizations to report specified information, including,
but not limited to, political contributions, in statements filed with
the Commission. Existing law requires a reporting
nonprofit organization that engages in campaign activity to deposit
into a separate bank account all specific sources of funds it
receives and to pay for all campaign activity from that separate bank
account. Existing law defines "reporting nonprofit organization" as
a nonprofit organization for which public resources from one or more
local agencies account for more than 20% of the nonprofit
organization's annual gross revenue, as specified.
Existing law requires a reporting nonprofit organization that
engages in campaign activity of specified amounts or more to
periodically disclose to the Franchise Tax Board, and post on its
Internet Web site in a certain manner, the identity and amount of
each specific source or sources of funds it receives for campaign
activity, a description of the campaign activity, and the identity
and amount of payments the organization makes from the required
separate bank account. Existing law authorizes, and in some instances
requires, the Franchise Tax Board to audit a reporting nonprofit
organization, requires the board to issue a written audit report, and
requires the board to transmit the audit report to the Attorney
General and the district attorney for the county in which the
reporting nonprofit organization is domiciled. Existing law
authorizes the Attorney General or the district attorney for the
county in which the reporting nonprofit organization is domiciled to
impose a monetary civil penalty of up to $10,000 against a reporting
nonprofit organization for misusing public resources received from a
local agency, as described in (1), for failing to maintain the
separate bank account, or for not complying with the disclosure
requirements described above.
This bill would recast and relocate those provisions within the
Political Reform Act of 1974, thereby making the Fair Political
Practices Commission responsible for their administration and
enforcement, except as specified. The bill would change the term
"reporting nonprofit organization" to "publicly funded nonprofit
organization," defined as a nonprofit organization for which public
resources from one or more local agencies account for more than 20%
of the nonprofit organization's annual gross revenue, as specified.
This The bill would require certain
publicly funded nonprofit organizations to register as recipient
committees and file the campaign statements that those committees are
required to file under the act. This bill would shift the Franchise
Tax Board's authority and duties under these provisions to the
Commission and would authorize the Commission, in addition to the
Attorney General or the district attorney, to impose the monetary
civil penalty of up to $10,000 against a publicly funded nonprofit
organization.
The Political Reform Act of 1974 makes a willful violation of
its provisions a misdemeanor. By expanding the scope of an
existing crime, this bill would impose a state-mandated local
program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
The Political Reform Act of 1974, an initiative measure, provides
that the Legislature may amend the act to further the act's purposes
upon a 2/3 vote of each house and compliance with specified
procedural requirements.
This bill would declare that it furthers the purposes of the act.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 54964.5 of the Government
Code is repealed.
SECTION 1. Section 54964.5 of the
Government Code is amended to read:
54964.5. (a) A nonprofit organization or an officer, employee, or
agent of a nonprofit organization shall not use, or permit another
to use, public resources, resources
received from any local agency for any campaign activity
to make a contribution or expenditure not
authorized by law.
(b) As used in this section and Section 54964.6,
84222.5, the following terms shall
have the following meanings:
(1) "Ballot measure" means a state or local initiative,
referendum, or recall measure certified to appear on a regular or
special election ballot or other measure submitted to the voters by
the Legislature or the governing body of a local agency at a regular
or special election.
(2) "Campaign activity" means a payment that is used for
communications that expressly advocate for or against the
qualification of a clearly identified ballot measure, the approval or
rejection of a clearly identified ballot measure, or the election or
defeat of a clearly identified candidate by the voters, or that
constitutes a campaign contribution.
(A) "Campaign activity" does not include the costs of adopting a
position or a resolution supporting or opposing a clearly identified
ballot measure or candidate, including, but not limited to, posting
the position or resolution on the nonprofit organization's Internet
Web site, communicating the position or resolution to members of the
nonprofit organization, or issuing a press statement.
(B) "Campaign activity" does not include incidental or minimal use
of public resources.
(C) "Campaign activity" does not include incidental costs related
to the establishment or administration of a sponsored committee as
defined in Section 82048.7. A reasonable accounting method may be
used to determine the use of nonpublic resources to pay for that
cost. "Establishment and administration" means the cost of office
space, telephones, salaries, utilities, supplies, legal and
accounting fees, and other expenses incurred in establishing and
operating a sponsored committee.
(3) "Candidate" means an individual who has qualified to have his
or her name listed on the ballot, or who has qualified to have
write-in votes on his or her behalf counted by elections officials,
for nomination or election to an elective office at any regular or
special primary or general election, and includes any officeholder
who is the subject of a recall election.
(4) "Expenditure" means a payment used for communications that
expressly advocate the approval or rejection of a clearly identified
ballot measure, or the election or defeat of a clearly identified
candidate, by the voters or that constitutes a campaign contribution.
(5)
(1) "Local agency" shall have
has the same meaning as that term is defined in paragraph (4)
of subdivision (b) of Section 54964 and shall also include a public
entity created pursuant to the Joint Exercise of Powers Act (Chapter
5 (commencing with Section 6500) of Division 7 of Title 1) by one or
more entities described in Section 54964.
(6)
(2) "Nonprofit organization" means any
an entity incorporated under the Nonprofit
Corporation Law (Division 2 (commencing with Section 5000) of Title 1
of the Corporations Code) or a nonprofit organization that qualifies
for exempt tax-exempt status under
Section 115 or 501(c) of the federal Internal Revenue
Code, provided, however, that "nonprofit Code.
"Nonprofit organization" does not include any
a nonprofit organization that qualifies for
tax-exempt status under Section 501(c)(3) of the federal
Internal Revenue Code.
(7)
(3) "Public resources" means either of the
following:
(A) Any property or asset owned by a local agency, including, but
not limited to, cash, land, buildings, facilities, funds, equipment,
supplies, telephones, computers, vehicles, travel, and local
government compensated work time that is provided to a nonprofit
organization, except funds received in exchange for consideration for
goods or services.
(B) Funds received by a nonprofit organization which
that have been generated from any activities
related to conduit bond financing by those entities subject to the
conduit financing and transparency and accountability provisions of
Chapter 10.7 (commencing with Section 5870) of Division 6 of Title 1,
whether or not those funds are received by the nonprofit
organization in exchange for consideration for goods or
services.
(4) "Publicly funded nonprofit organization" means a nonprofit
organization for which public resources from one or more local
agencies account for more than 20 percent of the nonprofit
organization's annual gross revenue in the current fiscal year or
either of the previous two fiscal years.
(8)
(5) "Use" means a use of public resources from one or
more local agencies that is substantial enough to result in a gain or
advantage to the user or a loss to any a
local agency for which any a
monetary value may be estimated.
(c) This section does not prohibit the use of public resources for
providing information to the public about the possible
effects of any ballot measure on the activities, operations, or
policies of the state or a local agency, provided that the
informational activities meet both of the following conditions:
expenditures authorized by law, including all of the
following:
(1) The costs of adopting a position or resolution supporting or
opposing a clearly identified ballot measure or candidate, including
posting the position or resolution on the nonprofit organization's
Internet Web site, communicating the position or resolution to
members of the nonprofit organization, or issuing a press statement.
(2) Incidental or minimal use of public resources.
(3) Incidental costs related to the establishment or
administration of a sponsored committee, as defined in Section
82048.7. A reasonable accounting method may be used to determine the
use of nonpublic resources to pay for that cost. For purposes of this
paragraph, "establishment and administration" means the cost of
office space, telephones, salaries, utilities, supplies, legal and
accounting fees, and other expenses incurred in establishing and
operating a sponsored committee.
(4) Providing information to the public about the possible effects
of a ballot measure on the activities, operations, or policies of
the state or a local agency if the informational activities meet both
of the following conditions:
(1)
(A) The informational activities are not otherwise
prohibited by the California Constitution or the laws of this state.
(2)
(B) The information provided constitutes an accurate,
fair, and impartial presentation of relevant facts to aid the
electorate in reaching an informed judgment regarding the ballot
measure.
(d) (1) Any person who intentionally or negligently violates this
section is liable for a civil penalty not to exceed one thousand
dollars ($1,000) for each day on which a violation occurs, plus three
times the value of the unlawful use of public resources. The penalty
shall be assessed and recovered in a civil action brought in the
name of the people of the State of California by the Attorney General
or by any district attorney or any city attorney of a city having a
population in excess of 750,000. If two or more persons are
responsible for any a violation, they
shall be jointly and severally liable for the penalty. If the action
is brought by the Attorney General, the moneys recovered shall be
paid into the General Fund. If the action is brought by a district
attorney, the moneys recovered shall be paid to the treasurer of the
county in which the judgment was entered. If the action is brought by
a city attorney, the moneys recovered shall be paid to the treasury
of that city.
(2) A civil action alleging a violation of this section shall not
be commenced more than four years after the date of the alleged
violation.
SEC. 2. Section 54964.6 of the Government Code is repealed.
SEC. 3. Section 84222.1 is added to the
Government Code, to read:
84222.1. (a) A nonprofit organization or an officer, employee, or
agent of a nonprofit organization shall not use, or permit another
to use, public resources received from any local agency to make a
contribution or expenditure not authorized by law.
(b) As used in this section and Section 84222.2, the following
terms have the following meanings:
(1) "Local agency" has the same meaning as that term is defined in
paragraph (4) of subdivision (b) of Section 54964 and shall also
include a public entity created pursuant to the Joint Exercise of
Powers Act (Chapter 5 (commencing with Section 6500) of Division 7 of
Title 1) by one or more entities described in Section 54964.
(2) "Nonprofit organization" means an entity incorporated under
the Nonprofit Corporation Law (Division 2 (commencing with Section
5000) of Title 1 of the Corporations Code) or a nonprofit
organization that qualifies for exempt status under Section 115 or
501(c) of the federal Internal Revenue Code. "Nonprofit organization"
does not include a nonprofit organization that qualifies for
tax-exempt status under Section 501(c)(3) of the federal Internal
Revenue Code.
(3) "Public resources" means either of the following:
(A) Any property or asset owned by a local agency, including, but
not limited to, cash, land, buildings, facilities, funds, equipment,
supplies, telephones, computers, vehicles, travel, and local
government compensated work time that is provided to a nonprofit
organization, except funds received in exchange for consideration for
goods or services.
(B) Funds received by a nonprofit organization that have been
generated from any activities related to conduit bond financing by
those entities subject to the conduit financing and transparency and
accountability provisions of Chapter 10.7 (commencing with Section
5870) of Division 6 of Title 1, whether or not those funds are
received by the nonprofit organization in exchange for consideration
for goods or services.
(4) "Publicly funded nonprofit organization" means a nonprofit
organization for which public resources from one or more local
agencies account for more than 20 percent of the nonprofit
organization's annual gross revenue in the current fiscal year or
either of the previous two fiscal years.
(5) "Use" means a use of public resources from one or more local
agencies that is substantial enough to result in a gain or advantage
to the user or a loss to a local agency from which a monetary value
may be estimated.
(c) This section does not prohibit the use of public resources for
expenditures authorized by law, including:
(1) The costs of adopting a position or resolution supporting or
opposing a clearly identified ballot measure or candidate, including,
but not limited to, posting the position or resolution on the
nonprofit organization's Internet Web site, communicating the
position or resolution to members of the nonprofit organization, or
issuing a press statement.
(2) Incidental or minimal use of public resources.
(3) Incidental costs related to the establishment or
administration of a sponsored committee, as defined in Section
82048.7. A reasonable accounting method may be used to determine the
use of nonpublic resources to pay for that cost. For purposes of this
subparagraph, "establishment and administration" means the cost of
office space, telephones, salaries, utilities, supplies, legal and
accounting fees, and other expenses incurred in establishing and
operating a sponsored committee.
(4) Providing information to the public about the possible effects
of a ballot measure on the activities, operations, or policies of
the state or a local agency if the informational activities meet both
of the following conditions:
(A) The informational activities are not otherwise prohibited by
the California Constitution or the laws of this state.
(B) The information provided constitutes an accurate, fair, and
impartial presentation of relevant facts to aid the electorate in
reaching an informed judgment regarding the ballot measure.
(d) (1) A person who intentionally or negligently violates this
section is liable for a civil penalty not to exceed one thousand
dollars ($1,000) for each day on which a violation occurs, plus three
times the value of the unlawful use of public resources. The penalty
shall be assessed and recovered in a civil action brought in the
name of the people by the Attorney General, the district attorney for
the county in which the organization is domiciled, or the
Commission. If two or more persons are responsible for a violation,
they shall be jointly and severally liable for the penalty. Any
moneys recovered by the Commission shall be paid into the General
Fund.
(2) A civil action alleging a violation of this section shall not
be commenced more than four years after the date of the alleged
violation.
(3) The Commission has jurisdiction to commence an investigation
for a violation of this section in the manner described in Section
83115 and issue an order under Section 83116. A civil action shall
not be filed or prosecuted under paragraph (1) with regard to a
person for a violation of this section after the Commission has
issued an order in the manner described in Section 83116 against that
person for the same violation.
SEC. 4. SEC. 3. Section
84222.2 84222.5 is added to the Government Code,
to read:
84222.2. 84222.5. (a) A publicly
funded nonprofit organization that makes contributions or
expenditures, either directly or through the control of another
entity, shall establish and deposit into a separate bank account all
funds that will be used to make contributions and expenditures, and
those contributions and expenditures shall come from that separate
bank account.
(b) In addition to subdivisions (b) and (c) of Section 84222, a
publicly funded nonprofit organization is a recipient committee
within the meaning of subdivision (a) of Section 82013 if any of the
following occur:
(1) It makes contributions or expenditures totaling fifty thousand
dollars ($50,000) or more related to statewide candidates or ballot
measures or makes contributions or expenditures totaling two thousand
five hundred dollars ($2,500) or more related to local candidates or
ballot measures, either directly or through the control of another
entity, during the prior quarter.
(2) By January 31 of each odd-numbered year, it makes
contributions or expenditures totaling one hundred thousand dollars
($100,000) or more related to statewide candidates or ballot measures
or makes contributions or expenditures totaling ten thousand dollars
($10,000) or more related to local candidates or ballot measures,
either directly or through the control of another entity, during the
previous two years.
(c) If a publicly funded nonprofit organization qualifies as a
recipient committee pursuant to subdivision (b), it shall comply with
the registration and reporting requirements of Section 84222.
(d) Each publicly funded nonprofit organization that makes
contributions or expenditures, either directly or through the control
of another entity, shall provide to the Commission, and display on
the organization's Internet Web site, the information it is required
to disclose under this section. The information shall be clearly
described and identified on a separate Internet Web page that is
linked from the homepage of the organization's Internet Web site. The
link to this Internet Web page from the homepage shall be as visible
as all similar links.
(e) The Commission may require an audit of a publicly funded
nonprofit organization that is required to provide records to the
Commission pursuant to this section. The Commission shall require an
audit of any publicly funded nonprofit organization that makes
contributions or expenditures in excess of five hundred thousand
dollars ($500,000) in a calendar year. The publicly funded nonprofit
organization shall provide records to the Commission to substantiate
the information required to be disclosed by this section.
(f) If the Commission determines at the conclusion of an audit
that a publicly funded nonprofit organization has violated this
section, the Commission, the Attorney General, or the district
attorney for the county in which the organization is domiciled may
impose a civil fine upon the organization in an amount up to ten
thousand dollars ($10,000) for each violation.
(g) The definitions in subdivision (b) of Section 84222.1
54964.5 apply to this section.
SEC. 5. SEC. 4. No reimbursement is
required by this act pursuant to Section 6 of Article XIII B of the
California Constitution because the only costs that may be incurred
by a local agency or school district will be incurred because this
act creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction, within
the meaning of Section 17556 of the Government Code, or changes the
definition of a crime within the meaning of Section 6 of Article XIII
B of the California Constitution.
SEC. 6. SEC. 5. The Legislature
finds and declares that this bill furthers the purposes of the
Political Reform Act of 1974 within the meaning of subdivision (a) of
Section 81012 of the Government Code.