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Campaign Finance Reform is Coming to City Council Campaigns

by on December 22, 2019

posted in Elections, Legislative Updates,

AB 571 provides statewide campaign contribution limits applicable to City Council campaigns (beginning in 2021) unless superseded by a local campaign limit ordinance or resolution. The City  does not have campaign contribution or funding limits at this time.    Therefore, absent a local resolution or ordinance, the provisions of AB 571 that amend the Political Reform Act will impose a basic limit of $3000  per election per contributor as of January 1, 2021, and impose other restrictions. This limit is adjusted annual by the Fair Political Practices Commission (FPPC) according to the consumer price index.  Your lobbyist requested that the Council be provided information about this change.

Although the author stated the bill keeps local control, that is not completely true.  The revisions of the Political Reform Act reviewed below contain a number of disincentives to the adoption of a local resolution or ordinance; perhaps the most relevant is the lack of ability to carry over contributions between elections. A local resolution or ordinance may be adopted at any time by the City Council.

Background

According to its author, Kevin Mullin, AB 571 “establishes default campaign contribution limits for cities and counties that have not adopted their own limits.” Relatively few California cities and counties have such limits.

As of January 1, 2021,  AB 571 repeals the Elections Code provisions allowing a county or city to set its own campaign contribution limits for county or city elections. All legislation regarding such local limits now is part of the Political Reform Act and administered by the FPPC. The bill also restates campaign funding limits previously applicable only to state elective offices and applies them to city and county elective offices.  The bill does not just provide for campaign contribution limits but for overall campaign financing regulations, including loans, contributions to recall campaigns and timing and amount of contributions before and after an election.

Contribution Limits

The key provision of the bill is the revision to Govt. Code Section 83501, part of the Political Reform Act, to add subsection (d)(1) that is applicable to cities and counties.   As of January 1, 2021, that section provides that no person may make a contribution to any candidate for elective city office, and no candidate for such office shall accept, a contribution of more than $3000 per election. That amount is adjusted by the FPPC in January of each year  pursuant to the CPI index and therefore will be higher than $3000 as of the effective date of the bill The provision does not apply to a candidate contributing personal funds to his/her/its campaign although it does apply to the contribution of loan proceeds, as explained below.

A city may adopt its own limits (higher or lower) by resolution or ordinance pursuant to Govt. Code Section 85702.5.  That section also provides for city  (not FPPC) enforcement of the resolution or ordinance by administrative, civil or criminal penalties.  If the City has a contribution limit in place on the effective date of the bill, that is deemed to be a city limit under Section 85702.5.  A local ordinance also may be adopted by initiative. If the City does not adopt a campaign financing resolution or ordinance, then the limits set out in AB 571  apply and are enforced by the FPPC (including as a misdemeanor).

Contributions to Other Candidates

AB 571 also  contains a variety of other provisions that create comprehensive state limits on campaign financing as of January 1, 2021 that may be avoided with a local ordinance.

Govt. Code Section 85305 provides that  a candidate for a city office or a committee controlled by that candidate cannot make a contribution to any other candidate for an elective state, county or city office in excess of the $3000 limit unless there is a local resolution or ordinance in place that sets a different limit.

Transfer of Contributions

Govt. Code Section 85306 provides that a candidate for a city office may transfer campaign funds from one controlled committee to another controlled committee for the same candidate for an elective city, county  or state office. However, contributions transferred must be identified by contributor using a certain accounting method (last in, first out or first in, first out) and the sum of those identified contributions – aggregated with contributions from the same contributor – cannot exceed $3000/election unless there is a local ordinance in place setting a different contribution limit.

Limitations on Loans

Govt. Code Section 85307 limits loans by a candidate for city office: the candidate cannot personally loan to his/her campaign more than $100,000 even where those funds came from a commercial lending institution on terms available to the public. The candidate cannot charge interest to be paid by the campaign on any such loan.  These restrictions do not apply when there is a local ordinance with the $3000 contribution limit.

Favorable provisions

In contrast, some of the provisions of AB 571 provide “benefits” not available where there is a local ordinance.

Recalls

Govt. Code Section 85315 applies to recall elections and contains a disincentive to the adoption of a local ordinance.  A city officer may establish a committee to oppose the qualification of a recall petition and any recall election.  That officer may accept contributions that are not subject to the state contribution limits  (i.e. $3,000, $100,000) and voluntary expenditure limits do not apply.  After the failure of the  petition or the outcome of the recall election, remaining funds are considered surplus and must be spent within 30 days for a specific purpose.  However, the exemption  from contribution limits in a recall election does not apply where there is a local ordinance (and thus the local ordinance could not contain such an exemption).

Contributions After the Election

Similarly, Govt. Code Section 85316 contains another disincentive:  A contribution may be accepted by a candidate for city office after the election as long as the contribution does not exceed the net debt outstanding from the  election and does not exceed the contribution limit for the election. However, if there is a local ordinance in place, such contributions after the election.

Carry-Over of Contributions

Govt. Code Section 85317 contains another significant disincentive regarding the carry-over of contributions:  This section allows a city candidate to carry over contribution from one election to  subsequent elections for the same office. However, the ability to carry over funds does not apply where there is a local ordinance (and thus the local ordinance cannot allow carryover).

Contributions before an Election

Govt. Code Section 85318 is a new provisions and provides that a candidate for a city office may establish separate accounts for primary and general elections (including special primary and special general elections).  The candidate may raise money for a general election before the  primary election (and the same for a special election) for that office sets aside the contributions raised before the primary election and uses them in the general election.  If he/she is defeated in the primary election (or withdraws) then the funds must be refunded on a pro rata basis after deduction of any expenses associated with the general election.  This ability  to raise money is not available if there is a local campaign resolution or ordinance.

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tags: Campaign Contributions, Campaign Finance Reform, Campaign Loans, Contribution Limits,

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