OVERVIEW OF THE MEASURE
This proposition makes major changes to the
way that political campaigns for state candidates
and ballot measures are funded. Candidates could
choose to receive public funding for the costs of
their campaigns. For those candidates choosing
not to receive public funding, existing limits on
the amount of political donations (“contributions”)
would be lowered. Figure 1 shows the main
provisions of the measure, which are discussed in
more detail below.
BACKGROUND
Current Limits on Political Contributions. Candidates for state offices collect private donations
from individuals, corporations, political parties,
and other organizations (such as labor unions and
nonprofit organizations) to pay for the costs of
their political campaigns. The maximum amount
of money that each person or group can give to a
candidate is determined by state law. The limits were
last changed when voters approved Proposition 34
at the November 2000 general election. Current
limits on the amount of money that can be given
depend on the office being sought and who is
giving the donation. For instance, an individual can
give a candidate for the state Assembly a donation
of up to $3,300. On the other hand, a political party
can give that same candidate as much money as
it chooses. A candidate can accept donations any
time before an election and can spend without limit
any money that is collected.
Role of Committees and Independent
Expenditures. Rather than make donations directly
to candidates, some individuals and groups choose
to make political donations to “committees.” These
committees take donations and then decide which
candidates to give money. For instance, one type
of committee—a small contributor committee—
accepts donations of up to $200 from more than100 individuals and then distributes the funds
to candidates. Other individuals, groups, and
committees choose to spend money on political
campaigns without giving money directly to
candidates. Instead, they make “independent
expenditures” without coordinating with the
candidate. These independent expenditures,
such as television commercials or newspaper
advertisements, may encourage voters to support
or oppose a candidate. There are no limits on the
amount of money that can be donated for or spent
on independent expenditures.
| FIGURE 1 |
| Proposition 89: Main Provisions |
 Public funding for Political Candidates
- A candidate for state office meeting certain requirements could receive state funds to pay for the costs of a political campaign.
- The amount of state funds that a candidate would receive would go up if an opponent spent more in private funds.
Lower Contribution Amounts for Privately Funded Candidates
- For candidates choosing not to receive public funding, the amount of money that could be collected from each individual, corporation, or other group would be lower than is currently the case.
Contribution Restrictions for State Ballot Measures
- Places new limits on contributions to candidates' efforts to supports or oppose ballot measures.
- Places new limits on contributions from corporations to support or oppose ballot measures.
Higher Corporate Taxes
- Increases tax rate on corporations and financial institutions. For corporations, tax rate would increase from 8.34 percent to 9.04 percent. For financial institutions, tax rate would increase from 10.84 percent to 11.04 percent.
- Raises over $200 million each year to implement the measure.
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Ballot Measures. There are no limits on the
amount of money that can be collected or spent for
and against state ballot measures (propositions).
State Government’s Responsibilities. The
state’s campaign finance laws are administered by
the Secretary of State (SOS) and the Fair Political
Practices Commission (FPPC). Under state law,
individuals and groups must tell SOS how much
money has been given, received, and spent on
political campaigns. This information is available
to the public—generally on the Internet. The FPPC
is in charge of enforcing the laws to make sure
candidates and donors obey the rules. The FPPC can
assess fines on candidates violating election laws.
PROPOSAL
This measure makes significant changes to
state laws regarding the financing of campaigns
for elected state offices and state ballot measures.
The measure’s provisions regarding candidates for
office generally affect only state elected officials
(see Figure 2).
| FIGURE 2 |
| State Elected Officials Covered by Propositon 89 |
Statewide Officials
Governor
Lieutenant Governor
Attorney General
Secretary of State
Treasurer
Controller
Insurance Commissioner
Superintendent of Public Instruction
Legislature
Senators (40)
Assembly Memembers (80)
Board of Equalization Members (4) |
PUBLIC FUNDING FOR POLITICAL CANDIDATES
The measure establishes a system for candidates
to receive public funds to pay for the costs of
campaigning for state offices.
Requirements to Receive Money
In order to receive public funding for a
campaign, a candidate would have to meet certain
requirements:
- $5 Donations and Signatures. A candidate would
be required to collect a number of $5 donations
(“qualifying contributions”) and signatures from
residents prior to a primary election. As shown
in Figure 3, the required number of donations
would range from 750 to 25,000 depending on
the office sought. The measure requires that
these donations be paid to the state.
- Private Contributions. To receive public
funding, a candidate could not receive private
campaign funding, with two main exceptions.
First, beginning up to 18 months prior to a
primary election, the measure allows candidates
to collect and spend start-up contributions, or
“seed money.” (These funds could be used, for
instance, to pay costs for collecting the qualifying
contributions and signatures.) The measure
restricts these types of donations to $100 each.
Total donations would be limited to between
$10,000 and $250,000 depending on the office
(see Figure 3). These funds could only be spent
until 90 days prior to a primary election. Second,
candidates would continue to be able to receive
donations from political parties. Donations from
political parties would be subject to the same
limits as for candidates choosing not to receive
public funds (described below).
- Other Requirements. By accepting public
funding, a candidate would be subject to
some additional requirements. For example,
candidates would be required to participate in
public debates before each election. In addition,
candidates could not use their personal funds to
pay for campaign costs.
Public Funding Provided
Those candidates meeting the requirements
described above would become eligible to receive
public funds. As shown in Figure 3, the amount
of funding would vary based on (1) the office
sought and (2) whether it was a primary or general
election. For instance, for a primary election, a
candidate running for the Assembly could receive
$250,000 for the primary election and an additional
$400,000 for the general election (if successful in
the primary election). A candidate for Governor
could receive $10 million in the primary election
and an additional $15 million in the general
election. The FPPC would administer the funds and
make disbursements using a debit card system.
Additional Public Funds. In cases where a
candidate’s opponent chose not to participate in
the public financing system, the measure allows a participating candidate to receive additional funds
in some cases. Specifically, if an opponent spent
more in private funds than the amount of public
funds available, additional public funds would be
provided to the candidate on a dollar-for-dollar
basis. Similarly, a participating candidate would
receive additional public funds if independent
expenditures were made in support of an opponent.
The maximum amount of additional public funds
that a candidate could receive is capped under the
measure (generally five times the original amount
provided to a candidate and four times the amount
for a candidate for Governor). For instance, the
maximum amount of additional public funds that
a candidate for the Assembly could receive for a
primary election would be $1.25 million.
| FIGURE 3 |
| Proposition 89: Public Financing Provisions for Major Party Candidates |
| |
Initial Steps |
Public Financing Available |
| Office |
NUMBER OF $5 CONTRIBUTIONS |
MAXIMUM START-UP CONTRIBUTIONS |
PRIMARY ELECTION |
GENERAL ELECTION |
| Assembly |
750 |
$10,000 |
$250,000 |
$400,000 |
| Senate |
1,500 |
20,000 |
500,000 |
800,000 |
| Board of Equalization |
2,000 |
30,000 |
250,000 |
400,000 |
| Statewide officials |
7,500 |
75,000 |
2,000,000 |
2,000,000 |
| Governor |
25,000 |
250,000 |
10,000,000 |
15,000,000 |
Funds for Expenses While in Office. Under
current law, state elected officials generally may
use leftover campaign funds to pay for some
expenses while in office. Under the measure, those
candidates who accept public financing and win
their election would be eligible to receive annual
payments to cover similar expenses. Members of
the Legislature would receive $50,000 each year
while in office and other state officials would
receive $100,000 each year.
Minor Party and Independent Candidates
The amounts shown in Figure 3 are for candidates representing major parties (generally,
parties whose nominee for Governor in the last
election received at least 10 percent of the vote).
Under the measure, candidates from minor parties
and independent candidates are eligible to receive
smaller amounts of public funds. Depending on the
situation, a minor party or independent candidate
could receive as much as one-half of the amount
that a major party candidate receives.
LOWER CONTRIBUTION AMOUNTS FOR PRIVATELY FUNDED CANDIDATES
Lower Campaign Contributions. For those
candidates who choose not to participate in the
public financing of campaigns, the measure
imposes new limits for campaign donations to
candidates. The measure’s limits generally are
much more restrictive than is now the case. For
instance, currently individuals, corporations,
and other groups can donate $3,300 per election
to a candidate for the Legislature. This measure
would restrict contributions to $500 for legislative
candidates. Currently, political parties can give
unlimited amounts to candidates. Under the
measure, a political party’s donations would be
limited. For example, a political party could give
a privately funded candidate for Assembly up to
$20,000 for a general election. These new limits
are summarized in Figure 4.
| FIGURE 4 |
| Campaign Contribution Limits for Privately Funded Candidates (For Each Election) |
| |
Individual, Group, or
Corporation |
Small Contributor
Committee |
Political Party |
| |
Current |
Proposition
89 |
Current |
Proposition 89 |
Current |
Proposition 89ª |
| Assembly |
$3,000 |
$500 |
$6,700 |
$2,500 |
No limit |
$20,000 |
| Senate |
3,300 |
500 |
6,700 |
2,500 |
No limit |
40,000 |
| Board of Equalization |
5,600 |
500 |
11,100 |
2,500 |
No limit |
20,000 |
| Statewide officials |
5,600 |
1,000 |
11,100 |
2,500 |
No limit |
200,000 |
| Governor |
22,300 |
1,000 |
22,300 |
2,500 |
No limit |
750,000 |
| ª Amounts shown are for general selections. Primary selection limits are between one half and two-thirds of the amounts shown. Political party limits would apply to both privately na dpublicly funded candidates. |
Other Restrictions on Campaign Contributions.
The measure also adds other types of restrictions on
campaign contributions related to privately funded
candidates, which are summarized in Figure 5.
- Independent Expenditure Contribution Limit.
The measure restricts donations to $1,000
each year to a committee for independent
expenditures. As under current law, individuals
could make unlimited independent expenditures
if they spent the money on their own, without the
use of a committee.
- Overall Donation Limit. The measure also adds
new limits on the overall amount of political
contributions that a person or group can make
to candidates and committees in a year. The total
amount that could be donated to all types of
committees to support or oppose state candidates
would be limited to $15,000. Of this total,
however, any contributions over $7,500 would
be required to go for independent expenditures.
- Lower Political Party Contribution Limit.
The measure lowers an existing limit on annual
contributions to political parties from $27,900 to
$7,500.
- Lobbyist Restrictions. Under existing
law, lobbyists are prohibited from making
contributions to candidates. The measure also
forbids lobbyists from making donations to
political parties and committees.
- State Contractor Restrictions. Under existing
law, those individuals and entities receiving state
contracts are not subject to any special restrictions
on political contributions. The measure forbids,
in some instances, those receiving state contracts
from making donations to candidates, political
parties, and committees.
CONTRIBUTION RESTRICTIONS FOR STATE BALLOT MEASURES
Unlike donations for candidates, the amount of
money donated by entities to support or oppose
state ballot measures currently is not subject to
contribution limits. This measure places two new
restrictions on donations for ballot measures:
- First, when a candidate for state office is
significantly involved with a committee that
supports or opposes a ballot measure, individuals,
corporations, and other groups would be limited
to a $10,000 contribution to that committee.
- Second, corporations would be prohibited from
making contributions or spending more than
$10,000 to support or oppose a ballot measure.
(Nonprofit corporations meeting certain
requirements would not be subject to this
restriction.) Corporations, however, could
establish special committees to collect voluntary
donations from employees for additional
expenditures.
| FIGURE 5 |
| Other Changes Under Proposition 89 |
| |
Current |
Proposition 89 |
| Candidate-Related Contributions |
|
|
- Total annual contribution to an independent expenditure committee to support or oppose a candidate.
|
No limit |
$1,000 |
- Total annual contributions to political parties for candidate-related expenditures.
|
$27,900 |
7,500 |
- Total annual contributions to all types of committees for candidate-related expenditures.
|
No limit |
15,000ª |
| Ballot Measure Contributions |
|
|
- Contributions for or against a ballot measure where a candidate is significantly involved.
|
No limit |
$10,000 |
- Contributions for or against a ballot measure by a corporation.
|
No limit |
10,000 |
| ª Contributing more than $7,500 is allowed oly for independent expenditures. |
FISCAL PROVISIONS
Higher Corporate Taxes. In order to pay for
the measure’s provisions (primarily for the public
financing of campaigns), the measure increases taxes
on corporations and financial institutions beginning
in 2007. The measure increases the income tax rates
paid by corporations from 8.84 percent to 9.04
percent. For financial institutions, the rate would rise
from 10.84 percent to 11.04 percent.
Other Revenues. In addition, the measure would
result in other, small sources of revenues, primarily
the collection of candidates’ $5 contributions and
fines on candidates violating election laws. (Under
current law, fines for violating election laws are
deposited into the state’s General Fund.)
Total Amount of Funds. The total amount of
funds that could be held by the state at any time for
the measure’s purposes would be limited to about
$900 million. (The formula determining this amount
would be adjusted for inflation every two years.)
Any amount over this limit would be transferred to
the state’s General Fund. If there were not enough
money to fully fund the measure’s provisions, the
measure authorizes FPPC to proportionately reduce
the amount of funds available to each candidate.
OTHER PROVISIONS
Administration Costs. The measure provides that
a minimum of $3 million (adjusted for inflation
every two years) of the new funds would go to
FPPC to pay for the administration of the measure.
The SOS would also be required to use some of the
funds for a voter education campaign.
Election Procedures. The measure makes a
number of other changes to election procedures.
For instance, the measure prohibits any candidate
(whether receiving public financing or not) from
collecting campaign donations earlier than 18
months prior to a primary election. Also, the measure
changes what counts as independent and political
expenditures prior to an election. These changes would result in more spending being subject to
donation limits and disclosure requirements.
FISCAL EFFECTS
New Revenues. We estimate that the measure
would raise over $200 million annually. Virtually
all of this amount would come from the increased
taxes on corporations and financial institutions.
Small amounts would come from the collection
of candidates’ $5 contributions and fines on
candidates violating election laws. Since fines for
violating election laws are currently deposited in
the state’s General Fund, the measure would slightly
reduce General Fund revenues (by about $1 million
annually).
New Spending. The new funds would pay for
costs associated with the measure. We estimate
costs to administer the provisions of the measure
and pay for voter education would be in the range
of several million dollars each year. (There would
be additional one-time costs, largely for computer
systems and voter education, to set up the public
financing of campaigns for the first time.) The
remaining funds would be available for candidates
who choose to receive public funds for their political
campaigns. The amount of spending on the public
financing of election campaigns would depend
on a number of factors and vary from election to
election. Among the factors affecting spending
would be:
- The number of candidates accepting public funds.
- The amount of money spent by candidates not
receiving public financing (which would determine
the level of any additional public funds).
The measure provides that total spending could
not exceed the amount of money available from
the increased revenues. Assuming that the number
of candidates in each election does not increase
significantly from current levels, there probably would
be sufficient funds available to provide all candidates
with the amounts allowed under the measure.
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