Proposition 89			00.00 10/05
	Summary
	Submitted as: "The California Clean Money and Fair Elections Act of 2006""
	Type:  Amendments to the Government Code, Elections Code, and Revenue and Taxation Code
	Subject:  Special tax on corporations to fund state elections
	Submitter:  Deborah Burger  (Ms. Burger is President of the California Nurses Association.)
	Supporting Organization:
		Name:	Californians for Clean Elections California Nurses Association 2000 Franklin St Oakland, CA, 94612
		Email: press at calnurses.org
		Web Site: www.cleanmoneyelections.org/
		Phone: 510.273.2200
	Opposing Organization:
		Name:	Californians to Stop 89 1415 L Street, Suite 1250 Sacramento, CA 95814
		Email: info at noprop89.org
		Web Site: www.noprop89.org
		Phone: 916.708.7824
	Proposition 89 creates a system of public financing for state political campaigns in California, limited to candidates for Assembly, State Senate, Board of Equalization and all Statewide Candidates, from Superintendent of Instruction up to Governor.  A Clean Money (CM) Fund is established in the State Treasury, to be administered by the Fair Political Practices Commission (FPPC).  Candidates who qualify and apply will be gifted with campaign funds, whose amount depends upon the office the candidate is running for.  If the total amount of money in the CM Fund ever exceeds $24 per each California resident, the excess over that amount goes to the State General Fund and cannot be returned.
	Money comes into the fund from several sources:
		1)  A tax increase starting in 2007, imposed by the Proposition and collected from banks and corporations by the Franchise Tax Board, at the increased rates shown in the following list.  In 2007, the tax increase is applied to the income for 2007 AND retroactively to the income for 2006, doubling the extra revenue in that first year.
			a) As part of the privilege tax on corporations, an increase from 8.84% to 9.04%.
			b) As part of the tax on banks, an increase from 10.84% to 11.04%.
			c) As part of the tax on passive income (S corporations), an increase from 1.5% to 1.66%, for corporations whose income exceeds $50 million.
		2) Each candidate's total "Qualifying Contributions" (discussed below)
		3) Each candidate's excess "Seed Money" (discussed below)
		4) Returned portions of the CM funds, which were given to candidates but not used by them.
		5) Fines for violation of election laws.
		6) Donations and interest.
	Elections are broken into several periods:
		"Exploratory Period", which begins 18 months before the Primary Election date and ends on the last day of the qualifying period.
		"Qualifying Period", the period during which "qualifying contributions" may be collected, described in more detail below.
		"Primary Election Campaign Period", which begins 120 days before the Primary Election date and ends on the day the Primary Election results are certified.
		"General Election Campaign Period", which begins the day after the Primary Election and ends on the day of the General Election.
	No candidate is required to accept CM funds.  Those who do not are called "non-participating candidates".  Those who do are "participating candidates".  Participating Candidates, in return for receiving money, are bound to certain obligations and given certain perks:
		The candidate must have been a Participating Candidate in the Primary Campaign Period in order to qualify as a Participating Candidate in the General Election Campaign Period.
		During his term, the Participating Candidate must not accept private contributions from any source.
		The Participating Candidate must take part in at least one public debate in the Primary Campaign Period and at least two in the General Election Campaign Period, in a format to be determined by the FPPC.
		During the Primary and General Election Campaign Periods, the Participating Candidate may not receive political contributions from any source other than the candidate's political party.  Money from parties does not count against contribution limits, and may be spent directly without using the CM Debit Card (discussed below).  Party contribution amounts are limited as follows:
			In the Primary Campaign Period:  Assembly, $12,500; State Senate, $25,000; Board of Equalization, $12,500; statewide office other than Governor, $100,000; Governor, $500,000.
			In the General Election Campaign Period:  Assembly, $20,000; State Senate, $40,000; Board of Equalization, $20,000; statewide office other than Governor, $200,000; Governor, $750,000.
		Participating Candidates are indicated as such in the state ballot pamphlet.  They are entitled to a free 250 word statement to be printed in the pamphlet and on any Web site listing of candidates kept by any government agency.  They may also provide a list of ten endorsers to go in the pamphlet.
		During his term, to defray officeholder expenses, an officeholder who was a Participating Candidate will receive an annual stipend from the CM Fund.  Members of the Legislature get $50,000 and statewide officers get $100,000.  Any of this money left when the officeholder leaves office must be returned.
	Participating Candidates are further divided, depending upon several factors, most significantly whether they represent a political party or are running as independents, and whether the party they represent is "office-qualified" or not.
	An office-qualified party is one whose candidate got at least 10% of the vote in the last election for Governor, OR whose candidate got at least 10% of the vote in the previous Assembly or Senate election in the District where the party's current candidate is running.  Since the Democrats and Republicans consistently get 10% of the vote for Governor, they are likely to always make the cut for office-qualified parties, statewide and in all Districts.  For smaller parties the situation is more complicated.  For example, in the 2004 election for Assembly District 10, only the Republican and Libertarian Parties ran candidates, and the Libertarian candidate got 26% of the vote.  In Assembly District 9, the race was three-way and the Libertarian candidate got only 5% of the vote.  Therefore, for an Assembly race in District 10 the Libertarian Party would be an office-qualified Party; in District 9 it would not be an office-qualified Party.
	In this context, the following types of Participating Candidates can then be defined.
			1) "Office-qualified" candidates are those who represent parties which are office-qualified in the District where the candidate is running, or, for statewide offices, are office-qualified statewide.
			2) "Qualified" candidates are those who represent parties which are NOT office-qualified in the District and are not office-qualified statewide.
	The first requirement for all candidates who wish to be Participating Candidates is to file a declaration with the FPPC, in the Primary Campaign Period, agreeing to abide by the rules of the Clean Money Act.  The second step is to obtain the number of "qualifying contributions" required for the office.  This must be accomplished within the "qualifying period".  A qualifying contribution is a single $5 contribution which must come from a resident of the District in which the candidate is running, or, for a statewide office, from a resident of the State.  The qualifying period is the 180 day span of time during which the candidate is allowed to collect qualifying contributions.  For candidates representing a party the qualifying period starts 270 days before the party's Primary Election Date and ends 90 days before the Primary.  For candidates running as independents the qualifying period begins any time after January 1, lasting at most 180 days, and must end no later than 90 days before the General Election.  Independent candidates must inform the FPPC when they begin their qualifying period.
	To be considered a Participating Candidate, an office-qualified candidate must collect a base number of qualifying contributions that varies with the office, as follows:  Assembly, 750; State Senate, 1500; State Board of Equalization, 2000; Statewide office other than Governor, 7500; Governor 25000.  These contributions must first be deposited in the candidate's campaign account and then, by the end of the qualifying period, be paid into the CM fund, regardless of whether the base number has been achieved or not.  Each qualifying contribution must be paired with a copy of a receipt that was given to the donor, and which identifies the donor.  These receipts must all be submitted to the FPPC.
	To be considered a Participating Candidate, a qualified candidate must collect at least half of the number of contributions that are required for an office-qualified candidate.  The candidate may choose to collect double the base number of contributions, and thereby become a "performance-qualified" candidate, which increases the amount of the CM grant that the candidate will get.  These contributions are likewise paid into the CM fund, regardless of the number achieved.
	At the start of the exploratory period, a Participating Candidate may also accept a limited amount of "seed money", which is used to get the candidate's campaign started.  Seed money contributions must not exceed $100 per donor, and the total that may be accepted is limited by the office:  Assembly, $10, 000; State Senate, $20,000; Board of Equalization, $30,000; Statewide Office other than Governor, $75,000; Governor, $250,000.  Seed money not spent, or seed money received past these limits, may not be kept but must be paid to the FPPC by the end of the qualifying period.  All seed money received must be reported to the FPPC.
	Party candidates, whether of the office-qualified or merely qualified type, become Participating Candidates for the Primary Election Campaign only if they have obtained the base number of qualifying contributions and made all the proper payments and reports, as certified by the FPPC.
	CM funding for the Primary Campaign must be given to Participating Candidates within 5 days following certification.  The base payment amount varies with the office as follows:  Assembly, $250,000; State Senate, $500,000; Board of Equalization, $250,000; statewide office other than Governor, $2 million; Governor $10 million.  Any of this funding unspent at the end of the Primary Campaign Period must be returned to the FPPC.
	Office-qualified party candidates receive the full amount above.  Performance-qualified candidates receive 20% of the amount.  Qualified (i.e., almost all third party) candidates receive nothing.  If the Primary is uncontested, the candidate receives only 10% of the base amount.
	The FPPC issues "a line of debit" and "CM Debit Cards" to all Participating Candidates, who must use them to pay for all campaign costs and expenses up to the limit of CM Funds received.  No other means of payment is allowed, except for a daily petty cash allowance of $100 that may be drawn on the card.
	During the Primary Campaign Period, non-participating Candidates are required to be mindful of the base rate figures for Primary Campaign funding that are listed above.  If, at any time during the Primary Campaign a non-participating candidate makes an expenditure that goes over the base, the non-participating candidate is required to report the overage to the FPPC, on the same day that it occurs.  By definition, this amount becomes an "excess expenditure".  Any additional excess expenditures must be reported, in increments of each additional $5000, within 24 hours of each occurrence.  Based upon the report of any such excess expenditure, or "its own judgment" as to whether one has occurred, the FPPC notifies all opposing Participating Candidates and releases additional CM funds to them, to match the excess expenditure.  The upper limit to the extra funds that may be granted in this way is 5 times the base amount, except for Governor for which it is 4 times the base amount.
	Related to this, the current definition of expenditure is expanded to include:
		1) Any communication, no matter who pays for it, that expressly advocates an outcome for passage of a ballot measure or election of a candidate.
		2) Any broadcast, cable or satellite communication, no matter who pays for it, that:
			A) Clearly refers to a candidate for office, or to a measure appearing on the ballot, and
			B) Is made within 30 days before a Primary Election or a General Election, and
			C) Can be received by 50,000 or more persons in the electoral jurisdiction in which the candidate or ballot measure will be voted on.
		3) Certain categories of communication are specifically exempted:
			A) Bona fide news stories, and
			B) Candidate debates and forums, and
			C) Content in a regularly published newsletter or other periodical limited to an organization's members, and
			D) Any other exceptions "the FPPC may promulgate".
	If the non-participating candidate contributes more than $25,000 of his own money to his campaign, this will be considered an expenditure, and triggers the release of matching funds, except that the upper limits are doubled.  Expenditures of $1000 or more made to candidates by any independent expenditure committee shall also be matched by granting equivalent CM funds to any opposing Participating Candidates.
	During the Primary campaign, if a Participating Candidate is running in a contested primary of the dominant party in a "one party dominant district", any such candidate may formally request a reallocation of 25% of the money from the CM funds that would be paid for the General Election Campaign Period, and other Participating Candidates competing in that Primary may do likewise.  (A "one party dominant district" is one in which, measured on a percentage basis, the registration rate for one party exceeds its nearest competitor by 20 percentage points.  A third of California's Assembly Districts and almost half of its State Senate Districts fall into this category.)  For candidates who choose this option, the base amount of CM funding available to them for the General Election Campaign Period, listed below, is reduced by 25%.
	Party candidates, whether from qualified or office-qualified parties, become Participating Candidates in the General Election Campaign Period if they were Participating Candidates in the Primary Election Campaign Period and they won the Primary of their party.
	Participating Candidates in the General Election Campaign Period must receive their CM funding within 2 days following certification of the Primary results.  The base payment amount varies with the office as follows:  Assembly, $400,000; State Senate, $800,000, Board of Equalization, $400,000; statewide office other than Governor, $2 million; Governor $15 million.  Any of this funding unspent at the end of the General Election Campaign Period must be returned to the FPPC.
	Office-qualified party candidates receive the full amount above.  Performance-qualified candidates receive 50% of the amount.  Qualified (i.e., almost all third party) candidates receive 25%.  If the General Election is uncontested, the candidate receives nothing.
	Constraints are imposed upon entities which have not chosen to participate in the CM funding process: No person other than a small contributor committee or independent expenditure committee or a political party committee or the candidate himself may make contributions of more than $500 per year to a non-participating candidate for Assembly or State Senate.  For non-participating candidates for statewide office, the limit is $1000.  Contributions from small contributor or independent expenditure committees are capped at $1000, in either case. No person may contribute more than a grand total of $7500 per year spread over all candidates and committees, except that an additional $7500 may be contributed to independent expenditure committees that support or oppose candidates. If a ballot measure committee is controlled by a candidate, no person may contribute more than $10,000 to it. No bank or any corporation may make any contribution in excess of $10,000 to support or oppose a ballot measure or to a candidate.  Certain non-profit organizations are specifically exempted.
	Violations of the CM Act are a misdemeanor, and may be punished by fines and imprisonment, or both.  Specifically, if a candidate has been found guilty, then if the conviction:
		A) Becomes final before the election, votes for the candidate will not be counted.
		B) Becomes final after the date of the election, and the candidate was declared elected, the candidate shall not take office.
		C) Becomes final after the candidate has assumed office, then the candidate shall be removed from office.  The office will be considered vacant, and filled as otherwise provided in state law.
	The FPPC must provide an annual report to the Legislature of a review and analysis of the CM Fund, and is granted an annual appropriation of no less than $3 million to administer the CM Act, drawn from the CM Fund.  The Secretary of State must provide voter education and outreach regarding the CM Act throughout the state, and is granted an annual appropriation to do so.  This appropriation is based upon a percentage of the amount spent for public financing, being no more than 5% of that amount in the first two years following passage of the CM Act and no more than 1% in the following years.
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