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Home My WebLink AboutAB 571 - Local Campaign Contribution LimitsSTAFF REPORT CITY OF PALM DESERT CITY ATTORNEY'S OFFICE MEETING DATE: September 24, 2020 PREPARED BY: Robert Hargreaves, City Attorney, and Jill Tremblay REQUEST: Review Assembly Bill 571, which sets local campaign contribution limits unless the City sets its own limits, and discuss the City's desire, timing and process to set its own limits. Recommendation Review and consider Assembly Bill 571, discuss the possibility of setting the City's own contribution limits, and discuss timing and process for establishing and enforcing limits. Backaround and Svnogsis The City of Palm Desert does not currently have city council candidate contribution limits. Assembly Bill 571, effective on January 1, 2021, would require the City to either adopt its own limits or use the state's limit of $4,700 per person per year. In other words, if the City does not enact its own limits by the end of the year, it must use the state's limits. However, the City maintains the ability to adopt and/or modify its own limits after AB 571 goes into effect. Therefore, the City is not precluded from adopting its own limits even if it has not done so before 2021. Discussion 1. Why was AB 571 developed? Legislators drafted AB 571 because: • most California cities and counties do not have their own campaign contribution limits; • in cities and counties without limits, candidates typically receive 40% or more of their total campaign funds from a single contributor; • in cities and counties without limits, there is a "risk and the perception that elected officials in those jurisdictions are beholden to their contributors and will act in the best interest of those contributors at the expense of the people"; • the state has a statewide interest in "preventing actual corruption and the appearance of corruption at all levels of government." September 24, 2020 - Staff Report AB 571 Re Campaign Contribution Limits Page 2 of 3 2. How does AB 571 affect the City? Currently, the City does not have candidate contribution limits. AB 571, which becomes effective on January 1, 2021, would impose the $4,700 state candidate contribution limit on City Council candidates. However, the City has the opportunity to adopt its own limits — at an amount greater or lesser than the state amount —at any time, including after the effective date of AB 571. If the City adopts its own limits now, it will not have to use the $4,700 state limit. If the City does not adopt its own limit by January 1, 2021, it will be required to use the state limit —but only until it adopts its own limit. In other words, the City is not bound by the state limit forever if it does not enact a limit now. The City can adopt its own limit at any time after AB 571 goes into effect. In jurisdictions that default to the state limit, the Fair Political Practices Commission ("FPPC") has greater administration and enforcement authority. Jurisdictions that adopt their own limit will be responsible for administration and enforcement. AB 571 does not place restrictions on small contributor or political party committees. The bill does extend contribution restrictions for elective local office regarding personal loans and for committees created to oppose recall measures. The bill allows a candidate for local office to carry over campaign expenditures in connection with a subsequent election for that same office, except in instances where a city and county has barred that practice in light of its own local contribution restrictions. The bill does not impact how much a local candidate may lend to their own campaign from their personal funds. As noted above, the City may: 1. Do Nothing. Under this scenario, as of January 1, 2021, the statewide campaign contribution restriction of $4,700 from one individual per calendar year would be imposed, by default, on those running for elective City office. The FPPC would take responsibility for enforcing the restriction. The City can later decide to enact its own limits. 2. Set Its Own Limit — Whether Higher or Lower. If the City follows this route, it would need to determine the cost of enforcement and how to pay such an expenditure within the budget. AB 571 does not permit the FPPC jurisdiction to enforce locally established campaign contribution limitations. The City Council may want to form a subcommittee to explore an appropriate limit amount, discuss potential exemptions in certain situations, and determine staff resources needed to enforce the limit. So far, none of the other Coachella Valley cities have adopted campaign contribution limits. The Riverside County Board of Supervisors proposed, at the August 4, 2020 meeting, to set a $20,000 cap on individual contributions per year. The Board's proposal provides that if a candidate either contributes more than $20,000 to their own campaign, September 24, 2020 - Staff Report AB 571 Re Campaign Contribution Limits Page 3of3 or is the beneficiary of an independent expenditure campaign in excess of $20,000, the other candidates in that race would be exempted from the campaign contribution limits for that election cycle as well. The proposal further provides that this would prevent a candidate from being put at a competitive disadvantage by their opponent's access to deep pockets that fall outside the legal jurisdiction of the ordinance. The Board directed county counsel to develop an ordinance for review to be implemented before January 1, 2021. An ordinance has yet to come before the Board. The City continues to monitor the Board's action on this item. While other Riverside County cities have not enacted limits, a handful of Orange County cities have set them, as seen below. City Laguna Beach Irvine Huntington Beach Newport Beach Anaheim Fiscal Analvsis Contribution Limit (Annual/per contributor) $440 $530 $600 $1,200 $2,100 There would be no direct fiscal impact to the City in making a decision with regard to establishment of limits on local campaign contributions in City elections. The cost of enforcing the limits would depend on the rigorousness of the enforcement program. No funding source has been identified for such potential enforcement activities, or for the staff time necessary to research and prepare enacting ordinance(s). LEGAL REVIEW M11 Robert W. Hargreaves City Attorney DEPT. REVIEW �2ym Grace Rocha Acting City Clerk City Manager Lauri Aylaian: daaoV AV FINANCIAL REVIEW Janet M. Moore Director of Finance ASSISTANT CITY MANAGER N/A Andy Firestine Assistant City Manager STAFF REPORT CITY OF PALM DESERT CITY ATTORNEY'S OFFICE MEETING DATE: September 24, 2020 PREPARED BY: Robert Hargreaves, City Attorney, and Jill Tremblay REQUEST: Review City enforcement if City adopts its own candidate contribution limits under Assembly Bill 571. Back -wound and Svnopsis If the City adopts its own candidate contribution limits under Assembly Bill 571, it will have to enforce those limits. The FPPC will only enforce default State limits in the event that the City does not adopt its own limits. Discussion Candidates for City Council will need to fill out various Fair Political Practices Commission ("FPPC") forms in order to run for City Council and maintain compliance with campaign finance law. For example, FPPC Form 460 Recipient Committee Campaign Statement requires each candidate to document the full names, addresses and zip codes of all contributors, lenders and payees of $100 or more and submit this form to the City Clerk. For the most part, City Council candidates will self -enforce candidate contribution limits by keeping track of contributions and submitting proof of same on various FPPC forms to the City Clerk. Cities that have adopted limits have not reported a great need for enforcement actions. For example, the City of Laguna Beach, which has had campaign contribution limits since 1994, has never had to get involved in an enforcement action. Enforcement cases may arise from audits or complaints. The City's monitoring process may detect potential violations through a review or audit of candidate forms. Potential violations may be brought to the City's attention through the complaint process. This process enables anyone to file a complaint alleging violations and explaining the basis for the allegations. Fiscal Analysis The cost of enforcing the limits would depend on the rigorousness of the enforcement program. LEGAL REVIEW DEPT. REVIEW FINANCIAL ASSISTANT REVIEW CITY MANAGER �}} N/A N/A Robert W. Hargreaves Grace Rocha Janet M. Moore Andy Firestine City Attorney Acting City Clerk Director of Finance Assistant City Manager City Manager Randy Bynder: Raa4 a