Bill Text: CA SB569 | 2023-2024 | Regular Session | Amended

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Bill Title: Political Reform Act of 1974: audits.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed) 2023-09-01 - September 1 hearing: Held in committee and under submission. [SB569 Detail]

Download: California-2023-SB569-Amended.html

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Amended  IN  Assembly  August 28, 2023

Amended  IN  Assembly  June 27, 2023

Amended  IN  Assembly  June 19, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill

No. 569

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Introduced by Senator Glazer

February 15, 2023

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An act to amend amend, repeal, and add Sections 90000, 90001, and 90006 of, and to add Section 90010 to, the Government Code, relating to the Political Reform Act of 1974.

LEGISLATIVE COUNSEL'S DIGEST

SB 569, as amended, Glazer. Political Reform Act of 1974: audits.

The Political Reform Act of 1974 requires the Franchise Tax Board to conduct audits and field investigations regarding the reports filed by lobbyists. Existing law requires 25% of lobbyist employers and lobbying firms to be subject to a random audit and investigation every 2 years.

This bill would transfer the responsibility for conducting audits and field investigations of lobbying reports to the Fair Political Practices Commission. The bill would also exclude lobbying firms and lobbyist employers with less than one dollar in payments or contributions from being selected for audit. Additionally, this bill would require the Fair Political Practices Commission to adopt regulations or policies that would ensure the operational independence of the commission’s audit personnel from the Fair Political Practices Commission’s enforcement operations. Audits conducted by the commission would be required to be posted on the commission’s internet website for 10 years following the conclusion of the audit and the commission would be required to annually report to the Legislature on the number and types of audits completed by the commission. This bill would delay the operation of these provisions until the January 1 of the next odd numbered year following an appropriation made to support the commission’s exercise of these responsibilities.

Existing law makes a knowing or willful violation of the Political Reform Act of 1974 a misdemeanor and subjects offenders to criminal penalties. 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 of the Legislature and compliance with specified procedural requirements.

This bill would declare that it furthers the purposes of the act.

Digest Key

Vote: 2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Section 90000 of the Government Code is amended to read:

90000.

 Except as provided in Section 90006, the Franchise Tax Board shall make audits and field investigations with respect to the following:

(a) Reports and statements filed with the Secretary of State under Chapter 4 (commencing with Section 84100), Chapter 5 (commencing with Section 85100), and Chapter 6 (commencing with Section 86100).

(b) Local candidates and their controlled committees selected for audit pursuant to subdivision (i) of Section 90001.

(c) If an appropriation is made to support the Commission in conducting biennial audits and field investigations of reports and statements filed with the Secretary of State pursuant to Chapter 6 (commencing with Section 86100) as required by the act adding this subdivision, this section shall be repealed on January 1 of the next odd numbered year following the appropriation.

SEC. 2.

 Section 90000 is added to the Government Code, to read:

90000.

 Except as provided in Section 90006, the Franchise Tax Board shall make audits and field investigations with respect to the following:

(a) Reports and statements filed with the Secretary of State under Chapter 4 (commencing with Section 84100) and Chapter 5 (commencing with Section 85100).

(b) Local candidates and their controlled committees selected for audit pursuant to subdivision (i) of Section 90001.

(c) Reports and statements filed with the Secretary of State under Chapter 6 (commencing with Section 86100) selected for audit pursuant to subdivision (j) of Section 90001 in years up to and including the year immediately before the operative date of this section.

(d) If an appropriation is made to support the Commission in conducting biennial audits and field investigations of reports and statements filed with the Secretary of State pursuant to Chapter 6 (commencing with Section 86100) as required by the act adding this subdivision, this section shall become operative on January 1 of the next odd numbered year following the appropriation.

SECTION 1.Section 90000 of the Government Code is amended to read:

90000.

Except as provided in Section 90006, the Franchise Tax Board shall make audits and field investigations with respect to the following:

(a)Reports and statements filed with the Secretary of State under Chapter 4 (commencing with Section 84100) and Chapter 5 (commencing with Section 85100).

(b)Local candidates and their controlled committees selected for audit pursuant to subdivision (i) of Section 90001.

(c)Reports and statements filed with the Secretary of State under Chapter 6 (commencing with Section 86100) selected for audit pursuant to subdivision (j) of Section 90001 in years up to and including 2023.

SEC. 3.

 Section 90001 of the Government Code is amended to read:

90001.

 Audits and investigations shall be made pursuant to Section 90000 with respect to the reports and statements of:

(a) Each lobbying firm and each lobbyist employer who employs one or more lobbyists shall be subject to an audit on a random basis with these lobbying firms or lobbyist employers having a 25-percent chance of being audited. When a lobbying firm or lobbyist employer is audited, the individual lobbyists who are employed by the lobbying firm or the lobbyist employer shall also be audited.

(b) Each statewide, Supreme Court, court of appeal, or Board of Equalization candidate in a direct primary or general election for whom it is determined that twenty-five thousand dollars ($25,000) or more in contributions have been raised or twenty-five thousand dollars ($25,000) or more in expenditures have been made, whether by the candidate or by a committee or committees controlled by the candidate or whose participation in the direct primary or general election is primarily in support of the candidate’s candidacy. Each statewide candidate whose contributions and expenditures are less than twenty-five thousand dollars ($25,000) shall be subject to an audit on a random basis of 10 percent of the number of such candidates.

(c) Each candidate for the Legislature or superior court judge in a direct primary or general election shall be subject to audit by random selection if it is determined that fifteen thousand dollars ($15,000) or more in contributions have been received or fifteen thousand dollars ($15,000) or more in expenditures have been made, whether by the candidate or by a committee or committees controlled by the candidate or primarily supporting the candidate’s candidacy. Random selection shall be made of 25 percent of the Senate districts, 25 percent of the Assembly districts, and 25 percent of the judicial offices contested in an election year.

(d) Each candidate for the Legislature in a special primary or special runoff election for whom it is determined that fifteen thousand dollars ($15,000) or more in contributions have been raised or fifteen thousand dollars ($15,000) or more in expenditures have been made, whether by the candidate or by a committee or committees controlled by the candidate or primarily supporting the candidate’s candidacy.

(e) Each controlled committee of any candidate who is being audited pursuant to subdivision (b), (c), or (d).

(f) Each committee, other than a committee specified in subdivision (c) of Section 82013, primarily supporting or opposing a candidate who is being audited pursuant to subdivision (b), (c), or (d) if it is determined that the committee has expended more than ten thousand dollars ($10,000).

(g) Each committee, other than a committee specified in subdivision (c) of Section 82013, whose participation is primarily in support of or in opposition to a state measure or state measures if it is determined that the committee has expended more than ten thousand dollars ($10,000) on such measure or measures.

(h) Each committee, other than a committee defined in subdivision (c) of Section 82013, a controlled committee or a committee primarily supporting or opposing a state candidate or measure, if it is determined that the committee has raised or expended more than ten thousand dollars ($10,000) supporting or opposing state candidates or state measures during any calendar year, except that if the commission determines from an audit report that a committee is in substantial compliance with the provisions of the act, the committee thereafter shall be subject to an audit on a random basis with each such committee having a 25-percent chance of being audited.

(i) (1) With respect to local candidates and their controlled committees, the commission shall promulgate regulations which provide a method of selection for these audits.

(2) With respect to candidates for the Board of Administration of the Public Employees’ Retirement System, the commission shall promulgate regulations that provide a method for selection of these audits. The Public Employees’ Retirement System shall reimburse the commission for all reasonable expenses incurred pursuant to this section.

(j) In accordance with subdivisions (a), (b), (c), and (h), the Fair Political Practices Commission shall select by lot the persons or districts to be audited on a random basis. For campaign audits the selection shall be made in public after the last date for filing the first report or statement following the general or special election for which the candidate ran, or following the election at which the measure was adopted or defeated. For lobbying firm and lobbyist employer audits, the selection shall be made in public in February of odd-numbered years.

(k) If an appropriation is made to support the Commission in conducting biennial audits and field investigations of reports and statements filed with the Secretary of State pursuant to Chapter 6 (commencing with Section 86100) as required the act adding this subdivision, this section shall be repealed on January 1 of the next odd numbered year following the appropriation.

SEC. 4.

 Section 90001 is added to the Government Code, to read:

90001.

 Audits and investigations conducted pursuant to Section 90000 and subdivision (b) of Section 90006 shall be made with respect to the reports and statements of:

(a) Twenty-five percent of the lobbying firms and twenty-five percent of the lobbyist employers who employ one or more lobbyists, who shall be selected for audit pursuant to the process described in subdivision (j).

(1) Lobbying firms and lobbyist employers with less than one dollar ($1) in payments or contributions shall be excluded from being selected for audit under this section.

(2) When a lobbying firm or lobbyist employer is audited, the individual lobbyists who are employed by the lobbying firm or the lobbyist employer shall also be audited.

(b) Each statewide, Supreme Court, court of appeal, or Board of Equalization candidate in a direct primary or general election for whom it is determined that twenty-five thousand dollars ($25,000) or more in contributions have been raised or twenty-five thousand dollars ($25,000) or more in expenditures have been made, whether by the candidate or by a committee or committees controlled by the candidate or whose participation in the direct primary or general election is primarily in support of the candidate’s candidacy. Each statewide candidate whose contributions and expenditures are less than twenty-five thousand dollars ($25,000) shall be subject to an audit on a random basis of 10 percent of the number of such candidates.

(c) Each candidate for the Legislature or superior court judge in a direct primary or general election shall be subject to audit by random selection if it is determined that fifteen thousand dollars ($15,000) or more in contributions have been received or fifteen thousand dollars ($15,000) or more in expenditures have been made, whether by the candidate or by a committee or committees controlled by the candidate or primarily supporting the candidate’s candidacy. Random selection shall be made of 25 percent of the Senate districts, 25 percent of the Assembly districts, and 25 percent of the judicial offices contested in an election year.

(d) Each candidate for the Legislature in a special primary or special runoff election for whom it is determined that fifteen thousand dollars ($15,000) or more in contributions have been raised or fifteen thousand dollars ($15,000) or more in expenditures have been made, whether by the candidate or by a committee or committees controlled by the candidate or primarily supporting the candidate’s candidacy.

(e) Each controlled committee of any candidate who is being audited pursuant to subdivision (b), (c), or (d).

(f) Each committee, other than a committee specified in subdivision (c) of Section 82013, primarily supporting or opposing a candidate who is being audited pursuant to subdivision (b), (c), or (d) if it is determined that the committee has expended more than ten thousand dollars ($10,000).

(g) Each committee, other than a committee specified in subdivision (c) of Section 82013, whose participation is primarily in support of or in opposition to a state measure or state measures if it is determined that the committee has expended more than ten thousand dollars ($10,000) on such measure or measures.

(h) Each committee, other than a committee defined in subdivision (c) of Section 82013, a controlled committee or a committee primarily supporting or opposing a state candidate or measure, if it is determined that the committee has raised or expended more than ten thousand dollars ($10,000) supporting or opposing state candidates or state measures during any calendar year, except that if the commission determines from an audit report that a committee is in substantial compliance with the provisions of the act, the committee thereafter shall be subject to an audit on a random basis with each such committee having a 25-percent chance of being audited.

(i) (1) With respect to local candidates and their controlled committees, the commission shall promulgate regulations which provide a method of selection for these audits.

(2) With respect to candidates for the Board of Administration of the Public Employees’ Retirement System, the commission shall promulgate regulations that provide a method for selection of these audits. The Public Employees’ Retirement System shall reimburse the commission for all reasonable expenses incurred pursuant to this section.

(j) In accordance with subdivisions (a), (b), (c), and (h), the Commission shall select by lot the persons or districts to be audited on a random basis. For campaign audits the selection shall be made in public after the last date for filing the first report or statement following the general or special election for which the candidate ran, or following the election at which the measure was adopted or defeated. For lobbying firm and lobbyist employer audits, the selection shall be made in public in February of odd-numbered years.

(k) If an appropriation is made to support the Commission in conducting biennial audits and field investigations of reports and statements filed with the Secretary of State pursuant to Chapter 6 (commencing with Section 86100) as required by the act adding this subdivision, this section shall become operative on January 1 of the next odd numbered year following the appropriation.

SEC. 2.Section 90001 of the Government Code is amended to read:

90001.

Audits and investigations conducted pursuant to Section 90000 and subdivision (b) of Section 90006 shall be made with respect to the reports and statements of:

(a)Twenty-five percent of the lobbying firms and twenty-five percent of the lobbyist employers who employ one or more lobbyists, who shall be selected for audit pursuant to the process described in subdivision (j).

(1)Lobbying firms and lobbyist employers with less than one dollar ($1) in payments or contributions shall be excluded from being selected for audit under this section.

(2)When a lobbying firm or lobbyist employer is audited, the individual lobbyists who are employed by the lobbying firm or the lobbyist employer shall also be audited.

(b)Each statewide, Supreme Court, court of appeal, or Board of Equalization candidate in a direct primary or general election for whom it is determined that twenty-five thousand dollars ($25,000) or more in contributions have been raised or twenty-five thousand dollars ($25,000) or more in expenditures have been made, whether by the candidate or by a committee or committees controlled by the candidate or whose participation in the direct primary or general election is primarily in support of the candidate’s candidacy. Each statewide candidate whose contributions and expenditures are less than twenty-five thousand dollars ($25,000) shall be subject to an audit on a random basis of 10 percent of the number of such candidates.

(c)Each candidate for the Legislature or superior court judge in a direct primary or general election shall be subject to audit by random selection if it is determined that fifteen thousand dollars ($15,000) or more in contributions have been received or fifteen thousand dollars ($15,000) or more in expenditures have been made, whether by the candidate or by a committee or committees controlled by the candidate or primarily supporting the candidate’s candidacy. Random selection shall be made of 25 percent of the Senate districts, 25 percent of the Assembly districts, and 25 percent of the judicial offices contested in an election year.

(d)Each candidate for the Legislature in a special primary or special runoff election for whom it is determined that fifteen thousand dollars ($15,000) or more in contributions have been raised or fifteen thousand dollars ($15,000) or more in expenditures have been made, whether by the candidate or by a committee or committees controlled by the candidate or primarily supporting the candidate’s candidacy.

(e)Each controlled committee of any candidate who is being audited pursuant to subdivision (b), (c), or (d).

(f)Each committee, other than a committee specified in subdivision (c) of Section 82013, primarily supporting or opposing a candidate who is being audited pursuant to subdivision (b), (c), or (d) if it is determined that the committee has expended more than ten thousand dollars ($10,000).

(g)Each committee, other than a committee specified in subdivision (c) of Section 82013, whose participation is primarily in support of or in opposition to a state measure or state measures if it is determined that the committee has expended more than ten thousand dollars ($10,000) on such measure or measures.

(h)Each committee, other than a committee defined in subdivision (c) of Section 82013, a controlled committee or a committee primarily supporting or opposing a state candidate or measure, if it is determined that the committee has raised or expended more than ten thousand dollars ($10,000) supporting or opposing state candidates or state measures during any calendar year, except that if the commission determines from an audit report that a committee is in substantial compliance with the provisions of the act, the committee thereafter shall be subject to an audit on a random basis with each such committee having a 25-percent chance of being audited.

(i)(1)With respect to local candidates and their controlled committees, the commission shall promulgate regulations which provide a method of selection for these audits.

(2)With respect to candidates for the Board of Administration of the Public Employees’ Retirement System, the commission shall promulgate regulations that provide a method for selection of these audits. The Public Employees’ Retirement System shall reimburse the commission for all reasonable expenses incurred pursuant to this section.

(j)In accordance with subdivisions (a), (b), (c), and (h), the Commission shall select by lot the persons or districts to be audited on a random basis. For campaign audits the selection shall be made in public after the last date for filing the first report or statement following the general or special election for which the candidate ran, or following the election at which the measure was adopted or defeated. For lobbying firm and lobbyist employer audits, the selection shall be made in public in February of odd-numbered years.

SEC. 5.

 Section 90006 of the Government Code is amended to read:

90006.

 (a) Audits and field investigations of candidates for Controller and member of the Board of Equalization and of committees supporting such candidates shall be made by the Commission instead of the Franchise Tax Board.

(b) If an appropriation is made to support the Commission in conducting biennial audits and field investigations of reports and statements filed with the Secretary of State pursuant to Chapter 6 (commencing with Section 86100) as required by the act adding this subdivision, this section shall be repealed on January 1 of the next odd numbered year following the appropriation.

SEC. 6.

 Section 90006 is added to the Government Code, to read:

90006.

 The Commission shall conduct audits and field investigations of the following:

(a) Candidates for Controller and member of the Board of Equalization, and of committees supporting those candidates.

(b) (1) Reports and statements filed with the Secretary of State pursuant to Chapter 6 (commencing with Section 86100).

(2) The Commission shall conduct audits pursuant to paragraph (1) commencing with the audits selected in February 2025 pursuant to subdivision (j) of Section 90001.

(c) If an appropriation is made to support the Commission in conducting biennial audits and field investigations of reports and statements filed with the Secretary of State pursuant to Chapter 6 (commencing with Section 86100) as required by the act adding this subdivision, this section shall become operative on January 1 of the next odd numbered year following the appropriation.

SEC. 3.Section 90006 of the Government Code is amended to read:

90006.

The Commission shall conduct audits and field investigations of the following:

(a)Candidates for Controller and member of the Board of Equalization, and of committees supporting those candidates.

(b)(1)Reports and statements filed with the Secretary of State pursuant to Chapter 6 (commencing with Section 86100).

(2)The Commission shall conduct audits pursuant to paragraph (1) commencing with the audits selected in the month of February of the year 2025 pursuant to subdivision (j) of Section 90001.

SEC. 4.SEC. 7.

 Section 90010 is added to the Government Code, to read:

90010.

 (a) An audit conducted by the Commission shall be publicly posted on the Commission’s internet website for at least 10 years from the conclusion of the audit.

(b) The Commission shall annually report to the Legislature on the number and type of audits completed by the Commission.

(c) The Commission shall adopt regulations or policies to ensure the operational independence of audit personnel from enforcement operations under this title.

(d) If an appropriation is made to support the Commission in conducting biennial audits and field investigations of reports and statements filed with the Secretary of State pursuant to Chapter 6 (commencing with Section 86100) as required by the act adding this section, this section shall become operative on January 1 of the next odd numbered year following the appropriation.

SEC. 8.

 This act shall not prohibit the Fair Political Practices Commission from hiring or training staff to implement the provisions this act before the operative date of any specific section of this act.

SEC. 5.SEC. 9.

 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. 10.

 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.