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

California Senate Bill 569

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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

Amended IN Assembly June 27, 2023

Amended IN Assembly June 19, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill

No. 569

Introduced by Senator Glazer

February 15, 2023

An act to amend Sections ~~86103, 86106,~~ 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 placement agents and their employers to renew their lobbyist registrations every even-numbered year.~~
This bill would require a lobbying firm whose lobbyists are placement agents, and each external manager who hires, engages, or retains a placement agent who will be conducting activities which require registration, to renew its registration annually between November 1 and December 31. The bill would also implement other conforming changes.

The Political Reform Act of 1974 ~~also~~ 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 ~~external managers, lobbying firms whose lobbyists qualify as lobbyists solely by being placement agents, and~~ lobbying firms and lobbyist employers with less than one dollar in payments or contributions from being selected for audit. Additionally, this bill would ~~establish a separate audit division in~~ require the Fair Political Practices ~~Commission, independent~~ 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 ~~and legal divisions.~~ ~~The audit division would be required to conduct audits under the Fair Political Practices Commission’s purview. The Fair Political Practices Commission~~ operations. Audits conducted by the commission would be required to ~~post the audit conducted on their~~ be posted on the commission’s internet website for 10 years following the conclusion of the audit and to the commission would be required to annually report to the Legislature on the number and types of audits ~~conducted by the audit division.~~ completed by the commission.

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.

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

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

SECTION 1.Section 86103 of the Government Code, as amended by Section 178 of Chapter 50 of the Statutes of 2021, is amended to read:
86103.
~~A lobbyist certification shall include all of the following:~~
~~(a)A recent photograph of the lobbyist, the size of which shall be prescribed by the Secretary of State.~~
~~(b)The full name, business address, and telephone number of the lobbyist.~~
~~(c)A statement that the lobbyist has read and understands the prohibitions contained in Sections 86203 and 86205.~~
(d)(1)In the case of a lobbyist who filed a completed lobbyist certification in connection with the last regular session of the Legislature, or a lobbyist described in subdivision (b) of Section 86106 who filed a completed lobbyist certification statement in the previous year, a statement that the lobbyist has completed, within the previous 12 months or will complete no later than June 30 of the following year, the course described in subdivision (b) of Section 8956. If the lobbyist certification states that the lobbyist will complete the course no later than June 30 of the following year, the certification shall be accepted on a conditional basis. Thereafter, if the lobbyist completes the course no later than June 30 of the following year, the lobbyist shall file a new lobbyist certification with the Secretary of State which shall replace the conditional lobbyist certification previously filed. If the lobbyist certification states that the lobbyist will complete the course no later than June 30 of the following year and the lobbyist fails to do so, the conditional lobbyist certification shall be void and the individual shall not act as a lobbyist pursuant to this title until the individual has completed the course and filed with the Secretary of State a lobbyist certification stating that the individual has completed the course and the date of completion. It shall be a violation of this section for any individual to act as a lobbyist pursuant to this title once that individual’s conditional certification is void.
(2)If, in the case of a new lobbyist certification, the lobbyist has not completed the course within the previous 12 months, the lobbyist certification shall include a statement that the lobbyist will complete a scheduled course within 12 months, or within six months for a lobbyist described in subdivision (b) of Section 86106, and the lobbyist certification shall be accepted on a conditional basis. Following the lobbyist’s completion of the ethics course, the lobbyist shall file a new lobbyist certification with the Secretary of State which shall replace the conditional lobbyist certification previously filed. If the new lobbyist certification states that the lobbyist will complete the course within 12 months, or within six months for a lobbyist described in subdivision (b) of Section 86106, and the lobbyist fails to do so, the conditional lobbyist certification shall be void and the individual shall not act as a lobbyist pursuant to this title until that individual has completed the course and filed with the Secretary of State a lobbyist certification stating the individual has completed the course and the date of completion. It shall be a violation of this section for any individual to act as a lobbyist pursuant to this title once that individual’s conditional certification is void.
~~(e)Any other information required by the commission consistent with the purposes and provisions of this chapter.~~
SEC. 2.Section 86103 of the Government Code, as amended by Section 179 of Chapter 50 of the Statutes of 2021, is amended to read:
86103.
~~A lobbyist certification shall include all of the following:~~
~~(a)A recent photograph of the lobbyist, in a size prescribed by the Secretary of State.~~
~~(b)The lobbyist’s full name, business address, email address, and telephone number.~~
~~(c)A statement that the lobbyist has read and understands the prohibitions contained in Sections 86203 and 86205.~~
~~(d)A statement regarding the lobbyist’s completion of the ethics course described in subdivision (b) of Section 8956 as follows:~~
(1)For a lobbyist who filed a completed lobbyist certification in connection with the last regular session of the Legislature, or a lobbyist described in subdivision (b) of Section 86106 who filed a completed lobbyist certification in the previous year, either of the following statements:
~~(A)That the lobbyist has completed the ethics course within the previous 12 months.~~
~~(B)That the lobbyist will complete the ethics course no later than June 30 of the following year, in which case the certification shall be accepted on a conditional basis.~~
(2)In the case of a new lobbyist certification, if the lobbyist has not completed the course within the previous 12 months, the lobbyist certification shall include a statement that the lobbyist will complete the course within 12 months, or within six months for a lobbyist described in subdivision (b) of Section 86106. The lobbyist certification shall be accepted on a conditional basis.
(3)If a lobbyist certification is accepted on a conditional basis, the lobbyist shall timely complete the ethics course and file a new lobbyist certification to replace the conditional lobbyist certification. If the lobbyist fails to timely complete the ethics course, the conditional lobbyist certification shall be void and the individual shall not act as a lobbyist under this title until the individual completes the course and files a lobbyist certification stating the date of completion. It is a violation of this section for any individual to act as a lobbyist under this title once that individual’s conditional certification is void.
~~(4)The date and confirmation that an individual has completed the ethics course may be transmitted to the Secretary of State by the legislative ethics committee.~~
~~(e)Any other information required by the commission consistent with the purposes and provisions of this chapter.~~
~~(f)Registration fees required by Section 86102 shall be paid online at the time a lobbyist certification is submitted for registration to be active.~~
SEC. 3.Section 86106 of the Government Code is amended to read:
86106.
(a)Except as provided in subdivision (b), each registered lobbying firm and lobbyist employer which will be conducting activities which require registration shall renew its registration by filing photographs of its lobbyists, authorizations, and a registration statement between November 1 and December 31, of each even-numbered year. Each lobbyist shall renew the lobbyist’s own lobbyist certification in connection with the renewal of registration by the lobbyist’s lobbying firm or employer.
(b)Each registered lobbying firm whose lobbyists are placement agents, and each external manager who hires, engages, or retains a placement agent who will be conducting activities which require registration, shall renew its registration by filing photographs of its placement agents, authorizations, and a registration statement annually between November 1 and December 31.

SEC. 4.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. 5.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) ~~External managers, as defined in Section 82025.3, lobbying firms whose lobbyists qualify as lobbyists solely by being placement agents, and lobbying~~ Lobbying firms and lobbyist employers with less than one dollar ($1) in payments or contributions shall ~~not be audited pursuant to~~ 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. 6.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. 7.SEC. 4.

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

~~(a)There is hereby created in the Commission an audit division. The audit division shall be independent from the Commission’s enforcement and legal divisions.~~

~~(b)The audit division shall conduct the audits required pursuant to 90006 or authorized pursuant to Section 90003.~~

~~(c)~~

90010.

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

~~(d)~~

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

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

SEC. 8.SEC. 5.

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. 9.SEC. 6.

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.