Senate Committee Says "No" to Closing Campaign Finance Loophole

Tuesday, April 23, 2019

The Senate Committee on Elections and Constitutional Amendments today rejected Senate Bill 401 by Senator Patricia Bates (R-Laguna Niguel) that would have closed a major loophole that allows elected officials and candidates to avoid contribution limits.
SB 401 would have subjected candidate-controlled ballot measure committees to the same contribution limits currently imposed on candidates for state office. It would have closed a campaign finance loophole that gain notoriety in the case of former State Senator Leland Yee, who mentioned the loophole when soliciting bribe money from an undercover FBI agent.
“The Senate missed an opportunity today to help enact real campaign finance reform,” said Senator Bates. “It’s clear that the status quo prevailed today, but I will continue to work with reformers to close a special interest loophole that has been exploited for far too long.”
Representatives from two campaign finance reform organizations, California Clean Money Campaign and California Common Cause, testified in support of Senator Bates’ bill during today’s committee hearing.
SB 401 was the reincarnation of the original version of Sen. Bates’ SB 1467 (2016), which was ultimately killed by the Senate Appropriations Committee.
Proposition 34 (2000), which California voters overwhelmingly approved, placed limits on the amount donors could give to state candidates’ and elected officials’ campaigns. However, politicians, candidates, and special interest groups quickly learned that they could get around these limits through a loophole that allows unlimited contributions into candidate-controlled ballot measure committees.
In a 2009 Fair Political Practices Commission (FPPC) report titled “The Billion Dollar Money Train,” the FPPC found that donations to candidate-controlled ballot measure committees shot up a staggering 200,000 percent in the five-year period after Proposition 34 was passed (page 4). By allowing special interest groups to continue giving huge amounts to candidates, this loophole has perpetuated the belief that money can buy influence in the California political system. It has also created an uneven playing field when it comes to state elections, because it allows some candidates to receive unlimited amounts of money from special interest groups, while those without separate ballot measure committees are left at a severe disadvantage. 
Currently, candidates are not required to state which ballot measure their committees are formed to support, giving the appearance, at least, that donors are giving to the politicians rather than particular causes.
The money raised into candidate-controlled ballot measure committees can be used to benefit candidates and their campaigns, very much like the money in actual campaign accounts. Expenditures from candidate-controlled committees have included thank-you gifts to donors, ads favorably portraying candidates, legal fees, campaign consulting fees, extravagant out-of-state fundraisers, and even a lawmaker’s tuition. At best, these expenditures often have a very tenuous link to ballot measures.
In 2016, Sen. Bates co-authored an op-ed with Dan Schnur, former chairman of the California Fair Political Practices Commission, on why they wanted to close the loophole exploited by candidate-controlled ballot measure committees.