Follow CA’s political money: New rules in 2018

Next year, Californians will learn more about who pays to influence their votes under a new law that requires more information about top donors on political ads.

The Disclose Act, which Gov. Jerry Brown signed earlier this month, passed the Legislature after years of negotiations with labor unions and other interest groups. Supporters call it the strongest campaign money transparency law in the nation, but others say interest groups had too much sway over the bill.

The new top-three donor disclosure requirement will apply to contributors of $50,000 or more, but will not apply to ads funded by political parties or candidates’ own campaign committees.

A lot is at stake here: More than $680 million was spent by legislative candidates, ballot measure committees and independent groups during the 2016 election cycle in California, according to state disclosure documents, about $260 million more than was spent in 2013-14.

The new law will take effect Jan. 1 and generally requires political committees to list their top three donors on their advertisements. Many are already required to disclose their top two donors, but the new law expands the requirements to more groups and aims to expose money that has been funneled through multiple committees.

Voters will start seeing the impact of the new law as campaigning for 2018 primaries ramps up.

The new top-three donor disclosure requirement will apply to contributors of $50,000 or more, but will not apply to ads funded by political parties or candidates’ own campaign committees.

Good government advocates have been pushing versions of the bill for about seven years.

Membership organizations like unions will only have to disclose donors who give $500 or more.

This year’s version finally appeased a broad enough swath of interest groups, said Trent Lange, president of the California Clean Money Campaign. Concerns about money in politics raised by 2016 presidential candidates also generated more support for the bill this year, Lange said.

In the past, labor unions have resisted the legislation, but they dropped their opposition this year after the bill’s sponsors agreed to change the law’s provisions on “earmarking,” when a donor contributes money to one committee for the purpose of funneling that money to another committee. To track earmarking, which can be used to circumvent campaign finance rules, committees are required to report all donors who give at least $100.

But, under the earmarking regulations in the new law, membership organizations like unions will only have to disclose donors who give $500 or more.

The act’s sponsors decided it would be more meaningful for voters to see the total amount of money given by an organization like a labor union, rather than have the contributions split up under the names of individual members, Lange said.

In other words, it would be more useful to a voter to know a union donated $100,000 to a campaign than to know the names of the 1,000 individuals who each contributed $100 through the union.

The new regulations are too narrow and will hamper the FPPC ‘s ability to prove illegal funneling of contributions, the staff wrote.

“The goal of the Disclose Act is always to show who is the true funder of the ads,” Lange said.

In April, the California School Employees Association wrote in a letter to an Assembly committee that it and other unions had agreed to drop their opposition to the bill in part because of the earmarking provisions.

“There was a major trade-off between labor and Clean Money over the … negotiated language,” California School Employees Association director Dave Low wrote in the letter. “Labor acquiesced to much of Clean Money’s requests for new disclosure rules as applied to radio, TV and print media, in exchange for new and clear language as to what constituted an earmarked contribution.”

The staff at the Fair Political Practices Commission, which enforces California campaign finance regulations, recommended in a September report that the commission oppose the legislation in part because of the new earmarking rules. The new regulations are too narrow and will hamper the commission’s ability to prove illegal funneling of contributions, the staff wrote.

The staff also criticized the earmarking exemption for membership organizations like unions, saying it could allow improper donations to fly under the radar.

Many television ads will be required to display the top donors for 5-10 seconds, depending on the length of the spot.

Despite concessions made to pass the law, the Disclose Act still gives California the strongest campaign finance transparency policies the country, Lange said, particularly when it comes to ballot measure campaigns.

Last year, donors contributed hundreds of millions of dollars to influence ballot measures on prescription drug pricing, the tobacco tax and other issues. The committees raising money for the campaigns often adopt names that mask their goals and funding from voters, Lange said. The committees also often funnel money among one another, sometimes obscuring whose money is funding what cause.

The law aims to reveal those donors, even if their money has passed through multiple campaign committees.

For most voters, knowing who funded an ad won’t necessarily sway their opinion on an issue.

Many television ads will be required to display the top donors for 5-10 seconds, depending on the length of the spot. In many cases, the names must appear on a solid black background at the beginning or end of the ad and must occupy the bottom third of the screen.

Radio ads will generally need to list the top one or two donors, depending on the length of the ad. Print and digital ads generally must include more information on who helped fund them.

The additional disclosure requirements could hinder some campaigns from reaching voters, said David Wolfe of the Howard Jarvis Taxpayers Association. He also characterized the new earmarking rules as an “unfair carve-out” for unions.

“If you truly want to be transparent, it needs to be equitable,” he said.

Democratic political consultant Steve Maviglio praised the bill’s new disclosure requirements, but said they only go so far in limiting the influence of big money on campaigns. For most voters, knowing who funded an ad won’t necessarily sway their opinion on an issue.

“I think it’s largely symbolic, but it’s an important step in disclosure,” he said. “There’s been a lot of talk about exposing big money behind campaigns, [but] until there’s some significant changes at the way the the Supreme Court looks at that, I think we’re just nibbling at the edges”

Want to see more stories like this? Sign up for The Roundup, the free daily newsletter about California politics from the editors of Capitol Weekly. Stay up to date on the news you need to know.

Sign up below, then look for a confirmation email in your inbox.