Proposition 34 of California Campaign Finance Law

Proposition 34 of California Campaign Finance Law

Proposition 34 has added several changes to the Political Reform Act of the California Government. At the state election in November 2000, the voters adopted this legislation in order to regulate financial play in politics (City Council Discussion, 2009). It repeals the voluntary spending limits and campaign contributions for local and state candidates, as provided in Proposition 208. Proposition 34 has replaced Proposition 208 by establishing higher dollar limits in regard to state offices and exempting local offices from such regulations (Branch, 2000). The legislation demanded disclosure of slate mailers, such as paid political advertisements and advocacy communication that permits intra-candidate transfers of campaign money and imposes restrictions on inter-candidate contributions (City Council Discussion, 2009). The initiative also demanded the expansion of electronic or online filing requirements after contributions had been received and independent expenditures had been remitted. Additionally, Proposition 34 prescribes the legal use of excess campaign funds. This legislation has been a long line effort to limit financial contributions and expenditures in the state. Several previous theatric sweeping reforms were recognized as unacceptable because they violated the First Amendment right of candidates and voters in regard to political association and speech. Proponents of the new legislation believe that it attempts to eliminate various defects in financial law through enactment of new provisions, as allowed in the Constitution, while also succeeding in establishing real reforms. Opponents of this initiative believe that it intends to eliminate the provisions provided by Proposition 208. Indisputably, this legislative measure raises numerous drafting issues as far as a campaign contribution is concerned. Proposition 34 has had tremendous impact on campaign contribution limits, political parties, lobbyists, individuals, and transfer of funds, thereby making it an important subject matter to discuss in relation to its impact on politics in California.

 

Increased Government Expenditures

Proposition 34 did not reduce legislative campaign financing, despite its objective to limit financial spending of California’s politics. On the contrary, according to Bob Stern, the chief director of the Center for Governmental Studies, this initiative has established the excessive campaign spending limits (Morain, 2003). Findings indicate a 200,000% increase in contributions to committees that control ballot measures from 2001 up to 2006 (Morain, 2003).  Also, 58% of the $ 1 billion collected for political campaigns in California was given to candidates for the state legislature, during a period of time when they were facing financial limits because of Proposition 34 (Morain, 2003). Since the passage of Proposition 34, $88 million was incurred on independent expenditures for the benefit of candidates vying for state offices (Morain, 2003). Unexpectedly, between 2000 and 2006, 6,144% increase in independent expenditures was experienced, as far as spending in legislative elections was concerned (Morain, 2003). These occurrences can be attributed to the fact that the measure gauged contribution limits by the size of the office a candidate sought after, thus eliminating the distinction between candidates who intended to incur higher expenditures.

Because of the adopted high contribution limits, statewide candidates and legislators have managed to raise large amounts of money to the level unseen before Proposition 34 was enacted. Consequently, a campaign finance system was created, in which wealthy interest groups could make greater contributions, in greater amounts than usually, thereby strengthening their influence on the law makers in the state (Morain, 2003). The campaign finance data analysis from CGS that regarded campaigns between 1998 and 2004 confirmed this conclusion, showing that special interests and wealthy people continued to dominate the contributions given to officeholders and state candidates (Levin, 2007). Specifically, the analysis pointed out that non-individuals, including political parties, PACs, and corporations, donated higher amounts than other individuals. Also, the contributions of those who gave more than $1000 outnumbered small contributions. Therefore, instead of Proposition 34 limiting campaign spending, it has only increased government expenditures.

Proposition 34 has fortified the dominance of money on the political arenas, thus weakening political influence and performance of candidates. Raising funds is a wasted time for candidates, since it diverts their attention from addressing the issues that could affect their voters. When a candidate accepts money from a private funder, such as wealthy people and special interest groups, the appearance of undue influence is created, thereby disillusioning the voters in regard to the ongoing political process (Weintraub, 2008). It is worth noting that the spectacle of private funding dampens voters’ spirits and discourages them from taking part in a political process due to a growing feeling of inability to contribute adequately to a candidate in California that truly seeks to make a difference. Also, the high cost of running campaigns has deterred some well qualified candidates from running for office, because they do not have access to private funds necessary for financing the campaigns. Lastly, Proposition 34 has paved way for the growth of private funding in the political system, lowering the quality of jurisdiction’s legislation and distorting the governmental process (Weintraub, 2008). It resulted in public officials paying more of their attention to the interests of large contributors rather than to the merits of the legislation.

Political Parties Unchecked

Proposition 34 has granted political parties a free pass in regard to continuous checking. Under Proposition 208, people were only permitted to pay $5,000 per annum to political parties (Gerston & Christensen, 2013). In turn, the parties could make contributions to a candidate up to 25% of the applicable spending limit. On the contrast, Proposition 34 has given political parties enough room to significantly increase their power by raising individual contribution limits to $25,000 to support candidates and allow limitless contributions for projects such as voter registration initiatives (Gerston & Christensen, 2013). It also removed the existing limits barring political parties from financially supporting their candidates. These changes have successfully transformed political parties, helping them become conduits through which different contributors can make enormous financial contributions, more than they are permitted under the individual contribution limits (Smith, 2001). The provisions that were meant to regulate political parties have raised questions on whether this initiative was a meaningful reform or just a way of adding loopholes into Californian Financial Law reforms.

Contributions to Candidate-Controlled Ballot Measure Committees

Currently, California law does not limit any contributions to ballot measure committees. These committees are directly or indirectly controlled by a political candidate, or they act together with a candidate in making expenditures. As a result, a candidate can gain significant influence over the actions of a committee by making contributions. Unlike contributions made to committees controlled by interest groups, contributions made to committees by candidates let them control ballot measures, which poses a big threat in regard to apparent political corruption (Smith, 2001). This is because contributors may demand special treatment from candidates controlling the committee. For instance, Governor Arnold Schwarzenegger took advantage of the loophole in candidate-controlled ballot measure committee. Even prior to becoming the Governor of California, Schwarzenegger created these kinds of committees to amass support for his agenda in 2002. After winning the seat, he faced a recalcitrant legislature controlled by members of the opposing party, which made him increase the use of the initiative in order to further his agenda and block the actions of his opponents(Polyakov, Counts & Yin 2013). A good example of ballot measure committee he created is California Recovery Team. This committee was established in order to raise money in unlimited proportions to oppose or support ballot measure projects. In 2004, the committee successfully raised $18.6 million through contributions (Levin, 2007). The largest share of this amount was contributed by special interest groups and wealthy individuals. In summary, Proposition 34 has increased contributions to these committees, thus resulting in real political corruption. 

The Rise of Wealthy Candidates and Independent Expenditures

Emergence of wealthy candidates and independent expenditures has greatly altered the dynamics of campaign finance laws, more than any other factor since the enactment of Proposition 34. Independent expenditures refer to expenses incurred by external entities which directly champion the defeat or election of the candidate. Along with member communications and electioneering communications, independent expenditures have played a prominent role in California politics. When Proposition 34 was imposed and implemented by setting contribution limits on candidates, various forms of non-candidate spending and independent expenditures have risen, mainly in competitive races. The average candidate in the state running for office in a competitive political environment, constrained by contribution limits, is undoubtedly alarmed by free-spending independent expenditure committees (Levin, 2007). This situation is attributed to the ability of independent expenditures to alter campaigns by colossal barrages of single-sided spending that intimidate candidates, making them try to raise huge sums through campaign contributions.

In addition to this problem, California has experienced the growth of wealthy candidates who are ready to involve their personal fortunes in financing their campaigns. This happens on both statewide and legislative levels. For instance, in 2006, two millionaires Steve Poizner and Steve Westly spent a lot of money from their own fortunes in order to run for Insurance Commissioner and Govern positions respectively (Polyakov, Counts & Yin 2013). Just like in case with independent expenditures, heavy spending by the wealthy candidates tends to drown out the voice of the candidates with insufficient resources, countering their effects in equal measure (Levin, 2007). However, the US Supreme Court has announced that candidates can freely spend money on their campaigns, for similar reasons that independent expenditure committees are allowed to spend money unlimitedly in their campaigns (Campaign Contributions and Spending Limits Disclosure, 2000). The courts did not view such expenditures as possible channels of corruption. Without the ability to control the amounts of money spent by the wealthy opponents and independent expenditure committees, reformers can only deal with the emerging problems by choosing between two options — namely between creating a public finance system to give additional funds to candidates who face wealthy opponents and independent expenditures, and demanding transparency in regard to financial management of the independent expenditure committee (Levin, 2007).

Role of Political Parties

One of the most notable impacts of Proposition 34 is the changes in roles of political parties in terms of individual contributions, contributions from political parties, and contributions in non-election years.

Contributions to Political Parties

Proposition 34 has increased the individual contribution limits from $5,000 per year, as stated in Proposition 208, to $25,000 (Levin, 2007). This initiative has allowed the giving of unlimited amounts of contributions to parties, even when parties channeled the money to other purposes, such as get-out-the-vote operation and voter registration efforts (Campaign Contributions and Spending Limits Disclosure, 2000).

Contributions from Political Parties

The previous law — Proposition 208 — allowed political parties freedom to offer candidates money up to 25% of the applicable spending limit (Branch, 2000). Proposition 34 has removed those limits of contributions from political parties to candidates. These changes, enacted through Proposition 34, have granted significant power to the political parties. Currently, they serve as conduits for contributors to bypass the set limits. For instance, in November 2006, Fabian Nunez, State Assembly speaker, received a $4 million donation from the California Democratic Party through his political committee (Levin, 2007). He used the money for dinners, conferences, polling, and consultations for the benefit of Democratic legislators. Under Proposition 34, the donation was permissible. Consequently, it allowed people seeking to gain influence to make larger contributions to candidates by bypassing contribution limits through political parties.

Contributions in Non-Election Years

This initiative has overturned Proposition 208’s ban on contributions during non-election years. Currently, contributors can freely give money to their preferred candidate at any time before or after election (Branch, 2000). Consequently, contributions during non-election years tend to buy governmental access or special treatment from the officeholders. As a result, the incumbents are strongly advantaged by this dynamic.

Conclusion

The paper discusses the impact of Proposition 34, a campaign finance reform, on Californian politics. This initiative has increased expenditures on politics in the state, left political parties unchecked, allowed contributions to Candidate-Controlled Ballot measure committees, initiated a rise in number of wealthy candidates running for state positions as well as  independent expenditures, and changed the roles and actions of political parties in California. This law has created monetary flows that remain virtually unchanged in an election environment that clearly needs reforms. The dominance exerted by private money in the state’s political system has significantly engendered a mounting crisis of public mistrust in regard to the democratic system of government and elected officials. Eventually, California will require a balanced campaign finance reform.


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