History of the Political Reform Act

In the aftermath of the Watergate scandal, California was the first state to pass a comprehensive political reform package. Proposition 9, known today as The Political Reform Act, was passed as a ballot measure by California voters in the June 1974 election. The initiative was championed by a tripartite group consisting of then-Secretary of State Jerry Brown, the People’s Lobby, and Common Cause. By including provisions regulating campaign finance, lobbying activity and conflicts of interest, Proposition 9 represented the most significant state-level response to the culture of corruption that was believed to be so pervasive in the pre-Watergate years.

In 1974, during the fallout from Watergate, a coalition of political reformers presented a statewide ballot initiative that they claimed would “put an end to corruption in politics.” These reform groups sought to end corruption by reducing the amount of money spent in elections and by eliminating secret or anonymous contributions. With the advent of the new law, the campaign activities and the personal financial affairs of state and local officials were subjected to greater public scrutiny than at any other time in California’s history. And the initiative directed that the law be vigorously enforced by the newly created Fair Political Practices Commission.  Proposition 9 had six main provisions, it:

1. Imposed mandatory spending limits on candidates for statewide offices and statewide ballot measure committees. However, in the landmark case, Buckley v. Valeo (1976) 424 U.S. 1, the United States Supreme Court held that mandatory spending limits were unconstitutional.
2. Imposed restrictions on lobbyists. It required lobbyists to register with the state and to file reports disclosing their activity expenses. It also imposed a $10 gift limit on lobbyists and prohibited lobbyists from making contributions.
3.  Imposed strict conflict of interest laws and required state and local agencies to establish conflict of interest codes, requiring agency officials who routinely participate in decisions to publicly disclose personal financial information.
4. Banned anonymous contributions of $100 or more and established extensive campaign disclosure laws. The underlying theory behind campaign disclosure is that an informed electorate will vote against the candidate or proposal having financial alliances adverse to the public interest. In addition, candidates are less likely to accept a contribution from a source with whom they do not want to be identified.
5. Enacted laws to curtail incumbent advantage (e.g., a prohibition on sending "mass mailings" at public expense). Many of these laws have been tailored significantly by regulatory or court action.
6. Created an independent centralized authority to secure compliance with the Act. Prior to the creation of the FPPC, campaign disclosure laws were rarely enforced.

In addition to creating the FPPC, Proposition 9 established strict auditing of campaign statements by the Franchise Tax Board. Prior to the Act, no systematic method existed to determine whether a candidate or committee reported all contributions and expenditures.

Often in cooperation with the FPPC, the Legislature added various provisions to the original version of the Act over the years:

1. In 1977, the Legislature required candidates and committees to disclose their identities on campaign literature. This law was later challenged in the California Supreme Court and upheld.  (Griset v. Fair Political Practices Comm. (1994) 8 Cal.4th 851.)  A subsequent challenge based on the United States Supreme Court case McIntyre v. Ohio Elections Commission (1995) 514 U.S. 334, 336, also failed.  (Griset v. Fair Political Practices Comm. (2001) 25 Cal.4^th 688.)
2. In 1980, the Legislature imposed restrictions on state employees who leave state service to join the private sector. These restrictions are commonly referred to as the "permanent ban" and prohibit state employees who work on specified proceedings such as procurements and lawsuits from being paid to “switch sides” after leaving state employment.
3. In 1982, the Legislature passed an important contribution limitation applicable to members of boards and commissions. Under section 84308, an appointed official may not accept a contribution of $250 or more from an applicant until three months after his or her agency’s decision on a matter is final. If the official has accepted a campaign contribution of $250 or more from an applicant within the preceding 12 months, the official is disqualified from participating in the decision. Before this new law was added to the Act, it was longstanding practice for appointed officials to solicit contributions from applicants and then vote on a decision affecting the applicant.
4. In 1982, the Legislature provided funding for the Enforcement Division to enforce the Act at the local level.
5. In 1985, the Legislature required sponsored committees to include the name of their sponsor on all political mailings sent by the committees.
6. In 1987, after extensive hearings on the matter by the FPPC, the Legislature imposed stricter identification and notification requirements on slate mailer organizations. The  new law required disclaimers to be placed on every slate mailer.

Voters simultaneously passed two political reform initiatives in 1988. Proposition 68, a measure sponsored by Common Cause, provided contribution limits with public financing for legislative election campaigns. Proposition 73, an initiative sponsored by members of the Legislature, was a more comprehensive campaign finance reform measure that did not include public financing.  The electorate approved both ballot measures, with Proposition 73 receiving the most votes.

The California Supreme Court subsequently ruled that when two competing comprehensive reform schemes are enacted at the same time, it will not sort through the provisions to determine which parts are compatible after the election. (Taxpayers to Limit Campaign Spending v. Fair Political Practices Comm. (1990) 51 Cal.3d 744.) Only the ballot measure with the most votes will prevail--in this case, Proposition 73.

The contribution limits and the inter-candidate transfer ban in Proposition 73 were later invalidated in federal court on the basis that the limits were applied on a fiscal year basis, which favored incumbents. (Service Employees International Union v. Fair Political Practices Comm. (9th Cir. 1992) 955 F.2d 1312.) Some provisions of Proposition 73 remain in effect (although many have been repealed by Proposition 34, discussed below). 

Proposition 73 also prohibits public financing of elections. However, this prohibition does not prevent a charter city from establishing a public financing scheme. (Johnson v. Bradley (1992) 4 Cal.4th 389.) Finally, Proposition 73 requires candidates to have one campaign bank account for each election.

In the 1980’s, the FBI began a three-year sting operation to uncover corruption in the California Legislature. The FBI investigation resulted in the conviction of five legislators. The FBI probe began when federal agents formed two fictitious seafood companies. During the investigation, the FBI gave $90,000 in campaign contributions and honoraria to various legislators and the Legislature approved two bills designed to give the sham companies business advantages, which were later vetoed by the Governor. Immediately following the investigation, a Los Angeles Times poll revealed that 53% of the voters surveyed thought that taking bribes was a common practice in Sacramento.

In June 1990, the Legislature placed Proposition 112 on the ballot. Proposition 112 was a constitutional amendment that directed the Legislature to pass new ethics laws. The new laws banned honoraria, imposed a gift limit of $250 (which is adjusted for inflation) and restricted travel payments on state elected officers and officials who file financial disclosure statements (later extended to all state and local candidates for office, local elected officers and local officials who file Statements of Economic Interests). Proposition 112 also strengthened laws prohibiting a candidate’s personal use of campaign funds.

In 1990, the Legislature passed the Milton Marks Postgovernmental Employment Restrictions Act, which prohibits state elected officers and specified state agency officers and employees from being paid to represent another person before their former state agency for one year after leaving that agency. In 2005, a similar law was added applying to certain local officers.

In 1997, the Legislature passed the Online Disclosure Act.  This and subsequent amendments to the Act requires specified candidates and committees to file their campaign finance reports electronically beginning in 2000. This information is available on the Internet. The following entities that spend or receive $25,000 or more are subject to the Online Disclosure Act: candidates for state elective office, committees supporting or opposing statewide ballot measures, general purpose committees and slate mailer organizations. The Online Disclosure Act also applies to state lobbyists, lobbying firms and lobbyist employers when they make certain expenditures totaling $2,500 or more in a calendar quarter.

In 1997, the voters passed Proposition 208, which again placed limits on campaign contributions to candidates but also added voluntary spending limits and imposed other restrictions aimed at supporting the contribution limits scheme. Before the measure was fully implemented, the federal district court issued a preliminary injunction against its enforcement. (California Prolife Council Political Action Committee v. Scully (E.D. Cal. 1998) 989 F.Supp. 1282). The court's preliminary injunction was upheld on appeal but the case was remanded for further proceedings by the trial court. Before the trial court could issue its ruling, the bulk of Proposition 208 was repealed by Proposition 34.

In the summer of 2000, concerned with the continued uncertainty over the fate of Proposition 208, the Legislature voted to place Proposition 34 on the November 2000 ballot. It passed by 59.9% of the vote.

Proposition 34 limits the amount of contributions a person can directly contribute to a candidate, expanded financial disclosure requirements, and prohibited contributions from lobbyists. It increased the maximum penalty for a violation of the Act from $2,000 to $5,000, and allowed for the creation of Independent Expenditure Committees, which have been criticized as a way for individuals to circumvent contribution limits. 

The Commission continues to concentrate on supporting meaningful reforms while maintaining the highest ethical standards. Our objective is to streamline the rules to reduce redundancy, eliminate loopholes and improve accountability with more timely and accurate disclosures. You can find the most current legislative report in the most current agenda.