McGeorge School of Law

Proposition 34

Proposition 34:
Limits on Campaign Contributions and Expenditures

By Harllee Branch

Copyright © 2000 by University of the McGeorge School of Law

JD, McGeorge School of Law, University of the Pacific
to be conferred May 2001with Certificate in Governmental Affairs
B.A., Arts, History, University of California at Berkeley, 1992

Table of Contents

I. Executive Summary
II. The Law
III. Drafting Issues
IV. Constitutional Analysis
V. Public Policy Considerations
VI. Conclusion

I. EXECUTIVE SUMMARY

Proposition 34, placed on the ballot for the November 7, 2000 general election, enacts additions to the Political Reform Act within the California Government Code. The initiative provides for campaign contribution limits and voluntary expenditure limits; requires certain disclosures in slate mailers, in paid political advertisements, and in certain issue advocacy communication; authorizes intra-candidate transfers of campaign funds and restricts inter-candidate contributions; expands on-line or electronic filing requirements with respect to the receipt of certain contributions and the making of certain independent expenditures; and prescribes the authorized use of surplus campaign funds.


This measure is one in a long line of attempts in California to limit campaign contributions and expenditures. Most of the dramatically sweeping reforms in these prior measures were invalidated due to violations of candidates' and voters' First Amendment political speech and association rights. According to proponents of this initiative, Proposition 34 attempts to cure these defects by enacting new provisions within the bounds of the Constitution while still accomplishing real reform. Analysis of the initiative seems to confirm these assertions.

Opponents, however, charge that it is attempting to make an end-run around Proposition 208, the most recent attempt at limiting campaign contributions. Proposition 208 has been enjoined in court, but stands a good chance of being validated following a recent U.S. Supreme Court decision.

Proposition 34 raises some drafting issues in regards to campaign contributions.

The fiscal effect of Proposition 34 has been estimated at several million dollars annually for monitoring and enforcement.

II. THE LAW

A. Existing Law

 

1. Historical Background

 

The history of campaign finance reform dates back to the late 19th and early 20th centuries. The electoral process and the public attitude toward elections had been tainted by the influence of city and state political bosses and their wealthy allies. As a result, the states jumped into the fray, establishing systems of voter registration, ballot printing, and the administration of elections in order to remedy the pervasive practices of fraudulent voting and ballot-box stuffing.

In the early 1970's, a similar scenario unfolded. The Watergate scandal wrought a general public mistrust of politicians, the political system, and skyrocketing campaign costs. The public demanded reform, and regulation of campaign contributions resulted. States began to strictly regulate campaign contributions, expenditures, and disclosure.

As the mighty checkbooks of lobbies and special interest groups have become publicly perceived as an ever-increasing and corrupting influence on elections, the continuous call for reform swells in volume. (Hoover Institution, The States: Laboratories for Reform, [visited Sept. 8, 2000] .)


In order to preserve the integrity of the electoral process, California is one of many states that have attempted to chip away at the perceived bedrock influence of these powerful groups.

 

2. The Political Reform Act of 1974



The Political Reform Act of 1974 was enacted by an initiative called Proposition 9. California voters approved the measure by an overwhelming percentage. Proposition 9 imposed campaign finance disclosure requirements upon candidates for state and local offices, proponents and opponents of ballot measures, and other campaign organizers. (University of California, Office of the President, A Guide to the Political Reform Act of 1974, [visited Oct. 10, 2000] .) It was enacted to accomplish the following purposes:

 

 

a. Full and truthful disclosure of receipts and expenditures in election campaigns in order to fully inform voters and inhibit improper practices.

 

b. Regulating the activities of lobbyists and disclosure of their finances in order to prevent improper influences on public officials.

c. Disclosure of assets and income of public officials which may be materially affected by their official actions and, in appropriate circumstances, disqualification of those officials from acting in order that conflicts of interest may be avoided.

d. Conversion of the state ballot pamphlet into a useful document so that voters will not be entirely dependent on paid advertising for information regarding state measures.

e. Abolishing laws and practices unfairly favoring incumbents in order to ensure fair elections.

f. Providing adequate enforcement mechanisms to public officials and private citizens in order that the initiative will be vigorously enforced.

(Cal. Gov't Code § 81002.) The Political Reform Act places no limits on campaign contributions or expenditures. (Legislative Analyst, Proposition 34: Campaign Contributions and Spending. Limits. Disclosure. Legislative Initiative Amendment, [2000].)

 

3.California's Prior Attempts at Campaign Finance Reform through Ballot Initiative


Numerous ballot initiatives in years past have attempted to amend the Political Reform Act in order to impose campaign contribution, expenditure, and other campaign finance limitations.

 

a) Propositions 68 and 7

In 1988, California voters approved Propositions 68 and 73. Proposition 73 banned the use of public money in campaigning and limited the contributions that candidates, committees, and political parties could accept during the fiscal year. Additionally, the transfer of campaign funds between candidates was prohibited. (Internet Guide to California's Legislature, Proposition 73, 1988 Primary Election, [visited Oct. 9, 2000] .)

Proposition 68 limited campaign contributions and expenditures to California Assembly and Senate candidates. The initiative permitted the funding of elections with money channeled from taxpayers who voluntarily directed part of their income tax payments to finance state matching payments. (Internet Guide to California's Legislature, Proposition 73, 1988 Primary Election, [visited 10/9/00] .)

In Taxpayers to Limit Campaign Spending v. FPPC, the California Supreme Court struck down Proposition 68. It held the regulatory schemes of Propositions 68 and 73 as conflicting. As a result, only one of the initiatives could be implemented. Since Proposition 73 received more affirmative votes, the Court invalidated all provisions of Proposition 68 and ordered Proposition 73 implemented. (Taxpayers to Limit Campaign Spending v. FPPC, 51 Cal. 3d 744 [1990].)

The same year, Proposition 73 was challenged in federal district court on constitutional grounds. The Court held that contribution limits based on fiscal year measurements discriminated against candidates challenging incumbent elected officials. (See Serv. Employees Int'l Union AFL-CIO v. FPPC, infra.)

According to the court's reasoning, challengers typically do not anticipate running years in advance of an election. Once they do decide, they are under severe time constraints to raise sufficient funds for effective name recognition and electoral viability. By allowing fiscal year limits, incumbents are able to legally raise funds years in advance for future elections. In contrast, fundraising efforts by challengers are effectively limited to a single fiscal year. As a result, Proposition 73 favored one form of political speech over another, thus rendering the portion pertaining to fiscal year limitation invalid as a violation of the First Amendment. (Serv. Employees Int'l Union AFL-CIO v. FPPC, 747 F. Supp. 580, 589-90. [E.D. Cal. 1990].) Supporters of Proposition 73 petitioned the California Supreme Court for permission to rewrite the unconstitutional portions of the initiative, but were denied. (Kopp v. FPPC, 11 Cal. 4th 607 [1995].) Parts of Proposition 73 survived constitutional challenge and remain in effect, such as the prohibition on the use of public funds for campaigning. (Cal. Gov't Code § 85300), and contribution limits on special elections. (Cal. Gov't Code § 85305.)

b) Proposition 208

In 1996, California voters passed Proposition 208. It amended the Political Reform Act of 1974 by limiting campaign contributions to candidates for state and local office. The per election contribution limits were extremely restricted: $100 for districts with less than 100,000 residents, $250 for larger districts and $500 for statewide election. (1996 Ballot Pamphlet, Campaign Contributions and Spending Limits. Restricts Lobbyists. Initiative Statute. [visited Oct. 15, 2000] .) If a candidate accepted voluntary expenditures, the limit would be raised to $250, $500 and $1,000 respectively. As with Propositions 68 and 73, Proposition 208 was challenged in court.

In 1998, the federal district court for the Eastern District of California awarded a preliminary injunction preventing the FPPC from enforcing Proposition 208. Applying the test used to determine whether contribution limits are constitutional, the court found that the contribution limits imposed by the initiative were not narrowly drawn to achieve the legitimate state interest of preventing corruption or the appearance of corruption. (California Prolife Council PAC v. Scully, 989 F. Supp. 1282 [1998].) As a result, the initiative unconstitutionally restricted the political speech of candidates. (Id.)

In 1999, the Ninth Circuit Court of Appeals upheld the preliminary injunction blocking the enforcement of Proposition 208. The injunction will remain in effect until the district court decides the constitutionality of the initiative after a full trial. (California Prolife Council PAC v. Scully, 164 F.3d 1189 [9th Cir. 1999].) According to the FPPC, the case has been postponed until after the November election in order to determine whether further proceedings are necessary in light of Proposition 34. (Fair Political Practices Commission, Injunction Of Proposition 208 Remains In Place At Least Through The Year 2000, [visited Sept. 30, 2000] .) The district court's final decision will almost certainly be based upon the U.S. Supreme Court's January, 2000 decision in Nixon v. Shrink Missouri Government PAC, which upheld Missouri's highly restrictive campaign contribution and expenditure limits. (Nixon v. Shrink Missouri Government PAC, 528 U.S. 377 [2000].)

c) Proposition 25

In March 2000, another campaign finance reform initiative was presented on the ballot for voter approval. Proposition 25 contained provisions similar to those in Proposition 208, such as limits on campaign contributions to political action committees (PAC's), political parties, and candidates for state and local offices. These limits were far less restrictive than Proposition 208: $5000 for statewide candidates and PAC's, and $3000 for local candidates. Also included were provisions for voluntary spending limits for political candidates. The use of public funds for campaigning was specifically permitted. In addition, Proposition 25 included disclosure and reporting requirements more restrictive than those in the existing Political Reform Act. (California Voter Pamphlet, Election Campaigns, Contributions and Spending Limits, Public Financing, and Disclosures Initiative Statute, [Mar. 2000].)


Proposition 25 was rejected by voters in the March 2000 election by a margin of nearly two to one. (Secretary of State, 2000 California Primary Election Results, [visited Sept. 20, 2000] .) Opponents of the initiative claimed that voters were turned off by the $55 million per year of taxpayer money that the measure would have provided for political campaigning and by a loophole allowing soft-money contributions to bypass the donation limits. Supporters, on the other hand, blamed the initiative's defeat on big-money opposition by Governor Davis, state political parties, and special interest groups. (Dennis Akizuki, Why Initiative to Cap Donations Failed Disputed, San Jose Mercury News [visited Sept. 15, 2000] .)

d) History of Proposition 34

Proposition 34's genesis came as Senate Bill 1223, authored by state Senator John Burton (D - San Francisco). The measure is directed at curing the First Amendment issues that stalled Proposition 208 in 1998. (Legislative Counsel's Digest, SB 1223 Proposed Conference Report, at 1-2 [Cal. 2000].) Specifically, Proposition 34's campaign contribution and voluntary spending limits are significantly less restrictive than Proposition 208's, so courts will view the limits as more narrowly tailored to the state's interest in preventing the appearance of electoral corruption. In addition, Proposition 34 leaves out the provisions that apparently doomed Proposition 25 to a sound defeat - specifically, soft-money loopholes and state election advertising financed with taxpayer money.

With SB 1223, the legislature intended to amend the Political Reform Act of 1974. (Id. at 1.) The legislature may only alter the Political Reform Act in two ways. First, if the legislature intends to further the purposes of the Act, it must pass any amendments by a two-thirds vote of both houses. Alternatively, it may submit any alterations to the voters for approval. (Cal. Gov't Code § 81012.) The authors of SB 1223 chose to make the bill a ballot proposition, which only requires a majority vote, instead of a legislative enactment, thus avoiding the Act's two-thirds vote requirement. (SB 1223 Proposed Conference Report, at 3.) Significantly, the bill failed to garner a two-thirds vote in the Assembly. (SB 1223, Assembly Roll Call, [Cal. 2000].)

In sections 85 and 86 of the initiative, the legislature called a special election for Proposition 34. (Proposition 34, Voter Information Guide [hereinafter "Guide"] at 65.) Under California law, initiatives proposed by the legislature must by adopted 131 days before the next statewide election. (California Election Code § 9040.) The legislature did not adopt Proposition 34 until 125 days before the November 7, 2000 election, thus missing the statutory deadline. (SB 1223, Enrolled Bill Text, [Cal. 2000].) The special election was the only way for the legislature to qualify the measure for the upcoming ballot. The special election was consolidated into November's general election. (Guide at 65.)

Notably, Proposition 34 was drafted after the Supreme Court handed down its decision upholding Missouri's strict campaign contribution limits. (See Nixon v. Shrink Missouri Government PAC, 528 U.S. 377 [2000], discussed infra.) The Court's holding in that case indicates that Proposition 208's campaign contribution limits may ultimately be upheld as constitutional. As a result, Proposition 34 will result in the repeal of the highly restrictive contribution limits contained in that measure.

E. Changes Proposed by Proposition 34

Proposition 34 revises state laws on political campaigns for state and local elective offices. Most changes will take effect beginning in 2001, with the exception of statewide elective offices, which will generally not be affected until after the November 2002 election. Existing contribution limits on local offices will generally be unaffected. (Guide at 13.)

The major components of Proposition 34 are listed below.

  1. Campaign Contribution Limits

Proposition 34 repeals the contribution limits contained in Proposition 208, replacing them with limits that are generally higher.

 

    1. Lobbyists

Contributions by lobbyists are prohibited if the lobbyist is registered to lobby the governmental agency for which the candidate is seeking election or the government agency of the elected state officer. (Guide at 62-65.)

    1. Political Parties

Generally, no limits are imposed on contributions by political parties. However, Proposition 34 does limit contributions by individuals to political parties for the support or defeat of candidates for elective state office to $25,000 per calendar year. Additional sums, however, may be given to parties for other activities. (Guide at 58-59.)

      1. Individuals

    Contribution limits are adjusted depending upon the contributor and the candidate's sought after office. Limits on campaign contributions from individuals are as follows:

    Individual Contributors

    Legislative Office $3,000

    Statewide Office other than Governor $5,000

    Governor $20,000

    (Guide at 57-58.)

    1. Small Contributor Committees

"Small contributor committees" are defined as committees in existence for at least six months with 100 or more members, none of whom contribute more than $200 to the committee in a year, and which contributes to five or more candidates. (Guide at 57-62.) Candidates are categorized as those running for legislative or statewide office. The limitations in these provisions of Proposition 34 are outlined below.

Small Contributor Committees

Legislative Office $6,000

Statewide Office other than Governor $10,000

Governor $20,000

(Guide at 58.)

    1. Funds Remaining From Prior Campaigns

Candidates for statewide elective office may carry over contributions raised in connection with one election to pay campaign expenditures in subsequent elections for the same office. (Guide at 61.)

    1. Political Committees Independent of Candidate

Proposition 34 repeals the portions of Proposition 208 which limit contributions to political committees which operate independently of a candidate's campaign committee. (Guide at 57-58.)

    1. Contributions and Loans by Candidates to Their Own Campaigns

Candidates may give unlimited amounts of their own money to their campaigns. However, the amount which candidates may loan to their campaigns is limited to $100,000. Interest may not be earned. (Guide at 60.)

    1. Transfers of Funds Between Candidates

The portions of Proposition 208 which banned transfers of funds from any state or local candidate or officeholder to another candidate are repealed. (Guide at 59.) Under Proposition 34, candidates or their committees may contribute to other candidates, but must stay within the contribution limits established by the measure. (Guide at 59.)

    1. Fundraising in Non-Election Years

Finally, Proposition 34 repeals the provision of Proposition 208 which prohibited candidates for state and local elective offices from fundraising in non-election years. (Guide at 59.)

2. Voluntary Spending Limits

Proposition 34 repeals Proposition 208's voluntary restrictions on the amount candidates may spend on their campaigns per election and replaces them with higher limits. (Guide at 62.) Candidates voluntarily accepting these limits will be designated in the state ballot pamphlet as having accepted the limits, and will be eligible to buy space to place a statement in support of his or her candidacy in the state ballot pamphlet. (Guide at 62.) The spending limits will be adjusted every two years for inflation. (Guide at 56.) The major provisions are listed below.

Primary General

Assembly $400,000 $700,000

Senate $600,000 $900,000

State Board of Equalization $1 million $1.5 million

Other Statewide Offices, except Governor $4 million $6 million

Governor $6 million $10 million

(Guide at 62.)

Listed below are the significantly lower voluntary spending limits of Proposition 208, which will be repealed by Proposition 34.

Primary General

Assembly $100,000 $200,000

Senate $200,000 $400,000

State Board of Equalization $200,000 $400,000

Other Statewide Offices, except Governor $1 million $2 million

Governor $4 million $8 million

  1. Campaign Disclosure
    1. Endorsements

Under Proposition 34, payment of $5,000 to a person appearing in a campaign advertisement for or against a state or local ballot proposition will have to be disclosed in the advertisement. (Guide at 57.)

    1. Reporting

Candidates for state elective office or a committee supporting a state ballot measure must report on-line or electronically to the Secretary of State within 24 hours of receiving a contribution of $1000 or more during the 90 days before an election. (Guide at 60.) Certain committees making independent expenditures also must report on-line or electronically their expenditures of $1000 or more related to a candidate for state elective office. (Guide at 62.)

    1. Advertising

Currently, expenditures to directly advocate the election or defeat of a candidate for state office generally must be disclosed to the Secretary of State before the election. (Cal. Gov't Code § 84200, et seq.) Proposition 34 generally requires an on-line or electronic report before the election from a person who spends $50,000 or more on campaign advertisements that clearly identify a candidate for state office, but do not expressly advocate election or defeat. (Guide at 60-61.)

    1. Slate Mailers

Mailed campaign advertisements that list recommended candidates and ballot measures must include a written notice, if they indicate an association with a political party, but recommend a position differing from the party's official position. (Guide at 57.)

  1. Other Provisions
    1. Surplus Campaign Funds

When a candidate leaves office, Proposition 34 limits the use of surplus campaign funds to such specific purposes as contributions to ballot measures, federal candidates and candidates for state office outside California; repayment of campaign debts or political contributors; charitable donations; contributions to political parties; home security systems for candidates or officeholders subjected to threats; and payment of legal bills related to seeking or holding office. Proposition 34 repeals the provision of Proposition 208 that requires distribution of surplus funds to political parties, political contributors, or to the state within 90 days of an election. (Guide at 63.)

    1. Penalties and Enforcement

This measure increases penalties for violation of campaign law to the same levels as Proposition 208. Under Proposition 34, the FPPC could impose a fine of up to $5000 per violation, instead of the prior penalty of $2000. (Guide at 64.) The measure repeals a provision of Proposition 208 allowing the FPPC to criminally prosecute alleged violations of campaign laws and instead, permits the FPPC to hold administrative penalty proceedings. (Guide at 56.) Finally, Proposition 34 narrows the persons liable for violations to those with obligations under its provisions or those who are compensated for services involving the planning, organizing, or directing of any activity required by the measure. (Guide at 56.)

III. DRAFTING ISSUES

In Article 7 of the measure, contributions made by lobbyists are prohibited if the lobbyist is registered to lobby the governmental agency for which the candidate is seeking election or the government agency of the elected state officer (Guide at 62.) Two problems are presented by this language.

First, unlike Proposition 208, nothing prohibits lobbyists from arranging contributions (San Francisco Chronicle, How Prop. 34 Falls Short of Real Campaign Reform, [visited Oct. 7, 2000] .) As a result, indirect contributions may be permitted. Adding to the problem is the fact that lobbyists not falling within the purview of the initiative would not be prohibited from making contributions. Thus, a lobbyist restricted by the language of Proposition 34 might simply arrange to make contributions through unrestricted lobbyists.

Second, Proposition 34 contains no definition of "governmental agency" as used in the lobbyist restrictions in Article 7. The Political Reform Act defines "agency" as "state agency or local government agency" and further defines "state agency" as including "every state office, department, division, bureau, board and commission, and the Legislature." (Cal. Gov't. Code §§82003, 82049.) However, it is difficult to determine whether use of the term "governmental agency" in Proposition 34, instead of a term defined in the Act, has significance as to which government entities actually are covered by the lobbying prohibition.

Individuals may not contribute more than $25,000 to political parties for the purpose of making contributions to candidates but may contribute unlimited amounts to parties for other purposes. (Guide at 58.) Under Proposition 34, there are no limits to the amount political parties can contribute to candidates. Consequently, large sums of money can be funneled from special interests into the campaigns of candidates through the party system.

IV. CONSTITUTIONAL ANALYSIS

Ballot initiatives may not violate the Constitution. (Citizens Against Rent Control / Coalition For Fair Housing v. City of Berkeley, 454 U.S. 290, 295 [1981].) Nor may a state radically interfere with a candidate's First Amendment rights in its regulation of elections. (Eu v. San Francisco County Democratic Cent. Comm., 489 U.S. 214, 222 [1989].)

A. First Amendment Issues

Buckley v. Valeo is the seminal U.S. Supreme Court case in the realm of campaign finance reform. The Buckley Court noted that campaign contribution and expenditure limits tread in the area of fundamental First Amendment activities -- political speech, expression, and association. As a result, any such limitation must be scrutinized by the Court under the First Amendment. (Buckley v. Valeo, 424 U.S. 1, 14-15 [1976].)

The Court upheld and applied Buckley's First Amendment concepts in its January 2000 decision in Nixon v. Shrink Missouri Government PAC. (Nixon v. Shrink Missouri Government PAC, 528 U.S. 377 [2000].) Limits on campaign contributions, disclosures, and transfers between candidates are subjected to "exacting scrutiny" by courts. The major portions of Proposition 34 are analyzed below according to Buckley, Nixon, and other related cases.

1. Limits on Campaign Contributions and Expenditures

According to the Supreme Court, a contribution limit involving a "significant interference" with First Amendment associational rights can only be justified if the government's regulations are "closely drawn" to match a "sufficiently important interest" -- although the dollar amount need not be finely tuned. (Buckley at 25, 30.) Under Buckley's test, the Court essentially asked whether contribution limits were "so radical in effect as to render political association ineffective, drive the sound of a candidate's voice below the level of notice, and render contributions pointless". (Id. at 21.)

According to the Court, restrictions on campaign contributions constitute a significant interference with associational rights. (Id. at 24, 25.)

Among the asserted purposes of Proposition 34 is the prevention of the appearance of corruption of candidates for public office. (SB 1225, Section 1 [Cal. 2000].) In Buckley, the Court held such an interest to be sufficiently important to justify an interference with associational rights. (Buckley at 25-26.) The question remains open, however, as to whether Proposition 34's campaign contribution limits are closely drawn to achieve this purpose.

In Nixon, the Court dealt with a Missouri statute which imposed limits of between $275 and $1,075 on campaign contributions to candidates for state office. The Court upheld the statute, in a 6-3 decision, because its contribution limits were "closely drawn" to achieve the government's purpose of preventing the appearance of corruption in the electoral process. (Nixon at 908, 909.) In essence, Missouri's contribution limits did not prevent the candidates and political committees from "amass[ing] the resources necessary for effective advocacy". (Id. at 909.) This finding was based on the fact that candidates had been able to amass large campaign war chests after the statute went into effect. Additionally, a study found that prior to the limits going into effect, nearly 97% of all contributors to candidates for state auditor donated less than $2000. The Court held, therefore, that candidates were still able to amass the resources necessary to get their message across without severe interference. (Nixon at 909.)

A brief survey of on-line disclosures of contributions to California state office candidates reveals that a majority of contributions fall within the limits proposed by Proposition 34. (Secretary of State, CalAccess, California Automated Lobbying and Campaign Contribution and Expenditure Search System: Contributions, [visited Sept. 13, 2000] .) However, the ability of candidates to amass sufficient money has not been proven. Such evidence would not arise until after Proposition 34 went into effect.

Regardless, the apparently minimal impact on campaign contributions would seem to bring the initiative within the acceptable bounds of Nixon. Because candidates can likely raise nearly as much money with the restrictions as they could without, the "radical" limitations envisioned as unconstitutional in Buckley are not present. Proposition 34 is, more likely than not, closely drawn to achieve the legitimate purpose of preventing the appearance of electoral corruption. As a result, its limits are likely valid under "exacting" First Amendment scrutiny.

2. Limits on Transfers of Funds Between State Candidates

Limiting the transfer of campaign funds between candidates closes a potential loophole in Proposition 34. If such transfers are allowed, contributors can effectively circumvent contribution limits by legally funneling unlimited funds through various candidates in order to support the contributor's target candidate.

The U.S. Supreme Court has validated election regulations which seek to limit opportunities to do indirectly that which is prohibited directly -- namely, laundering unlimited campaign contributions through other candidates. (California Med. Ass'n v. FEC, 453 U.S. 182, 198 [1981].) In fact, the federal court for the Eastern District of California has intimated that a total ban on such practices may be permissible. (Service Employees Int'l Union AFL-CIO v. FPPC, 747 F.Supp. 580 [E.D. Cal. 1990].) Since Proposition 34 only envisions limits on such transfers, and those limits are intended to close a loophole in what is presumably a constitutionally sound campaign contribution and expenditure regulatory scheme, this provision is likely valid.

3. Voluntary Spending Limits

States may not prevent candidates from expending money for their own election. Such a restraint is a direct limitation on political speech and is invalid under the First Amendment. (Buckley at 44.) In a footnote in the Buckley opinion, however, the Court noted that a state may constitutionally condition benefits on a candidate's voluntary agreement to abide by set expenditure limitations. (Id. at 57 n.65.) Since the state is not forcing candidates to forgo their First Amendment rights, there is no constitutional violation.

Proposition 34 conditions two benefits on candidates voluntarily accepting set expenditure limits. First, eligible candidates have access to otherwise unavailable advertising space in state ballot pamphlets. (Guide at 62.) Second, candidates are identified in the pamphlets as having accepted the voluntary spending limits. (Id.) These conditioned benefits are directly analogous to the situation postulated in Buckley as being constitutionally permitted. Under Proposition 34, candidates are not forced to forgo their First Amendment right to political expression. Thus, the voluntary spending limits are presumably valid.

4. Campaign Disclosure Requirements

In Buckley, the U.S. Supreme Court analyzed the constitutional validity of a federal statute requiring persons contributing funds on behalf of a candidate to file a statement with the Federal Election Commission. The Court noted that disclosure requirements may seriously infringe on the privacy of association and belief guaranteed by the First Amendment, thus the government's interest in requiring disclosure must survive exacting scrutiny. (Buckley at 64.) The Court balanced the benefit of disclosure to the public against the harm it inflicts upon political candidates. It held that candidates must prove that funds will not be donated due to contributors' fears of public reprisal for their political associations. Since the parties in Buckley did not prove this element, the Court found that the scales tipped in favor of the government. Therefore, the government's interests in informing the electorate and preventing the appearance of corruption survived the Court's scrutiny. (Id. at 72.)

Proposition 34 has the declared purpose of informing the public and preventing the appearance of electoral corruption. (SB 1223 §1.) This interest seems to outweigh any potential associational harm resulting from contributors' fear of disclosure. Campaign finance disclosure requirements have been pervasive since the adoption of the Political Reform Act in 1974. In spite of those conditions, the flow of campaign contributions has shown no signs of abating.

Buckley held that a "substantial relation" must exist between the government's interest and the information required to be disclosed. (Buckley at 64.) Such a relationship was found to exist between the government's interest in informing the electorate and preventing the appearance of corruption and the disclosure of identities of persons giving money expressly to advocate candidates for office.

Similarly, a substantial relationship seems to exist between Proposition 34's disclosure requirements and the government's asserted interests. The declarations required by the measure simply increase the amount of information available to the public in regards to financing of state campaigns. The more exhaustive such data is, the more likely that the public perception of shadow influences on candidates and campaigns is diminished. Consequently, the appearance of corruption in the electoral process is diminished.

The refusal of California courts to interfere with past campaign finance disclosure requirements militates heavily in favor of the validity of similar provisions in Proposition 34. (See Socialist Workers 1974 California Campaign Committee v. Brown, 53 Cal. App. 3d 879 [1976].)

5. Limits on Lobbyist Contributions

In FPPC v. Superior Court of Los Angeles County, the California Supreme Court dealt with a challenge to a portion of the Political Reform Act of 1974, which entirely prohibited campaign contributions by lobbyists. The Court held that such a restriction substantially restricted their First Amendment rights of association. Analyzing the provision under the Buckley test, it found that the statute was not closely drawn to achieve the government's purpose of preventing the appearance of corruption. Specifically, it found that the total ban on contributions was overbroad. Contributions were banned even if a lobbyist had never had an opportunity to lobby a candidate. In addition, the statute did not discriminate between large and small contributions. As a result, the statute would reach activities which could not be perceived as corrupt. (FPPC v. Superior Court of Los Angeles, 25 Cal. 3d 33, 45 [1979].)

Proposition 34 avoids these defects. It only prohibits contributions by lobbyists who have actual or potential contact with the candidate or the sought after office. As a consequence, lobbyists' associational freedoms are only restricted in the area where the appearance of corruption is strongest - specifically, where it appears as if influence is being bought. Lobbyists may still contribute money to any other candidate they politically endorse. Therefore, Proposition 34's limits on lobbyist contributions are closely drawn to prevent the appearance of corruption. The ability of a lobbyist to freely associate does not appear to be radically restricted.

V. PUBLIC POLICY CONSIDERATIONS

Campaign finance reform has become a hot button issue nationwide. The amount of money spent on campaigns and the gap in funding between election winners and losers has grown exponentially in the past quarter century. For instance, in 1998, the average California Senate race cost nearly a quarter million dollars. At an average of $144,000, Assembly races were not far behind. Between 1976 and the late 1990's, the gap in spending between Assembly victory and defeat increased nearly fivefold. (California Secretary of State, 1998 California General Election Campaign Receipts, Expenditures, Figure 7 [visited Sept. 17, 2000], .) Thus, the need for candidates to acquire adequate funding in order to run viable campaigns is starkly evident. At the same time, however, the public perceives that colossal amounts of money are deciding elections instead of ideological positions. Limiting campaign contributions and expenditures is seen as a way to even the playing field. The perception of such limits is that they will decrease the ability of candidates with Herculean bankrolls to drown out the message of lesser-funded competitors. At the same time, office seekers will be allowed to raise enough money to effectively communicate their message. The debate over Proposition 34 centers on its effectiveness in achieving these policy aspirations.

A. Proponents' Arguments

The proponents of Proposition 34 include the National Council of Senior Citizens, the Bipartisan Commission on the Political Reform Act, the Committee for Constitutional Campaign Reform, Senator John Burton (D - San Francisco), Dan Stanford (formerly of FPPC), Lee Baca (Los Angeles County Sheriff), George Zenovich (Retired Associate Justice, 5th District Court of Appeal), Assembly Speaker Robert Herzberg (D - Van Nuys), Senator Ross Johnson (R - Irvine), Assembly Majority Leader Kevin Shelley (D - San Francisco), and Senator Kevin Murray (D - Los Angeles).

According to Senator Burton, the author of Proposition 34, "This [measure] is a big step toward reform. It doesn't include every reform I'd like, and it's not the last look we'll take at reform, but I've learned you can't kill the good waiting for the perfect". (Press Release, Committee Unveils Campaign Finance Reform Proposal For Voters To Approve, [visited Sept. 9, 2000] .) In essence, the proponents argue that the limits in the initiative are tough enough to prevent huge donations by special interest groups, while at the same time reasonable enough to be upheld by courts. (Voter Pamphlet at 16.)It would offer immediate reform, rather than the limbo of the court-stalled Proposition 208. And, as one noted commentator says, it is "highly questionable whether any reform could both pass constitutional muster and effectively reduce the commerce in political money". (Dan Walters, A Sneak Attack or Real Reform?, [visited Sept. 9, 2000] .) Thus, it is imperfect, but might be the best that can be done.

B. Opponents' Arguments

Opponents of Proposition 34 include Tony Miller, (Californians Against Phony "Reform"), California Common Cause, California League of Women Voters, American Association of Retired Persons - California, Lonni Granlund (Western Group), Assemblyman Brett Granlund, and Senator Bill Morrow.

According to Californians Against Phony "Reform", Proposition 34 is an attempt by politicians to undo the true reforms contained in Proposition 208. They assert that Proposition 208 is the true will of the voters, is significantly more restrictive, and is likely to be reinstated in light of the recent Nixon decision. (Californians Against Phony "Reform", No on 34, [visited Sept. 9, 2000] .)

Proposition 34 was rushed through both houses of the Legislature without public comment in order to place it on the November ballot. The Political Reform Act's 2/3 vote requirement for amendments was circumscribed. The initiative was placed on the ballot in order to avoid a lack of sufficient support in the legislature. According to some opponents, it therefore appears that politicians are trying to make an end-run around the strict limits of Proposition 208. (Dan Walters, A Sneak Attack or Real Reform?, [visited Sept. 10, 2000] .)

Opponents are also anxious over the allowance of unlimited contributions to candidates by political parties. They fear that special influence will be shifted from one target to another. These critics charge that this apparent loophole amounts to "money laundering." They charge that candidates will be even less accountable, due to the fact that special interest groups donating through parties will not appear in a candidate's campaign finance disclosures. (Scott Lindlaw, Associated Press, Parties Would Be Big Winners Under Proposition 34, North County Times [visited Oct. 9, 2000] .)

Other opponents assert that any limits on campaign contributions and expenditures will limit the amount of information that candidates can communicate to the electorate, thus hampering informed voting. Moreover, they contend that politicians will be forced to concentrate on fund-raising, instead of tending to the public's business. (Voter Pamphlet at 17.)

C. Policy Analysis

As mentioned above by a noted political commentator, achieving strict campaign contribution limits while conforming to constitutional restrictions is a difficult balancing act. Restrictions on campaign finance must be narrowly drawn in order to prevent undue impacts on both a candidate's ability to communicate his political message and a contributor's right of free association and political expression. Severe limits cannot be placed on these rights, and therefore, unless accepted voluntarily, contribution limits may never be confined to a minute sum. Consequently, reality dictates that the political process cannot fully be insulated from the influence of money. However, placing reasonable restrictions on campaign donations may level the contribution playing field. Thus, the appearance that politicians can be bought by the highest bidder is potentially lessened. With candidates forced to make a wider search for funds, there is a lower likelihood that influence will belong to a small cabal of generous contributors.

On the other hand, Proposition 34 may raise more concerns than it alleviates. Senate Bill 1223 could not muster enough support in the Senate and Assembly to become law through the customary legislative process. Legislators were then forced to circumvent the 2/3 vote requirement. By making the bill a ballot initiative, a bare Democratic majority was able to push it through both houses and drop it into the hands of voters. (Dan Walters, A Sneak Attack or Real Reform?, [visited Sept. 10, 2000]

capalert02_20000705.html>.) No public comment was heard on the measure. (Californians Against Phony "Reform", No on 34, [visited Sept. 9, 2000] .)

Proposition 34 will result in additional costs to the state. These expenses will be primarily related to the publication of candidate statements in the state ballot pamphlet and the implementation and enforcement of the provisions of the measure. Costs will be offset to an unknown extent by payments and fines from candidates and political committees. Net costs to the state are estimated at potential levels as high as several million dollars annually. In addition, local governments will incur unknown, but probably not insignificant, costs to implement the voluntary spending limit provisions of the measure. (Guide at 15.)

VI. CONCLUSION

Proposition 34 is the latest in a long line of initiative attempts to enact reform in the realm of campaign contribution and expenditure limits. Each previous initiative has been stalled in the courts on constitutional grounds. This initiative seeks to enact reform while still passing First Amendment muster.

The initiative provides for campaign contribution limits and voluntary expenditure limits; requires certain disclosures in slate mailers, in paid political advertisements, and in certain issue advocacy communication; authorizes intra-candidate transfers of campaign funds and restricts inter-candidate contributions; expands on-line or electronic filing requirements with respect to the receipt of certain contributions and the making of certain independent expenditures; and prescribes the authorized use of surplus campaign funds.

In light of the U.S. Supreme Court decisions in Buckley v. Valeo and Nixon v. Shrink Missouri Government PAC, the major provisions of Proposition 34 appear sound under First Amendment analysis. However, there appear to be some drafting issues in regards to campaign contributions.

Proponents of Proposition 34 assert that by compromising between reform and constitutional validity, the measure achieves the best practical campaign contribution and expenditure limits that are currently available by law. As such, it legally addresses the publicly perceived need for limiting the influence of money in politics. Opponents, however, see Proposition 34 as ambushing the more restrictive provisions of Proposition 208 -- which stands a good chance of being upheld in federal court. Both arguments have some validity, so it remains to be seen which side the voters will support in November.