California legislators seek corruption law exemptions for unions, developers

(The Center Square) - California lawmakers are seeking to create an exemption for unions and real estate developers for the state’s anti-corruption laws that place limits on when and how much politicians can accept from interests they’ll be voting or overseeing matters for.

In California, the three largest donor types by sector are organized labor, including public sector unions representing state and local government employees, real estate, including developers seeking permits or regulatory changes, and healthcare, which includes healthcare providers and healthcare worker unions with lucrative government contracts.

By exempting unions and most real estate, the new bill would allow unions representing government employees or workers with government contracts to donate to candidates who will support paying them more, and developers to more transparently donate to politicians who will approve their projects; while businesses and unions typically oppose each other on legislation, their shared interest in maintaining political access have created an unusual alliance.

Under the Political Reform Act of 1974 and the Levine Act, officials are unable to accept donations from interests over $250 for the three months before and after the donor has a proceeding involving some kind of license, permit, or other pertinent decision before the official. Officials who receive a donation over $250 must return the amount over $250 within 30 days of knowing they are voting on or overseeing anything that has to do with the donor.

However, the acts exempted local government officials, who tend to oversee real estate approvals and many union contracts. Notably, interests are free to donate as they wish — within legal limits — after the wait period is over.

SB 1439, passed unanimously without any formal opposition in 2022, closed that loophole for local governments, such as city councils and boards of supervisors, and extended the three month period to 12 months. Officials who have received a donation over $250 must return the amount over $250 within 30 days of knowing they are voting on or overseeing anything that has to do with the donor.

“The problem of special interests seeking to influence local decision-making is longstanding, well-documented, and real,” wrote SB 1439 author State Sen. Steve Glazer, D-Orinda.

However, State Sen. Bill Dodd, D-Napa, says the bill has had some unintended consequences and introduced exemptions to address them.

“By making transparent, direct contributions infeasible, the law essentially freezes out a sector of the community from donating anything directly to the candidates,” Dodd said to the Senate Elections and Constitutional Amendments Committee. “This, unfortunately, produces a very undesirable consequence: independent expenditures pouring into campaigns.”

Independent expenditures in campaigns are essentially parallel campaigns run to support or oppose a candidate or political issue, without official coordination with the candidate or party, and have no donation limits. Political action committees must strictly report spending and donations, while 501c(4) “social welfare” organizations such as the Sierra Club and National Rifle Association often must report spending but not their donors.

Dodd’s exemptions would not only allow for union and most real estate donations, but raises the $250 threshold to $1,000 and shrinks the donation period from 12 months to 9. Currently, donations from one interest are considered in aggregate for the $250 threshold; Dodd’s bill would allow for interests to no longer have donations counted in aggregate, which means various agents could donate up to $1,000 each in support of an interest, with essentially no limit with regards to SB 1439 and the PPA and Levine Acts.

In committee, Democrats and Republicans nearly unanimously passed Dodd’s bill to the Senate floor — save for one “no” vote from State Sen. Catherine Blakespear, who chairs the committee.

“This is essentially a pay-to-play bill … and it’s exempting from ethics rules these two industries,” Blakespear said to the committee before voting no.

Blakespear also pointed out the Fair Political Practices Commission, which oversees California political finance matters, largely exempted unions, except in exceptionally high-value cases, from SB 1439 in an October 2023 guidance.