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Analysis by the Legislative Analyst Background Payroll Deductions. Employers make a variety of payroll deductions from their employees' wages, such as deductions for Social Security, income taxes, medical plans, and charitable contributions. The deductions are sent to various organizations, businesses, and governments. Existing law does not require employers to identify how the organizations will use the monies. Political Contributions from Labor Unions. Many workers in California belong to labor unions. In addition, many workers who do not .belong to a union work for a business or organization in which a union provides collective bargaining and representation for all of the employees, both union members and nonmembers. Workers who are represented by unions pay dues or fees to the unions. In most cases, such dues or fees are automatically deducted by the employer from the workers' wages and sent to the union. The union may use some of the dues or fees for political activities. A union member may request that his or her dues or fees not be used for political activities, although there is no legal requirement that the union honor. the request. If 'a nonunion member requests that the fees not be used for itical activities, the .union must comply with the uest. ;ampaign Contributions by Foreign Interests. currently, federal law prohibits a foreign national from making a contribution to or expenditure for a federal, state, or local .election campaign for a candidate for public office. A foreign national includes a foreign government, certain foreign businesses and organizations, and any person who is not a citizen or lawful permanent resident of the United States. Federal law also prohibits a person from accepting a campaign contribution from a .foreign national. . In addition, state law prohibits a foreign/government or business, or a person outside of the U.S. 4vho is not a U.S. citizen, from making a contribution or expenditure in connection with a campaign for a state or local ballot measure. State law also prohibits a person or a political campaign committee from soliciting or accepting a contribution for a ballot measure from a foreign government, business, or person outside the U.S. Political Reform Act. California's Political Reform Act of 1974, an initiative adopted by the voters, establishes guidelines and requirements for political candidates and campaigns. The state.'s Fair Political Practices Commission (FPPC) enforces the requirements of the act. Proposal This proposition makes two primary changes to California's Political Reform Act of 1974. First, it -' ablishes new requirements with regard to payroll luctions for political activities. Second, it establishes in state law a provision similar to federal law prohibiting campaign contributions from a foreign national for a candidate for public office. Payroll Deductions for Political Activities. This proposition requires that, in order for an employer to deduct money from an employee's wages that the employer knows or has reason to know will be used for political campaign activities, the employer must have a signed form from the employee each year authorizing the deduction. These requirements apply to both private and government employers. The measure also requires that, in order for a labor union to use'a portion of the dues or fees it collects for political campaign activities, the union must have a signed form from the worker each year authorizing the use of the money for those activities. The proposition requires that employers and labor unions keep certain records, including a copy of the authorization form. Campaign Contributions by Foreign Nationals. Similar to existing federal law, this measure makes it illegal under state law for any person or political campaign committee to solicit or accept a campaign contribution for a candidate for public office from a foreign national. Enforcement. A violation of the .provisions of the measure would be punishable by the existing criminal and civil penalties established in the Political Reform Act of 1974. The FPPC would be responsible for enforcement. Fiscal Effect The proposition would result in additional costs to the state and local governments in two areas. First, the measure would result in state costs to the FPPC to enforce its provisions. The costs could be offset in part by fines imposed by the FPPC for violations of the measure. The net costs are unknown, but probably are not major. Second, the proposition could result in additional administrative costs to the state and local governments to review payroll deductions of their employees and to keep additional records. The extent of these costs would probably depend on the regulations developed by the FPPC. The State Controller's Office estimates that its annual administrative costs would be up to about $2 million, with one-time costs in the range of $2 million to $5 million. These costs would be offset by fees paid by the businesses, organizations, and unions that receive the monies that are deducted from employee wages, thereby resulting in no net administrative costs to the state. Local governments could incur the same type of administrative costs. The costs to local governments are unknown, but are probably not major, and could be offset by fees. For the text of Proposition 226 see page 73 a- V96