SJ City Council Passes Draft Proposal To Bar Political Donations by Foreign-Owned Corps

The San Jose City Council voted 9-1 on Tuesday on a piece of draft legislation to prohibit foreign-influenced corporations from making political contributions to any city elections in San Jose.

According to the passed draft proposal, the new campaign finance law would not allow corporations with one percent or more ownership by a single foreign national or 5% or more ownership by multiple foreign nationals from making political expenditures in city elections. While the proposal on Tuesday was only a policy memorandum on final draft ordinance language, its passage was seen as a major indicator that the San Jose City Council would pass the ordinance in the coming weeks.

Under the proposed law, most S&P 500 members would not be able to make contributions or spend money on city candidates through means such as political action committees. In San Jose, this would effectively block out Silicon Valley heavyweights such as Alphabet (Google), Apple, and Meta (Facebook).

If enacted, San Jose would join cities such as Seattle and St. Petersburg, Florida who have passed similar ordinances in the past few years. Seattle, which passed their ordinance in 2020, made their restrictions after companies in the city started giving up to seven-figure sums to local candidates, such as a Seattle City Council candidate who received $1 million alone from Amazon through PAC contributions. By moving up their ordinance, San Jose lawmakers hope to stop similar contributions from being given there and sop foreign-influence in city campaigns. In addition to San Jose, state-level bills are currently under consideration in the California and New York legislatures, with Congress also currently considering such a bill.

Council members maintained on Tuesday that the draft proposal was passed to maintain election integrity and to keep lawmakers accountable to taxpayers and not corporations.

“In my mind, election integrity and where the money flows from and how it flows into the city elections and such, that to me is at the very core of our democracy,” Councilman Sergio Jimenez said on Tuesday.

Outside organizations, such as the Center for American Progress think tank and Free Speech for People, also agreed.

“The proposed law is an important tool in protecting San Jose’s elections as foreign investors in 2019 owned 40 percent of U.S. corporation’s equity compared to four percent in 1986,” said Center for American Progress senior fellow Michael Sozan on Tuesday. “This is a common sense recommended ordinance that would strengthen the right of San Jose’s residents to determine the political and economic future of their city, it would build public trust and it would help ensure lawmakers are accountable to voters instead of foreign-influenced corporations.”

President of Free Speech For People John Bonifaz added, “The San Jose City Council’s passage of this model bill marks a major victory for our democracy. Across the country, legislators are working to advance this critical reform to address the threat of foreign corporate money in our elections and to defend our democracy. We congratulate San Jose for leading the way in addressing this threat and in protecting its elections.”

Concern over draft language by many city lawmakers

Despite the passage on Tuesday, many San Jose lawmakers expressed concern over the proposed ordinance, as it could allow picking and choosing which foreign influence is allowed in elections. It also could cause numerous lawsuits to be filed against the city due to the broad barring of corporate political donations.

“We have real issues like homelessness, trash on our streets, lack of enough police officers, especially in traffic enforcement as many know I have a real problem with,” said Councilwoman Dev Davis on Tuesday, the sole council member to vote against the ordinance. “I just think we should not be passing questionable and questionably constitutional issues like frankly the gun ordinance or this proposed action.”

Mayor Sam Liccardo also shared his concern on Tuesday over the ordinance only adding to the number of high-cost lawsuits facing the city already this year, including one concerning a recently passed ordinance required firearm insurance for all city gunowners.

“My concern is that we’re passing a law that would essentially create a blanket preclusion and that’s a great opportunity for some litigant to come after us and run us around with a lot of litigation,” noted Mayor Liccardo.

The ordinance is expected to go in front of the San Jose City Council in the coming weeks.