Will San Jose ban foreign money from local elections?

With campaign season underway, and donations soon to pour in, San Jose officials are looking to make sure money funding local elections is from America.

The San Jose City Council is poised to consider a policy that would prohibit foreign-influenced corporations from making contributions in city races—in hopes that election results reflect the will of residents, rather than wealthy international moguls. Councilmembers David Cohen, Sergio Jimenez and Pam Foley’s co-authored policy is coming back to council on Tuesday after a nearly two-year delay ahead of next year’s election.

“Our elections are supposed to be based on local interests,” Cohen told San José Spotlight. “There have been experiences and other places in the country where a large amount of money has come in from foreign companies with some intent to influence what’s going on in the local election. We just want to make sure that that doesn’t happen in San Jose.”

In the heart of Silicon Valley, tech companies and shareholders have a vested interest in shaping which leaders represent their cities and counties. As a result, they can influence election results with hefty campaign spending through direct donations to candidates or political action committees.

Former President Barack Obama warned about the influence of foreign money in U.S. elections with Citizens United—a 2010 Supreme Court decision that asserted corporations are people and gave them the ability to spend unlimited amounts on election ads and political action committees.

Judges said it would not increase foreign influence in elections, but some cities report that it already has and are taking steps to combat it. With more than 40% of U.S. stocks owned by foreign investors, it’s possible it could happen again—especially in Silicon Valley, said Ron Fein, legal director for nonpartisan nonprofit organization Free Speech for People.

“A surprising number of corporations have substantial amounts of foreign investment,” Fein told San José Spotlight. “That doesn’t mean that they are engaged in hostile actions to deliberately manipulate U.S. elections for diplomatic or strategic purposes. But what it does mean is that corporate decision makers are mindful of these powerful investors and how they can influence the decisions of corporate management.”

San Jose defines foreign influence as more than 1% ownership by an individual foreign national or more than 5% ownership by multiple foreign nationals. That would prevent nearly every member of the S&P 500 from making political expenditures in city elections, including Silicon Valley tech giants Apple, Alphabet (Google) and Meta, according to Free Speech for People.

Fein said the city’s policy will close an unintended loophole. Federal and state laws already prohibit foreign individuals—other than green card holders—governments, companies and other groups from making contributions or independent expenditures to candidates. However, foreign companies with domestic subsidiaries can make donations as long as the donations are made by a U.S. citizen or permanent resident.

“So (a foreigner) can buy enormous stakes in U.S. corporations that have enhanced influence over corporate decision making,” Fein said. “Those corporations then can spend a ton of money on local elections.”

Cohen said San Jose hasn’t seen massive spending from such corporations, but he doesn’t want to wait until it’s too late to pass legislation to limit it.

The proposed policy was part of a larger discussion happening at the state and local level to make campaigns more fair and transparent following a heated and costly 2020 election. San Jose leaders toyed with the idea of a pilot program to publicly finance campaigns and make campaign mailers disclose top donors in an effort to show who is paying for ads. The state also implemented the Levine Act this year, which seeks to curb pay for play politics by requiring a councilmember who received donations from a lobbyist to recuse themselves from votes that same lobbyist worked on.

The San Jose City Council meets Tuesday at 1:30 p.m. Learn how to watch and participate.

This story will be updated.

Contact Jana at [email protected] or follow @Jana_Kadah on X, formerly known as Twitter.