(Update: On Oct. 7 Gov. Jerry Brown signed into law AB 249, meaning campaigns will now have to be more transparent about the source of their funding.)

Who pays for all those political ads that bombard voters every election season?

An effort to make the answer clearer to the public is squeezing California Democrats between two liberal constituencies. On one side, they’re facing pressure from progressive activists who decry the influence of dark money and want more disclosure. On the other, they’re being lobbied by labor unions, which help fund their campaigns and are fighting a bill meant to bring more transparency.

“This is an issue of who spends tens or hundreds of millions of dollars in campaigns, and do they feel that it would hurt the way that they do business?” said Trent Lange, president of the California Clean Money Campaign.

The face-off comes as California Democrats are already suffering from internal divisions that have cleaved left-wing “Berniecrats” from the party’s established leaders. The camps disagreed openly in the race last month for chair of the state party, and in debates in the Capitol over a proposal to create a single-payer health care system.

For years, Lange and an array of advocacy groups have been pushing for legislation dubbed the “Disclose Act,” which would change California’s political ethics law in two significant ways. It would require campaign ads to more clearly display the names of the groups that paid for them—dictating details such as font size and background color. And it would require that the listed funders are the original source of the money, not masked by a misleading committee name such as “Citizens for Mom and Apple Pie.”

Many grassroots Democrats support the bill. Activists have gathered thousands of signatures on non-binding petitions, and the platform adopted at the California Democratic Party convention this spring states Democrats will “implement full disclosure of funding sources for political advertisements… in a way that clearly and unambiguously identifies the largest major donor.”

Yet various forms of the Disclose Act have failed in the Democratic-controlled Legislature four times in the last seven years. (It requires approval from a two-thirds majority because it changes the state’s Political Reform Act.) A recent version—mired in opposition from some labor unions—couldn’t even get a vote in committee. That prompted a rally outside the Capitol this month where one Democratic lawmaker implored the visiting activists not to give up, and another told them, “this is not an easy fight.

“And you know something? This should be an easy fight,” said Democratic Assemblywoman Laura Friedman of Glendale. “We have nothing to hide. Everybody should know who is funding campaigns, who is funding independent expenditures. This is a small but very important step.”

The bill was on hold while its author, Democratic Assemblyman Jimmy Gomez of Los Angeles, negotiated behind the scenes with key labor unions. He just released a new version, Assembly Bill 249, and it’s been substantially watered down. Instead of applying the proposed disclosure rules to ads for all kinds of political campaigns, the new version would only require the actual funders be listed on ballot measures ads, not candidate ads. Last year in California, ballot measure campaigns drew a record $473 million.

What the new rendition of the bill leaves out is a large and growing sector of political advertising—the commercials and mailers paid for by so-called “independent expenditures.” These super-PAC style groups pool money from several sources and spend it to mount campaigns for and against candidates, but without any involvement from the candidates themselves. Last year, these independent groups spent $80.7 million on campaigns in California as they worked to sway the outcome of numerous legislative races.

The approach is used by interest groups across the political spectrum, including labor unions, oil companies, education advocates, casino-owning tribes, and associations for lawyers, dentists and doctors. Only labor unions have come out publicly against the Disclose Act this year. In a letter explaining why it opposed the earlier version of the bill, the California School Employees Association wrote that it didn’t want new disclosure rules applied to independent expenditures.

“This change would hamper labor’s ability to pool resources and share information to engage in independent expenditures from coalition committees,” said a letter signed by the union’s executive director, Dave Low.

The California Labor Federation, an umbrella group for many unions, also opposed the earlier version of the Disclose Act. Since the independent expenditure disclosure was removed, spokesman Steve Smith said the new version is “much closer to something that we would support.”

The earlier version was unworkable, Smith said, because some independent expenditures are paid for collectively by many different unions, and “there is only so much you can put in a disclaimer without it taking up the entire ad.”

“We want to make it clear to voters that labor unions are funding an advertisement, but it has to be something we can comply with,” he said.

Gomez, who worked as a union’s political director before being elected to the Legislature, said his own background in the labor movement helped him in negotiating the bill.

“I could take a lot of pressure,” said Gomez, who is likely to resign from the Legislature in the coming weeks because he was recently elected to Congress. “I think anybody will be able to carry it over the finish line, but I was able to get very close because I come from labor.”

Lange’s seven-year effort to pass the Disclose Act has outlasted several supportive legislators. Although he’s unhappy that the latest version of the bill leaves out independent expenditures for candidates, Lange said voters will benefit from improved disclosure of the funders behind ballot measure ads.

“We’re not thrilled with it,” Lange said. “But we do want a bill that can pass.”

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Laurel covers California politics for CalMatters, with a focus on power and personalities in the state Capitol. She's been included in the Washington Post’s list of outstanding state politics reporters...