BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1673| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- CONSENT Bill No: AB 1673 Author: Garcia (D) Amended: 4/9/14 in Assembly Vote: 27 SENATE ELECTIONS & CONST. AMEND. COMM. : 5-0, 6/24/14 AYES: Padilla, Anderson, Hancock, Jackson, Pavley SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 75-0, 5/8/14 - See last page for vote SUBJECT : Political Reform Act of 1974: contributions SOURCE : Author DIGEST : This bill provides that a campaign contribution does not include fundraising events held in a home or office if the occupant is not a lobbyist, lobbying firm, or lobbyist employer. ANALYSIS : Existing law: 1. Provides, pursuant to the Political Reform Act (PRA), provides for the comprehensive regulation of campaign financing, including requiring the reporting of campaign contributions and expenditures and imposing other reporting and recordkeeping requirements on campaign committees. CONTINUED AB 1673 Page 2 2. Defines "contribution" for purposes of the PRA as a payment, a forgiveness of a loan, a payment of a loan by a third party, or an enforceable promise to make a payment, except to the extent that full and adequate consideration is received, unless it is clear from the surrounding circumstances that it is not made for political purposes. 3. Does not include in the definition of "contribution" a payment made by an occupant of a home or office for costs related to any meeting or fundraising event held in the occupant's home or office if the costs for the meeting or fundraising event are $500 or less. 4. Prohibits a lobbyist from making, and an elected state officer or candidate for elective state office from accepting, a contribution if the lobbyist is registered to lobby the governmental agency for which the candidate is seeking election or the governmental agency of the elected state officer. This bill: 1. Provides that a payment made by an occupant of a home or an office who is a lobbyist, lobbying firm, or lobbyist employer for costs related to a meeting or fundraising event held in the occupant's home or office is considered a "contribution" under the PRA, regardless of the costs for the meeting or fundraising event. 2. Exempts events held in the home or office of a lobbyist, lobbying firm, or lobbyist employer from a provision of law that provides that a payment made by an occupant of a home or an office for costs related to any meeting or fundraising event held in the occupant's home is not considered a contribution if the costs for the meeting or fundraising event are $500 or less. Background Hosted Fundraisers . The PRA, among other things, requires candidates and committees to disclose contributions made and received and expenditures made in connection with campaign activities. The term "contribution" is defined as any payment for political purposes for which full and adequate consideration CONTINUED AB 1673 Page 3 is not provided to the donor. When individuals or entities make payments in connection with holding a fundraiser for a candidate, such payments ordinarily are considered contributions to the candidate. However, current law allows for some exceptions. For example, payments made by the occupant of a home or office for costs related to any meeting or fundraising event in the occupant's home or office are not considered contributions under the PRA if the costs for the meeting or fundraising event are $500 or less. Although existing law prohibits lobbyists from making contributions to elected state officers or candidates for elected state office if that lobbyist is registered to lobby the governmental agency for which the candidate is seeking election or the governmental agency of the elected state officer, the exception to the definition of the term "contribution" for the purposes of hosted fundraising events does not exclude events hosted by lobbyists. As a result, a lobbyist could hold a fundraiser at his/her home and the cost would not be considered a contribution, as long as the total cost of such an event did not exceed $500. If other parties donate money or goods in connection with the event, their payments must also be counted to determine if $500 has been spent in connection with the fundraiser. This includes goods or services provided by the candidate or any other person attending the event. If the cost of the event exceeds $500, all payments are counted as contributions. Recent Events . In February of this year, the Fair Political Practices Commission (FPPC) approved a settlement in a case in which a registered lobbyist hosted campaign fundraisers for state elective officers and candidates at his house where he provided items such as beverages, flower arrangements, and cigars. The FPPC investigated and determined that the total cost of the fundraisers hosted by the lobbyist at his home, including the value the items provided by the lobbyist, exceeded $500. As a result, the items provided by the lobbyist during the fundraisers constituted non-monetary contributions to the campaign committees of the elective officers and candidates who benefitted from the fundraisers - all violations of the PRA. As a result, the FPPC levied one of the largest penalties against a lobbyist and issued warning letters to the elected officers and candidates who benefitted from the fundraisers. CONTINUED AB 1673 Page 4 FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes SUPPORT : (Verified 8/6/14) California Common Cause ARGUMENTS IN SUPPORT : According to the author's office, this bill bans lobbyists hosting home fundraisers and eliminates the dual standard that allows lobbyists to host at their homes, non-reportable private affair fundraisers for lawmakers, valued under $500, while at the same time limiting direct gifts to lawmakers to only $10 per month. Recent new stories about lavish home parties have brought to light a loophole that allows lobbyist and contributors to circumvent the spirit of campaign finance laws. While lobbyists are prohibited from donating to candidates running for offices they are registered to lobby, they can host fundraisers in their home or office. Under a separate section of law that allows anyone to host campaign fundraisers, lobbyists hold fundraisers in their private homes and offices, claiming that the cost is under $500 - not defined as a reportable contribution. Through this exemption lobbyists can legally connect their clients, who give campaign contributions, with the officials whose decisions they seek to sway. ASSEMBLY FLOOR : 75-0, 5/8/14 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dababneh, Dahle, Daly, Dickinson, Donnelly, Fong, Fox, Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea, Quirk, Quirk-Silva, Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A. Pérez NO VOTE RECORDED: Eggman, Gorell, Mansoor, V. Manuel Pérez, Vacancy CONTINUED AB 1673 Page 5 RM:d 8/6/14 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED