Amended in Assembly April 8, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1692

Introduced by Assembly Member Garcia

February 13, 2014

An act to amend Sections 85304, 85304.5, 89511, 89512, 89513, and 89519 of the Government Code, relating to the Political Reform Act of 1974.

LEGISLATIVE COUNSEL’S DIGEST

AB 1692, as amended, Garcia. Political Reform Act of 1974.

(1) The Political Reform Act of 1974 provides for the comprehensive regulation of campaign financing, including requiring the reporting of campaign contributions and expenditures, as defined, and imposing other reporting and recordkeeping requirements on campaign committees, as defined. The Fair Political Practices Commission administers and enforces the act. A violation of the act’s provisions is punishable as a misdemeanor.

The act authorizes certain candidates and elective officers to establish a separate legal defense fund campaign account to defray attorney’s fees and other related legal costs incurred in the defense of the candidate or elective officer who is subject to one or more civil, criminal, or administrative proceedings arising directly out of the conduct of an election campaign, the electoral process, or the performance of the officers’ governmental activities and duties, as specified.

This bill would define the phrase “attorney’s fees and other related legal costs” for purposes of legal defense funds to include only attorney’s fees and other legal costs related to the defense of the candidate or officer and administrative costs directly related to compliance with the act. The definition would exclude certain other costs, including payment or reimbursement for a fine, penalty, judgment or settlement, except as specified.

The act provides that all contributions deposited into a campaign account are deemed to be held in trust for expenses associated with the election of the candidate or for expenses associated with holding offices. The act provides that an expenditure to seek or hold office is within the lawful execution of this trust if it is reasonably related to a political, legislative, or governmental purpose. Expenditures that confer a substantial personal benefit must be directly related to a political, legislative, or governmental purpose. The act prohibits the use of campaign funds for fines, penalties, judgments, or settlements, except for certain parking fines and for actions for which attorney’s fees may be paid with contributions under the act.

The bill would prohibit an expenditure of campaign funds begin delete of more than $200 end delete for a fine, penalty, judgment, or settlement relating to an expenditure of campaign funds that resulted in a personal benefit to the candidate or officer if it is determined that the expenditure was not reasonably related to a political, legislative, or governmental purpose. The bill would also begin delete impose the $200 limitation with respect to end delete begin insert prohibit an expenditure of campaign funds for end insert a fine, penalty, judgment, or settlement relating to an expenditure of campaign funds that resulted in a substantial personal benefit to the candidate or officer if it is determined that the expenditure was not directly related to a political, legislative, or governmental purpose. The bill would also apply the above-described definition for “attorney’s fees and other costs” for purposes of the article concerning campaign fund expenditures.

(2) By expanding the scope of an existing crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(3) The Political Reform Act of 1974, an initiative measure, provides that the Legislature may amend the act to further the act’s purposes upon a 2⁄3 vote of each house and compliance with specified procedural requirements.

This bill would declare that it furthers the purposes of the act.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 85304 of the Government Code is
amended to read:

85304.  

(a) A candidate for elective state office or an elected
state officer may establish a separate account to defray attorney’s
fees and other related legal costs incurred for the candidate’s or
officer’s legal defense if the candidate or officer is subject to one
or more civil or criminal proceedings or administrative proceedings
arising directly out of the conduct of an election campaign, the
electoral process, or the performance of the officer’s governmental
activities and duties. These funds may be used only to defray those
attorney fees and other related legal costs.

(b) A candidate may receive contributions to this account that
are not subject to the contribution limits set forth in this article.
However, all contributions shall be reported in a manner prescribed
by the commission.

(c) Once the legal dispute is resolved, the candidate shall dispose
of any funds remaining after all expenses associated with the
dispute are discharged for one or more of the purposes set forth in
paragraphs (1) to (5), inclusive, of subdivision (b) of Section
89519.

(d) (1) For purposes of this section and Section 85304.5,
“attorney’s fees and other related legal costs” includes only the
following:

(A) Attorney’s fees and other legal costs related to the defense
of the candidate or officer.

(B) Administrative costs directly related to compliance with the
requirements of this title.

(2) “Attorney’s fees and other related legal costs” does not
include expenses for fundraising, media or political consulting
fees, mass mailing or other advertising, or, except as expressly
authorized by subdivision (c) of Section 89513, a payment or
reimbursement for a fine, penalty, judgment or settlement, or a
payment to return or disgorge contributions made to any other
committee controlled by the candidate or officer.

SEC. 2.  

Section 85304.5 of the Government Code is amended
to read:

85304.5.  

(a) A candidate for elective office other than an
elective state office or an elected officer other than an elected state
officer may establish a separate account pursuant to subdivision
(a) of Section 85304 and may use these funds only to defray
attorney’s fees and other related legal costs.

(b) A candidate for an elective office other than an elective state
office may receive contributions to the separate account subject
to any limitations provided by local ordinance. However, all
contributions to these separate accounts shall be reported in a
manner prescribed by the commission.

(c) Once the legal dispute is resolved, the candidate or elected
officer shall dispose of any funds remaining in the separate
accounts after all expenses associated with the dispute are
discharged for one or more of the purposes set forth in paragraphs
(1) to (5), inclusive, of subdivision (b) of Section 89519.

(d) For purposes of this section, “attorney’s fees and other
related legal costs” has the same meaning as in Section 85304.

SEC. 3.  

Section 89511 of the Government Code is amended
to read:

89511.  

(a) This article applies to campaign funds held by
candidates for elective office, elected officers, controlled
committees, ballot measure committees, committees opposed to
a candidate or measure, and any committee which qualifies as a
committee pursuant to subdivision (a) of Section 82013.

(b) (1) For purposes of this chapter, “campaign funds” includes
any contributions, cash, cash equivalents, and other assets received
or possessed by a committee as defined by subdivision (a) of
Section 82013.

(2) For purposes of this chapter, “committee” means a controlled
committee, ballot measure committee, committee opposed to a
candidate or measure, and any committee which qualifies as a
committee pursuant to subdivision (a) of Section 82013.

(3) For purposes of this chapter, “substantial personal benefit”
means an expenditure of campaign funds which results in a direct
personal benefit with a value of more than two hundred dollars
($200) to a candidate, elected officer, or any individual or
individuals with authority to approve the expenditure of campaign
funds held by a committee.

(4) For purposes of this article, “household” includes the
candidate’s or elected officer’s spouse, dependent children, and
parents who reside with the candidate or elected officer.

(5) (A) For purposes of this article, “attorney’s fees and other
costs” includes only the following:

(i) Attorney’s fees and other legal costs related to the defense
of the candidate or officer.

(ii) Administrative costs directly related to compliance with the
requirements of this title.

(B) “Attorney’s fees and other costs” does not include expenses
for fundraising, media or political consulting fees, mass mailing
or other advertising, or, except as expressly authorized by
subdivision (c) of Section 89513, a payment or reimbursement for
a fine, penalty, judgment or settlement, or a payment to return or
disgorge contributions made to any other committee controlled by
the candidate or officer.

SEC. 4.  

Section 89512 of the Government Code is amended
to read:

89512.  

(a) An expenditure to seek office is within the lawful
execution of the trust imposed by Section 89510 if it is reasonably
related to a political purpose. An expenditure associated with
holding office is within the lawful execution of the trust imposed
by Section 89510 if it is reasonably related to a legislative or
governmental purpose. Expenditures which confer a substantial
personal benefit shall be directly related to a political, legislative,
or governmental purpose.

(b) Except as expressly authorized by this article, an expenditure
for a fine, penalty, judgment, or settlement is not within the lawful
execution of the trust imposed by Section 89510.

SEC. 5.  

Section 89513 of the Government Code is amended
to read:

89513.  

This section governs the use of campaign funds for the
specific expenditures set forth in this section. It is the intent of the
Legislature that this section shall guide the interpretation of the
standard imposed by Section 89512 as applied to other expenditures
not specifically set forth in this section.

(a) (1) Campaign funds shall not be used to pay or reimburse
the candidate, the elected officer, or any individual or individuals
with authority to approve the expenditure of campaign funds held
by a committee, or employees or staff of the committee or the
elected officer’s governmental agency for travel expenses and
necessary accommodations except when these expenditures are
directly related to a political, legislative, or governmental purpose.

(2) For the purposes of this section, payments or reimbursements
for travel and necessary accommodations shall be considered as
directly related to a political, legislative, or governmental purpose
if the payments would meet standards similar to the standards of
the Internal Revenue Service pursuant to Sections 162 and 274 of
the Internal Revenue Code for deductions of travel expenses under
the federal income tax law.

(3) For the purposes of this section, payments or reimbursement
for travel by the household of a candidate or elected officer when
traveling to the same destination in order to accompany the
candidate or elected officer shall be considered for the same
purpose as the candidate’s or elected officer’s travel.

(4) Whenever campaign funds are used to pay or reimburse a
candidate, elected officer, his or her representative, or a member
of the candidate’s household for travel expenses and necessary
accommodations, the expenditure shall be reported as required by
Section 84211.

(5) Whenever campaign funds are used to pay or reimburse for
travel expenses and necessary accommodations, any mileage credit
that is earned or awarded pursuant to an airline bonus mileage
program shall be deemed personally earned by or awarded to the
individual traveler. Neither the earning or awarding of mileage
credit, nor the redeeming of credit for actual travel, shall be subject
to reporting pursuant to Section 84211.

(b) (1) Campaign funds shall not be used to pay for or reimburse
the cost of professional services unless the services are directly
related to a political, legislative, or governmental purpose.

(2) Expenditures by a committee to pay for professional services
reasonably required by the committee to assist it in the performance
of its administrative functions are directly related to a political,
legislative, or governmental purpose.

(3) Campaign funds shall not be used to pay health-related
expenses for a candidate, elected officer, or any individual or
individuals with authority to approve the expenditure of campaign
funds held by a committee, or members of his or her household.
“Health-related expenses” includes, but is not limited to,
examinations by physicians, dentists, psychiatrists, psychologists,
or counselors, expenses for medications, treatments or medical
equipment, and expenses for hospitalization, health club dues, and
special dietary foods. However, campaign funds may be used to
pay employer costs of health care benefits of a bona fide employee
or independent contractor of the committee.

(c) Campaign funds shall not be used to pay or reimburse fines,
penalties, judgments, or settlements, except those resulting from
either of the following:

(1) Parking citations incurred in the performance of an activity
that was directly related to a political, legislative, or governmental
purpose.

(2) Any other action for which payment of attorney’s fees from
contributions would be permitted pursuant to this title. However,
begin delete an expenditure of campaign funds shall in no event exceed two
hundred dollars ($200) for payment of end delete begin insert campaign funds shall not
be used to pay end insert a fine, penalty, judgment, or settlement relating to
an expenditure of campaign funds that resulted in either of the
following:

(A) A personal benefit to the candidate or officer if it is
determined that the expenditure was not reasonably related to a
political, legislative, or governmental purpose.

(B) A substantial personal benefit to the candidate or officer if
it is determined that the expenditure was not directly related to a
political, legislative, or governmental, purpose begin insert . end insert

(d) Campaign funds shall not be used for campaign, business,
or casual clothing except specialty clothing that is not suitable for
everyday use, including, but not limited to, formal wear, if this
attire is to be worn by the candidate or elected officer and is directly
related to a political, legislative, or governmental purpose.

(e) (1) Except where otherwise prohibited by law, campaign
funds may be used to purchase or reimburse for the costs of
purchase of tickets to political fundraising events for the attendance
of a candidate, elected officer, or his or her immediate family, or
an officer, director, employee, or staff of the committee or the
elected officer’s governmental agency.

(2) Campaign funds shall not be used to pay for or reimburse
for the costs of tickets for entertainment or sporting events for the
candidate, elected officer, or members of his or her immediate
family, or an officer, director, employee, or staff of the committee,
unless their attendance at the event is directly related to a political,
legislative, or governmental purpose.

(3) The purchase of tickets for entertainment or sporting events
for the benefit of persons other than the candidate, elected officer,
or his or her immediate family are governed by subdivision (f).

(f) (1) Campaign funds shall not be used to make personal gifts
unless the gift is directly related to a political, legislative, or
governmental purpose. The refund of a campaign contribution
does not constitute the making of a gift.

(2) Nothing in this section shall prohibit the use of campaign
funds to reimburse or otherwise compensate a public employee
for services rendered to a candidate or committee while on
vacation, leave, or otherwise outside of compensated public time.

(3) An election victory celebration or similar campaign event,
or gifts with a total cumulative value of less than two hundred fifty
dollars ($250) in a single year made to an individual employee, a
committee worker, or an employee of the elected officer’s agency,
are considered to be directly related to a political, legislative, or
governmental purpose. For purposes of this paragraph, a gift to a
member of a person’s immediate family shall be deemed to be a
gift to that person.

(g) Campaign funds shall not be used to make loans other than
to organizations pursuant to Section 89515, or, unless otherwise
prohibited, to a candidate for elective office, political party, or
committee.

begin delete

SEC. 6.  

Section 89519 of the Government Code is amended
to read:

89519.  

(a) Upon leaving any elected office, or at the end of
the postelection reporting period following the defeat of a candidate
for elective office, whichever occurs last, campaign funds raised
after January 1, 1989, under the control of the former candidate
or elected officer shall be considered surplus campaign funds and
shall be disclosed pursuant to Chapter 4 (commencing with Section
84100).

(b) Surplus campaign funds shall be used only for the following
purposes:

(1) The payment of outstanding campaign debts or elected
officer’s expenses.

(2) The repayment of contributions.

(3) Donations to any bona fide charitable, educational, civic,
religious, or similar tax-exempt, nonprofit organization, where no
substantial part of the proceeds will have a material financial effect
on the former candidate or elected officer, any member of his or
her immediate family, or his or her campaign treasurer.

(4) Contributions to a political party committee, provided the
campaign funds are not used to support or oppose candidates for
elective office. However, the campaign funds may be used by a
political party committee to conduct partisan voter registration,
partisan get-out-the-vote activities, and slate mailers as that term
is defined in Section 82048.3.

(5) Contributions to support or oppose any candidate for federal
office, any candidate for elective office in a state other than
California, or any ballot measure.

(6) The payment for professional services reasonably required
by the committee to assist in the performance of its administrative
functions, including payment for attorney’s fees and other costs
for litigation which arises directly out of a candidate’s or elected
officer’s activities, duties, or status as a candidate or elected officer,
including, but not limited to, an action to enjoin defamation,
defense of an action brought of a violation of state or local
campaign, disclosure, or election laws, and an action from an
election contest or recount.

(c) For purposes of this section, the payment for, or the
reimbursement to the state of, the costs of installing and monitoring
an electronic security system in the home or office, or both, of a
candidate or elected officer who has received threats to his or her
physical safety shall be deemed an outstanding campaign debt or
elected officer’s expense, provided that the threats arise from his
or her activities, duties, or status as a candidate or elected officer
and that the threats have been reported to and verified by an
appropriate law enforcement agency. Verification shall be
determined solely by the law enforcement agency to which the
threat was reported. The candidate or elected officer shall report
any expenditure of campaign funds made pursuant to this section
to the commission. The report to the commission shall include the
date that the candidate or elected officer informed the law
enforcement agency of the threat, the name and the telephone
number of the law enforcement agency, and a brief description of
the threat. No more than five thousand dollars ($5,000) in surplus
campaign funds may be used, cumulatively, by a candidate or
elected officer pursuant to this subdivision. Payments made
pursuant to this subdivision shall be made during the two years
immediately following the date upon which the campaign funds
become surplus campaign funds. The candidate or elected officer
shall reimburse the surplus fund account for the fair market value
of the security system no later than two years immediately
following the date upon which the campaign funds became surplus
campaign funds. The campaign funds become surplus campaign
funds upon sale of the property on which the system is installed,
or prior to the closing of the surplus campaign fund account,
whichever comes first. The electronic security system shall be the
property of the campaign committee of the candidate or elected
officer.

end delete

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 89519 of the end insert begin insert Government Code end insert begin insert , as amended
by Chapter 9 of the Statutes of 2014, is amended to read: end insert

89519.  

(a) Upon the 90th day after leaving an elective office,
or the 90th day following the end of the postelection reporting
period following the defeat of a candidate for elective office,
whichever occurs last, campaign funds under the control of the
former candidate or elected officer shall be considered surplus
campaign funds and shall be disclosed pursuant to Chapter 4
(commencing with Section 84100).

(b) Surplus campaign funds shall be used only for the following
purposes:

(1) The payment of outstanding campaign debts or elected
officer’s expenses.

(2) The repayment of contributions.

(3) Donations to a bona fide charitable, educational, civic,
religious, or similar tax-exempt, nonprofit organization, where no
substantial part of the proceeds will have a material financial effect
on the former candidate or elected officer, any member of his or
her immediate family, or his or her campaign treasurer.

(4) Contributions to a political party committee, provided the
campaign funds are not used to support or oppose candidates for
elective office. However, the campaign funds may be used by a
political party committee to conduct partisan voter registration,
partisan get-out-the-vote activities, and slate mailers as that term
is defined in Section 82048.3.

(5) Contributions to support or oppose a candidate for federal
office, a candidate for elective office in a state other than
California, or a ballot measure.

(6) The payment for professional services reasonably required
by the committee to assist in the performance of its administrative
functions, including payment for attorney’s fees begin insert and other costs end insert
for litigation that arises directly out of a candidate’s or elected
officer’s activities, duties, or status as a candidate or elected officer,
including, but not limited to, an action to enjoin defamation,
defense of an action brought for a violation of state or local
campaign, disclosure, or election laws, and an action from an
election contest or recount.

(c) For purposes of this section, the payment for, or the
reimbursement to the state of, the costs of installing and monitoring
an electronic security system in the home or office, or both, of a
candidate or elected officer who has received threats to his or her
physical safety shall be deemed an outstanding campaign debt or
elected officer’s expense, provided that the threats arise from his
or her activities, duties, or status as a candidate or elected officer
and that the threats have been reported to and verified by an
appropriate law enforcement agency. Verification shall be
determined solely by the law enforcement agency to which the
threat was reported. The candidate or elected officer shall report
an expenditure of campaign funds made pursuant to this section
to the Commission. The report to the Commission shall include
the date that the candidate or elected officer informed the law
enforcement agency of the threat, the name and the telephone
number of the law enforcement agency, and a brief description of
the threat. No more than five thousand dollars ($5,000) in surplus
campaign funds may be used, cumulatively, by a candidate or
elected officer pursuant to this subdivision. Payments made
pursuant to this subdivision shall be made during the two years
immediately following the date upon which the campaign funds
become surplus campaign funds. The candidate or elected officer
shall reimburse the surplus fund account for the fair market value
of the security system no later than two years immediately
following the date upon which the campaign funds became surplus
campaign funds. The campaign funds become surplus campaign
funds upon sale of the property on which the system is installed,
or prior to the closing of the surplus campaign fund account,
whichever comes first. The electronic security system shall be the
property of the campaign committee of the candidate or elected
officer.

SEC. 7.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

SEC. 8.  

The Legislature finds and declares that this bill furthers
the purposes of the Political Reform Act of 1974 within the
meaning of subdivision (a) of Section 81012 of the Government
Code.