BILL ANALYSIS Ó
SENATE COMMITTEE ON ELECTIONS
AND CONSTITUTIONAL AMENDMENTS
Senator Norma J. Torres, Chair
BILL NO: SB 1441 HEARING DATE: 4/22/14
AUTHOR: LARA ANALYSIS BY: Darren Chesin
AMENDED: 4/3/14
FISCAL: YES
SUBJECT
Political Reform Act: definition of "contribution": lobbyist
homes and offices
DESCRIPTION
Existing law , 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.
Existing law 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.
Existing law 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.
Existing law 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 would revise the definition of "contribution" to
include a payment made by a lobbyist or a cohabitant of a
lobbyist for costs related to a fundraising event held at the
home of the lobbyist, as specified. Hence, this bill would make
these payments attributable to the lobbyist for purposes of the
prohibition against a lobbyist making a contribution to
specified candidates and elected officers.
This bill would also similarly revise the definition of
"contribution" to include a payment made by a lobbying firm for
costs related to a fundraising event held at the office of the
lobbying firm.
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
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 or 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
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of the event exceeds $500, all payments are counted as
contributions.
Recent Events : In February of this year, the 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.
COMMENTS
1.According to the Author(s) : This bill is a part of a package
of bills that are aimed at strengthening the relationship
between the citizens of California and their state government.
Recent events have raised significant questions about the
transparency and accountability of rules and political
practices. In an effort to tighten state law, we are
authoring SB 1441 which bans fundraisers from being held at
the home of a lobbyist or at a lobbying firm. This will
delete ambiguity and ensure that lobbyists are not providing
illegal contributions to state elected officials.
Currently, the PRA provides for a $500 home hospitality
exception for fundraisers, where the first $500 does not count
as a contribution. This exception does not specifically
exclude lobbyists. At the same time lobbyists are prohibited
entirely from giving any campaign contributions to elected
officials. The value of all goods provided, regardless of
source, counts towards the $500 threshold. Once the threshold
is met the value of all goods count as campaign contributions.
This leads to a situation where it is virtually impossible to
have a fundraiser in a lobbyist's home or office without
having an illegal contribution.
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2.Related Legislation . This bill is similar in intent to AB
1673 (Garcia) which is pending in the Assembly Appropriations
Committee.
POSITIONS
Sponsor: Author
Support: None received
Oppose: None received
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