BILL ANALYSIS Ó
AB 10
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GOVERNOR'S VETO
AB
10 (Gatto)
As Enrolled September 14, 2015
2/3 vote
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|ASSEMBLY: |79-0 |(June 2, 2015) |SENATE: |40-0 |(September 9, |
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|ASSEMBLY: |80-0 |(September 10, | | | |
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Original Committee Reference: E. & R.
SUMMARY: Makes several significant changes to the Political
Reform Act (PRA) of 1974. Specifically, this bill:
1)Increases the thresholds at which a public official's
financial interest can potentially create a conflict of
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interest under the PRA, as follows:
a) From $2,000 to $10,000 for interests in real property;
b) From $2,000 to $5,000 for investments in a business
entity; and,
c) From $500 to $1,000, for sources of income, other than
gifts or specified loans.
2)Revises the monetary ranges that specified public officials or
candidates, when filing a statement of economic interests
(SEI), use to describe the value of their investments,
interests in real property, and income.
3)Requires a public official or candidate who is required to
disclose a business entity investment on his or her SEI
because the official or candidate is a director, officer,
partner, or trustee of the entity, to provide a thorough and
detailed description of the entity's activities and disclose
the names of all business partners who share a financial
interest in the entity on the official or candidate's SEI,
based on criteria established by the Fair Political Practices
Commission (FPPC).
4)Requires a public official or candidate who is required to
disclose his or her pro rata share of income to a business
entity on an SEI to include a thorough and detailed
description of the business activity of the business entity,
instead of a general description of the entity's business
activity.
5)Requires a public official who holds an office listed in
Government Code Section 87200 to disclose on his or her SEI,
as specified, each governmental decision for which a financial
interest resulted in the official's disqualification from
making, participating in making, or in any way attempting to
use his or her official position to influence a governmental
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decision.
The Senate amendments:
1)Delete provisions of the bill that would have made behested
payment reporting requirements applicable to candidates who
are not elected officials, and to elected officials for a year
after leaving office.
2)Provide that detailed descriptions of a business entity's
activities and a disclosure of the names of business partners
who share a financial interest in a business entity are not
required to be included on an SEI if the business entity is
publicly traded.
3)Add an additional disclosure tier on the SEI for describing
the value of investments, interests in real property, and
income.
4)Make technical and corresponding changes.
5)Add double-joining language to avoid chaptering problems with
SB 21 (Hill) of the current legislative session.
FISCAL EFFECT: According to the Senate Appropriations
Committee, the FPPC indicates that this bill would result in a
one-time General Fund cost of $260,000. Ongoing costs would
total about $130,000 per year.
COMMENTS: According to the author, "AB 10? will modernize the
financial interest thresholds that necessitate a public official
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excusing him or herself from a governmental decision. These
numbers have been updated only once since 1974? It will include
additional middle tiers and upper tiers in the financial
disclosures on the FPPC's Form 700, ensuring that the public has
a more accurate view of the financial holdings and potential
conflicts of interest for their public officials? It will
require a more detailed disclosure of these holdings,
specifically a more thorough description of any businesses and
the names of any business partners? It will add an additional
disclosure to the Form 700 that requires public officials to
specify any instances in the previous year where a financial
interest has been cause for a recusal from being involved with
or making a governmental decision."
As part of the PRA's comprehensive scheme to prevent conflicts
of interest by state and local public officials, existing law
identifies certain elected and other high-level state and local
officials who must file SEIs. Similarly, candidates for those
positions must file SEIs. Other state and local public
officials and employees are required to file SEIs if the
position they hold entails the making or participation in the
making of governmental decisions that may foreseeably have a
material financial effect on the decision maker's financial
interests.
California voters passed an initiative, Proposition 9, in 1974
that created the FPPC and codified significant restrictions and
prohibitions on candidates, officeholders and lobbyists. That
initiative is commonly known as the PRA. Amendments to the PRA
that are not submitted to the voters, such as those contained in
this bill, must further the purposes of the initiative and
require a two-thirds vote of both houses of the Legislature.
The Senate amendments delete provisions of the bill that would
have expanded behested payment reporting requirements to
candidates who are not elected officials and to elected
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officials for a year after leaving office. Additionally, the
Senate amendments narrow the scope of information that must be
disclosed on SEIs about businesses that are publicly traded, and
further revise the monetary ranges used on the SEI to describe
the value of investments, interests in real property, and
income. This bill, as amended in the Senate, is consistent with
Assembly actions.
GOVERNOR'S VETO MESSAGE:
This bill makes several changes to the Political Reform Act of
1974, including significant changes to reporting requirements on
statements of economic interests.
The Political Reform Act already requires public officials to
disclose their income, investments and business activities with
enough particularity so that conflicts of interest can be
identified. This bill adds yet more complexity to existing
reporting requirements without commensurate benefit, and I am
not convinced that this bill will provide more useful
information to the public.
Analysis Prepared by:
Ethan Jones / E. & R. / (916) 319-2094 FN:
0002516
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