BILL ANALYSIS                                                                                                                                                                                                    Ó



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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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