BILL ANALYSIS Ó
AB 1544
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Date of Hearing: August 24, 2015
ASSEMBLY COMMITTEE ON ELECTIONS AND REDISTRICTING
Sebastian Ridley-Thomas, Chair
AB 1544
(Cooley and Jones) - As Amended August 20, 2015
SUBJECT: Political Reform Act of 1974: behested payments.
SUMMARY: Provides that a payment made by a state, local, or
federal governmental agency that is made principally for
legislative or governmental purposes does not need to be
reported as a behested payment, as specified. Specifically,
this bill:
1)Specifies that a payment by a state, local, or federal
governmental agency that is made principally for a legislative
or governmental purpose is not subject to the behested payment
reporting requirements described below.
2)Contains an urgency clause, allowing this bill to take effect
immediately upon enactment. Provides that the urgency clause
is necessary for the following reasons:
a) It is a core principle of representative government that
an elected official's duties include advocacy of government
agencies in favor of expenditures that benefit constituents
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or public purposes generally.
b) It is also well-established that a government agency may
not expend public funds for purposes unrelated to the
business of that agency.
c) To that end, government expenditures are subject to a
myriad of laws designed to protect the public interest and
promote transparency, including laws relating to open
meetings, the appropriate use of public resources,
conflicts of interests, and disbursement practices.
d) Therefore, it is necessary for this bill to take effect
immediately in order to provide clarity for elected
officials, in conformity with the Legislature's intent that
reporting requirements for behested payments not apply with
respect to the payments made by a government agency at the
behest of an elected official for a legislative or
governmental purpose.
3)Contains double-jointing language to avoid chaptering problems
with AB 10 (Gatto) of the current legislative session.
EXISTING LAW:
1)Creates the Fair Political Practices Commission (FPPC), and
makes it responsible for the impartial, effective
administration and implementation of the Political Reform Act
(PRA).
2)Provides that a payment made at the behest of a candidate is a
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contribution unless at least one of the following criteria are
satisfied:
a) Full and adequate consideration is received from the
candidate; or
b) It is clear from the surrounding circumstances that the
payment was made for purposes unrelated to the candidate's
candidacy for elective office. Provides that the following
types of payments are presumed to be for purposes unrelated
to a candidate's candidacy for elective office:
i) A payment made principally for personal purposes, in
which case it may be considered a gift under the PRA, as
specified;
ii) A payment made by a state, local, or federal
governmental agency or by a nonprofit organization that
is exempt from taxation under Section 501(c)(3) of the
Internal Revenue Code; or,
iii) A payment that is made principally for legislative,
governmental, or charitable purposes, in which case it is
neither a gift nor a contribution.
3)Requires a candidate who is an elected officer to report a
payment made at the behest of that officer, made principally
for legislative, governmental, or charitable purposes, within
30 days following the date on which the payment or payments
equal or exceed $5,000 in the aggregate from the same source
in the same calendar year. Requires this report to be filed
with the elected officer's agency and to contain all of the
following:
a) The name and address of the payor;
b) The amount of the payment;
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c) The date or dates that the payment or payments were
made;
d) The name and address of the payee;
e) A brief description of the goods or services provided or
purchased, if any; and,
f) A description of the specific purpose or event for which
the payment or payments were made.
FISCAL EFFECT: None. This bill is keyed non-fiscal by the
Legislative Counsel.
COMMENTS:
1)Purpose of the Bill: According to the author:
AB 1544 provides specific guidance for elected
officers who request or provide support for an agency
action as part of the public procedures of duly
constituted state, local or federal agencies for
purposes of the behested payment provisions of the
Political Reform Act.
Government Code Section 82015 generally provides that
a payment made at the "behest" of an elected officer
is a campaign contribution to that officer. However,
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Section 82015 also provides that a "behested" payment
made by a government agency is presumed not to be a
contribution. In another provision, Section 82015
requires that elected officers file what is known as a
"behested payment report" for payments made for a
legislative, governmental or charitable purpose that
they "behest" from others. These provisions are
ambiguous on whether payments made by government
agencies must be covered in these reports.
Government expenditures are subject to many laws
designed to protect the public interest, promote
transparency, and ensure the appropriate use of public
resources. It is illegal for a government agency to
spend its funds unless the expenditure relates to the
agency's official function. It is a core principle of
representative government that an elected officer's
duties include advocating to government agencies on
matters of consequence to benefit their constituents,
which can include funding of various types.
This bill would clarify that a payment made at the
behest of an elected officer by a state, local, or
federal governmental agency that is made principally
for legislative or governmental purposes is exempt
from "behested payment" reporting.
2)Behested Payments and Previous Legislation: In 1996, the FPPC
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amended its regulatory definition of the term "contribution"
to include any payment made "at the behest" of a candidate,
regardless of whether that payment was for a political
purpose. As a result, payments made by a third party at the
request or direction of an elected officer were required to be
reported as campaign contributions, even if those payments
were made for governmental or charitable purposes.
The change in regulations by the FPPC, along with a number of
advice letters issued by the FPPC interpreting the new
definition of "contribution," limited the ability of elected
officers to co-sponsor governmental and charitable events. In
one advice letter, the FPPC concluded that a member of the
Legislature would be deemed to have accepted a campaign
contribution if, at his behest, a third party paid for the
airfare and lodging for witnesses to testify at a legislative
hearing.
In response to the FPPC's modified definition of "contribution,"
the Legislature enacted SB 124 (Karnette), Chapter 450,
Statutes of 1997, which provided that a payment made at the
behest of a candidate for purposes unrelated to the
candidate's candidacy for elective office is not a
contribution. SB 124 specifically provided that a payment
made at the behest of a candidate principally for a
legislative, governmental, or charitable purpose is not
considered a contribution or a gift. However, SB 124 also
required that such payments made at the behest of a candidate
who is also an elected officer, when aggregating $5,000 or
more in a calendar year from a single source, be reported to
the elected officer's agency. The elected officer must report
such a payment within 30 days.
Examples of payments made at the behest of an elected officer
that have to be reported under this provision of law include
charitable donations made in response to a solicitation sent
out by an elected officer or donations of supplies and
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refreshments made by a third party for a health fair that was
sponsored by an elected officer.
Because SB 124 was enacted in response to the FPPC's modified
regulatory definition of the term "contribution," the rules
governing behested payments-including the requirement that
certain behested payments be publicly reported-are found
within the provision of state statute that defines the term
"contribution." The language added by SB 124 specifically
provides that a payment made at the behest of a candidate is
not a contribution if it is "clear from the surrounding
circumstances that the payment was made for purposes unrelated
to his or her candidacy for elective office." SB 124
additionally enumerates three types of payments that are
"presumed to be for purposes unrelated to a candidate's
candidacy for elective office": (1) payments made principally
for personal purposes (which may be gifts under the PRA); (2)
payments made by governmental agencies or by nonprofit
organizations that are exempt from taxation pursuant to
Section 501(c)(3) of the Internal Revenue Code; and (3)
payments made principally for legislative, governmental, or
charitable purposes. It is the third type of payments-those
made principally for legislative, governmental, or charitable
purposes-that are potentially required to be reported when
made at the behest of a public official.
Notwithstanding the fact that payments by governmental agencies
are covered by the second enumerated type of payments that are
presumed to be for purposes unrelated to a candidate's
candidacy, the FPPC nonetheless has advised that such payments
also may be covered by the third enumerated type of payments
(those made principally for legislative, governmental, or
charitable purposes), and thus may be required to be reported
as behested payments.
3)Behested Payments by Governmental Agencies and FPPC Advice:
In 2013, the FPPC was asked to provide advice on whether a
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member of the Legislature would have reporting requirements
under the behested payment rules if the member communicated
with a local, state, or federal government agency to express
his or her support for a payment to be made to a local
government agency within the legislator's district. In its
response (Harrison Advice Letter, No. I-13-106), the FPPC
concluded that such payments were not required to be reported
by the member of the Legislature as behested payments. In
reaching that conclusion, the FPPC noted that regulations it
adopted to implement the behested payment rules provided that
a payment behested by an elected officer and made by a local,
state, or federal government agency is not subject to
reporting if "that payment will be used in the regular course
of official agency business of the elected officer['s
agency.]" The FPPC noted that legislators "have traditionally
been expected to assist local agencies within their
legislative districts in obtaining government funding for
local government agency projects," and as such, "when a
legislator acts to achieve this purpose, he or she is acting
in the regular course of legislative business and bringing
benefits, through the affected local government agency, to the
state citizens whom he or she represents as constituents." In
the same response, however, the FPPC stated that "not all
payments an elected officer 'behests' from a government
agency" would be exempt from reporting, mentioning
specifically that "a payment from a government agency to a
private individual or entity, such as through a government
grant or contract," could have benefits to specific,
identified private persons, and thus may not be exempt from
reporting.
Earlier this year, in response to a request for advice from the
Executive Officer of the California State Coastal Conservancy
(SCC) (Schuchat Advice Letter, No. A-15-070), the FPPC cited
the Harrison Advice Letter in concluding that "[a]n elected
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official has a 'behested payment' reporting obligation when he
or she provides a letter to the [SCC] expressing support for a
grant of funds to be made by the Conservancy to a nonprofit
501(c)(3) organization to carry out a specific project." The
FPPC letter indicated that "a key component of the SCC's work
is to grant funds to public entities and?501(c)(3) nonprofit
organizations to aid the grant recipients in carrying out
projects that further the SCC goals," and acknowledged that
the SCC "typically asks grant applicants to contact their
local and state elected representatives to seek letters of
support for their projects." Nonetheless, the FPPC concluded
that grants made by the SCC to private nonprofit entities
would "not be used in the regular course of official agency
business of the elected officer" and therefore are subject to
behested payment reporting.
This bill specifies that payments made by state, local, and
federal governmental agencies that are made principally for
legislative or governmental purposes are not subject to the
behested payment reporting requirements, regardless of whether
the beneficiary of the payments is another governmental agency
or a private entity. In effect, this bill would overturn the
Schuchat Advice Letter, and future payments made by
governmental agencies that are made principally for
legislative or governmental purposes would not be subject to
behested payment reporting.
4)Related Legislation: AB 10 (Gatto), which is pending in the
Senate Appropriations Committee, requires members of the
Legislature and statewide elected officials to continue to
publicly report behested payments for a year after leaving
office, if certain conditions are met. This bill contains
double-jointing language to avoid chaptering problems with AB
10.
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5)Political Reform Act of 1974: 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.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file.
Opposition
None on file.
Analysis Prepared by:Ethan Jones / E. & R. / (916) 319-2094
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