BILL ANALYSIS Ó
SENATE COMMITTEE ON
ELECTIONS AND CONSTITUTIONAL AMENDMENTS
Senator Ben Allen, Chair
2015 - 2016 Regular
Bill No: AB 1544 Hearing Date: 9/9/15
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|Author: |Cooley |
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|Version: |8/20/15 Amended |
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|Urgency: |Yes |Fiscal: |No |
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|Consultant:|Darren Chesin |
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Subject: Political Reform Act of 1974: behested payments.
DIGEST
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.
ANALYSIS:
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
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. The following types of
payments are presumed to be for purposes unrelated to a
candidate's candidacy for elective office:
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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 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;
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.
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.
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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
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 language to avoid chaptering problems with AB 10
(Gatto).
BACKGROUND
Behested Payments and Previous Legislation. In 1996, the FPPC
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
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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 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
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"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.
Behested Payments by Governmental Agencies and FPPC Advice: In
2013, the FPPC was asked to provide advice on whether a 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
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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 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.
COMMENTS
According to the author : AB 1544 is an urgency bill that is
meant to clear up confusion over whether payments made by
government agencies, such as grants for highway construction,
coastal restoration or drought relief, fall under the "behested
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payment" reporting requirements for elected state and local
officers under the Political Reform Act. (See Gov. Code Sec.
82015(b)(2)(B)(iii).)
The FPPC's interpretation of this law, as it has evolved since
passage in 1997, is now seen as overbroad, duplicating other
laws and, in practice, a trap for the unwary.
One of the core principles of representative government is that
elected officers act as advocates before government agencies for
expenditures that benefit constituents or public purposes
generally. It is also well-established that a government agency
may not expend public funds for purposes unrelated to the
business of that agency. To that end, government expenditures
are subject to a myriad of laws designed to protect the public
interest and promote transparency.
As such, it is difficult to conclude that the Legislature meant
these types of payments to be subject to additional reporting
and accountability requirements.
The current statute is ambiguous on this point. However, the
legislative history of this law, as well as the FPPC's varying
interpretations and exceptions on this issue support the
conclusion that the Legislature did not intend for behested
payment reporting to encompass government payments.
PRIOR ACTION
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|Assembly Floor: |74 - 0 |
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|Assembly Elections and Redistricting | 6 - 0 |
|Committee: | |
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POSITIONS
Sponsor: Author
Support: None received
Oppose: None received
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