BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1828


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          Date of Hearing:  April 13, 2016


                  ASSEMBLY COMMITTEE ON ELECTIONS AND REDISTRICTING


                                Shirley Weber, Chair


          AB 1828  
          (Dodd) - As Amended April 5, 2016


          SUBJECT:  State Board of Equalization:  members:  conflicts of  
          interest.


          SUMMARY:  Eliminates the current $250 campaign contribution  
          threshold that triggers conflict of interest requirements for  
          members of the Board of Equalization (BOE) under the Quentin L.  
          Kopp Conflict of Interest Act of 1990 (Kopp Act).  Expands the  
          conflict of interest provisions of the Kopp Act to apply to  
          contributions made in the 12 months after a proceeding before  
          the BOE, and to apply to behested payments aggregating $5,000 or  
          more. Specifically, this bill:  


          1)Provides, for the purposes of the Kopp Act and this bill, that  
            the term "contribution" includes payments totaling $5,000 or  
            more in the aggregate that are made at the behest of a member  
            of the BOE principally for legislative, governmental, or  
            charitable purposes, thereby expanding the conflict of  
            interest provisions of the Kopp Act to include behested  
            payments.  Provides that "at the behest of a member of the  
            BOE," for these purposes, means made under the control or at  
            the direction of, in cooperation, consultation, coordination,  
            or concert with, at the request or suggestion of, or with the  









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            express prior consent of a member of the BOE.


          2)Lowers the campaign contribution threshold that triggers the  
            conflict of interest requirements under the Kopp Act from $250  
            to $0.


          3)Prohibits a member of the BOE from requesting, suggesting, or  
            accepting a contribution of any amount from a party,  
            participant, or agent of a party or participant in the 12  
            months following an adjudicatory proceeding before the BOE in  
            which the party or participant is involved.  By virtue of the  
            definition of the term "contribution" in this bill, this  
            prohibition also applies to behested payments aggregating  
            $5,000 or more.


             a)   Provides, for the purposes of this restriction, that  
               "suggesting" a contribution means mentioning or implying as  
               a possibility, or putting forward as a consideration.


             b)   Provides that if a member of the BOE receives a  
               contribution that is prohibited under this provision, the  
               member's acceptance of that contribution shall be deemed  
               lawful if it is returned within 30 days from the time the  
               member knows or has reason to know about the contribution  
               and the decision in the adjudicatory proceeding.  


          4)Requires a party or participant in an adjudicatory proceeding  
            before the BOE that makes a contribution to a member of the  
            BOE in the 12 months following the decision in that proceeding  
            to disclose that contribution to the BOE within 30 days of  
            making the contribution.  By virtue of the definition of the  
            term "contribution" in this bill, this requirement also  









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            applies when a party or participant makes behested payments  
            aggregating $5,000 or more.


          5)Requires the BOE to make any disclosure of a contribution or  
            behested payment, which is made by a party or participant in  
            an adjudicatory proceeding, publicly available on the BOE's  
            Internet Web site.


          6)Makes various findings and declarations about the BOE, its  
            authority, and potential conflicts of interest, including the  
            following:


             a)   As a quasi-judicial body, the BOE is subject to strict  
               contribution limits under the Kopp Act. The Kopp Act  
               recognizes the unique positions of BOE members as both  
               elected officials and judges presiding over tax appeals.

             b)   The strict contribution limits of the Kopp Act do not  
               apply to payments made at the behest of a BOE candidate or  
               committee when the payment is made for purposes unrelated  
               to his or her candidacy for elected office.



             c)   Despite passage of the Kopp Act in 1990, a loophole  
               allowing parties before the BOE, as well as parties'  
               agents, to aggregate multiple contributions that  
               individually fall below the $250 limit but together exceed  
               $250 creates a perceived conflict of interest when the BOE  
               hears the parties' appeals. Similarly, payments made at the  
               behest of a BOE member by parties with an approaching  
               appeal before the BOE create a perceived conflict of  
               interest.










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             d)   The intent of the Legislature in enacting this bill is  
               to eliminate the perceived conflicts of interest associated  
               with contributions and behested payments by parties,  
               participants, and their agents related to appeals before  
               the BOE.


          7)Makes corresponding and technical changes.


          EXISTING LAW:  


          1)Limits, pursuant to the Kopp Act, the ability of a member of  
            the BOE to participate in an adjudicatory proceeding that  
            involves a participant or party who contributed $250 or more  
            in the preceding 12 months to that member, as follows:



             a)   Requires a member of the BOE who knows or has reason to  
               know that he or she received a contribution or  
               contributions totaling $250 or more in the last 12 months  
               from a party, participant, or agent of a party or  
               participant, to an adjudicatory proceeding before the BOE,  
               to disclose the fact on the record prior to rendering a  
               decision on the proceeding.

             b)   Requires a party or participant in an adjudicatory  
               proceeding before the BOE to disclose on the proceeding's  
               record any contribution or contributions of $250 or more  
               made in the last 12 months by that party, participant, or  
               his or her agent to any member of the BOE.  Provides that  
               when a "close corporation" is the party or participant,  
               disclosure only applies to the majority shareholder. 









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             c)   Prohibits a member of the BOE from making, participating  
               in making, or otherwise attempting to use his or her  
               official position to influence, a decision in an  
               adjudicatory proceeding if the member knows or has reason  
               to know that he or she received a contribution or  
               contributions totaling $250 or more in the last 12 months  
               from a party, participant, or agent of a party or  
               participant, and if the member knows or has reason to know  
               that the participant has a financial interest in the  
               decision, as specified. Permits a member to participate in  
               a decision under the circumstances described above if the  
               member returns the contribution within 30 days from the  
               time that he or she knows or has reason to know about the  
               contribution and the adjudicatory proceeding.



          2)Provides that a knowing or willful violation of the Kopp Act  
            is a misdemeanor, and provides that in addition to other  
            penalties provided by law, a violation is punishable by a fine  
            of $10,000, or three times the amount the person failed to  
            disclose or report properly, whichever is greater.  Requires  
            prosecution for a violation to be commenced within four years  
            after the date of the violation.

          3)Creates the Fair Political Practices Commission (FPPC), and  
            makes it responsible for the impartial, effective  
            administration and implementation of the Political Reform Act  
            (PRA).



          4)Prohibits a person, other than a small contributor committee  
            or political party committee, from making any contribution  









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            totaling more than $7,000 to any candidate for BOE, and  
            prohibits candidates from accepting a contribution that  
            exceeds that amount. Requires the FPPC to adjust this limit in  
            January of every odd-numbered year to reflect any increase or  
            decrease in the Consumer Price Index, and requires those  
            adjustments to be rounded to the nearest $100.



          5)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. 





          6)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;










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             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. 


          FISCAL EFFECT:  Unknown.  State-mandated local program; contains  
          a crimes and infractions disclaimer.


          COMMENTS:  


          1)Purpose of the Bill:  According to the author:


               The BOE is a unique governmental entity. Its members  
               maintain the dual role of administering the sales and  
               use tax and a variety of fee programs, as well as  
               adjudicating disputes between taxpayers and the state  
               regarding those same programs. Further, the BOE Chair,  









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               and the State Controller, a BOE member, also serve on  
               the state Franchise Tax Board, which administers  
               income and franchise taxes.  Disputes pertaining to  
               those two programs are also adjudicated by the BOE.  
               Finally, the BOE issues regulations and sets property  
               tax values for utilities, railroads and  
               telecommunication companies.





               California elected officials, including BOE members  
               are subject to campaign contribution limits in primary  
               and general elections. However, BOE members are  
               subject to an additional set of rules - the Quentin L.  
               Kopp Act, which requires BOE members to recuse  
               themselves, or return a contribution of $250 or more,  
               before voting on matters affecting the contributor for  
               a 12 month period. Nothing in the Act, however,  
               prohibits multiple individuals within the same  
               organization who did not actually work on the case  
               from contributing up to the $250 limit without  
               triggering the Act's recusal/return provisions.  





               As is the case with any other elected official, BOE  
               members can request an individual or organization  
               contribute money to a non-profit entity, like a  
               charity.  If a contribution over a certain amount is  
               made at a member's behest, the member must report it,  
               as any elected official is required to do.











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               Notwithstanding existing campaign finance and  
               reporting laws in general, and the additional rules  
               pertaining to the BOE, recent reports have highlighted  
               contribution activities of individuals and  
               organizations having cases before the [BOE], which,  
               while not illegal, raise concerns about potential  
               conflicts of interest.  For example, organizations  
               having cases before the BOE have had multiple  
               individuals associated with that same organization  
               each make $249 contributions to a single [BOE] member,  
               thereby complying with the letter of the Kopp Act, but  
               cumulatively, exceeding the contribution threshold  
               triggering recusal or a return of the contribution.   
               Concerns have also been raised that organizations  
               having cases before the BOE have contributed  
               substantial sums to a [Political Action Committee],  
               which in turn contributes an unlimited amount to a BOE  
               member.





               To be clear, there is no allegation of improper action  
               by any BOE member who may have received such  
               contributions.  AB 1858 would, however, remove any  
               perception of a conflict of interest, and would have  
               the effect and benefit of increasing the public's  
               trust in the BOE, which is responsible for collecting  
               approximately $60 billion in state revenue each year.


          2)Board of Equalization Background: Established in 1879 by a  
            constitutional amendment, the BOE is composed of four members  









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            elected by districts and the State Controller, and was  
            initially charged with responsibility for ensuring that county  
            property tax assessment practices were equal and uniform  
            throughout the state.  Currently, the BOE also administers the  
            sales and use tax, locally-imposed transactions and use taxes,  
            several excise taxes, and more than 30 other fee programs, and  
            considers all appeals under these laws and programs.   
            Additionally, the BOE hears appeals from Franchise Tax Board  
            actions.  The BOE is the only elected tax board in the  
            country.


          3)Kopp Act:  Under the PRA, campaign contributions generally  
            cannot be the basis for a disqualifying conflict of interest.   
            There is one exception-the Levine Act-which was enacted in  
            1982 as a response to reports that members of a state agency  
            sought to raise money from individuals and entities that had  
            permit requests pending before the agency.



          The Levine Act is narrowly drafted to apply only to decisions  
            made by agencies with membership that is not directly elected  
            by voters, and only to proceedings involving licenses,  
            permits, or other entitlements for use.  Proceedings of a more  
            general nature and with broader applicability are not covered  
            by the Levine Act.  The Levine Act expressly provides that it  
            does not apply to the Legislature, the BOE, or constitutional  
            officers.

          In 1990, the Legislature approved and Governor Deukmejian signed  
            SB 1738 (Roberti), Chapter 84, Statutes of 1990, a  
            comprehensive ethics reform package that enacted new  
            legislative conflict of interest rules, banned honoraria and  
            limited gifts to public officials, and imposed new  
            post-government employment restrictions on former public  
            officials, among other provisions.  One provision of SB 1738  









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            established the Kopp Act-so named because those provisions  
            originally were contained in legislation authored by  
            then-Senator Quentin Kopp.  The Kopp Act-which was modeled  
            after the Levine Act-prohibits a member of the BOE from  
            participating in an adjudicatory proceeding if the member  
            knows or has reason to know that he or she received  
            contributions totaling $250 or more in the 12 months prior to  
            the proceeding from a party, participant, or agent of a party  
            or participant, as specified. Members are permitted to  
            participate in the decision, however, if they return the  
            contribution within a specified time period.  When the Kopp  
            Act was being considered, the author argued that the BOE  
            should be subject to rules similar to those that applied to  
            appointed boards and commissions under the Levine Act because  
            of the BOE's quasi-judicial role as the appellate body for  
            state tax appeals.  Unlike the Levine Act, the Kopp Act is not  
            part of the PRA, and is neither administered nor enforced by  
            the FPPC.

          4)Behested Payments:  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  
            governmental or charitable purposes.



          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,  









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            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.

          5)Strategic Disqualification Under the Kopp Act:   Under the  
            BOE's Regulation 5550, any three members of the BOE constitute  
            a quorum, except in specified circumstances, and a majority of  
            the quorum is required to approve or disapprove taxpayer  
            appeals and other matters.  As a result, if two members of the  
            BOE are disqualified under the Kopp Act from participating in  
            a proceeding, it would take only two of the remaining three  
            members to reach a decision in the proceeding.  The fact that  
            disqualifications due to the Kopp Act can reduce the number of  
            votes necessary for the BOE to reach a decision has led to  
            concern that parties and participants can strategically  
            disqualify members of the BOE from certain proceedings by  
            making campaign contributions of $250 or more to those  
            members.  To the extent that the Kopp Act is actually being  
            used to strategically disqualify members in proceedings, this  
            bill could exacerbate that problem, as detailed below.


           
          6)Restrictions on Behested Payments and FPPC Regulation:  This  
            bill defines the term "contribution," for the purposes of the  
            Kopp Act, to include behested payments aggregating $5,000 or  









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            more that are made by a party, participant, or agent of a  
            party or participant in an adjudicatory proceeding at the BOE.  
             While the behested payments language in this bill is similar  
            to language in PRA and related regulations that were adopted  
            by the FPPC, the Kopp Act is not enforced by the FPPC, nor  
            would it be enforced by the FPPC under this bill. As a result,  
            regulations adopted by the FPPC to implement the behested  
            payments provisions of the PRA, and advice letters and  
            opinions issued by the FPPC interpreting the behested payments  
            provisions of the PRA would not necessarily govern the  
            interpretation of this bill.  While the behested payments  
            provisions of the PRA and related regulations, advice letters,  
            and opinions likely would be considered when interpreting and  
            enforcing the provisions of this bill, there is no guarantee  
            that the similar provisions necessarily will be interpreted  
            and enforced consistently.



          Furthermore, while this bill defines the term "at the behest of  
            a member of the board" in a manner that is similar to the way  
            that term is defined in FPPC regulations, the definition in  
            this bill does not include exceptions that are found in the  
            FPPC regulation.  Specifically, the FPPC's regulations provide  
            that a payment is not "made at the behest" of an elected  
            officer if the payment is made in response to a fundraising  
            solicitation that does not feature an elected officer, as  
            defined.  Generally, a solicitation is deemed to feature an  
            elected officer if it includes the officer's photograph or  
            signature, if it singles out the elected officer, or if it  
            includes a roster or letterhead listing in which a majority of  
            the people listed are elected officers.  Additionally, the  
            FPPC's regulations provide that certain payments made by  
            governmental agencies are not behested payments.  Because this  
            bill does not include those exceptions, and because the Kopp  
            Act is neither contained in the PRA nor administered by the  
            FPPC, the behested payment restrictions found in this bill  









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            could be construed much more broadly than existing rules  
            governing behested payments.

          7)Implementation and Compliance Issues:  The broad new additions  
            to the Kopp Act that are proposed by this bill could make  
            compliance with that Act considerably more difficult, could  
            increase the risk of inadvertent violations of the law, and  
                                                   could exacerbate the potential for parties and participants in  
            BOE proceedings to use the Act's conflict of interest  
            provisions strategically to force BOE members to disqualify  
            themselves from participating in certain proceedings. While  
            the reduction in the campaign contribution threshold that  
            triggers the conflict of interest requirements under the Kopp  
            Act from $250 to $0 could present all of those challenges,  
            three other aspects of this bill arguably would present even  
            greater challenges to implementation of and compliance with  
            this bill.



             a)   Making Behested Payments Subject to Disqualification  
               under the Kopp Act:  While behested payments must be  
               publicly reported by public officials in certain  
               circumstances, under no area of existing law are they the  
               basis for a disqualifying conflict of interest.  This bill,  
               however, not only creates a situation where a behested  
               payment could create a disqualifying conflict of interest,  
               but also subjects a member of the BOE to potential criminal  
               penalties if that member fails to recuse himself or herself  
               from participating in a proceeding involving a party or  
               participant that made certain payments at that member's  
               behest.  This restriction could make compliance with the  
               Kopp Act considerably more difficult given the fact that  
               public officials have much less control over payments made  
               at their behest than they do over other types of interests  
               that can be the basis for disqualification under existing  
               law.









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             If a member of the BOE has received a potentially  
               disqualifying campaign contribution from a party to or  
               participant in a proceeding before the BOE, that member can  
               return the contribution, as specified, in order to preserve  
               his or her ability to participate in the proceeding.   
               Unlike campaign contributions made to members of the BOE,  
               however, payments made at the behest of a member of the BOE  
               are not necessarily made to or received by an entity under  
               the control of the member.  As a result, it will be  
               considerably more difficult for members to reject or return  
               behested payments that create conflicts under the Kopp Act  
               than it is for members to reject or return campaign  
               contributions that would create conflicts.

             For example, if a member of the BOE agrees to lend his or her  
               name to a fundraising solicitation by a charitable  
               organization, payments made in response to that  
               solicitation could be considered "behested payments" even  
               if the nonprofit organization distributed the solicitation  
               itself and the BOE member had no control over or knowledge  
               of the entities to which the solicitation was being sent.   
               If a party to an adjudicatory proceeding before the BOE  
               made a donation of $5,000 or more in response to such a  
               solicitation, this bill would prohibit the BOE member from  
               participating in the proceeding, unless the behested  
               payment was somehow returned.  Even though the member could  
               not control whether the nonprofit organization chose to  
               accept the donation, and could not compel the nonprofit  
               organization to return it, the payment nonetheless would  
               create a disqualifying conflict of interest for that member  
               under this bill.  

             Furthermore, making behested payments the basis for  
               disqualification under the Kopp Act could make it easier  
               for parties to BOE proceedings to force strategic  
               disqualifications of BOE members, as described above.  If a  









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               party wanted to prevent a member of the BOE from  
               participating in a proceeding, that party could donate to a  
               charitable organization in response to a solicitation by  
               that member of the BOE.  The member would then be forced  
               either to recuse himself or herself from the proceeding, or  
               to prevail upon the charitable organization to return the  
               donation that it had received.

             b)   Making the Kopp Act Applicable to Contributions and  
               Behested Payments Made in the 12 Months After Proceedings:   
               Currently, the Kopp Act applies only to contributions that  
               were made in the 12 months prior to a BOE proceeding.  As a  
               result, a member of the BOE has the ability to determine at  
               the time of a proceeding whether that member has a conflict  
               under the Kopp Act.  This bill, however, makes the Kopp Act  
               applicable to contributions and behested payments that are  
               made after a BOE proceeding has occurred.  In a situation  
               where a proceeding has already occurred, there is no  
               ability for a member of the BOE to recuse himself or  
               herself from participating in that proceeding.  As a  
               result, the only way for a BOE member to avoid a violation  
               of the Kopp Act would be to refuse or return a contribution  
               from a party to or participant in a proceeding that is  
               received in the 12 months following a BOE proceeding.  



             As detailed above, however, particularly with respect to  
               behested payments, the decision of whether to return a  
               payment may not always be a decision that is within the  
               control of the member of the BOE.  Using the example from  
               above, if a party to a proceeding made a $5,000 charitable  
               donation to an organization in response to a solicitation  
               that featured a member of the BOE, and that donation was  
               made six months after the proceeding, the only way for the  
               member to avoid violating this bill would be for the  
               organization to return the donation.  The member, however,  









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               would not be able to compel the organization to return the  
               donation, and if the organization refused to do so, the  
               member could face potential criminal penalties under this  
               bill.
             c)   Making the Kopp Act Applicable to Situations Where BOE  
               Members "Suggest" a Contribution or Behest:  Under current  
               law, a member of the BOE can have a conflict of interest  
               under the Kopp Act only if that member received a campaign  
               contribution of $250 or more from a party to or participant  
               in a proceeding.  This bill, however, creates a  
               disqualifying conflict of interest in situations where no  
               contribution or behested payment is ever made.   
               Specifically, this bill prohibits a member of the BOE from  
               requesting or suggesting a contribution from a party to or  
               participant in a proceeding in the 12 months after that  
               proceeding.  Even if the request or suggestion does not  
               result in a contribution or payment being made, the BOE  
               member still would have violated the provisions of this  
               bill, and could face criminal penalties.



             This restriction would seem to create a significant potential  
               for inadvertent violations of the law.  Prior to sending  
               any solicitation for campaign contributions, a member of  
               the BOE would have to compare the list of entities to which  
               the solicitation will be sent against all parties to and  
               participants in BOE adjudicatory proceedings in the prior  
               12 months in order to ensure that the member does not  
               "request" or "suggest" a contribution as prohibited by this  
               bill.  Similarly, with respect to behested payments, a  
               member would have to ensure that nothing he or she did  
               could be construed as requesting or suggesting a behested  
               payment from a party to or participant in any BOE  
               proceeding in the previous 12 months.  Would a general  
               solicitation-as opposed to an individualized  
               solicitation-be sufficient to conclude that a member had  









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               requested or suggested a contribution or behested payment?   
               If so, this bill could significantly restrict the ability  
               of members of the BOE to solicit campaign contributions or  
               behested payments from anyone, not only from entities that  
               were parties to or participants in BOE proceedings in the  
               prior 12 months.

             Furthermore, the broad definition of the term "suggest" could  
               increase the potential for inadvertent violations of this  
               bill.  "Suggest" is defined to mean "to mention or imply as  
               a possibility or put forward for consideration."  If a  
               member of the BOE was speaking at the annual conference of  
               a nonprofit organization, and broadly praised the  
               organization and encouraged attendees to support its work,  
               could such a statement be construed as a suggestion that  
               attendees make behested payments to the organization?  If  
               so, the restrictions of this bill presumably would apply if  
               any attendee at the conference was a party to or  
               participant in a BOE proceeding in the previous 12 months.
          8)Arguments in Support:  In support of a prior version of this  
            bill, BOE Chair Fiona Ma wrote:


               This legislation strengthens a number of key  
               provisions that exist in current law, including  
               toughening the reporting requirements for  
               contributions to [BOE] Members' political committees  
               from individuals and businesses with petitions before  
               the [BOE]?and extending the blackout period by which  
               individuals and businesses with petitions before the  
               board are prohibited from contributing to [BOE]  
               Members' political committees from one year prior to  
               their petition hearing until one year after.



               In addition, this Legislation adds new provisions to  









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               the law prohibiting [BOE] Members from soliciting  
               behested payments from businesses or individuals with  
               petitions before the [BOE].  In general, behested  
               payments do not represent a conflict of interest for  
               members of the Legislature or the Constitutional  
               Officers of the State, provided they are appropriately  
               disclosed.  However, the duties of the members of the  
               [BOE] are not analogous to Legislators or Executive  
               Branch officers.  The [BOE] carries out a number of  
               quasi-judicial functions in their capacity as the  
               Appeals Board for tax payers in California.































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            Also in support of a prior version of this bill,  
          California Common Cause wrote:


               The [BOE] is the only elected tax commission in the  
               nation; it is also unique in that it not only  
               administers tax programs, but also adjudicates  
               individual tax disputes as an appellate body. To  
               ensure commissioner impartiality in tax disputes,  
               state law requires a member of the [BOE] to recuse  
               himself or herself from hearing the appeal of any  
               party who has contributed $250 or more to member's  
               campaign in the prior twelve months. This recusal  
               limit, which is lower than the campaign contribution  
               limits to a member of the [BOE], helps to ensure that  
               members do not have a conflict of interest or the  
               appearance of a conflict of interest as they  
               adjudicate tax claims?



               AB 1828 would require recusal whenever a member has  
               received any value donation from a party or one of  
               their agents?The recusal rule would also apply when a  
               member has received a behested payment. Finally, the  
               bill also prevents parties before the [BOE] from  
               donating to members for 12 months after any  
               adjudication, to prevent the possibility or the  
               appearance that members are being "paid off" for a  
               favorable decision. These are common sense amendments  
               that reinforce the basic notion that quasi-judicial  
               bodies should be above reproach when hearing and  
               deciding cases.
          9)Arguments in Opposition:  In opposition to this bill, BOE  
            Member Jerome Horton writes:










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               [This] bill? has three major constitutional, fairness,  
               and equality flaws as summarized below.





               First, the bill has overly restrictive contribution  
               limits that violate free speech.  In Randall v.  
               Sorrell, 548 U.S. 230 (2006), the Supreme Court found  
               that Vermont's limits on contributions were so  
               restrictive as to violate the First Amendment?.  AB  
               1828 is a far more egregious violation of political  
               free speech, in that it reduces the contribution limit  
               to one cent from the current Kopp Act restriction of  
               $249 - already the lowest contribution limit in the  
               nation for statewide elected officials - without valid  
               cause.  This is also a direct violation of the equal  
               protection to which every citizen and elected official  
               is entitled.  


               


               Second, the bill violates the Equal Protection  
               Clause?.It does not treat equally all California  
               elected officials or the citizens who donate to  
               nonprofit organizations they support, but singles out  
               BOE members and their contributors only, with no  
               justification or compelling reasons.  Other elected  
               officials with similar duties, and even more  
               authority, responsibilities, and influence - e.g.,  
               judges, commissioners, and legislators - are not  
               similarly restricted, despite the countless articles  
               about their appearance of influence/corruption and  









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               conflicts of interest?.





               Third, the bill violates equal protection and Davis v.  
               Federal Election Commission, 554 U.S. 724 (2008).  In  
               that Supreme Court case, Justice Samuel Alito noted  
               that the court had never upheld the constitutionality  
               of a law imposing different contribution limits for  
               candidates competing against one another.  This bill  
               however, will give candidates for the Senate and  
               Assembly a distinct advantage over BOE candidates, in  
               that they can raise $8,400 (combined) without being  
               disqualified from voting on any matter (or being  
               accused of a conflict of interest) - and then they can  
               transfer these funds to a campaign committee for  
               [BOE], without restriction.  Conversely, Members of  
               the [BOE] who seek another office would be subjected  
               to the provisions in this bill, but their opponents  
               seeking the same office would not.


            In a letter opposing a prior version of this bill, the  
            California State Conference of the National Association for  
            the Advancement of Colored People wrote:


               Proponents admit that there is no evidence of any  
               wrongdoing or illegal activity by any BOE member, nor  
               any evidence that a charitable donation to a nonprofit  
               influenced a Member's decision on an adjudicatory  
               matter.  Yet, AB 1828 would have the effect of  
               prohibiting the [BOE], its Members, and the State  
               Controller from publicizing, partnering, hosting, or  
               co-hosting any events with nonprofit  









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               organizations?which have a charitable, governmental,  
               or legislative purpose?



               Further, this bill places an enormous administrative,  
               as well as economic, burden on the nonprofit-both in  
               terms of reporting and in terms of discouraging  
               donors.  It would also be a great financial and  
               accounting challenge for nonprofits to actually return  
               the money to contributors when a [BOE] Member is  
               required to do so in order to vote. 
          10)Technical Amendments:  The current version of this bill  
            contains ambiguous language that could be interpreted to  
            permit members of the BOE to accept contributions made by  
            parties and participants to a proceeding in the 12-month  
            period subsequent to the decision in that proceeding.  Such an  
            interpretation, however, seems contrary to the author's and  
            sponsor's intent.  To eliminate that ambiguity, committee  
            staff recommends that the language on page 4, lines 35-39 and  
            page 5, lines 1-2 of the bill be amended as follows:



          (d) (1) Notwithstanding subdivision (c),  a contribution shall  
            not be deemed received by a member for the purposes of   if a  
            member receives a contribution which would otherwise require   
            disqualification under subdivision (c)  , and he or she   if the  
            member  returns the contribution within 30 days from the time  
            he or she knows, or has reason to know, about the contribution  
            and the adjudicatory proceeding pending before the board  , his  
            or her participation in the proceeding shall be deemed lawful  .  


          Additionally, as currently drafted, this bill appears to make it  
            illegal for a member of the BOE to accept contributions from  
            parties and participants to a proceeding in the 12-month  









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            period following that proceeding even if the member did not  
            participate in that proceeding.  In fact, this provision  
            appears to apply even in the situation where the BOE member  
            was not on the BOE at the time the decision was made.  The  
            committee may wish to consider whether the post-decision  
            restrictions of this bill should be limited only to those  
            members who participated in the decision.
          11)Related Legislation: SB 816 (Hill), which is pending in the  
            Senate Elections & Constitutional Amendments Committee,  
            eliminates the current $250 campaign contribution threshold  
            that triggers conflict of interest requirements for members of  
            the BOE under the Kopp Act, thereby prohibiting a member of  
            the BOE from participating in an adjudicatory proceeding if  
            the member received a contribution of any amount in the  
            preceding 12 months from a party or participant in the  
            proceeding, as specified.


          REGISTERED SUPPORT / OPPOSITION:




          Support


          Board of Equalization Chair Fiona Ma (prior version)


          Board of Equalization Member George Runner (prior version)


          California Clean Money Campaign (prior version)


          California Common Cause (prior version)










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          CALPIRG (prior version)




          Opposition


          Beverly Hills Chamber of Commerce (prior version)


          Black Business Association (prior version)


          Board of Equalization Member Diane Harkey (prior version)


          Board of Equalization Member Jerome Horton


          California State Conference of the National Association for the  
          Advancement of Colored People (prior version)


          Jewish Labor Committee Western Region (prior version)


          National Association for Equal Justice in America (prior  
          version)


          Orange County Assessor Claude Parrish (prior version)













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          Analysis Prepared by:Ethan Jones / E. & R. / (916) 319-2094