BILL ANALYSIS Ó
AB 1828
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Date of Hearing: May 18, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1828 (Dodd) - As Amended April 28, 2016
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|Policy |Elections and Redistricting |Vote:|4 - 3 |
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill 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 three months after a proceeding before
the BOE, and applies conflict of interest provisions to behested
payments aggregating $5,000 or more. Specifically, this bill:
1)Lowers the campaign contribution threshold that triggers the
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conflict of interest requirements under the Kopp Act from $250
to $0, and in addition subjects to the Kopp Act behested
payments of $5,000 or more that are currently reportable by a
BOE member pursuant to the Political Reform Act (PRA) and made
within the 12 months prior to a proceeding.
2)Prohibits a member of the BOE from accepting a contribution of
any amount from a party, participant, or agent of a party or
participant in the three months following an adjudicatory
proceeding before the BOE in which the party or participant is
involved, and in which the BOE member participated.
3)Provides that if a member of the BOE receives a contribution
that is prohibited per (2), the member shall be deemed not to
have accepted the contribution 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, participant, or agent in an adjudicatory
proceeding before the BOE-who makes a behested payment of
$5,000 or more that is currently reportable by a BOE member
pursuant the PRA in the 12 months preceding the decision on
the proceeding-to disclose that payment on the record of the
proceeding.
5)Requires a party, participant, or agent in an adjudicatory
proceeding before the BOE that makes a contribution to a
member of the BOE in the three months following the decision
in that proceeding to disclose that contribution to the BOE
within 30 days of making the contribution.
6)Requires the BOE to make the contributions and payments
reported per (4) and (5) available on its website.
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FISCAL EFFECT:
This measure will add significantly to the requirement for BOE
members to track the timing of contributions and also of
reportable behested payments, in order to avoid conflicts of
interest on matters before the board. This is particularly so
because the Kopp Act would now encompass contributions of any
amount, including contributions under $100 that are not even
reportable under current campaign laws. Assuming one-half a
staff analyst position for each of the five BOE members, annual
General Fund costs would be around $212,000. (Two board members
assert that their costs to comply with this bill will be
absorbable, while two other members believe that they will
require at least one full-time staff position to comply.)
The BOE estimates additional one-time General Fund costs of
$35,000 in the first year provide notification to taxpayers,
participants, and agents with matters before the board, creating
online disclosure forms and revising contribution forms and
relevant regulations.
COMMENTS:
1)Purpose. According to the author's office "?recent reports
have highlighted contribution activities of individuals and
organizations having cases before the Board, which, while not
illegal, raise concerns about potential conflicts of interest.
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For example, organizations having cases before the BOE have
had multiple individuals associated with that same
organization each make $249 contributions to a single Board
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 PAC, 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 1828
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."
In support, Board Members Fiona Ma argues that AB 1828, by
strengthening disclosure requirements, will "close a potential
avenue for corruption" and ensure citizens that BOE decisions
are made fairly and impartially. Board Member George Runner
believe AB 1828 will "remove the perception of potential
conflicts of interest created when Board Members accept
contributions from parties, or participants, or their
employees who have or recently had business before the Board."
2)The Kopp Act (named for former Senator Quentin Kopp) 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. The
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argument for enacting the Kopp Act was 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.
3)Behested Payments. 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. 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. AB 1828 brings such
behested payments under the Kopp Act.
4)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.
5)Implementation Issues. As noted in the analysis of this bill
by the Assembly Elections Committee, "The broad new additions
to the Kopp Act that are proposed by this bill could make
compliance with that Act considerably more difficult, could
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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."
6)Opposition. Board Member Diane Harkey argues that the bill
will "create an extremely complex, if not impossible,
situation for monitoring campaign contributions, but more
egregiously, behested payments and participation on charitable
boards and foundations." Board Member Jerome Horton expresses
similar concerns, and contends the bill will create increased
filing burdens for small businesses and for third-party donors
to nonprofits, and believes that the requirements could deter
donors to nonprofits that participate in charitable events
with BOE members.
7)Related Legislation. AB 816 (Hill), which recently passed the
Senate, reduces the campaign contribution threshold that
triggers the conflict of interest requirements under the Kopp
Act from $250 to $100.
Analysis Prepared by:Chuck Nicol / APPR. / (916)
319-2081
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