Amended in Assembly August 17, 2015

Senate Bill No. 21

Introduced by Senator Hill

December 1, 2014

An act to amend Sections 87207 and 89506 of the Government Code, relating to the Political Reform Act of 1974.

LEGISLATIVE COUNSEL’S DIGEST

SB 21, as amended, Hill. Political Reform Act of 1974: gifts of travel.

The Political Reform Act of 1974 provides for the comprehensive regulation of campaign financing and related matters, including the reporting of gifts, as defined. The act prohibits specified officers from receiving gifts in excess of $440 in value from a single source in a calendar year. The act exempts gift payments for the actual costs of specified types of travel that are reasonably related to a legislative or governmental purpose, or to an issue of state, national, or international public policy, from the annual limit on the value of gifts from a single source.

This bill would require a nonprofit organization begin insert end insert begin insert that regularly organizes and hosts travel for elected officials, as specified, and end insert that pays for these types of travel for an elected state officer or local elected officeholder to disclose the names of donors begin delete responsible for funding the payments, end delete begin insert who, in the preceding year, both donated to the nonprofit and accompanied an elected officer or officeholder for any portion of the travel, end insert as specified. The bill would require a person who receives a gift of a travel payment from any source to report the travel destination on his or her statement of economic interests.

A violation of the Act’s provisions is punishable as a misdemeanor. By expanding the scope of an existing crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

The Political Reform Act of 1974, an initiative measure, provides that the Legislature may amend the act to further the act’s purposes upon a 2⁄3 vote of each house and compliance with specified procedural requirements.

This bill would declare that it furthers the purposes of the act.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 87207 of the Government Code is
amended to read:

87207.  

(a) If income is required to be reported under this
article, the statement shall contain, except as provided in
subdivision (b):

(1) The name and address of each source of income aggregating
five hundred dollars ($500) or more in value, or fifty dollars ($50)
or more in value if the income was a gift, and a general description
of the business activity, if any, of each source.

(2) A statement whether the aggregate value of income from
each source, or in the case of a loan, the highest amount owed to
each source, was at least five hundred dollars ($500) but did not
exceed one thousand dollars ($1,000), whether it was in excess of
one thousand dollars ($1,000) but was not greater than ten thousand
dollars ($10,000), whether it was greater than ten thousand dollars
($10,000) but not greater than one hundred thousand dollars
($100,000), or whether it was greater than one hundred thousand
dollars ($100,000).

(3) A description of the consideration, if any, for which the
income was received.

(4) In the case of a gift, the amount and the date on which the
gift was received, and the travel destination for purposes of a gift
that is a travel payment, advance, or reimbursement.

(5) In the case of a loan, the annual interest rate, the security,
if any, given for the loan, and the term of the loan.

(b) If the filer’s pro rata share of income to a business entity,
including income to a sole proprietorship, is required to be reported
under this article, the statement shall contain:

(1) The name, address, and a general description of the business
activity of the business entity.

(2) The name of every person from whom the business entity
received payments if the filer’s pro rata share of gross receipts
from that person was equal to or greater than ten thousand dollars
($10,000) during a calendar year.

(c) If a payment, including an advance or reimbursement, for
travel is required to be reported pursuant to this section, it may be
reported on a separate travel reimbursement schedule which shall
be included in the filer’s statement of economic interest. A filer
who chooses not to use the travel schedule shall disclose payments
for travel as a gift, unless it is clear from all surrounding
circumstances that the services provided were equal to or greater
in value than the payments for the travel, in which case the travel
may be reported as income.

SEC. 2.  

Section 89506 of the Government Code is amended
to read:

89506.  

(a) Payments, advances, or reimbursements for travel,
including actual transportation and related lodging and subsistence
that is reasonably related to a legislative or governmental purpose,
or to an issue of state, national, or international public policy, are
not prohibited or limited by this chapter if either of the following
applies:

(1) The travel is in connection with a speech given by the elected
state officer, local elected officeholder, candidate for elective state
office or local, elective office, an individual specified in Section
87200, member of a state board or commission, or designated
employee of a state or local government agency, the lodging and
subsistence expenses are limited to the day immediately preceding,
the day of, and the day immediately following the speech, and the
travel is within the United States.

(2) The travel is provided by a government, a governmental
agency, a foreign government, a governmental authority, a bona
fide public or private educational institution, as defined in Section
203 of the Revenue and Taxation Code, a nonprofit organization
that is exempt from taxation under Section 501(c)(3) of the Internal
Revenue Code, or by a person domiciled outside the United States
who substantially satisfies the requirements for tax-exempt status
under Section 501(c)(3) of the Internal Revenue Code.

(b) Gifts of travel not described in subdivision (a) are subject
to the limits in Section 89503.

(c) Subdivision (a) applies only to travel that is reported on the
recipient’s statement of economic interests.

(d) For purposes of this section, a gift of travel does not include
any of the following:

(1) Travel that is paid for from campaign funds, as permitted
by Article 4 (commencing with Section 89510), or that is a
contribution.

(2) Travel that is provided by the agency of a local elected
officeholder, an elected state officer, member of a state board or
commission, an individual specified in Section 87200, or a
designated employee.

(3) Travel that is reasonably necessary in connection with a
bona fide business, trade, or profession and that satisfies the criteria
for federal income tax deduction for business expenses in Sections
162 and 274 of the Internal Revenue Code, unless the sole or
predominant activity of the business, trade, or profession is making
speeches.

(4) Travel that is excluded from the definition of a gift by any
other provision of this title.

(e) This section does not apply to payments, advances, or
reimbursements for travel and related lodging and subsistence
permitted or limited by Section 170.9 of the Code of Civil
Procedure.

(f) (1) A nonprofit organization that begin insert end insert begin insert regularly organizes and
hosts travel for elected officials and that end insert makes payments,
advances, or reimbursements that total more than ten thousand
dollars ($10,000) in a calendar year, or that total more than five
thousand dollars ($5,000) in a calendar year for a single person,
for travel by an elected state officer or local elected officeholder
as described in subdivision (a) shall disclose to the Commission
the names of begin delete the end delete donors begin delete responsible for funding those payments,
advances, or reimbursements. The disclosure of donor names shall
be limited to donors end delete who begin insert did both of the following in the preceding
year: end insert begin delete donated end delete

begin insert (A) end insert begin insert   end insert begin insert Donated end insert one thousand dollars ($1,000) or more to the
nonprofit begin delete organization in a calendar year and who knew or had
reason to know that the donation would be used for a payment,
advance, or reimbursement for travel by an elected state officer or
local elected officeholder as described in subdivision (a). end delete
begin insert organization. end insert

begin delete

(2) A donor knows or has reason to know that his or her donation
will be used in the manner described in paragraph (1) under any
of the following conditions:

end delete begin delete

(A) The donor directed the nonprofit organization to use the
donation to make a payment, advance, or reimbursement for travel
by an elected state officer or local elected officeholder as described
in subdivision (a).

end delete begin delete

(B) The donor made the donation in response to a message or
solicitation for donations for the stated purpose of making a
payment, advance, or reimbursement for travel by an elected state
officer or local elected officeholder as described in subdivision
(a).

end delete begin delete

(C) The donor, or an agent, employee, or representative of the
donor, accompanied an elected state officer or local elected
officeholder for any portion of travel as described in subdivision
(a).

end delete begin delete

(3)

end delete begin insert

(B) Accompanied an elected state officer or local elected
officeholder, either personally or through an agent, employee, or
representative, for any portion of travel described in subdivision
(a).

end insert begin insert

(2) For purposes of this subdivision, an organization “regularly
organizes and hosts travel for elected officials” if the sum of the
organization’s expenses that relate to any of the following types
of activities with regard to elected officials was greater than
one-third of its total expenses reflected on the organization’s
Internal Revenue Service Form 990, or the equivalent, filed most
recently within the last twelve months:

end insert begin insert

(A) Travel.

end insert begin insert

(B) Study tours.

end insert begin insert

(C) Conferences, conventions, and meetings.

end insert

begin insert (3) end insert   begin delete For purposes of Sections 87103, 87207, and 89503, a
nonprofit organization that makes payments, advances, or
reimbursements for travel by an elected state officer or local elected
officeholder as described in subdivision (a) is the source of the
gift unless the nonprofit organization end delete begin insert This subdivision does not
preclude a finding that a nonprofit organization end insert is acting as an
intermediary or agent of the donor. If the nonprofit organization
is acting as an intermediary or agent of the donor, all of the
following apply:

(A) The donor to the nonprofit organization is the source of the
gift.

(B) The donor shall be identified as a financial interest under
Section 87103.

(C) The gift shall be reported as required by Section 87207.

(D) The gift shall be subject to the limitations on gifts specified
in Section 89503.

begin insert

(4) For purposes of this subdivision, a nonprofit organization
includes an organization that is exempt from taxation under Section
501(c)(3) or Section 501(c)(4) of the Internal Revenue Code.

end insert

SEC. 3.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

SEC. 4.  

The Legislature finds and declares that this bill furthers
the purposes of the Political Reform Act of 1974 within the
meaning of subdivision (a) of Section 81012 of the Government
Code.