Amended in Assembly August 26, 2015

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 that regularly organizes and hosts travel for elected officials, as specified, and that pays for these types of travel for an elected state officer or local elected officeholder to disclose the names of donors who, in the preceding year, both donated to the nonprofit begin insert organization end insert and accompanied an elected officer or officeholder for any portion of the travel, 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.

begin insert

This bill would incorporate additional changes to Section 87207 of the Government Code proposed by both this bill and AB 10, which would become operative only if both bills are enacted and become effective on or before January 1, 2016, and this bill is chaptered last.

end insert

A violation of the begin delete Act’s end delete begin insert act’s end insert 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.

begin insert

begin insert SEC. 1.5. end insert   

end insert

begin insert Section 87207 of the end insert begin insert Government Code end insert begin insert is amended
to read: end insert

87207.  

(a)  begin delete When end delete begin insert Except as provided in subdivision (b), if end insert
income is required to be reported under this article, the statement
shall begin delete contain, except as provided in subdivision (b): end delete begin insert contain all of
the following: end insert

(1) The name and address of each source of income aggregating
begin delete five hundred end delete begin insert one thousand end insert dollars begin delete ($500) end delete begin insert ($1,000) end insert 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 begin delete whether end delete begin insert indicating which end insert begin insert of the following
represents end insert the aggregate value of income from each source, or in
the case of a loan, the highest amount owed to each begin delete 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). end delete
begin insert source: end insert

begin insert

(A) At least one thousand dollars ($1,000) but not greater than
ten thousand dollars ($10,000).

end insert begin insert

(B) Greater than ten thousand dollars ($10,000) but not greater
than one hundred thousand dollars ($100,000).

end insert begin insert

(C) Greater than one hundred thousand dollars ($100,000) but
not greater than two hundred fifty thousand dollars ($250,000).

end insert begin insert

(D) Greater than two hundred fifty thousand dollars ($250,000)
but not greater than five hundred thousand dollars ($500,000).

end insert begin insert

(E) Greater than five hundred thousand dollars ($500,000).

end insert

(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 begin delete received. end delete begin insert received, and the travel destination for purposes
of a gift that is a travel payment, advance, or reimbursement. end insert

(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)  begin delete When end delete begin insert If end insert 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 begin delete contain: end delete begin insert contain the
following: end insert

(1)  begin insert (A) end insert begin insert   end insert begin insert The name, address, end insert begin insert and, except as provided in
subparagraph (B), a thorough and detailed description of the
business activity of the business entity based on criteria established
by the commission. end insert

begin insert (B) end insert begin insert   end insert begin delete The name, address, and a general end delete begin insert A filer is not required to
provide a thorough and detailed end insert description of the business activity
of the business begin delete entity. end delete begin insert end insert begin insert entity if the business entity is publicly traded. end insert

(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)  begin delete When end delete begin insert If end insert 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 begin delete schedule end delete begin insert schedule, end insert
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 begin delete local, end delete begin insert local end insert 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 regularly organizes and
hosts travel for elected officials and that 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 donors who did both of the following in the preceding
year:

(A) Donated one thousand dollars ($1,000) or more to the
nonprofit organization.

(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).

(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 begin delete twelve end delete begin insert 12 end insert months:

(A) Travel.

(B) Study tours.

(C) Conferences, conventions, and meetings.

(3) This subdivision does not preclude a finding that a nonprofit
organization 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.

(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.

begin insert

begin insert SEC. 3. end insert   

end insert begin insert

Section 1.5 of this bill incorporates amendments to
Section 87207 of the Government Code proposed by both this bill
and AB 10. It shall only become operative if (1) both bills are
enacted and become effective on or before January 1, 2016, (2)
each bill amends Section 87207 of the Government Code, and (3)
this bill is enacted after AB 10, in which case Section 1 of this bill
shall not become operative.

end insert

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

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.

begin delete SEC. 4. end delete
begin insert SEC. 5. end insert   

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.