BILL ANALYSIS Ó
SB 21
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Date of Hearing: July 1, 2015
ASSEMBLY COMMITTEE ON ELECTIONS AND REDISTRICTING
Sebastian Ridley-Thomas, Chair
SB
21 (Hill) - As Introduced December 1, 2014
SENATE VOTE: 36-1
SUBJECT: Political Reform Act of 1974: gifts of travel.
SUMMARY: Requires nonprofit organizations that make travel
payments for travel by public officials to disclose the names of
the donors who funded such payments, as specified. Requires a
public official who receives a gift that is a travel payment to
disclose the destination of the travel, as specified.
Specifically, this bill:
1)Requires a nonprofit organization that makes payments,
advances, or reimbursements that total more than $10,000 in a
calendar year, or that total more than $5,000 in a calendar
year for a single person, for travel by an elected state
officer or local elected officeholder related to a legislative
or governmental purpose, or to an issue of state, national, or
international public policy, to disclose to the Fair Political
Practices Commission (FPPC) the names of donors responsible
for funding the payments, advances, or reimbursements.
Provides that the names must be disclosed only for donors who
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donated $1,000 or more in a calendar year and who knew or had
reason to know that their donation would be used for a
payment, advance, or reimbursement for the travel. Provides
that a donor knows or has reason to know that his or her
donation will be used for the travel under any of the
following conditions:
a) The donor directed the nonprofit organization to use the
donation for the travel;
b) The donation was made in response to a solicitation for
donations for the travel; or,
c) The donor, or an agent, employee, or representative of
the donor, accompanied the officeholder for any portion of
the travel.
2)Provides that a nonprofit organization that makes payments,
advances, or reimbursements for travel by an elected state
officer or local elected officeholder related to a legislative
or governmental purpose, or to an issue of state, national, or
international public policy, is the source of the gift to the
officer unless the nonprofit organization is acting as an
intermediary or agent of the donor. Provides that if the
nonprofit is acting as an intermediary or agent, 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,
as specified;
c) The gift is required to be reported, as specified; and,
d) The gift is subject to the limitation on gifts, as
specified.
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3)Requires a public official who receives a gift that is a
travel payment, advance, or reimbursement, and who is required
to report that gift on his or her Statement of Economic
Interests (SEI), to disclose the travel destination on the SEI
in addition to the value of the payment, advance, or
reimbursement.
EXISTING LAW:
1)Creates the FPPC, and makes it responsible for the impartial,
effective administration and implementation of the Political
Reform Act (PRA).
2)Prohibits specified elected officers and other public
officials from receiving gifts, as defined, in excess of $460
in value from a single source in a calendar year. Provides
that payments for travel that is reasonably related to a
legislative or governmental purpose, or to an issue of state,
national, or international public policy, are not subject to
the gift limit if either of the following is true:
a) The travel is in connection with a speech given by the
official and 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; or,
b) The travel is provided by a government, a governmental
agency, a foreign government, a governmental authority, a
bona fide public or private educational institution, 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
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status under Section 501(c)(3) of the Internal Revenue
Code.
3)Requires candidates for, and current holders of, specified
elected or appointed state and local offices and designated
employees of state and local agencies to file SEIs disclosing
their financial interests, including investments, real
property interests, and income, including gifts.
4)Provides that a person who makes a gift to a public official
is the source of the gift for reporting and other applicable
purposes unless that person is acting as an intermediary.
Provides that the person is acting as an intermediary for the
source of the gift when the gift to the official was provided
under any of the following conditions:
a) The person receives a payment from a source and the
payment is made to the official after the source identifies
the official as the intended recipient of the gift;
b) The person receives a payment from a source after
soliciting the payment with the understanding that the
payment will be used for the sole or primary purpose of
making a gift to an official; or,
c) The person receives a payment from a source after the
payment was solicited by the official or the official's
agent for the purpose of making a gift to the official.
5)Provides that in the case where a person is acting as an
intermediary in making a gift, the source of the payment to
that person that is used to make the gift is considered the
source of the gift.
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FISCAL EFFECT: According to the Senate Appropriations
Committee, annual costs of $178,778 to the FPPC (General Fund).
This estimate includes the need for one Political Reform
Consultant and 1/2 of an Attorney III position to create the new
form and update related materials; promulgate regulations;
handle advice requests; and provide public outreach and
education. State-mandated local program; contains a crimes and
infractions disclaimer.
COMMENTS:
1)Purpose of the Bill: According to the author:
SB 21 increases transparency within the [PRA] by
requiring non-profits that pay for elected official
travel to disclose to the FPPC the names of the donors
responsible for funding the travel.
Currently non-profits do not have to disclose the
source of travel funding preventing the public from
knowing who was behind the gift to the elected
official.
The bill would also require elected officials to
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disclose to the FPPC the destination of the travel.
This is a scaled back version of last year's SB 831 -
I've only included the transparency provisions to
address the Governor's veto message.
2)Gifts of Travel: As noted above, the PRA generally prohibits
elected state and local officers, among others, from accepting
gifts from a single source in a calendar year with a total
value of more than $460. This gift limit is adjusted every
two years to reflect changes in inflation. Additionally,
elected state officers, among others, may not accept gifts
aggregating more than $10 in a calendar month from or arranged
by registered state lobbyists or lobbying firms. Travel
payments received by public officials generally are considered
to be reportable gifts or income under the PRA, with certain
exceptions. If a travel payment is a gift, it is also
normally subject to the $460 gift limit and $10 lobbyist gift
limit, though certain exceptions apply.
Payments for travel (including lodging and subsistence) that are
related to a legislative or governmental purpose, or to an
issue of state, national, or international public policy, are
considered gifts but are not subject to the $460 gift limit if
the travel is: (1) in connection with a speech given by the
official and any 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, or (2) provided by a government agency or
authority, a bona fide public or private educational
institution, as specified, or a nonprofit organization
pursuant to Section 501(c)(3) of the Internal Revenue Code or
a similar foreign organization. Although these payments are
not subject to the $460 gift limit, they must be reported on
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an official's SEI, and the travel payments can create a
conflict of interest for the official.
While nonprofit organizations must submit some financial
information to the United States Internal Revenue Service and
make it publicly available, they are not generally required to
publicly disclose the identity of their donors. As a result,
nonprofit organizations that provide payments for foreign and
domestic travel for California public officials are not
required to publicly disclose this information, even when
donations are solicited for those purposes, as long as the
payments are not solicited for a specific recipient of the
travel payment.
3)Arguments in Support: In support of this bill, the League of
Women Voters of California writes:
Californians have the right to know how travel by
their elected officials is financed. SB 21 requires
nonprofits that make significant payments for
officials' travel in connection with public policy
issues or legislative or governmental purposes to
disclose the names of donors who fund those payments.
It also requires that gifts of travel disclosed on
Statements of Economic Interests list the travel
destination.
This improved transparency will reduce the public's
perception of undue influence and corruption and
bolster citizens' faith in the honesty of their
elected representatives, thus encouraging citizen
participation in the political process.
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4)Previous Legislation: This bill is similar to portions of SB
831 (Hill) of 2014, which was vetoed by Governor Brown. In
addition to the portions that were similar to this bill, SB
831 also proposed new restrictions on the use of campaign
funds and would have prohibited an elected official from
requesting that behested payments be made to specified
nonprofit organizations that are owned or controlled by that
official or by family members of the official. In his veto
message, the Governor wrote "The activities that are addressed
by this bill are already subject to extensive regulation,
including robust disclosure requirements. The additional
restrictions proposed by this bill would add more complexity
to the regulations governing elected officials, without
reducing undue influence."
5)Political Reform Act of 1974: California voters passed an
initiative, Proposition 9, in 1974 that created the FPPC and
codified significant restrictions and prohibitions on
candidates, officeholders and lobbyists. That initiative is
commonly known as the PRA. Amendments to the PRA that are not
submitted to the voters, such as those contained in this bill,
must further the purposes of the initiative and require a
two-thirds vote of both houses of the Legislature
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REGISTERED SUPPORT / OPPOSITION:
Support
California Newspaper Publishers Association
League of Women Voters of California
Opposition
None on file.
Analysis Prepared by:Ethan Jones / E. & R. / (916)
319-2094