BILL ANALYSIS Ó SB 21 Page 1 SENATE THIRD READING SB 21 (Hill) As Amended August 26, 2015 2/3 vote SENATE VOTE: 36-1 ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Elections |6-0 |Ridley-Thomas, Grove, | | | | |Gatto, Gordon, | | | | |Mullin, Perea | | | | | | | |----------------+-----+----------------------+--------------------| |Appropriations |17-0 |Gomez, Bigelow, | | | | |Bloom, Bonta, | | | | |Calderon, Chang, | | | | |Nazarian, Eggman, | | | | |Gallagher, Eduardo | | | | |Garcia, Holden, | | | | |Jones, Quirk, Rendon, | | | | |Wagner, Weber, Wood | | | | | | | ------------------------------------------------------------------ SB 21 Page 2 SUMMARY: Requires specified nonprofit organizations that make payments for travel by public officials to disclose the names of certain donors. Requires a public official who receives a gift of travel to disclose the destination of the travel. Specifically, this bill: 1)Requires a tax exempt 501(c)(3) or 501(c)(4) nonprofit organization to disclose the names of certain donors to the organization if both of the following apply: a) The organization 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 or local officer related to a legislative or governmental purpose, or to an issue of state, national, or international public policy; and, b) The sum of the organization's expenses that relate to elected officials' travel, study tours, or conferences, conventions, or meetings was greater than one-third of its total expenses reflected on the organization's most recently filed Internal Revenue Service Form 990. 2)Requires an organization that meets the criteria in 1) above, to disclose to the Fair Political Practices Commission (FPPC) the names of those donors who did both of the following in the preceding calendar year: a) Donated at least $1,000 to the nonprofit organization; and, b) Accompanied the elected official, either personally or through a representative of the donor, for any portion of the travel. SB 21 Page 3 3)Provides that this bill shall not preclude a finding that a nonprofit organization is acting as an intermediary or agent of a donor of a gift of travel. 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. 4)Requires a public official who receives a gift that is a travel payment, advance, or reimbursement that must be disclosed on the official's Statement of Economic Interests (SEI), to disclose the travel destination on the SEI. 5)Contains double-jointing language to avoid chaptering problems with AB 10 (Gatto) of the current legislative session. FISCAL EFFECT: According to the Assembly Appropriations Committee, the FPPC will incur one-time General Fund costs of $90,000 for one-half position to develop the forms and procedures for implementing the new reporting requirements. Ongoing General Fund costs would be around $170,000 for regulations, responding to advice requests, monitoring filings, and enforcement. COMMENTS: According to the author, "SB 21 increases transparency within the Political Reform Act [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. SB 21 Page 4 The bill would also require elected officials to disclose to the FPPC the destination of the travel." Certain payments for travel related to a legislative or governmental purpose, or to an issue of state, national, or international public policy, are not subject to gift limits if the travel is: 1) in connection with a speech given by the official, or 2) provided by a government agency, 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. 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. This bill is similar to portions of SB 831 (Hill) of 2014, which was vetoed by Governor Brown. 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." 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, SB 21 Page 5 must further the purposes of the initiative and require a two-thirds vote of both houses of the Legislature. Please see the policy committee analysis for a full discussion of this bill. Analysis Prepared by: Ethan Jones / E. & R. / (916) 319-2094 FN: 0001660