BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 21|
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UNFINISHED BUSINESS
Bill No: SB 21
Author: Hill (D)
Amended: 8/26/15
Vote: 27
SENATE ELECTIONS & C.A. COMMITTEE: 3-1, 4/7/15
AYES: Allen, Hancock, Hertzberg
NOES: Anderson
NO VOTE RECORDED: Liu
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SENATE FLOOR: 36-1, 6/1/15
AYES: Allen, Bates, Beall, Berryhill, Block, Cannella, De
León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock,
Hernandez, Hertzberg, Hill, Huff, Jackson, Leyva, Liu,
McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell,
Nguyen, Nielsen, Pan, Pavley, Roth, Runner, Stone, Vidak,
Wieckowski, Wolk
NOES: Anderson
NO VOTE RECORDED: Hueso, Lara, Leno
ASSEMBLY FLOOR: 78-0, 9/8/15 - See last page for vote
SUBJECT: Political Reform Act of 1974: gifts of travel
SOURCE: Author
DIGEST: This bill requires certain nonprofit organizations
that pay for specified types of travel for elected officeholders
to disclose the names of donors responsible for funding the
travel. This bill requires an officeholder who receives a gift
of a travel payment from any source to report the travel
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destination on his or her statement of economic interests (SEI).
Assembly Amendments (1) narrow application of the bill to
specified nonprofit organizations that regularly organize and
host travel for elected officials, as defined, and to donors who
send a representative on any portion of the travel subject to
disclosure, and (2) address a potential chaptering problem with
AB 10 (Gatto).
ANALYSIS:
Existing law:
1)Prohibits specified elected officeholders and other public
officials from receiving gifts, as defined, in excess of $440
in value from a single source in a calendar year.
2)Exempts payments for the actual costs of specified types of
travel from the annual gift limit. Specifically, 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 applies:
a) The travel is in connection with a speech given by the
officeholder or 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.
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
status under Section 501(c)(3) of the Internal Revenue
Code.
1)Requires candidates for, and current holders of, specified
elected or appointed state and local offices and designated
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employees of state and local agencies to file periodic SEI
rests disclosing their financial interests, including
investments, real property interests, income, and gifts,
including gifts of travel. SEI must include a description of
the gift as well as the amount and the date on which the gift
was received.
2)Provides that pursuant to Fair Political Practices Commission
(FPPC) regulations, 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. 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.
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,
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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.
1)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.
1)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.
1)Requires a public official who receives a gift that is a
travel payment, advance, or reimbursement that must be
disclosed on the official's SEI, to disclose the travel
destination on the SEI.
2)Contains double-jointing language to avoid chaptering problems
with AB 10 (Gatto) of the current legislative session.
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Background
1)Travel payment exceptions. As discussed above, some travel
payments are not subject to the $440 gift limit but are
reportable on an official's statement of economic interests,
e.g., certain travel in connection with a speech, panel or
seminar and certain travel provided by specified nonprofit
organizations.
2)While nonprofit organizations must submit some specified
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.
Hence, nonprofit organizations that provide payments for
foreign and domestic travel for California public officials
are not required to publicly disclose this information either
even when donations are solicited for those purposes provided
they are not solicited for a specific recipient of the travel
payment.
Comments
1)According to the author, under current law, the public has no
way of knowing who is paying for legislator travel or where
they are going. Donors hide behind non-profits preventing the
public from knowing who was behind the gift to the elected
official. The public has a right to know where elected
officials are traveling when the travel is paid for by special
interests. The public also has a right to know which special
interests are paying for the travel.
Examples of non-profits that fund legislator travel include:
California Foundation on the Environment and the Economy,
California Independent Voter Project, and the Pacific Policy
Research Foundation. An analysis by the Sacramento Bee found
that California lawmakers received more than $550,000 in
travel-related expenses from outside organizations in 2013.
Related/Prior Legislation
This bill is a reintroduction of a portion of SB 831 (Hill,
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2014) which was vetoed by the Governor. The Governor vetoed the
bill because it contained many restrictions in addition to
disclosure requirements. The restrictions in SB 831 included:
Prohibiting elected officials from contributing campaign funds
to 501(c)(4) nonprofits owned or operated by their family
members.
Prohibiting elected officials from asking people to donate to
a 501(c)(4) nonprofit owned or operated by a family member.
Prohibiting elected officials from contributing campaign funds
to 501(c)(4) nonprofits operated by another elected official
on the same governing body.
Prohibiting the expenditure of campaign funds for an elected
official's mortgage, rent, utility bills, clothing, club
memberships, vacations, tuition, vehicles, and gifts to family
members.
SB 21 removes the prohibitions in last year's SB 831 and only
requires increased transparency for elected official travel.
In his veto message, the Governor stated the following: "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."
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
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.
SUPPORT: (Verified 9/8/15)
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Page 7
California Common Cause
California Newspaper Publishers Association
California Public Interest Research Group
League of Women Voters of California
OPPOSITION: (Verified9/8/15)
None received
ASSEMBLY FLOOR: 78-0, 9/8/15
AYES: Achadjian, Alejo, Baker, Bigelow, Bloom, Bonilla, Bonta,
Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu,
Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman,
Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo
Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove,
Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,
Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,
Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Travis Allen, Chávez
Prepared by:Darren Chesin / E. & C.A. / (916) 651-4106
9/9/15 9:07:30
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