BILL ANALYSIS                                                                                                                                                                                                    



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          6Date of Hearing:  August 3, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          SB 816  
          (Hill) - As Amended April 26, 2016


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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   
          No


          SUMMARY:


          This bill lowers, from $250 to $100, the campaign contribution  
          threshold that triggers conflict of interest requirements for  
          members of the Board of Equalization (BOE), under the Quentin L.  
          Kopp Conflict of Interest Act of 1990 (Kopp Act).


          FISCAL EFFECT:


          Additional costs for BOE members to track contributions under  
          the lower conflict of interest threshold and one-time  








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          administrative costs for the BOE to notify taxpayers,  
          participants and agents of the revised threshold and to amend  
          corresponding regulations will be minor and absorbable.


          COMMENTS:


          1)The Kopp Act (named for former Senator Quentin Kopp) prohibits  
            a member of the BOE from participating in an adjudicatory  
            proceeding if the member knows, or has reason to know, that he  
            or she received contributions totaling $250 or more in the 12  
            months prior to the proceeding from a party, participant, or  
            agent of a party or participant, as specified. Members are  
            permitted to participate in the decision, however, if they  
            return the contribution within a specified time period.  The  
            argument for enacting the Kopp Act was that the BOE should be  
            subject to rules similar to those that applied to appointed  
            boards and commissions (under the Levine Act) because of the  
            BOE's quasi-judicial role as the appellate body for state tax  
            appeals.  Unlike the Levine Act, the Kopp Act is not part of  
            the PRA, and is neither administered nor enforced by the FPPC.


          2)Purpose. This bill reduces the threshold Kopp Act threshold  
            from $250 to $100, thus matching the minimum contribution  
            amount that is reportable under the state's campaign finance  
            laws. In support, BOE President Fiona Ma states, "these are  
            reasonable restrictions that will strengthen public confidence  
            that the Board decides cases based on facts and the law,  
            independent of inappropriate influence."


          3)Strategic Disqualification Under the Kopp Act.  Under the  
            BOE's Regulation 5550, any three members of the BOE constitute  
            a quorum, except in specified circumstances, and a majority of  
            the quorum is required to approve or disapprove taxpayer  
            appeals and other matters.  As a result, if two members of the  
            BOE are disqualified under the Kopp Act from participating in  








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            a proceeding, it would take only two of the remaining three  
            members to reach a decision in the proceeding.  The fact that  
            disqualifications due to the Kopp Act can reduce the number of  
            votes necessary for the BOE to reach a decision has led to  
            concern that parties and participants can strategically  
            disqualify members of the BOE from certain proceedings by  
            making campaign contributions of $250 or more to those  
            members.


          4)Opposition. BOE Member Jerome Horton is opposed to lowering  
            the threshold, arguing in part that "It subjects a subset of  
            small businesses, who previously participated in the political  
            process, to civil and criminal penalties in Government Code  
            section 15626(i) and violates their due process if they fail  
            to report even minimal amounts (or in-kind donations)  
            aggregating to $100 within 30 days of making the  
            contribution."


          5)Related Legislation. AB 1828 (Dodd), which eliminated the $250  
            Kopp Act threshold and expanded the conflict of interest  
            provisions to apply to contributions made in the three months  
            after a proceeding before the BOE and to include behested  
            payments aggregating $5,000 or more, was held on this  
            committee's Suspense file in May.


          Analysis Prepared by:Chuck Nicol / APPR. / (916)  
          319-2081

















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