BILL ANALYSIS
AB 2842
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Date of Hearing: April 20, 2004
ASSEMBLY COMMITTEE ON ELECTIONS, REDISTRICTING AND
CONSTITUTIONAL AMENDMENTS
John Longville, Chair
AB 2842 (Leno) - As Amended: April 14, 2004
SUBJECT : Political Reform Act of 1974.
SUMMARY : Provides that the proceeds of a loan obtained by a
candidate from a commercial lending institution and loaned by
the candidate to his or her campaign are subject to the $100,000
personal loan limitation.
EXISTING LAW :
1)Provides that a candidate for elective state office may not
personally loan to his or her campaign an amount in excess of
$100,000.
2)Prohibits a candidate for state elective office from returning
a contribution made by the candidate to his or her own
campaign.
FISCAL EFFECT : Unknown. State-mandated local program;
contains a crimes and infractions disclaimer.
COMMENTS :
1)Purpose of the Bill : According to the author, "This measure
closes the candidate bank loan loophole used by multiple
candidates so that loans are limited to $100,000, consistent
with the current limit on personal loans. AB 2842 will make
California law consistent with the decision in Camp v.
Schwarzenegger. Since this was a Superior Court ruling, it
does not have the force of law.
2)Bank Loans and the Personal Loan Limit : Title 2, California
Code of Regulations, Section 18530.8(c) provides, in part:
"(c) The proceeds of a loan made to a candidate by a commercial
lending institution for which the candidate is personally
liable . . . which the candidate then lends to his or her
campaign do not count toward the $100,000 loan limit."
AB 2842
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Based on this provision and on advice from the Fair Political
Practices Commission (FPPC), a number of candidates for state
elective office have taken out bank loans in excess of
$100,000, and have loaned the proceeds of those bank loans to
their campaigns. However, the Sacramento County Superior
Court ruled in Camp v. Schwarzenegger (2004) Super. Ct.
Sacramento County, No. 03AS05478, that the state law does not
permit a candidate for state elective office to loan his or
her campaign an amount in excess of the $100,000 loan limit,
regardless of the source of funds. The court found that the
provisions of Title 2, California Code of Regulations, Section
18530.8(c) are "an erroneous and unreasonable construction of"
state law.
In light of the Superior Court ruling in Camp , the FPPC has
indicated its intent to revisit its interpretation that
excludes bank loans from the personal loan limit. The FPPC is
scheduled to review that regulation in August of this year.
This bill would, in effect, codify the court's ruling in Camp ,
by specifying that the proceeds of a loan obtained by a
candidate from a commercial lending institution are included
in the $100,000 limit on the amount that a candidate for
elective state office may personally loan to his or her
campaign.
3)Related Legislation : SB 1449 (Johnson), pending in the Senate
Elections Committee, clarifies that the proceeds of a loan
obtained by a candidate from a commercial lending institution
and loaned by the candidate to his or her campaign are subject
to the $100,000 personal loan limitation.
4)Political Reform Act of 1974 (PRA) : California voters passed
an initiative, Proposition 9, in 1974 that created the FPPC
and codified significant restrictions and prohibitions on
candidates, officeholders and lobbyists. Amendments to the PRA
that are not submitted to the voters, such as those contained
in this bill, require a 2/3 vote of both houses of the
Legislature.
5)Urgency Clause : This bill contains an urgency clause and, if
signed into law before November 2, 2004, would apply to this
year's statewide general election.
REGISTERED SUPPORT / OPPOSITION :
AB 2842
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Support
None on file.
Opposition
None on file.
Analysis Prepared by : Ethan Jones / E., R. & C. A. / (916)
319-2094