BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2842
                                                                  Page  1

          Date of Hearing:   May 5, 2004

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                   Judy Chu, Chair

                    AB 2842 (Leno) - As Amended:  April 14, 2004 

          Policy Committee:                              ElectionsVote:7-0

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          Establishes that the proceeds of a loan obtained by a candidate  
          for state office from a commercial lending institution and  
          loaned by the candidate to their campaign is subject to the  
          $100,000 personal loan limitation.

           FISCAL EFFECT  

          Minor absorbable costs to the Fair Political Practices  
          Commission (FPPC) for enforcement, offset to some extent by  
          penalty revenues.

           COMMENTS  

           1)Background and Purpose  .  Title 2, California Code of  
            Regulations, Section 18530.8(c) provides, in part: "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." 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 to their campaigns. However, the Sacramento County  
            Superior Court recently ruled in  Camp v. Schwarzenegger  that  
            the state law does not permit a candidate for state elective  
            office to loan their campaign an amount in excess of the  
            $100,000 limit regardless of the source of funds.  This bill  
            would, in effect, codify the court's ruling in  Camp  . 

           2)Related Legislation  .  SB 1449 (Johnson), pending in the Senate  
            Elections Committee, clarifies that the proceeds of a loan  








                                                                  AB 2842
                                                                  Page  2

            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.

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