BILL ANALYSIS
AB 2842
Page 1
ASSEMBLY THIRD READING
AB 2842 (Leno)
As Amended April 14, 2004
2/3 vote. Urgency
ELECTIONS 7-0 APPROPRIATIONS 21-0
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|Ayes:|Longville, Samuelian, |Ayes:|Chu, Runner, Bates, Berg, |
| |Jerome Horton, Levine, | |Calderon, Corbett, |
| |Strickland, Mullin, | |Correa, Daucher, |
| |Vargas | |Firebaugh, Goldberg, |
| | | |Haynes, Keene, Leno, |
| | | |Nation, Negrete McLeod, |
| | | |Oropeza, Pavley, |
| | | |Ridley-Thomas, Wesson, |
| | | |Wiggins, Yee |
|-----+--------------------------+-----+--------------------------|
| | | | |
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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 : According to the Assembly Appropriations
Committee analysis, minor absorbable costs to the Fair Political
Practices Commission (FPPC) for enforcement, offset to some
extent by penalty revenues.
COMMENTS : 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
AB 2842
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Superior Court ruling, it does not have the force of law."
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.
Based on this provision and on advice from 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 , FPPC has
indicated its intent to revisit its interpretation that excludes
bank loans from the personal loan limit. 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.
SB 1449 (Johnson), pending in the Senate, 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.
California voters passed an initiative, Proposition 9, in 1974
that created FPPC and codified significant restrictions and
prohibitions on candidates, officeholders and lobbyists.
Amendments to the Political Reform Act that are not submitted to
the voters, such as those contained in this bill, require a
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two-thirds vote of both houses of the Legislature.
This bill contains an urgency clause and, if signed into law
before November 2, 2004, would apply to this year's statewide
general election.
Analysis Prepared by : Ethan Jones / E., R. & C. A. / (916)
319-2094
FN: 0005422