BILL ANALYSIS �
SENATE COMMITTEE ON ELECTIONS
AND CONSTITUTIONAL AMENDMENTS
Senator Alex Padilla, Chair
BILL NO: AB 1673 HEARING DATE: 6/24/14
AUTHOR: GARCIA ANALYSIS BY: Darren Chesin
AMENDED: 4/9/14
FISCAL: YES
SUBJECT
Political Reform Act: contributions
DESCRIPTION
Existing law , pursuant to the Political Reform Act (PRA),
provides for the comprehensive regulation of campaign financing,
including requiring the reporting of campaign contributions and
expenditures and imposing other reporting and recordkeeping
requirements on campaign committees.
Existing law defines "contribution" for purposes of the PRA as a
payment, a forgiveness of a loan, a payment of a loan by a third
party, or an enforceable promise to make a payment, except to
the extent that full and adequate consideration is received,
unless it is clear from the surrounding circumstances that it is
not made for political purposes.
Existing law does not include in the definition of
"contribution" a payment made by an occupant of a home or office
for costs related to any meeting or fundraising event held in
the occupant's home or office if the costs for the meeting or
fundraising event are $500 or less.
Existing law prohibits a lobbyist from making, and an elected
state officer or candidate for elective state office from
accepting, a contribution if the lobbyist is registered to lobby
the governmental agency for which the candidate is seeking
election or the governmental agency of the elected state
officer.
This bill provides that a payment made by an occupant of a home
or an office who is a lobbyist, lobbying firm, or lobbyist
employer for costs related to a meeting or fundraising event
held in the occupant's home or office is considered a
"contribution" under the PRA, regardless of the costs for the
meeting or fundraising event. Specifically, this bill exempts
events held in the home or office of a lobbyist, lobbying firm,
or lobbyist employer from a provision of law that provides that
a payment made by an occupant of a home or an office for costs
related to any meeting or fundraising event held in the
occupant's home is not considered a contribution if the costs
for the meeting or fundraising event are $500 or less.
BACKGROUND
Hosted Fundraisers . The PRA, among other things, requires
candidates and committees to disclose contributions made and
received and expenditures made in connection with campaign
activities. The term "contribution" is defined as any payment
for political purposes for which full and adequate consideration
is not provided to the donor.
When individuals or entities make payments in connection with
holding a fundraiser for a candidate, such payments ordinarily
are considered contributions to the candidate. However, current
law allows for some exceptions. For example, payments made by
the occupant of a home or office for costs related to any
meeting or fundraising event in the occupant's home or office
are not considered contributions under the PRA if the costs for
the meeting or fundraising event are $500 or less.
Although existing law prohibits lobbyists from making
contributions to elected state officers or candidates for
elected state office if that lobbyist is registered to lobby the
governmental agency for which the candidate is seeking election
or the governmental agency of the elected state officer, the
exception to the definition of the term "contribution" for the
purposes of hosted fundraising events does not exclude events
hosted by lobbyists. As a result, a lobbyist could hold a
fundraiser at his or her home and the cost would not be
considered a contribution, as long as the total cost of such an
event did not exceed $500. If other parties donate money or
goods in connection with the event, their payments must also be
counted to determine if $500 has been spent in connection with
the fundraiser. This includes goods or services provided by the
candidate or any other person attending the event. If the cost
of the event exceeds $500, all payments are counted as
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contributions.
Recent Events . In February of this year, the FPPC approved a
settlement in a case in which a registered lobbyist hosted
campaign fundraisers for state elective officers and candidates
at his house where he provided items such as beverages, flower
arrangements, and cigars. The FPPC investigated and determined
that the total cost of the fundraisers hosted by the lobbyist at
his home, including the value the items provided by the
lobbyist, exceeded $500. As a result, the items provided by the
lobbyist during the fundraisers constituted non-monetary
contributions to the campaign committees of the elective
officers and candidates who benefitted from the fundraisers -
all violations of the PRA. As a result, the FPPC levied one of
the largest penalties against a lobbyist and issued warning
letters to the elected officers and candidates who benefitted
from the fundraisers.
COMMENTS
1.According to the Author : AB 1673 will ban lobbyists hosting
home fundraisers and eliminate the dual standard that allows
lobbyists to host at their homes, non-reportable private
affair fundraisers for lawmakers, valued under $500, while at
the same time limiting direct gifts to lawmakers to only $10
per month.
Recent new stories about lavish home parties have brought to
light a loophole that allows lobbyist and contributors to
circumvent the spirit of campaign finance laws.
While lobbyists are prohibited from donating to candidates
running for offices they are registered to lobby, they can
host fundraisers in their home or office. Under a separate
section of law that allows anyone to host campaign
fundraisers, lobbyists hold fundraisers in their private homes
and offices, claiming that the cost is under $500 - not
defined as a reportable contribution. Through this exemption
lobbyists can legally connect their clients, who give campaign
contributions, with the officials whose decisions they seek to
sway.
2.Related Legislation . This bill is similar in intent to SB
1441 (Lara) which is pending in the Assembly Appropriations
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Committee.
PRIOR ACTION
Assembly Elections and Redistricting Committee: 6-0
Assembly Appropriations Committee: 17-0
Assembly Floor: 75-0
POSITIONS
Sponsor: Author
Support: California Common Cause
Oppose: None received
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