BILL ANALYSIS �
SENATE COMMITTEE ON ELECTIONS
AND CONSTITUTIONAL AMENDMENTS
Senator Alex Padilla, Chair
BILL NO: AB 1692 HEARING DATE: 6/24/14
AUTHOR: GARCIA ANALYSIS BY: Darren Chesin
AMENDED: 4/8/14
FISCAL: YES
SUBJECT
Political Reform Act
DESCRIPTION
Existing law prohibits campaign funds from being used to pay or
reimburse fines, penalties, judgments, or settlements, except
those resulting from either of the following:
Parking citations issued in the performance of an activity
that was directly related to a political, legislative, or
governmental purpose; or,
Any other action for which payment of attorney's fees from
contributions is permitted pursuant to the PRA.
Existing law requires campaign expenditures to be reasonably
related to a political, legislative, or governmental purpose.
Campaign expenditures that confer a substantial personal benefit
on an individual with the authority to approve the expenditure
of campaign funds must be directly related to a political,
legislative, or governmental purpose. "Substantial personal
benefit" for these purposes means an expenditure that results in
a direct personal benefit of more than $200.
Existing law permits candidates and elected officials to
establish a legal defense fund to defray attorney's fees and
other related legal costs incurred in the defense of the
candidate or elective officer who is subject to one or more
civil, criminal, or administrative proceedings arising directly
out of the conduct of an election campaign, the electoral
process, or the performance of the officer's governmental
activities and duties. Funds deposited into a legal defense
fund may be used only to defray those attorney's fees and other
related legal costs.
Existing law provides that campaign funds that are raised on or
after January 1, 1989 by a candidate and that remain in the
campaign account at the time the candidate leaves elective
office, or at the end of the postelection reporting period
following the defeat of the candidate, are considered surplus
campaign funds. Such funds may be used for payment of
attorney's fees for litigation which arises directly out of a
candidate's or elected official's activities, duties, or status
as a candidate or elected officer.
Existing law provides that expenditures of campaign funds for
attorney's fees and other costs in connection with
administrative, civil, or criminal litigation are not directly
related to a political, legislative, or governmental purpose
except where the litigation is directly related to activities of
a committee that are consistent with its primary objectives or
arises directly out of a committee's activities or out of a
candidate's or elected officer's activities, duties, or status
as a candidate or elected officer.
This bill limits the use of campaign funds and legal defense
funds to pay fines and penalties that are imposed for an
improper personal use of campaign funds. Specifically, this
bill :
a.Prohibits an expenditure of campaign funds to pay a fine,
penalty, judgment, or settlement relating to an expenditure of
campaign funds that was found to be improper because the
expenditure resulted in either of the following:
A personal benefit to the candidate or officer, and the
expenditure was not reasonably related to a political,
legislative, or governmental purpose; or,
A substantial personal benefit to the candidate or
officer, and the expenditure was not directly related to a
political, legislative, or governmental purpose.
a.Codifies a regulatory definition of the term "attorney's fees
and other related legal costs" for the purposes of provisions
of existing law that specify the permissible uses of funds
raised into a legal defense fund, and makes that definition
applicable to provisions of state law that restrict the use of
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surplus campaign funds and that limit the circumstances under
which campaign funds may be used to pay fines, penalties,
judgments, or settlements.
BACKGROUND
Personal Use of Campaign Funds : Existing law generally
prohibits campaign funds from being used for personal expenses,
and instead requires campaign expenditures to be reasonably
related to a political, legislative, or governmental purpose.
When a campaign expenditure results in a personal benefit of
more than $200 to an individual who had the authority to approve
the expenditure, the expenditure must be directly related to a
political, legislative, or governmental purpose. These
provisions are intended to ensure that campaign funds are not
used as a method of personally enriching candidates and officers
of political committees.
Use of Campaign Funds to Pay Fines & Penalties and Possible
Amendment : As noted above, the PRA generally allows campaign
funds to be used to pay or reimburse fines and penalties only if
the action is one for which the use of campaign funds to pay
attorney's fees would be permissible. The use of campaign funds
to pay attorney's fees is permissible only when those attorney's
fees arise directly out of an election campaign, the electoral
process, or the performance of an official's governmental
activities. These provisions are a natural extension of the
"personal use" provisions of the PRA -- if litigation against a
candidate or elected official is unrelated to that person's
duties or activities as a candidate or official, then the
expenditure of campaign funds for attorney's fees (or to pay any
fines or penalties that result from the litigation) would not be
reasonably or directly related to a political, governmental, or
legislative purpose, but instead would serve to defray the
personal legal expenses of the candidate or official.
Arguably, the concept behind this bill is similar. When a
determination is made in an enforcement action that a candidate
or other person has received an impermissible personal benefit
from a campaign expenditure, a necessary part of that
determination is an assessment that the expenditure in question
was not related to a political, legislative, or governmental
purpose as required by law. To permit campaign funds to be used
to pay a fine or penalty in such a situation would seem to be
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inconsistent with the policy that campaign expenditures must be
related to a political, legislative, or governmental purpose,
since the underlying expenditure that led to the fine or penalty
being imposed was deemed not to be related to a political,
legislative, or governmental purpose.
Regulatory Definition of "Attorney's Fees" : As noted above,
existing law permits candidates and elected officials to
establish a legal defense fund to defray attorney's fees and
other related legal costs under certain situations. The FPPC
has adopted a regulation to define the term "attorney's fees and
other related legal costs" for the purpose of expenditures from
legal defense funds. This bill codifies the definition in the
FPPC regulation.
Additionally, this bill adopts the FPPC's regulatory definition
of "attorney's fees" for the purposes of other provisions of the
PRA that allow surplus campaign funds and non-legal defense
campaign funds to be used for attorney's fees.
COMMENTS
1.According to the Author : Under existing law, a candidate,
elected officer, or individual with authority to approve
campaign expenditures may authorize the use of campaign funds
to pay for administrative fines. Fines such as those
assessed by the FPPC to address issues like the misuse of
campiagn funds are currently eligible to be paid out of
campaign accounts.
While this practice is technically legal, it flys in the face of
the spirit of FPPC rules and regualtions and promotes further
distrust between elected officals who abuse responsibliites
and those they were elected to serve.
To prevent campaign funds from being used to pay for fines that
result from the violation of campaign fund laws (i.e. making
expenditures intended for private purposes), AB 1692
prohibits the use of campaign funds to pay for the associated
fines, penalties, judgments and settlements.
2.Related Legislation : AB 2692 (Fong), which was approved by
this committee and is now pending in the Senate Appropriations
Committee, requires a person who is found in an administrative
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proceeding to have improperly used campaign funds for personal
purposes, to pay the value of the personal benefit received to
the general fund, in addition to any other fine or penalty
imposed as a result of the proceeding.
AB 1666 (Garcia), which is also being heard in this committee
today, prohibits the use of campaign funds to pay restitution
fines that are imposed when a public official is convicted of
bribery, as specified.
SB 1379 (Huff), which is also being heard in this committee
today, would prohibit the use of campaign funds for attorney's
fees and other costs in connection with criminal litigation
but would maintain the option of using a legal defense account
for such expenses.
PRIOR ACTION
Assembly Elections and Redistricting Committee: 6-0
Assembly Appropriations Committee: 17-0
Assembly Floor: 77-0
POSITIONS
Sponsor: Author
Support: None received
Oppose: None received
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