Senate Bill No. 831

Introduced by Senator Hill

(Principal coauthor: Senator Beall)

(Principal coauthors: Assembly Members Garcia and Levine)

January 6, 2014

An act to amend Sections 82015, 89506, and 89515 of, and to add Sections 87106, 89512.7, and 89515.5 to, the Government Code, relating to the Political Reform Act of 1974.

LEGISLATIVE COUNSEL’S DIGEST

SB 831, as introduced, Hill. Political Reform Act of 1974.

(1) The Political Reform Act of 1974 provides for the comprehensive regulation of campaign financing and related matters, including the reporting of campaign contributions, as defined. Under existing law, a payment made at the behest of a candidate for elective office is considered a contribution unless the payment is made for purposes unrelated to the candidate’s candidacy, and a payment is presumed to be unrelated to a candidate’s candidacy if it is made principally for legislative, governmental, or charitable purposes. Pursuant to the act, payments principally for legislative, governmental, or charitable purposes made at the behest of a candidate who is an elected officer must be reported within 30 days following the date on which the payment or payments equal or exceed $5,000 in the aggregate from the same source in the same calendar year in which they are made.

This bill would reduce the reporting threshold for a behested payment to $2,500. The bill would also require the Fair Political Practices Commission to post certain behested payment reports on its Internet Web site within 30 days of receipt of the report. The bill would prohibit an elected officer from requesting that a payment be made, or a person from making a payment, at the behest of the elected officer to a business entity or nonprofit organization owned or controlled by specified persons, as specified, including that officer, any other elected officer who serves on the same elective body as the behesting officer and family members, as defined, of elective officers serving on that elective body.

(2) The act prohibits specified officers from receiving gifts, as defined, in excess of $440 in value from a single source in a calendar year. The act exempts gift payments for the actual costs of specified types of travel that are reasonably related to a legislative or governmental purpose, or to an issue of state, national, or international public policy from the annual limit on the value of gifts from a single source.

This bill would impose an annual limit on gift payments from a single source for these types of travel at $5,000.

(3) The act requires that contributions deposited into a campaign account be held in trust for expenses associated with the election of the candidate or for expenses associated with holding office. The act provides that an expenditure to seek office is within the lawful execution of this trust if it is reasonably related to a political purpose and an expenditure associated with holding office is within the lawful execution of this trust if it is reasonably related to a legislative or governmental purpose. Expenditures which confer a substantial personal benefit must be directly related to a political, legislative, or governmental purpose. The act authorizes the use of campaign funds to make donations or loans to bona fide charitable, educational, civic, religious, or similar tax-exempt nonprofit organizations. The act imposes additional limitations on certain expenditures, including those relating to automotive expenses, travel expenses, tickets for entertainment or sporting events, personal gifts, and real property expenses.

The bill would prohibit an elected officer or a committee controlled by the elected officer from making an expenditure of campaign funds to a business entity or nonprofit organization owned or controlled by the officer, any other elected officer who serves on the same elective body, or family members, as defined, of elective officers serving on that elective body, as specified.

This bill would also limit the expenditure of campaign funds for other purposes, including country club memberships, household food items, tuition payments, and payments to a health club or recreational facility.

(4) A violation of the act’s provisions is punishable as a misdemeanor. By expanding the scope of an existing crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(5) The Political Reform Act of 1974, an initiative measure, provides that the Legislature may amend the act to further the act’s purposes upon a 2⁄3 vote of each house and compliance with specified procedural requirements.

This bill would declare that it furthers the purposes of the act.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 82015 of the Government Code is
amended to read:

82015.  

(a) “Contribution” means 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.

(b) (1) A payment made at the behest of a committee as defined
in subdivision (a) of Section 82013 is a contribution to the
committee unless full and adequate consideration is received from
the committee for making the payment.

(2) A payment made at the behest of a candidate is a contribution
to the candidate unless the criteria in either subparagraph (A) or
(B) are satisfied:

(A) Full and adequate consideration is received from the
candidate.

(B) It is clear from the surrounding circumstances that the
payment was made for purposes unrelated to his or her candidacy
for elective office. The following types of payments are presumed
to be for purposes unrelated to a candidate’s candidacy for elective
office:

(i) A payment made principally for personal purposes, in which
case it may be considered a gift under the provisions of Section
82028. Payments that are otherwise subject to the limits of Section
86203 are presumed to be principally for personal purposes.

(ii) A payment made by a state, local, or federal governmental
agency or by a nonprofit organization that is exempt from taxation
under Section 501(c)(3) of the Internal Revenue Code.

(iii) A payment not covered by clause (i), made principally for
legislative, governmental, or charitable purposes, in which case it
is neither a gift nor a contribution. However, payments of this type
that are made at the behest of a candidate who is an elected officer
shall be reported within 30 days following the date on which the
payment or payments equal or exceed begin delete five thousand dollars
($5,000) end delete begin insert two thousand five hundred dollars ($2,500) end insert in the
aggregate from the same source in the same calendar year in which
they are made. The report shall be filed by the elected officer with
the elected officer’s agency and shall be a public record subject
to inspection and copying pursuant to subdivision (a) of Section
81008. The report shall contain the following information: name
of payor, address of payor, amount of the payment, date or dates
the payment or payments were made, the name and address of the
payee, a brief description of the goods or services provided or
purchased, if any, and a description of the specific purpose or event
for which the payment or payments were made. Once the
begin delete five-thousand-dollar ($5,000) end delete begin insert two thousand five hundred dollar
($2,500) end insert aggregate threshold from a single source has been reached
for a calendar year, all payments for the calendar year made by
that source must be disclosed within 30 days after the date the
threshold was reached or the payment was made, whichever occurs
later. Within 30 days after receipt of the report, state agencies shall
forward a copy of these reports to the begin delete Fair Political Practices end delete
Commission, and local agencies shall forward a copy of these
reports to the officer with whom elected officers of that agency
file their campaign statements. begin insert Reports filed with the Commission
pursuant to this clause shall be posted on the Commission’s
Internet Web site not later than 30 days after receipt by the
Commission. end insert

(C) For purposes of subparagraph (B), a payment is made for
purposes related to a candidate’s candidacy for elective office if
all or a portion of the payment is used for election-related activities.
For purposes of this subparagraph, “election-related activities”
shall include, but are not limited to, the following:

(i) Communications that contain express advocacy of the
nomination or election of the candidate or the defeat of his or her
opponent.

(ii) Communications that contain reference to the candidate’s
candidacy for elective office, the candidate’s election campaign,
or the candidate’s or his or her opponent’s qualifications for
elective office.

(iii) Solicitation of contributions to the candidate or to third
persons for use in support of the candidate or in opposition to his
or her opponent.

(iv) Arranging, coordinating, developing, writing, distributing,
preparing, or planning of any communication or activity described
in clause (i), (ii), or (iii).

(v) Recruiting or coordinating campaign activities of campaign
volunteers on behalf of the candidate.

(vi) Preparing campaign budgets.

(vii) Preparing campaign finance disclosure statements.

(viii) Communications directed to voters or potential voters as
part of activities encouraging or assisting persons to vote if the
communication contains express advocacy of the nomination or
election of the candidate or the defeat of his or her opponent.

(D) A contribution made at the behest of a candidate for a
different candidate or to a committee not controlled by the
behesting candidate is not a contribution to the behesting candidate.

(3) A payment made at the behest of a member of the Public
Utilities Commission, made principally for legislative,
governmental, or charitable purposes, is not a contribution.
However, payments of this type shall be reported within 30 days
following the date on which the payment or payments equal or
exceed begin delete five thousand dollars ($5,000) end delete begin insert two thousand five hundred
dollars ($2,500) end insert in the aggregate from the same source in the same
calendar year in which they are made. The report shall be filed by
the member with the Public Utilities Commission and shall be a
public record subject to inspection and copying pursuant to
subdivision (a) of Section 81008. The report shall contain the
following information: name of payor, address of payor, amount
of the payment, date or dates the payment or payments were made,
the name and address of the payee, a brief description of the goods
or services provided or purchased, if any, and a description of the
specific purpose or event for which the payment or payments were
made. Once the begin delete five-thousand-dollar ($5,000) end delete begin insert two thousand five
hundred dollar ($2,500) end insert aggregate threshold from a single source
has been reached for a calendar year, all payments for the calendar
year made by that source must be disclosed within 30 days after
the date the threshold was reached or the payment was made,
whichever occurs later. Within 30 days after receipt of the report,
the Public Utilities Commission shall forward a copy of these
reports to the Fair Political Practices Commission. begin insert Reports filed
with the Fair Political Practices Commission pursuant to this
subparagraph shall be posted on the Commission’s Internet Web
site not later than 30 days after receipt by the Commission. end insert

begin insert

(4) For purposes of this subdivision and subdivision (h), “made
at the behest of” means made under the control or at the direction
of; in cooperation, consultation, coordination, or concert with; at
the request or suggestion of; or with the express, prior consent of.

end insert

(c) “Contribution” includes the purchase of tickets for events
such as dinners, luncheons, rallies, and similar fundraising events;
the candidate’s own money or property used on behalf of his or
her candidacy other than personal funds of the candidate used to
pay either a filing fee for a declaration of candidacy or a candidate
statement prepared pursuant to Section 13307 of the Elections
Code; the granting of discounts or rebates not extended to the
public generally or the granting of discounts or rebates by television
and radio stations and newspapers not extended on an equal basis
to all candidates for the same office; the payment of compensation
by any person for the personal services or expenses of any other
person if the services are rendered or expenses incurred on behalf
of a candidate or committee without payment of full and adequate
consideration.

(d) “Contribution” further includes any transfer of anything of
value received by a committee from another committee, unless
full and adequate consideration is received.

(e) “Contribution” does not include amounts received pursuant
to an enforceable promise to the extent those amounts have been
previously reported as a contribution. However, the fact that those
amounts have been received shall be indicated in the appropriate
campaign statement.

(f) “Contribution” does not include 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 five hundred dollars ($500)
or less.

(g) Notwithstanding the foregoing definition of “contribution,”
the term does not include volunteer personal services or payments
made by any individual for his or her own travel expenses if the
payments are made voluntarily without any understanding or
agreement that they shall be, directly or indirectly, repaid to him
or her.

(h) “Contribution” further includes the payment of public
moneys by a state or local governmental agency for a
communication to the public that satisfies both of the following:

(1) The communication expressly advocates the election or
defeat of a clearly identified candidate or the qualification, passage,
or defeat of a clearly identified measure, or, taken as a whole and
in context, unambiguously urges a particular result in an election.

(2) The communication is made at the behest of the affected
candidate or committee.

SEC. 2.  

Section 87106 is added to the Government Code, to
read:

87106.  

(a) An elected officer shall not request that a payment
be made, and a person shall not make a payment, at the behest of
the elected officer, as described in Section 82015, to a business
entity or nonprofit organization that is owned or controlled by that
officer, any other elected officer who serves on the same elective
body, or a family member of any elective officer who serves on
that elective body.

(b) For purposes of this section, as applied to a Member of the
Legislature, “same elective body” includes both houses of the
Legislature.

(c) For purposes of this section, a business entity or nonprofit
organization is owned or controlled by an elective officer or family
member of an elected officer if either of the following conditions
is satisfied:

(1) The elective officer or family member of the elective officer,
or a member of that person’s immediate family, has a direct or
indirect interest worth two thousand dollars ($2,000) or more in
the business entity or nonprofit organization.

(2) The elective officer or family member of the elective officer,
or a member of that person’s immediate family, is a director,
officer, partner, or trustee of, or holds any position of management
with, the business entity or nonprofit organization.

(d) For purposes of this section, “family member of an elected
officer” means the spouse, child, sibling, or parent of an elected
officer.

SEC. 3.  

Section 89506 of the Government Code is amended
to read:

89506.  

(a) Payments, advances, or reimbursements, for travel,
including actual transportation and related lodging and subsistence
that is reasonably related to a legislative or governmental purpose,
or to an issue of state, national, or international public policy, begin insert shall
not exceed five thousand dollars ($5,000) in a calendar year from
a single source, but end insert are begin insert otherwise end insert not prohibited or limited by this
chapter if either of the following apply:

(1) The travel is in connection with a speech given by the elected
state officer, local elected officeholder, candidate for elected state
office or local elected office, an individual specified in Section
87200, member of a state board or commission, or designated
employee of a state or local government agency, the lodging and
subsistence expenses are limited to the day immediately preceding,
the day of, and the day immediately following the speech, and the
travel is within the United States.

(2) The travel is provided by a government, a governmental
agency, a foreign government, a governmental authority, a bona
fide public or private educational institution, as defined in Section
203 of the Revenue and Taxation Code, a nonprofit organization
that is exempt from taxation under Section 501(c)(3) of the Internal
Revenue Code, or by a person domiciled outside the United States
which substantially satisfies the requirements for tax-exempt status
under Section 501(c)(3) of the Internal Revenue Code.

(b) Gifts of travel not described in subdivision (a) are subject
to the limits in Section 89503.

(c) Subdivision (a) applies only to travel that is reported on the
recipient’s statement of economic interests.

(d) For purposes of this section, a gift of travel does not include
any of the following:

(1) Travel that is paid for from campaign funds, as permitted
by Article 4 (commencing with Section 89510), or that is a
contribution.

(2) Travel that is provided by the agency of a local elected
officeholder, an elected state officer, member of a state board or
commission, an individual specified in Section 87200, or a
designated employee.

(3) Travel that is reasonably necessary in connection with a
bona fide business, trade, or profession and that satisfies the criteria
for federal income tax deduction for business expenses in Sections
162 and 274 of the Internal Revenue Code, unless the sole or
predominant activity of the business, trade, or profession is making
speeches.

(4) Travel that is excluded from the definition of a gift by any
other provision of this title.

(e) This section does not apply to payments, advances, or
reimbursements for travel and related lodging and subsistence
permitted or limited by Section 170.9 of the Code of Civil
Procedure.

SEC. 4.  

Section 89512.7 is added to the Government Code, to
read:

89512.7.  

Except as expressly authorized by this article,
expenditures for the following are prohibited as inconsistent with
the trust imposed by Section 89510:

(a) A home mortgage, rent, or utility payment.

(b) A clothing purchase.

(c) A noncampaign-related automobile expense.

(d) A country club membership.

(e) A vacation or other noncampaign-related travel payment.

(f) A household food item.

(g) A tuition payment.

(h) Admission to a sporting event, concert, theater, or other
form of entertainment not related to an election campaign.

(i) The dues, fees, and other payments to a health club or
recreational facility.

(j) A gift to a spouse, child, sibling, or parent of a candidate,
elected officer, or other individual with authority to approve the
expenditure of campaign funds held by a committee.

SEC. 5.  

Section 89515 of the Government Code is amended
to read:

89515.  

Campaign funds may be used to make donations or
loans to bona fide charitable, educational, civic, religious, or similar
tax-exempt, nonprofit organizations, where no substantial part of
the proceeds will have a material financial effect on the candidate,
begin delete elected officer, end delete campaign treasurer, or any individual or individuals
with authority to approve the expenditure of campaign funds held
by a committee, or member of his or her immediate family, and
where the donation or loan bears a reasonable relation to a political,
legislative, or governmental purpose begin insert , except as prohibited by
S end insert begin insert ection 89515.5 end insert .

SEC. 6.  

Section 89515.5 is added to the Government Code, to
read:

89515.5.  

(a) An expenditure of campaign funds by an elected
officer or committee controlled by the elective officer to a business
entity or nonprofit organization that is owned or controlled by the
elective officer, any other elected officer who serves on the same
elective body, or a family member of any elective officer who
serves on that body is deemed to serve the primary purpose of
conferring a personal financial benefit on the recipient and is
prohibited as being unrelated to a political, legislative, or
governmental purpose and inconsistent with the trust imposed by
Section 89510.

(b) For purposes of this section, as applied to a Member of the
Legislature, “same elective body” includes both houses of the
Legislature.

(c) For purposes of this section, a business entity or nonprofit
organization is owned or controlled by an elective officer or family
member of an elected officer if either of the following conditions
is satisfied:

(1) The elective officer or family member of the elective officer,
or a member of that person’s immediate family has a direct or
indirect interest worth two thousand dollars ($2,000) or more in
the business entity or nonprofit organization.

(2) The elective officer or family member of the elective officer,
or a member of that person’s immediate family is a director, officer,
partner, or trustee of, or holds any position of management with,
the business entity or nonprofit organization.

(d) For purposes of this section, “family member of an elected
officer” means the spouse, child, sibling, or parent of an elected
officer.

SEC. 7.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

SEC. 8.  

The Legislature finds and declares that this bill furthers
the purposes of the Political Reform Act of 1974 within the
meaning of subdivision (a) of Section 81012 of the Government
Code.