BILL ANALYSIS Ó
SB 1443
Page 1
Date of Hearing: June 24, 2014
ASSEMBLY COMMITTEE ON ELECTIONS AND REDISTRICTING
Paul Fong, Chair
SB 1443 (De León, et al.) - As Amended: April 10, 2014
SENATE VOTE : 34-0
SUBJECT : Political Reform Act of 1974: gift limitations.
SUMMARY : Limits the value and types of gifts that can be given
to and received by public officials. Specifically, this bill :
1)Prohibits a lobbyist or lobbying firm from making any gift to
a candidate for elective state office, an elected state
officer, or a legislative official, or to an agency official
of any agency required to be listed on the registration
statement of the lobbying firm or the lobbyist employer of the
lobbyist, instead of limiting such gifts to an aggregate value
of not more than $10 in a calendar month, as is the case under
existing law. Prohibits an official from knowingly receiving
a gift that is unlawful under this provision.
2)Lowers, from $440 to $200, the limit on the aggregate value of
gifts that specified public officials can receive from a
single source in a calendar year. Ends a requirement for the
Fair Political Practices Commission (FPPC) to adjust this
limit in January of each odd-numbered year to reflect any
changes in the Consumer Price Index (CPI), and instead permits
the FPPC, at its discretion, to increase the limit in January
of each odd-numbered year by an amount that does not exceed
any changes reflected in the CPI.
3)Prohibits a candidate for elective state office, an elected
state officer, or a legislative official from accepting the
following gifts:
a) A gift of tickets or the equivalent of tickets to any of
the following events or venues:
i) A professional concert or other professional
entertainment event, regardless of the value of the
ticket;
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ii) A professional sporting event, regardless of the
value of the ticket;
iii) An amateur sporting event for which the value of the
ticket received exceeds $50;
iv) A racetrack event, regardless of the value of the
ticket;
v) A theme park, amusement park, or other similar
venue, regardless of the value of the ticket; or,
vi) An amateur theatre, concert, or other entertainment
event for which the value of the ticket received exceeds
$50;
b) Golfing green fees, complimentary golf course access, or
the equivalent, regardless of the value;
c) Skiing, hunting, or fishing trips or other recreational
outings, regardless of the value;
d) Spa treatments, spa access fees, or other equivalent
complimentary beauty or cosmetic services, regardless of
the value; or
e) Cash, gift cards, or cash equivalents, regardless of the
value.
4)Provides that, for the purposes of the ban on certain gifts of
tickets outlined above, the term "professional" means an event
with performers who are compensated for the event or who
engage in the performance activity as their vocation.
EXISTING LAW :
1)Creates the FPPC, and makes it responsible for the impartial,
effective administration and implementation of the Political
Reform Act (PRA).
2)Makes it a felony for a public official or public employee to
accept or agree to accept anything of value in exchange for an
official act.
3)Defines "agency official" to mean any member, officer,
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employee, or consultant of any state agency who as part of his
or her official responsibilities participates in any
administrative action, as defined, other than in a purely
clerical, secretarial, or ministerial capacity.
4)Defines "legislative official" to mean any employee or
consultant of the Legislature whose duties are not solely
secretarial, clerical, or manual.
5)Prohibits a lobbyist or lobbying firm from making gifts
aggregating more than $10 in a calendar month to a candidate
for elective state office, an elected state officer, or a
legislative official, or to an agency official of any agency
required to be listed on the registration statement of the
lobbying firm or the lobbyist employer of the lobbyist.
Prohibits an official from knowingly receiving a gift that is
unlawful under this provision.
6)Prohibits elected state and local officers, candidates for
elective state or local office, members of state boards and
commissions, and designated employees of state or local
government agencies from accepting gifts from a single source
in a calendar year with a total value of more than $440, with
certain limited exceptions. Requires the FPPC to adjust this
gift limit on January 1 of each odd-numbered year to reflect
changes in the CPI, rounded to the nearest $10.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
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COMMENTS :
1)Purpose of the Bill : According to the author:
SB 1443 is a product of the Senate Ethics Working
Group, and a part of a legislative package supported
by the Senate Democratic Caucus (the others are SB
1441 and SB 1442) aimed at bolstering public
confidence in California's elected officials and
improving transparency in the gift reporting process.
This measure seeks to severely reduce the gift limit
and completely ban gifts such as tickets to
professional sporting events and concerts, amusement
parks, golfing green fees, spa treatments, and
recreational trips. Increasing of the gift limit over
the years, which is currently set at $440,
is?approaching the conflict of interest threshold of
$500. SB 1442 would reduce the gift limit to $200.
The legislative package put forward by the Senate
Ethics Working Group represents the most comprehensive
reform to the Political Reform Act in decades.
2)Gift Definitions and Exemptions : The following is a
description of existing statutory and regulatory gift
definitions and a list of exemptions taken from an FPPC fact
sheet intended for elected state officers, candidates for
elective state office, members of state boards and
commissions, designated employees of state government
agencies, and state officials who manage public investments.
For a complete discussion of these definitions and exemptions
please see the fact sheet at
http://www.fppc.ca.gov/factsheets/StateGiftFactSheet2014.pdf.
Gift Definition
A "gift" is any payment or other benefit provided to an
official that confers a personal benefit for which the
official does not provide payment or services of equal or
greater value. A gift includes a rebate or discount in the
price of anything of value unless the rebate or discount is
made in the regular course of business to members of the
public.
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Gifts to Family Members
Under certain circumstances, a gift to an official's family
member is considered a gift to the official. Anything given
to a family member is presumed to be a gift to the official
if: (1) there is no established relationship between the donor
and the family member where it would generally be considered
appropriate for the family member to receive the gift or; (2)
the donor is someone who lobbies the official's agency, is
involved in an action before the official's agency in which
the official may foreseeably participate, or engages in
business with the agency in which the official will
foreseeably participate. (Wedding gifts are treated
differently, see below.)
For purposes of this rule, an official's "family member"
includes the official's spouse; registered domestic partner;
any minor child of the official who the official can claim as
a dependent for federal tax purposes; and a child of the
official who is aged 18 to 23 years old, attends school,
resides with the official when not attending school, and
provides less than one-half of his or her own support.
General Gift Exceptions
The following payments are not gifts, are not required to be
reported on an official's Statement of Economic Interests
(SEI) (Form 700), and are not subject to the $10 lobbyist gift
limit:
1. Items that are returned unused to the donor or for which
the recipient reimburses the donor.
2. Items that are donated unused to a non-profit, tax-exempt
(501(c)(3)) organization or to a government agency without
claiming a tax deduction.
3. Gifts from a family member unless the family member is
acting as an agent or intermediary for another person who is
the true source of the gift.
4. Informational material provided to assist the recipient in
the performance of official duties.
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5. A devise or inheritance.
6. Campaign contributions.
7. Personalized plaques and trophies with an individual value
of less than $250.
8. Admission for the official and one guest at an event where
the official performs a ceremonial role.
9. Admission, and food and nominal items, at an event at
which the official makes a speech.
10. Benefits received as a guest attending a wedding
reception.
11. Bereavement offerings, such as flowers at a funeral.
12. Benefits received as an act of neighborliness such as the
loan of an item, an occasional ride, or help with a repair.
13. Two tickets for admission to attend a campaign or charity
fundraiser, as specified.
14. Passes or tickets that the recipient does not use and
does not give to another person.
15. Certain travel payments, as specified.
16. Gifts provided to the recipient's government agency, as
specified.
17. Leave credits (e.g., sick leave or vacation credits), as
specified.
18. Food, shelter, or similar assistance received in
connection with a disaster relief program.
19. Items awarded in an employee raffle, as specified.
20. Items received by an employee during an employee gift
exchange.
Limited Gift Exceptions
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The following payments generally are not considered gifts, and
are not required to be reported on an official's SEI (Form
700), but may be subject to the $10 lobbyist gift limit:
1. Gifts of hospitality including food, drink, or occasional
lodging that is received in an individual's home when the
individual or a member of his or her family is present. Such
hospitality provided by a lobbyist is a gift unless the
hospitality is related to another purpose unconnected with the
lobbyist's professional activities.
2. Gifts commonly exchanged between an official and another
individual (other than a lobbyist registered to lobby the
official's agency) on holidays, birthdays, or similar
occasions to the extent that the gifts exchanged are not
substantially disproportionate in value.
3. Reciprocal exchanges between the recipient and another
individual (other than a lobbyist registered to lobby the
official's agency) that occur on an ongoing basis, as
specified.
4. Personal benefits commonly received from a dating partner.
These benefits are subject to disqualification under conflict
of interest laws if the dating partner is a lobbyist
registered to lobby the official's agency, as specified.
5. Acts of human compassion provided by an individual other
than a lobbyist registered to lobby the official's agency, as
specified.
6. Benefits received from a long-time personal friend, other
than a lobbyist registered to lobby the official's agency,
where the gift is unrelated to the official's duties.
7. Benefits received from an individual who is not a lobbyist
registered to lobby the official's agency, where it is clear
that the gift was made because of an existing personal or
business relationship unrelated to the official's position, as
specified.
Gift Exceptions Requiring Alternate Reporting
The following payments are not subject to the gift limit, but
the recipient may be required to report these items and they
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can subject the recipient to disqualification under conflict
of interest laws:
1. A prize or award received in a bona fide competition,
contest, or game of chance not related to the official's
duties is not subject to the gift limit, but must be reported
as income on the official's SEI (Form 700) if the prize or
award is valued at $500 or more, and can subject the recipient
to disqualification under conflict of interest laws.
2. Gifts or donations made to an agency and used by one or
more officials in the agency are not gifts to the officials,
subject to certain conditions, and do not subject the
officials to disqualification under conflict of interest laws,
but the agency must report the gift, as specified.
3. A payment made at the behest of an official that is
principally for legislative, governmental, or charitable
purposes is not a gift and does not subject the official to
disqualification under conflict of interest laws, but must be
reported under certain circumstances.
4. Wedding gifts are not subject to the $440 gift limit, but
are subject to the $10 lobbyist/lobbying firm gift limit, are
reportable, and can subject the recipient to disqualification
under conflict of interest laws. For purposes of valuing
wedding gifts, one-half of the value of each gift is
attributable to each spouse.
3)Any Public Official May Choose to Decline Gifts : No public
official is compelled to accept gifts. To the extent that a
public official is concerned that the acceptance of gifts may
result in a negative public perception, that official is free
to decline any or all gifts. In fact, a number of members of
the Legislature have chosen not to accept gifts of any kind or
value.
4)Lobbyist Gift Limit & Inadvertent Violations of the Law : As
noted above, existing law prohibits lobbyists and lobbying
firms from making gifts aggregating more than $10 in a
calendar month to a candidate for elective state office, an
elected state officer, or a legislative official. This bill
would eliminate that $10 limit, and instead would prohibit a
lobbyist or lobbying firm from making a gift of any value to a
candidate for elective state office, an elected state officer,
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or a legislative official.
By prohibiting lobbyists and lobbying firms from making gifts of
any value to candidates for elective state office, elected
state officers, and legislative officials, this bill could
result in an inadvertent violation of the law if an official
accepted a bottle of water while meeting with a lobbyist.
Given the fact that the $10 gift limit has long protected
against this type of inadvertent violation, and given that it
is unlikely that a gift valued at $10 or less could raise the
possibility of corruption or the appearance thereof, the
committee may wish to consider whether it is prudent to
prohibit gifts of less than $10.
5)Different Gifts, Different Limits : This bill would establish
restrictions on gifts given to certain officials based not on
the value of the gift, but rather on the type of gift given.
As a result, it would be legal for an elected state official
to accept a gift of a bottle of wine valued at $200, but it
would be illegal for the same official to accept an $8 ticket
to a minor league baseball game. An elected state official
could not accept a $5 gift card to a coffee shop from the
shop's owner, but could accept $200 worth of coffee from the
same person. The committee may wish to consider whether it is
rational to restrict gifts in this manner, based not on the
value of the gift, but rather on the type of gift.
6)Why $200 ? When the PRA was enacted in 1974, it did not
include a general limit on the value of gifts that could be
received by public officials, though it did include the $10
lobbyist gift limit. In 1988, the voters approved Proposition
73, which prohibited elected officeholders from accepting any
gift exceeding $1,000 in value in a calendar year from a
single source, among other provisions. SB 1738 (Roberti),
Chapter 84, Statutes of 1990, subsequently lowered the gift
limit to $250 for elected state officials, and made the same
$250 gift limit applicable to members of state boards and
commissions and to designated employees of state agencies,
among other provisions (though the gift limit remained at
$1,000 for local elected officeholders until the passage of SB
701 (Craven), Chapter 690, Statutes of 1995). SB 1738 also
required the FPPC to adjust the gift limit every two years to
reflect inflation. Based on those adjustments, the gift limit
has risen to $440.
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This bill lowers the gift limit from $440 to $200, and makes it
discretionary for the FPPC to decide whether to adjust that
limit to reflect any inflation. The author argues these
changes are appropriate because the $440 limit "may be
perceived as too high a level." While it is almost certainly
true that some individuals view a $440 gift limit as "too high
a level," it is also likely true that some individuals view a
$200 gift limit as too high, while others may not be concerned
with a gift limit that is higher. To the extent that the
concern is one of public perception, the rationale for setting
the gift limit at $200 is unclear.
7)Technical Amendment : While this bill lowers the gift limit,
it does not adjust the corresponding conflict of interest
threshold for gifts received by public officials. To resolve
this technical issue, committee staff recommends that this
bill be amended to adjust the conflict of interest threshold
in Government Code Section 87103 (e).
8)Previous Legislation : SB 1426 (Blakeslee) of 2012, would have
prohibited lobbyists, lobbyist firms, and lobbyist employers
from giving specific types of gifts (such as gift cards, and
amusement park and racetrack tickets) to elected state
officers and members of their immediate family. SB 1426 was
approved by this committee, but was held on the Assembly
Appropriations Committee's suspense file. A similar bill, SB
18 (Blakeslee) of 2011, was held on the Senate Appropriations
Committee's suspense file.
AB 1412 (Torrico) of 2009, and AB 2368 (Blakeslee) of 2010,
would have prohibited a lobbyist employer from making gifts to
a Member of the Legislature aggregating more than $10 in a
calendar month. AB 1412 was approved by this committee, but
died on the inactive file on the Assembly Floor. AB 2368 was
approved by this committee, but was held on the Assembly
Appropriations Committee's suspense file.
AB 2795 (Blakeslee) of 2008, would have prohibited a lobbyist
employer from making gifts to state candidates, elected state
officers, legislative officials, and certain agency officials
aggregating more than $10 in a calendar month with certain
exceptions for food or refreshments of a nominal value offered
other than as part of a meal and tickets to certain events
sponsored by the lobbyist employer. AB 2795 was approved by
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this committee but was held on the Assembly Appropriations
Committee's suspense file.
9)Political Reform Act of 1974 : California voters passed an
initiative, Proposition 9, in 1974 that created the FPPC and
codified significant restrictions and prohibitions on
candidates, officeholders and lobbyists. That initiative is
commonly known as the PRA. Amendments to the PRA that are not
submitted to the voters, such as those contained in this bill,
must further the purposes of the initiative and require a
two-thirds vote of both houses of the Legislature.
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REGISTERED SUPPORT / OPPOSITION :
Support
California Common Cause
Opposition
Professional Beauty Federation of California (unless amended)
Analysis Prepared by : Ethan Jones / E. & R. / (916) 319-2094