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California’s Ethics in Government Act

Guidance of use of campaign funds, gifts, honoraria, travel

By Chris Micheli, August 9, 2020 7:59 am

The Ethics in Government Act (EGA) is found in California’s Government Code Title 9, which concerns political reform, Chapter 9.5, related to ethics. Section 89500 specifies that the chapter is known as the Ethics in Government Act of 1990. Chapter 9.5 contains the following four articles:

Article 1 Honoraria, Sections 89501 – 89502

Article 2 Gifts, Sections 89503 – 89503.5

Article 3 Travel, Section 89506

Article 4 Campaign Funds, Sections 89510 – 89522

Article 1 on honoraria defines the term to mean any payment made in consideration for any speech given, article published, or attendance at any public or private conference, convention, meeting, social event, meal, or like gathering. In addition, Section 89510 specifically excludes earned income for personal services which are customarily provided in connection with the practice of a bona fide business, trade, or profession, such as teaching, practicing law, medicine, insurance, real estate, banking, or building contracting, unless the sole or predominant activity of the business, trade, or profession is making speeches.

Section 89502 prohibits any elected state officer, elected officer of a local government agency, or other individual from accepting any honorarium. In addition, no candidate for elective state office, for judicial office, or for elective office in a local government agency shall accept any honorarium.

Article 2 on gifts prohibits any elected state officer, elected officer of a local government agency, or other individual from accepting gifts from any single source in any calendar year with a total value of more than two hundred fifty dollars. In addition, no candidate for elective state office, for judicial office, or for elective office in a local government agency shall accept gifts from any single source in any calendar year with a total value of more than two hundred fifty dollars.

Moreover, no member of a state board or commission or designated employee of a state or local government agency shall accept gifts from any single source in any calendar year with a total value of more than two hundred fifty dollars if the member or employee would be required to report the receipt of income or gifts from that source on his or her statement of economic interests. However, this section does not apply to a person in his or her capacity as a judge, or to a person in his or her capacity as a part-time member of the governing board of any public institution of higher education unless that position is an elective office.

Finally, this section does not prohibit or limit payments, advances, or reimbursements for travel and related lodging and subsistence permitted, or wedding gifts and gifts exchanged between individuals on birthdays, holidays, and other similar occasions, provided that the gifts exchanged are not substantially disproportionate in value.

This amount of $250 is adjusted annually to reflect changes in the Consumer Price Index. As a result, under current FPPC regulations, the gift limit is over $500.

Article 3 on travel provides that 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, are not prohibited or limited by this chapter under specified conditions.

First, there is an exception for travel that is in connection with a speech, then 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.

Second, there is an exception for travel that is provided by a government, a governmental agency, a foreign government, a governmental authority, a bona fide public or private educational institution, a nonprofit organization that is exempt from taxation, or by a person domiciled outside the United States who substantially satisfies the requirements for tax-exempt status.

Note that a gift of travel does not include any of the following:

  • Travel that is paid for from campaign funds or that is a contribution.
  • Travel that is provided by the governmental agency of a local elected officeholder, an elected state officer, member of a state board or commission, or a designated employee.
  • 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 unless the sole or predominant activity of the business, trade, or profession is making speeches.
  • Travel that is excluded from the definition of a gift by any other provision of this law.

Article 4 on campaign funds specifies that a candidate for elective state office may only accept contributions within the limits provided by law. All contributions deposited into the campaign account are deemed to be held in trust for expenses associated with the election of the candidate or for expenses associated with holding office. Section 89511 provides several definitions for terms used in this law.

Section 89512.5 specifies that any expenditure by a committee not subject to the trust imposed by law must be reasonably related to a political, legislative, or governmental purpose of the committee. Any expenditure by a committee that confers a substantial personal benefit on any individual or individuals with authority to approve the expenditure of campaign funds held by the committee, must be directly related to a political, legislative, or governmental purpose of the committee.

Section 89513 governs the use of campaign funds for the specific expenditures set forth in this section. Campaign funds may not be used to pay or reimburse the candidate, the elected officer, or any individual or individuals with authority to approve the expenditure of campaign funds held by a committee, or employees or staff of the committee or the elected officer’s governmental agency for travel expenses and necessary accommodations except when these expenditures are directly related to a political, legislative, or governmental purpose.

In addition, campaign funds may not be used to pay for or reimburse the cost of professional services unless the services are directly related to a political, legislative, or governmental purpose. Campaign funds cannot be used to pay health-related expenses for a candidate, elected officer, or any individual or individuals with authority to approve the expenditure of campaign funds held by a committee, or members of their households. Campaign funds cannot be used to pay or reimburse fines, penalties, judgments, or settlements, except in specified circumstances.

Other prohibited uses of campaign funds include:

  • Campaign, business, or casual clothing generally
  • Costs of tickets for entertainment or sporting events
  • Personal gifts unless directly related to a a political, legislative, or governmental purpose
  • Loans other than to organizations specified
  • Penalties, judgments, or settlements for claims of sexual assault, abuse or harassment

Section 89515 allows campaign funds to 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, elected officer, 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.

Section 89516 governs the use of campaign funds for vehicle expenses. Section 89517 prohibits campaign funds from being used for payment or reimbursement for the lease of real property or for the purchase, lease, or refurbishment of any appliance or equipment, where the lessee or sublessor is, or the legal title resides, in whole or in part, in a candidate, elected officer, campaign treasurer, or any individual or individuals with authority to approve the expenditure of campaign funds, or member of his or her immediate family.

Section 89518 prohibits campaign funds from being used to compensate a candidate or elected officer for the performance of political, legislative, or governmental activities, except for reimbursement of out-of-pocket expenses incurred for political, legislative, or governmental purposes.

Surplus campaign funds under Section 89519 can only be used for the following:

  • The payment of outstanding campaign debts or elected officer’s expenses.
  • The repayment of contributions.
  • Donations to a bona fide charitable, educational, civic, religious, or similar tax-exempt, nonprofit organization, where no substantial part of the proceeds will have a material financial effect on the former candidate or elected officer, any member of his or her immediate family, or his or her campaign treasurer.
  • Contributions to a political party committee, provided the campaign funds are not used to support or oppose candidates for elective office. However, the campaign funds may be used by a political party committee to conduct partisan voter registration, partisan get-out-the-vote activities, and slate mailers as that term is defined in Section 82048.3.
  • Contributions to support or oppose a candidate for federal office, a candidate for elective office in a state other than California, or a ballot measure.
  • The payment for professional services reasonably required by the committee to assist in the performance of its administrative functions, including payment for attorney’s fees and other costs for litigation that arises directly out of a candidate’s or elected officer’s activities, duties, or status as a candidate or elected officer, including, but not limited to, an action to enjoin defamation, defense of an action brought for a violation of state or local campaign, disclosure, or election laws, and an action from an election contest or recount.
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