Limitations on Receipt of Gifts
What is the Gift Limit?
The Political Reform Act actually establishes two separate gift limits: the gift limit and the lobbyist gift limit.
The gift limit restricts the total value of gifts that officials and candidates may receive from a single source during a calendar year.
As of January 2013, the limit is $440 annually.
In 2015, the amount of the limit will be adjusted to reflect any changes in the consumer price index.
The Lobbyist Gift Limit
The lobbyist gift limit restricts an official’s receipt of gifts made or arranged by lobbyists or lobbying firms. For elected state officers, the restriction applies to all lobbyists and lobbying firms. For all other state agency officials, the restriction applies if the lobbyist or lobbying firm is registered to lobby the official or the official’s agency. The limit is $10 per month and it is not adjusted for inflation. The lobbyist gift limit applies only to state and not local officials.
Jessica and Jose are having lunch when he asks her if she has any questions about her new position. Follow along as she inquires about the gift limit.
Jessica: “Now that I understand the basics of disqualification and the eight-step process, I would like to understand where the gift limit fits in. The term gift limit makes it sound like there is some kind of ceiling on the receipt of gifts. Is that true?”
Jose: “Well, Jessica, the term gift limit generally refers to a limit on the total value of gifts that officials and candidates may receive from a single source in a calendar year. However, there also is a special limit that pertains to lobbyists.”
Jessica: “What is the monetary ceiling associated with the gift limit?”
Jose: “At present, the limit is $440 annually. In 2015, the amount of the limit will be adjusted to reflect any changes in the consumer price index.”
Jessica: “And how does the lobbyist gift limit differ?”
Jose: “The lobbyist gift limit restricts officials from receiving gifts made or arranged by lobbyists and lobbying firms. Unless it’s an elected official, the restriction only applies to lobbyists and lobbying firms that are registered to lobby the official or the official’s agency”
Jessica: “Thanks Jose. Actually, I’ve got to get going. I have an appointment at 1:00, and it’s with a lobbyist! Before I go, you’d better clue me in on the lobbyist gift limit. What is the dollar ceiling and to whom does it apply?”
Jose: “The lobbyist gift limit is $10 per month and it is not adjusted for inflation. The lobbyist gift limit applies only to state officials. Local officials, however, may be covered by locally established lobbyist limits.”
How Does the Gift Limit Relate to Other Provisions Concerning Gifts?
The Political Reform Act contains several provisions concerning gifts. These include disclosure, limits and disqualification. Each receipt of a gift must be independently evaluated to determine if the gift triggers one or more of the provisions.
Disclosure on Statement of Economic Interests
Receipt of gifts totaling $50 or more from a single covered source during the reporting period must be disclosed on a Statement of Economic Interests.
The Gift Limit
Receipt of gifts totaling more than $440 from a single covered source during the calendar year is prohibited.
Lobbyist Gift Limit
Receipt of gifts made or arranged by a lobbyist or lobbying firm totaling more than $10 in a calendar month is prohibited. For elected state officers, the limit applies to all lobbyists and lobbying firms. For other state agency officials, the limit applies if the lobbyist or lobbying firm is registered to lobby the official or the official’s agency.
Public officials must disqualify themselves from participating in government decisions that may affect sources of gifts of $440 or more during the previous 12-month period. This provision most often comes up when gifts are made in two calendar years but within a 12-month period. Even though the gifts may comply with the annual limit, because they total $440 or more within a 12-month period, the official may be disqualified from participating in a decision affecting the source of the gifts.
Who is Subject to the $440 Gift Limit?
Following is a list of officials to whom the gift limit applies.
Officials and designated employees who must report gifts on a Statement of Economic Interests are subject to the $440 gift limit.
- Officers and employees who are listed as “designated employees”
- Elected state officers and candidates for elective state office
- Members of the Public Utilities Commission
- Members of the State Energy Resources Conservation and Development Commission
- Members of the Fair Political Practices Commission
- Members of the California Coastal Commission
- Members of the High-Speed Rail Authority
- Specified individuals who manage public investments
- Members of other state boards and commissions
If a state board or commission member or a designated employee of an agency would not be required to report the receipt of income or gifts from a source on his or her Statement of Economic Interests, the gift limit is not applicable.
Public officials should familiarize themselves with the “disclosure category” portion of their agencies’ conflict of interest code to determine what sources of income or gifts must be reported on their Statements of Economic Interests.
Question: Andrea is the chair of a regulatory board. A friend of hers, who is registered to lobby her board, offers to buy her a $15 lunch. Would acceptance of the lunch violate the law? Yes or No.
Answer: Yes. The $15 lunch would violate the $10 per calendar month lobbyist gift limit because Andrea’s friend is registered to lobby Andrea’s agency.
Question: For an official who is a designated employee in a conflict of interest code, the $440 gift limit applies only to sources of gifts covered by the official’s disclosure category. True or False.
What is a Gift?
A “gift” is any payment or other benefit provided to an official that confers a personal benefit for which the official does not provide goods 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.
Although most provisions of the Political Reform Act relate to economic interests within the official’s jurisdiction, both the disclosure of gifts and the gift limit apply to gifts received from covered sources regardless of whether they are located inside or outside of the official’s jurisdiction.
Follow along as new Governor’s appointee, Jessica Carrington, discusses the gift limit with her colleague, Jose Lopez.
Jessica: “Jose, as a new Governor’s appointee, I want to make sure I don’t violate the gift limit. Can you help me understand when an official receives and accepts a gift?”
Jose: “An official receives and accepts a gift when the official knowingly takes actual possession of the gift, is provided the benefit of the gift, or takes any action exercising direction or control over the gift, including discarding it or giving it away.”
Jessica: “That’s good to know. I had wrongly assumed that if I didn’t use it, it wouldn’t count. So Jose, if I am going to comply with the limit, I have to know the value of the gifts that I receive. How am I to determine the value of a gift? It’s not as if the giver leaves the price tag on the gift or provides a receipt, you know?”
Jose: “When an official receives a gift, the official should attempt to determine the fair market value of the gift. The best way to determine the value is to ask the donor, but sometimes that can be awkward.”
Jessica: “I agree. It sure seems like it would be awkward. Isn’t there any other way?”
Jose: “Well, if it is a truly unique gift, you should really ask the donor for its actual value, despite the awkwardness. In other situations, you can make a reasonable approximation of the value by attempting to locate similar items in a store or on-line.”
Jessica: “Thanks, Jose. I really appreciate all the help you’ve been giving me.”
Jose: “No problem, Jessica. I remember what it was like to be the new kid on the block. I’m always glad to help.”
Let’s explore the gift limit further. Remember, a public official accepts a gift when it is in his or her possession or when the official makes decisions about its dispensation. See specific situations and their implications on the gift limit.
- “The gift limit is based on reasonable retail value. Although the giver may have purchased the gift “at cost” you must consider its retail value, the price that a member of the public would be charged, to avoid violation of the gift limit.”
- “A giver cannot offer to sell a public official merchandise or services at a rate that is less than the rate available to the general public.”
Are there Exceptions to the Gift Limit?
There are two types of exceptions to the gift limit.
- Items that are exempt from both the gift limit and disclosure requirements
- Items that are exempt from the limit but which are disclosable
Items that are Exempt from both the Gift Limit and Disclosure Requirements
Under specified circumstances, these exceptions may include:
- Gifts returned within 30 days
- Gifts from close relatives
- Unused tickets
- Informational material
- Personalized plaques
- Hospitality in a friend’s home
- Two tickets to political or 501(c)(3)organization's fundraiser
There is also an exception for gifts made to a public entity, but specific steps must be followed under procedures established by the Fair Political Practices Commission and the Department of Finance.
Items that are Exempt from the Limit but which are Disclosable
It is important to note that gifts that are not subject to the limit may trigger disqualification.
- Wedding gifts
- Prizes that result from a bona fide competition
- Some gifts of travel within the United States (including travel within California)
Special Rules for Gifts of Travel
Gifts of travel are particularly tricky. As a general rule, transportation, lodging and accommodations are covered by the gift limit. However, there are a number of exceptions. Let’s take a closer look at these exceptions.
State officials are sometimes offered free transportation and lodging in connection with an invitation to make a speech, conduct a seminar, or serve on a panel. Previously, gifts of intrastate transportation and necessary accommodations were exempt from the gift limits, reporting requirements, and disqualification. In most instances, this is no longer the case. So you should consult with legal counsel before you accept any gift of transportation or lodging from any entity other than your own government agency.
As a general rule, when an official makes a speech, conducts a seminar or serves on a panel held within the United States and the travel is reasonably related to a legislative or governmental purpose, or to an issue of state, national, or international public policy, payments or reimbursements for the transportation, and related lodging and subsistence on the day before, day of, and day after the speech, are not subject to the gift limit or honoraria ban, but are subject to reporting and disqualification.
There are additional limited exceptions for travel paid for by:
- Campaign funds
- Nonprofit organizations pursuant to section 501(c)(3) of the Internal Revenue Code
- Federal, state, or local government agencies
- Foreign governments
- Other entities for which the official performs services
Question: Eileen is a deputy director of a state department. Her disclosure category in her conflict of interest code for her department provides that she must disclose gifts from any source. An El Dorado winery presents her with some wines to thank her for improving marketing of El Dorado wines in Oregon. Which of the following could Eileen do to determine the fair market value? From the list below, select the correct answers. Select all that apply.
- Call the winery and ask for the retail price
- Call the winery and ask for the wholesale price
- Taste the wine and determine its value accordingly
- Look for the price on the open market
Answer: a and d. Eileen must determine the retail price of the wine. She may do this by contacting the winery and asking for the price or by looking for the price on the open market.
Question: Jonathan, a member of a state commission, receives four tickets for excellent seats at an NBA basketball game from a business in town. He and his daughter use two of them, and give the other two to his friend Ken. The face value of each ticket is $125 and the accompanying parking pass is valued at $10. Does Jonathan avoid potential violation of the gift limit by giving two tickets to Ken? Select the best answer.
Yes. Jonathan avoids the gift limit by giving two tickets away to his friend Ken.
No. Giving away the tickets does not avoid a potential violation of the gift limit.
Answer: No. An official receives a gift when the official has actual possession of the gift, receives the benefit of the gift, or takes any action exercising direction or control over the gift, including transferring it to another person. Jonathan’s total gift, therefore, is $510.
Question: Jack is a director of a state agency. He is offered the opportunity to rent a Tahoe condo from Good Times Inc. for its cost, rather than the standard rental fee. Does the difference between the standard rental fee and the amount paid by Jack constitute a gift? Yes or No.
Answer: Yes. The discount constitutes a gift because it was not a discount made in the regular course of business to members of the public.
Penalties for a Violation of the Gift Limit
Any official who violates the gift limit is liable in a civil action brought by the FPPC for an amount of up to three times the amount of the unlawful gift. Violators are also subject to administrative sanctions, which include fines of up to $5,000 per violation.
Remember These Points
- The gift limit is $440 from a single covered source in a calendar year.
- Exceptions to the gift limit are very technical.
- The lobbyist gift limit is $10 for a gift made or arranged by a registered lobbyist or lobbying firm in a calendar month.
You have completed the "Limitations on Receipt of Gifts" module. The next module is Honoraria Ban.
The California Attorney General's Office and the Fair Political Practices Commission