Update On Levine Act Changes Effective 2025

On September 30, 2024, Governor Newsom signed Senate Bill 1243 (SB 1243), which amends the "pay to play" campaign contribution law known as the Levine Act. These changes will take effect on January 1, 2025, along with changes made by the recent passage of Senate Bill 1181 (SB 1181) which was approved by the Governor on September 27, 2024.

Codified at Government Code Section 84308, the Levine Act generally prohibits a party seeking a “license, permit, or other entitlement for use” (as defined, to include most contracts) from making a contribution of more than $250 to an official of a government agency. As amended by SB 1439 effective January 1, 2023, Government Code Section 84308 applies to agencies whose members are directly elected by voters including local elected officials such as city councilmembers and county supervisors serving on their respective boards, and prohibits officials from accepting, soliciting, or directing a contribution exceeding $250 from a party or participant while such a proceeding is pending and for 12 months after the final decision of the proceeding.

The changes that will be made by SB 1243 and SB 1181, collectively, are discussed below.
 
Changes that will go into effect in 2025:

1. The limit for regulated contributions will increase from $250 to $500. Regulated contributions above the $500 threshold will trigger the Levine Act’s conflict prohibitions.
    
2. A party (defined as a person who files an application for, or is the subject of, the proceeding) to a proceeding involving a “license, permit, or other entitlement for use” must disclose on the record of the proceeding any contribution over $500 made by the party or its agent in the 12 months before the date the decision is rendered by the agency. A party may not make a contribution over $500 during a pending proceeding and within 12 months after the final decision is rendered. An agent to a party or participant shall not make a contribution in any amount to an officer during said time periods. Contributions from agents will not be combined with those from the party or participant. “Participant” refers to a person who is not a party but who actively supports or opposes a decision, and will now expressly exclude individuals whose only financial interest results from a change in membership dues.
    
3. “Pending” in a proceeding involving a “license, permit, or other entitlement for use” will now be defined, and will include, for an officer, when either an item involving the “license, permit or other entitlement for use” is placed on the agenda of the body of which the officer is a member, or when the officer knows the proceeding is within the jurisdiction of the agency for action and it is reasonably foreseeable that the decision will come before the officer in the officer’s decision making capacity.
    
4. The definition of “license, permit, or other entitlement for use” currently includes all contracts, other than competitively bid, labor, or personal employment contracts.  This list will now be modified to exempt the following from the definition:

• Contracts valued under $50,000;
• Competitively bid contracts that are required to be awarded pursuant to a competitive process;
• Labor and personal employment contracts;
• Contracts where no party receives financial compensation;
• Contracts between two or more government agencies;
• Periodic reviews and renewals of development agreements and competitively bid contracts unless there are material modifications; and
• Modifications or amendments to contracts that are exempt from this definition, other than competitively bid contracts.

5. City Attorneys and County Counsel will be expressly exempted from the definition of an agency “officer” if the attorney’s role is to solely provide legal advice without final decision-making authority in the proceeding.
    
6. The period for officers to return contributions in excess of $500 in order to avoid being prohibited from participating in a proceeding will be extended to within 30 days (rather than within 14 days) from the time the officer makes any decision, or knows or should have known about the contribution and the proceeding, whichever comes last.
    
7. When an officer accepts, solicits, or directs a prohibited contribution in excess of $500 within 12 months after the final decision is rendered, the officer will be permitted to cure the violation by returning the contribution in excess of $500 within 30 days (rather than 14 days) of accepting, soliciting, or directing the contribution, whichever comes latest.  However, as is the case with current law, if the officer knowingly and willfully accepted, solicited or directed the prohibited contribution, the cure is not permitted.

Current Provisions of the Levine Act remain in effect for the remainder of 2024:

The existing Levine Act provisions, including the $250 contribution limit, will remain valid through the 2024 calendar year.