Gatto introduces ‘transparency’ bill, aims to amend rules on financial disclosures

Public officials in California would have to disclose more about their investments and who they do business with under a state Assembly bill introduced Monday as the legislature began a new session.

Assemblyman Mike Gatto (D-Glendale) introduced the measure, which would update and amend the state’s law requiring public officials to report their financial interests.

The measure would require officials who are invested in a business entity to “provide a thorough and detailed description” of its activities and “disclose the names of all business partners who share a financial interest” in it.

It also requires more specific reporting ranges for investments, property and income.

“We want to make sure that the public — and the media — know exactly what the financial holdings of the people elected to hold the public trust are,” Gatto said in a phone interview.

He said he was motivated to introduce the bill after news reports of disclosures that included only vague details of a business entity’s name and general description, which he said were like “shadow entities.”

The current state requirement was created 40 years ago with the passage of the Political Reform Act of 1974, said Jay Wierenga, spokesman for the state’s Fair Political Practices Commission.

He said an estimated 500,000 people throughout the state are required to complete some level of financial reporting on a document known as “Form 700,” including elected officials and public employees.

“These are people that also take part in policy decisions” with financial impacts, Wierenga said, “from someone who sits on a library board all the way up to the governor.”

The reporting requirement is intended to give the public “some idea” of the officials’ vested interests, “not necessarily what they’re worth, but what their business and financial interests are,” Wierenga said.

Gatto said his bill seeks to modernize the disclosure form and requirements.

The bill increases the minimum dollar amounts for various financial interests that must be reported. For example, public officials are currently required to report a financial interest in real estate if it exceeds $2,000.

Under Gatto’s bill, the minimum would increase to $10,000, reflecting the fact that real-estate prices are higher now compared to the 1970s.

Gatto said the bill would also eliminate “great imprecision” in the current law by updating and revising the ranges used to report a financial interest’s value.

Under the current law, the value of an investment would be reported in increments of $2,000 to $10,000; $10,000 to $100,000; $100,000 to $1,000,000; and more than $1,000,000.

Gatto’s bill would adjust those ranges to $5,000 to $10,000; $10,000 to $100,000; $100,000 to $250,000; $250,000 to $500,000; $500,000 to $1 million; $1 million to $2 million; or more than $2 million.

The bill would also add a requirement that public officials report how many times they recused themselves from a vote in the previous year because of a conflict of interest.

“We’re going for full disclosure,” Gatto said.