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Indiana Lobby Registration Commission

ILRC > Advisory Opinions > Final Advisory Opinions > PROPOSED ADVISORY OPINION 98-10: Advisory Opinions

FINAL ADVISORY OPINION 98-10:
Reporting expenditures related to events to which all members of the General Assembly are invited and to which only certain members of the General Assembly are invited

Indiana Lobby Registration Commission

(Ratification Vote vote taken at public meeting of February 9, 1999)

VOTES ON RATIFICATION:

Chairman Bepko - yes
Vice-Chairman Krahulik - yes
Commissioner Hicks - yes
Commissioner Abbs - yes

Questions and written comments may be directed to Indiana Lobby Registration Commission, 115 W. Washington, Suite 1375 S., Indianapolis, IN 46204 (317) 232-9860
http://www.ai.org./ilrc/


Example 1:

Lobby firm "A" invites all members of the GA to a reception. The total cost of the reception is $5,000.00, which includes a fixed food cost ($1,500.00), a pianist ($500.00), room rental ($500.00) and a small gift for each legislator in attendance, valued at $100.00 each (crystal ashtray with a client's logo) ($2,500.00). Only 25 members of the GA attend the event, along with 10 of A's clients, and 5 of A's hired lobbyists. Thus, there were 40 people in attendance. The per-person cost of the event is $15.15, which is derived by subtracting out the value of the personal gifts ($2,500.00), and dividing the remainder of the fixed costs by the total number of persons invited ($2,500 (150+15)). The reportable aggregate value of the event relating to expenditures which benefited legislators is $378.75 ($15.15 x 25). Because this is an expenditure made to benefit all members of the GA, that amount is reported on line 6 of the activity report. Additionally, the value of the personal gifts ($2,500.00) made to legislators must be reported and pro-rated in Section D of the activity report, and must be factored into the aggregate figure reported on line 7. The personal gifts made to legislators are also reportable on the Report of Legislative Gift or Purchase. There were no unfixed costs relating to this event. Had there been unfixed costs, those costs would have been divided by the number of persons in attendance, rather than by the number of persons invited.


Example 2:

Lobby firm "A" invites 75 members of the General Assembly to the same reception depicted in Example 1. Only 25 of them attend the event, along with 10 of A's clients and 5 of A's hired lobbyists. As in Example 1, there were 40 people in attendance. The cost of the reception is $5,000.00, including the same expenditures as described in Example 1. The per-person cost of the event is $27.78 ($2,500 (75+15)). The entire amount spent on each legislator in attendance is reported in Section D of the activity report, by pro-rating $127.78 as the expenditure made for each legislator in attendance ($27.78 + $100.00). $694.50 ($27.78 x 25) will be reported in aggregate on line 3 (receptions) of the activity report. And, as in Example 1, $2,500.00 (personal gifts) will be reported on line 7. The personal gifts made to legislators are also reportable on the Report of Legislative Gift or Purchase.

Example 3:

Lobby firm "A" invites all members of the GA to a sporting event. The total cost of the event is $5,000.00, which includes $100.00 tickets for the 50 persons who attended. Only 25 members of the GA attend the event, along with 20 of A's clients, and 5 of A's hired lobbyists. Thus, there were 50 people in attendance. The per-person cost of the event is $100.00. The reportable value of the event relating to expenditures which benefited legislators is $2,500.00 ($100.00 x 25). Because this is an expenditure for entertainment made to benefit all members of the GA, that amount is reported on line 6 of the activity report. The tickets are not personal gifts because they are entertainment expenditures made to benefit all members of the GA on a given occasion, to be used en mass.

Example 4:

Lobby firm "A" invites 75 members of the General Assembly to the same sporting event depicted in Example 1. Only 25 of them attend the event, along with 20 of A's clients and 5 of A's hired lobbyists. As in Example 1, there were 50 people in attendance. The cost of the event is $5,000.00. The net reportable amount is the same as in Example 1 ($2,500.00), only the entire amount is reported in Section D of the activity report, by pro-rating $100.00 as the expenditure made for each legislator in attendance. This is because the entertainment expenditure was made to benefit "a member of the general assembly" (IC 2-7-3-3(a)(3)(A)), rather than "all members of the general assembly." (IC 2-7-3-3(a)(4)). $2,500.00 will be reported in aggregate on line 4 ("entertainment") of the activity report.

Discussion:

When a lobbyist makes an expenditure such as meal or entertainment to benefit a member of the General Assembly and the lobbyist is present at the time the legislator consumes the item, then the expenditure is reportable only on the activity report, and not on the Report of Legislative Gift or Purchase.

When any of the above expenditures are made to benefit all members of the GA, the value of the expenditures are not to be pro-rated in Section D among the legislators in attendance. IC 2-7-3-3(a)(4). Instead, the value of such an event is reported in the aggregate on line 6 of the activity report.

The reason the value of a given event is not pro-ratable among legislators in attendance when all members of the GA are invited is because there is a statutory requirement that expenditures made to benefit all members of the GA are not to be pro-rated. It has nothing to do with the issue of whether a legislator has given consideration or even whether said expenditure can be characterized as a gift. This provision provides for an incentive for lobbyists to invite all members of the GA to events, and also eliminates having those legislators who attend such events from being penalized because not all members of the GA attend. When all members are invited, no one group or individual legislator is preferenced, and no legislator walks away with anything of value.

Examples 1 & 2 relate only to the actual costs of an event, such as a reception (IC 2-7-3-3(a)(2)(C)). Although there was food served and entertainment available, the nature of the event was that is was a reception, and all costs associated with the event are reportable as a reception (line 3), except for the personal gifts made to legislators. However, because the statute provides for separate disclosure of expenditures made to benefit all members of the GA, when all are invited, those expenditures are reported on line 6 of the activity report.

The reason that the personal gifts are separated out from the computation in Examples 1 & 2 is because when a legislator walks away from an event with an item of value, then the expenditure was not made to benefit all members of the GA. It goes beyond the forum of full invitation to all members of the GA. Rather, it becomes an expenditure personal to the legislator, characterizable only as a personal gift. A personal gift is never an "expenditure" as contemplated under IC 2-7-3-3(a)(4).

When actual costs can be determined, such as when legislators are given tickets to an event, then the actual cost attributable to the legislator is the cost of the ticket. However, when an event such as a reception is held, and actual costs for each legislator cannot be ascertained, then the total reportable amount is computed as follows:

((the fixed cost of the event the total number of persons invited) + (unfixed costs of the event number of persons in attendance)) x (number of legislators in attendance).

Only when it is an event to which less than all members of the General Assembly are invited will there be a requirement to pro-rate the expenditures among each legislator in attendance on Section D of the activity report.