$100,000-Loan Club: AD-55 Candidate Ling-Ling Chang (R-Diamond Bar), AD-73 Candidate Paul Glaab (R-Laguna Niguel), and AD-73 Candidate Steve Baric (R-Rancho Santa Margarita)
$100,000 is the magical amount sprinkled in loans across campaigns for Assembly representing portions of Orange County.
- In AD-55, OC Political’s Allen Wilson reported earlier on initial indications of $100,000 from Diamond Bar Councilwoman Ling-Ling Chang to her own Assembly campaign. Her Form 497 shows she loaned herself $100,000 on June 30. (Although Chang is from the LA County city of Diamond Bar, the tri-county 55th Assembly District includes the OC cities of Brea, La Habra, Placentia, and Yorba Linda.)
- In AD-73, former Laguna Niguel Councilman Paul Glaab loaned his own Assembly campaign $100,000 on June 30, according to his Form 497.
- Also in AD-73, the law firm of Baric & Tran loaned Rancho Santa Margarita Councilman Steve Baric‘s Assembly campaign $100,000 on July 10, according to his Form 497.
So why do candidates loan $100,000 to their own campaigns? On rare occasions, a candidate may actually spend the money. However, 99% of the time, the candidates will not spend the money, as they are simply loaning their campaigns the $100,000 to inflate their warchests with every expectation of repaying the entire loan once the election is over. By inflating their warchests by $100,000, the candidates hope to:
- scare potential opponents (who would be afraid to face down another $100,000)
- convince donors to contribute more to the campaign (donors tend to give money to candidates who show they have money in a bandwagon effect)
- both of the above
As they are not yet due, the Form 460s (the complete campaign finance reports for each reporting period) have not been filed by any campaigns for AD-55 or AD-73 for the January 1-June 30 reporting periods. Due to the $100,000 loans, the Chang, Glaab, and Baric campaigns had to submit their Form 497s, as those must be filed within 10 business days of receipt of more than $5,000 from any one source (in the final 90 days before an election, Form 497s must be filed within 24 hours of receipt of more than $1,000 from any one source).
Chang and Glaab both loaned their campaigns the $100,000 on June 30. The significance of that date is that June 30 is the final date of the reporting period for the first half of 2013. The next reporting period doesn’t close until December 31. Due to their loans, Chang and Glaab will be able to show an additional $100,000 on their Form 460 reports and then spend the latter half of 2013 raising money before the next reports are due.
The $100,000 loan from Baric & Tran on July 10 is a puzzling case, as it is not a personal loan and it was made very early in the reporting period and won’t appear on Baric’s Form 460 until after December 31.
What is the magic of the specific $100,000 figure? It’s the most a candidate can loan their own campaign and still get repaid. Any amount loaned to the campaign that exceeds a $100,000 balance is considered a contribution to the campaign, rather than a loan, so it cannot be repaid to the candidate.
Specifically, Government Code Section 85307(b) prohibits candidates for state office (i.e. the Legislature, the Board of Equalization, and all statewide offices other than U.S. Senator) from having an outstanding balance of more than $100,000 in personal loans to their own campaigns.
The candidate is the only person (or entity) who can loan a campaign more than the contribution limit. Any other person or entity is subject to the campaign contribution limit of $4,100 per election for a state legislative race (this limit is in place through the end of the 2014 General Election).