Follow the money "how special interests avoid spending limits"..FPPC to review

I tip my hat to the San Francisco Chronicle and staff writer Erin McCormich for exposing this “follow the money” story. Before voting for candidates or Ballot Measures please check to see who is providing the funds. What makes this difficult is that some campaigns the money may not be received until just after a filing date so the public cannot follow last minute contributions until after the election.i.e. Check out your local city council races where you might find some interesting special interest contributions in December.

For those preferring to read this Chronicle story later the link can be found at the bottom of the post. I did not wish to edit the text due to the fact that my areas of interest may differ from Juice readers.

“How special interests avoid spending limits”

Erin McCormick, Chronicle Staff Writer

Monday, February 11, 2008

More money is flowing into California’s legislative campaigns than ever, despite contribution limits that voters approved eight years ago in an attempt to quash the influence of well-heeled special interests in state elections, according to an analysis by The Chronicle.

Big-ticket donations have moved from candidate-run funds, where individual contributions are capped at $3,600 per election, into independent campaigns run by powerful groups to elect or defeat candidates.

Special interests also use loopholes to funnel money to legislators by donating to funds that fall outside the law’s limits, including legal defense funds, ballot measure committees or lawmakers’ favorite charities.

As a result, watchdog groups say, it has become nearly impossible for the public to follow the money.

Insurance and tobacco companies, unions, Indian tribes and other groups have used independent expenditure campaigns to pump millions of dollars into otherwise obscure state Assembly and Senate races, sometimes outspending the candidates themselves.

While such expenditures were allowed before voters restricted political giving by passing Proposition 34 in 2000, their use in legislative races has exploded by more than 2,500 percent since campaign contributions went into effect – growing from $1 million in 2000 to nearly $27 million in the 2006 election cycle.

For example, a special election in December to fill a vacant Los Angeles Assembly seat turned into a slugfest between labor unions and business groups – as a committee funded by state employees spent $251,000 running phone banks and organizing precinct walkers to support Democratic candidate Warren Furutani, who eventually won.

A corporate coalition funded by real estate developers, doctors and energy companies ran a $266,000 campaign for another Democrat in the race.

“The bottom line is the financing of political campaigns is a mess,” said Allan Hoffenblum, a Republican strategist, who follows state legislative campaigns as publisher of the California Target Book, a nonpartisan guide to state and federal election races. “The system favors the moneyed – and there’s been no sign of reform.”

On Thursday, the state Fair Political Practices Commission will hold hearings on the spike in independent campaign expenditures since Prop. 34 went into effect in 2001.

In the coming months, the agency’s chairman, Ross Johnson, a former legislator who was a co-author of the contribution-limits law, says he hopes to investigate the multitude of ways big contributors are getting around the reforms.

“The people of California have repeatedly voted to limit contributions to candidates – with the expectation that that would reduce special interests’ influence over legislation,” said Johnson. “But the will of the people has largely been thwarted.”

Special interests run massive campaigns against candidates they don’t like, paying to produce their own negative ads and mailers:

— When Ellen Corbett, then a San Leandro assemblywoman who supported consumer rights, ran for state Senate in the 2006 primary, she faced a mysterious opponent. Californians for Civil Justice Reform, funded by insurers, tobacco companies and other corporate interests opposed to consumer lawsuits, spent $577,000 for mailers opposing her and ads supporting her opponent, John Dutra.

Meanwhile, a consumer attorney group called California Alliance jumped in to support Corbett, funding a $385,000 campaign. By the time the primary was over, 14 different independent committees had weighed in, spending a total of $2.2 million to influence the election. Corbett survived that primary and went on to win the Senate seat.

— Former Democratic Assemblywomen Cindy Montanez of Los Angeles wasn’t so lucky. Montanez was author of a Car Buyers’ Bill of Rights in 2005. A year later, she was crushed in a Senate primary against Democrat Alex Padilla, thanks in part to a $123,000 opposition campaign by a committee known as Californians Allied for a Prosperous Economy – which was funded by car dealers.

The U.S. Supreme Court has ruled that the Constitution’s First Amendment guarantees individuals and groups the right to spend unlimited amounts of their own money to promote their political views. Under state law, candidates are not allowed to coordinate any of the activities of these independent spenders.

“Do we really believe legislators are less beholden to these outside groups because they’ve spent independently?” asked UC Berkeley political scientist Bruce Cain.

Even after the election is over, there are plenty of places special interests seeking to curry favor with lawmakers can put their money without having it subject to campaign limits. They can give unlimited amounts to a lawmaker’s favorite charity or to his legal defense fund or ballot measure committee.

Since contribution limits went into effect, The Chronicle found, special interests have nearly tripled the amount of money they give to charities at the behest of legislators – from $1 million in 2000 to $2.6 million in 2007. Some of these donations benefit bona fide charitable groups, while others seem to serve only the legislators’ personal interests:

— Last year, as a group of Indian tribes sought to win lucrative gambling compacts from state government, the Barona Band of Mission Indians allowed 16 of its favorite legislators to pick a school to receive a $5,000 donation – contributing a total of $80,000.

— State Senate President Pro Tem Don Perata, D-Oakland, solicited $850,000 in contributions to charities last year from donors, including Sierra Pacific logging company, E&J Gallo winery, Kaiser Permanente and the Irvine Co. development firm. Of that, $560,000 went to the Rebuilding California Foundation – an Oakland nonprofit formed in January of 2007 to monitor the spending of the state infrastructure bonds approved by voters in a campaign led by Perata.

— In 2006, Democratic Assemblyman Mervyn Dymally of Los Angeles directed $357,000 in contributions from a host of special interest groups to the California Black Legislative Caucus Foundation, a group that he chairs. The caucus has sponsored conferences and posh retreats for legislators.

In some cases, contributors pull out the stops and give money in as many different ways as they can think of.

In 2006, as AT&T Corp. sought legislation that would allow it to enter the cable television industry throughout the state, it gave direct campaign contributions to 76 of 80 assembly members and 36 of 40 senators.

But it didn’t stop there. AT&T gave $205,000 to the Democratic Party, $605,000 to the Republican Party and put $137,000 into various independent expenditure campaigns. And it made $99,000 in donations at the behest of nine legislators. In the year following the vote, it gave $50,000 to a ballot
measure committee controlled by Assembly Speaker Fabian Núñez, who sponsored the bill, and $25,000 to a ballot measure committee controlled by Senate leader Perata.

The bill, which took control of cable TV contracts away from localities and allowed statewide competition, passed overwhelmingly. Consumer groups said it was a giveaway that essentially deregulated the cable TV industry.

“I don’t think special interests are spending any less,” said Carmen Balber of the Foundation for Taxpayer and Consumer Rights, a Santa Monica consumer lobby that opposed the bill. “They are simply funneling the money through different avenues.”

Meanwhile, Prop. 34 hasn’t made much of a dent in the regular fundraising by lawmakers’ campaigns.

In the 2000 statewide election, before campaign contribution limits took effect, legislative candidates, competing in 100 races, raised a combined $109 million in their campaign funds.

In 2002, the year after Prop 34 took effect, total fundraising dropped to $72 million. But by the last legislative election in 2006, candidates for the 100 Assembly and Senate seats on the ballot raised enough money to surpass their 2000 record – collecting a combined total of $110 million.

Dave Gilliard, who has worked as a strategist in Republican Assembly races and independent expenditure campaigns, said the new ways money is being spent have made more work for campaign consultants like him but haven’t made things easier for the public.

“I think contribution limits have had the opposite affect that voters wanted,” he said. “It’s driven a lot of money underground and made it harder for people to figure out who’s behind a candidate. But it hasn’t lessened the amount of money going into politics.”

How to fix the system is a matter of debate. Republicans and many academics who follow campaign money argue that, because the nation’s highest court has ruled that independent expenditures can’t be banned, the best answer might be to get rid of campaign limits and improve disclosure to the public.

More liberal reform groups are calling for lower limits, elimination of loopholes and public funding of campaigns. But few people think the current system is working.

“It’s just a screwed deal,” said former state Sen. John Burton, co-author of the campaign contribution law. “There’s always a way to get around limits.”

Big spenders

The biggest independent expenditure committees and what they spent in the California legislative elections during 2006 and 2007.

California Alliance for Progress and Education $3,621,409

This committee, which bills itself as “an alliance of professionals, employees and small business,” ran campaigns in seven legislative primaries and four general election races in 2006, including opposing Democratic San Leandro state Sen. Ellen Corbett in her primary run for her Senate seat.

Major funders

California Dental Association Independent Expenditure PAC$1 million

California Real Estate Independent Expenditure Committee$760,000

California Real Estate Political Action Committee$450,000

Farmers Employees & Agents Political Action Committee$344,500

California Building Industry Association PAC$200,000

California Hospital Association PAC$120,000

Team 2006, sponsored by California sovereign Indian nations $1,992,392

This group of tribes with casinos ran independent expenditure campaigns in eight 2006 Assembly and Senate races, including helping Republican incumbent Sheila Horton fight off Democrats’ attempts to capture her San Diego Assembly seat.

Major funders

Agua Caliente band of Cahuilla Indians $2.8 million

Sycuan band of the Kumeyaay Nation $2.8 million

Pechanga band of Luiseno Indians $2.8 million

California Correctional Peace Officers Association Independent Expenditure Committee $1,653,226

This group representing California prison guards, one of the state’s biggest contributing groups, made independent expenditure contributions in 17 legislative races in 2006.

Major funders

California Correctional Peace Officers Association$2.8 million

Californians for Civil Justice Reform $1,666,883

This group of corporations and industry groups that support legal tort reform funded independent expenditure campaigns in three Senate primaries in 2006, including spending more than $500,000 to oppose Ellen Corbett.

Major funders

California Building Industry Association$100,000

21st Century Insurance$100,000

ACC Capital Holdings Corp.$100,000

California Real Estate Political Action Committee$100,000

Bank of America California Political Action Committee$100,000

Pfizer Inc.$100,000

Pacific Gas & Electric Corp.$75,000

American Insurance Association$75,000

Amgen Inc.$60,000

Countrywide Home Loans Inc.$50,000

Farmers Insurance Group$50,000

Chevrontexaco Corp.$50,000

The Irvine Co.$50,000

Philip Morris USA Inc.$40,000

Source: Chronicle analysis of campaign finance filings

Follow the money

Loopholes in California’s campaign contribution limits make special-interest spending hard to follow:

Before Proposition 34 took effect in 2001

— Unlimited: Special interests could give unlimited amounts to candidates’ campaign funds.

After Prop. 34 took effect

— Limited: Special interests are limited to $3,600 per election to state Assembly and Senate candidates.

— Unlimited: Special interests can spend unlimited amounts on their own campaigns to support or oppose candidates.

— Unlimited: Special interests can give unlimited amounts to legal defense funds or ballot measure committees or make big donations to a charity at a legislator’s behest.

To view campaign contributions and expenses, go to the California secretary of state’s Web site:

Get involved

The state’s Fair Political Practices Commission meets Thursday at 10 a.m. at 428 J St., Suite 800 in Sacramento to discuss skyrocketing independent campaign expenditures and new rules for legislators’ out-of-state travel expenses.

To read the agenda, go to:

E-mail Erin McCormick at

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