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Dems target ‘stealth cash’ rules

An effort to beef up campaign disclosure rules prompted by the dramatic, multimillion-dollar infusion of stealth cash into the November 2012 elections could be on the governor’s desk by the end of the month – in time for this year’s races.

The proposal, backed by majority Democrats and the state’s political watchdog and opposed by Republicans, would require greater disclosure of donations and expand the authority of the Fair Political Practices Commission.

The measure comes largely in response to an $11 million flood of Republican-linked money, funneled through nonprofits, that went into the November 2012 elections some three weeks before Election Day.

It clarifies the ability of the FPPC to perform pre-election audits, examine campaigns’ books before disclosure documents are filed and seek pre-election injunctions. The bill, a survivor of a number of finance-reform bills from last year’s session, requires the unveiling of the payments of subcontractors and subvendors, entities that  have been exempted from fiscal disclosure. It also allows more time for candidates to close down their campaigns following an election.

The measure comes largely in response to an $11 million flood of Republican-linked money, funneled through nonprofits, that went into the November 2012 elections some three weeks before Election Day.

“It allows them (FPPC enforcers) to do their job better,” said Assemblyman Rich Gordon, D-Menlo Park, the author of the legislation, AB 800. “It makes their job easier in some ways.”

The FPPC, following an investigation, levied some $16 million in penalties – a settlement for $1 million in fines against two nonprofits and a demand to recoup the $15 million and pay it into the state’s general fund.

“We believe we have the injunction authority, but the statute is not clear,” said Gary Winuk, the FPPC’s chief enforcement officer. “When you have clarity in the statute, and especially when you have to move fast before the election, it is extremely helpful.”

The legislation stems from a total $15 million in so-called “dark money” — $4 million in September 2012 and $11 million the following month — that was routed along a complex trail through out-of-state nonprofits. The donors were not disclosed.

The money, since linked to a political network that backs conservative and Republican causes, went to support Proposition 32, which would have curbed unions’ ability to raise political cash, and defeat Proposition 30, the governor’s attempt to temporarily raise sales and income taxes to help balance the budget.

Proposition 32 was rejected; Proposition 30 was approved. Democrats were angered at the cloaked contributions and Common Cause filed a complaint.

The FPPC, following an investigation, levied some $16 million in penalties – a settlement for $1 million in fines against two nonprofits and a demand to recoup the $15 million and pay it into the state’s general fund. To date, that has not happened, although the case remains alive; the deadline to submit the payment was passed.

“”Not one dime of this money” remains in the campaign account, Steve Churchwell, attorney for the Small Business Action Committee PAC, told reporters last fall. “It was all spent on Props 30 and 32.”

Democrats, with supermajorities in both houses, favor the measure as a way of tracking out-of-state money flowing into California from wealthy GOP donors, among others.

In a letter to lawmakers, top GOP lawyers — including Chip Nielsen and Chuck Bell — said the Gordon bill and related legislation allowed the FPPC “to commence an audit of any person at any time for any or no reason, with no practical oversight. ”

Some believe, they added, “that the FPPC has engaged in fishing expeditions in the past, and nothing in these legislative bills would prevent abuses.”

Democrats, with supermajorities in both houses, favor the measure as a way of tracking out-of-state money flowing into California from wealthy GOP donors, among others. Republicans, while favoring transparency, say the expanded use of injunctions and disclosure may constitute impermissible government interference in conference.

“I don’t know that the FPPC has made the case that it needs greater enforcement authority,” said Assemblyman Donald Wagner, R-Irvine, adding that he was concerned about “the potential here for government abuse”  of campaign accounts.

This week, Gordon’s measure went back again to the Senate for a final action described in the Capitol as technical. The bill is likely to go to Gov. Brown by the end of the month.

The governor has not taken a position on the bill, but has made a number of statements backing transparency in campaign finances.

In October, following the FPPC’s settlement on the out-of-state money, Brown said that “secrecy and money don’t mix well in a democracy. For 40 years, I have been fighting for disclosure and honest reporting of campaign spending. Today’s shocking revelation by the FPPC makes it plain we still have big loopholes to close.”


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