Gavin Newsom: Debt treadmill or political fastrack?

San Francisco mayor Gavin Newsom is nearing the finish line in a two-year
race to retire his $550,000 campaign debt.

Fundraising trips around the state–even around the country–have earned him
some criticism from the city’s progressives. However, these efforts could
also provide a textbook case of a politician creating the kind of
organization that could catapult him to even higher office.

At the end of 2004, the Newsom for Mayor reported $414,817 in remaining
debt, according to filings with the San Francisco Ethics Commission. By June
30 of this year, the number had fallen to $194,668.

Three and a half months later, Newsom’s debt is now below $50,000, said Eric
Jaye, proprietor of the San Francisco political consulting firm Storefront
Political Media and director of Newsom’s election campaign.

“He is steadily paying down the debt,” Jaye said. “It’s all kind of on
autopilot at this point. It shows the cost of getting elected to office in
San Francisco.”

This cost was over well over $5 million for Newsom. And if there is one
thing that both Newsom supporters and opponents can agree on, that is more
than the city could support, given its population of 775,000 and strict
campaign finance rules.

This has meant recent trips to Sacramento, Los Angeles, Eureka, Fresno–even
to Washington, D.C. The decision to raise money outside of the city, which
has irked some Bay Area progressives, stems from a desire of Newsom to stay
unbiased, Jaye claimed.

“There are all kinds of people he could be raising money from in San
Francisco,” Jaye said. “He wanted to avoid owing favors.”

Neither the Newsom campaign nor top fundraiser Mike Montgomery returned
calls for this story. However, in an August interview with Capitol Weekly,
Newsom said the debt has allowed him to make political connections he would
not have otherwise.

“In hindsight, I’m really pleased I had the debt,” Newsom said.

His efforts to retire this debt have kept Newsom under the microscope in the
city’s hypercharged political environment–especially when it comes to his
relationship with powerful consultants like Jaye, Montgomery and campaign
lawyer Jim Sutton. To some who have looked at the numbers, Newsom seems to
be stuck on a hamster wheel of debt, due to a high cost of raising money.

“Since March they have been pulling out the stops to get the debt retired,”
said Charles Marsteller, former coordinator of San Francisco Common Cause.
“The fundraising costs are off the charts.”

The campaign’s June 30 filing, which covers the first six months of 2005,
listed contributions of $354,275 and fundraising costs of just over $86,000.
This would put Newsom’s fundraising costs at about 24 cents on the dollar.

This is a high but not exorbitant number, according to fundraising
professionals. Ten percent to 15 percent is more standard, according to Mark
Bogetich of MB Public Affairs, Inc. Under certain circumstances, 25 to 30
cents on the dollar may be appropriate, he added.

“If you’re putting 1,500 people in the ballroom of the Grand Hyatt, that’s
going to cost you a lot of money,” Bogetich said. “But if he’s being invited
to small gatherings at someone’s house, there should be almost no overhead.”
However, Marsteller said that there are some are likely some other
fundraising expenses hidden in the forms. The campaign reported $49,033 in
expenses incurred this year to existing creditors, only a tiny fraction of
which was classified under fundraising. This includes large amounts owed to
the accounting firm Warren & Associates, the law firm of Remcho Johansen &
Purcell, the Sutton Law Firm, and Storefront Political Media. Storefront is
also Newsom’s largest creditor, owed $56,957.

Some of these expenses were for services like phone banking and polling. Tom
Willis, a partner with Remcho, said he could not comment specifically on the
firm’s work for Newsom. But he did say that they do work to keep sitting
politicians from violating Ethics rules during fundraising.

Newsom has run afoul of the Commission at times. His most dramatic run-in
came in January of last year when a wayward mail sent by a secretary for Jim
Sutton outed an alleged scheme to divert money from his inauguration to pay
down his campaign debt. This debacle caused two ethics employees to turn
whisteblower on then executive director Ginny Vida after she ordered them to
destroy the email. The city’s Sunshine Ordinance Task Force later ruled
against Vida, who resigned.

The Newsom campaign was also dinged the by state Fair Political Practices
Commission for $2,5000 for sending a mass mailing targeting the campaign of
opponent Matt Gonzalez without properly identifying the source.

Meanwhile, there is a movement afoot to end big money fundraising by
providing public financing of mayoral races. While this might be a pipe
dream in many cities, San Francisco already offers public funding to
supervisor candidates.

“We don’t see this as an opportunity to blame Gavin Newsom,” said Rob Arno,
campaign coordinator for San Franciscans for Voter-Owned Elections. “We
think that the system is broken.”

However, if this happens, it might make the San Francisco mayor’s seat less
attractive to someone with higher political ambitions. This issue is
particularly relevant in Newsom’s case, Marsteller said, given his skill in
using fundraising to create a loyal base.

After all, Marsteller said, Newsom essentially started running for mayor in
2002 with his Care Not Cash initiative. The successful campaign for the
homelessness ballot measure not only made the then-supervisor a household
name, it also allowed him to create a 10,000-name fundraising list that was
integral to his mayoral campaign.

Similarly, Newsom’s current travels could be viewed not as a failure to get
elected within the fundraising boundaries of a smallish big city, but as
building a statewide base.

“He could be moving up the political ladder,” said fundraiser Julie Sandino,
principal in Sandino Consulting. “We should all have such trouble with our

Want to see more stories like this? Sign up for The Roundup, the free daily newsletter about California politics from the editors of Capitol Weekly. Stay up to date on the news you need to know.

Sign up below, then look for a confirmation email in your inbox.


Support for Capitol Weekly is Provided by: