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Labor leaders urge Nunez to return $4 million from Democratic Party

California's largest labor organization has demanded that Assembly Speaker Fabian Nunez return $4 million the speaker received from the state Democratic Party–money that the labor leaders said should go to help Democratic candidates.

The executive council of the California Labor Federation, meeting privately at the Biltmore Hotel in Los Angeles, unanimously approved the resolution Monday night urging Nunez to return the money “for the purpose for which it was originally intended,” according to three ranking officials familiar with the action.

Nunez, who is leaving office this year, has more than $5.1 million in his personal campaign account. Labor leaders cited concerns that Nunez might use those funds for his own political purposes — a future political race or Nunez-backed ballot initiative campaign — instead of being used to benefit the Assembly Democratic Caucus.

The resolution did not specifically call on Nunez to return the money to the state party. But several participants in the discussions said that clearly was the resolution’s intent. Art Pulaski, head of the Labor Federation, introduced the resolution. The Federation is an umbrella labor organization representing about 4 million workers.

"When the speaker asked for the money, it was for one purpose — to help elect Assembly Democratic candidates. It was not for a slush fund for the speaker. If he does the moral thing, he will return the money," said Robert Balgenorth, president of the State Building and Construction Trades Council, and a member of the Federation's executive committee.

But haggling over the details of the resolution continued Tuesday. A Nunez spokesman said the language of the resolution directed the speaker to spend the money on behalf of Democratic candidates, and not necessarily return the funds to the party.  But sources at the labor convention said Nunez, subect to campaign restrictions, could not spend the $4 milion as originally promised because of the $3,600 limit per candidate.

The money had been transferred to Nunez in November 2006.

Steven Maviglio, a spokesman for the speaker, said the funds had indeed been directed to political activities to assist candidates.  

"The speaker has been the largest fundraiser of the Democratic Party in recent memory. He fully funded all the legislative races. We had 48 Democrats in '04 and '06, and he raised money in the '05 special election," he said. "He has sided with labor on all those issues. We don't question how labor runs its operations. It's unfortunate they don't offer the same consideration to the speaker."

But spending reports from the Secretary of State's office show Nunez has only spent about $1.4 million out of his campaign account since 2005. In those four years, only $153,000 has been spent on candidate contributions, the records indicate. The largest benefactor was Kevin Shelly's legal defense fund, which received $15,000 from Nunez in 2005, before the $4 million from the party was received. Others who received donations from the committee include Phil Angelides ($6,600), Darrell Steinberg ($6,600) Mark Leno ($3,600) and Gavin Newsom ($500).  

There was no immediate public comment from the Labor Federation, which was in the midst of an annual convention. The state Democratic Party also was not immediately available to comment. Several sources familiar with the executive committee's action confirmed the vote for Capitol Weekly.

Political parties, unlike officeholders, can raise unlimited sums. With Nunez's help, the Democratic Party did so-and later transferred $4 million to Nuñez's campaign account.

But giving the money back may not be as easy as it would appear. Because of state contribution limits, Nunez can only give the money out to legislative candidates in $3,600 increments. He could give all of the money back to the state party, but the party would only be allowed to spend the money on candidates in $30,200 increments.

Another possibility is that Nunez retains the money for a future political run of his own, or spend it on a statewide ballot measure. Democratic sources have said talks are underway to craft a measure that would provide a guaranteed funding stream for the state’s beleaguered foster care system. If Nunez were to use that money on a foster care, or any other ballot measure, he could give unlimited funds to that campaign.

And there would be precedent, if that is in fact the road that Nunez decides to take. When former Speaker Antonio Villaraigosa left Sacramento to run for mayor of Los Angeles in 2000, he took $1 million of caucus funds. Most of that money was used to fund television ads, which ran in Los Angeles, starring Villaraigosa urging support for a state park bond. The ads were used to boost Villaraigosa’s name identification and political visibility in the run-up to his first mayoral bid.

The Villaraigosa precedent is part of the reason labor’s has taken this combative stance against Nunez. They want to ensure that money raised for state political causes and candidates stays in Sacramento.

At the time, the transaction was criticized as a ploy by Nunez to make an end run around the contribution limits that applied to candidates.

The timing of the payment also drew fire.

Earlier in the year, Nunez had pushed through legislation that benefited AT&T, among others, in a major Capitol dispute over cable franchising. AT&T was a major donor to the state Democratic Party, as well as to the Republican Party and other candidates and causes.

Nunez's political committee got the $4 million on election day, and party officials at the time said the money was a refund of unspent money that Nunez had helped raise for the party's treasury. They noted that Nunez intended to use the funds for fund-raising events, polling and surveying, consulting and other political activities to benefit candidates.

The huge infusion of cash-it more than tripled the amount of the funds in his account at the time – came at a time when Nunez's campaign committee was barred from raising new political cash because of term limits.  A year later, Nunez's political spending was targeted by the Los Angeles Times, which reported that the speaker spent large sums on personal luxuries, including travel, lavish meals and wine.

Earlier this year, voters rejected an attempt by Nunez and others to lengthen to 12 the number of years a lawmakers can serve in one house. Currently, that limit is six in the Assembly and eight in the Senate.

Nunez's staff described the transaction then as a routine transfer to accommodate political fundraising restrictions imposed by Proposition 34 of 2000.

 "He used that money for Assembly operations," Maviglio noted.


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