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Parties use county, state committees to skirt donation caps

Democrats and Republicans, legally exploiting a loophole in California law, have funneled more than $10 million in oversized contributions through a network of county and state committees to skirt around voter-approved contribution limits.

In the biannual money shuffle, donors–both well-heeled interest groups and legislators looking to curry favor–are giving to multiple committees, sometimes shifting, indirectly, more than $100,000 into candidate coffers, despite a $3,300 legal limit on direct contributions.

For example, during the last 40 days, more than a half-dozen Assembly Democrats, from Santa Cruz to Fresno to Eureka, have donated at least $27,900 to an obscure political committee in Stanislaus County.

That money, in turn, was packaged into six-figure chunks and passed on to the handful of Democratic candidates–sometimes hundreds of miles away–locked competitive races on the November 7 ballot.

The process repeated itself in San Diego, San Luis Obispo and Sacramento.

In the half-dozen competitive legislative races in California, such party-given money often comprises a majority of all funding in the campaign.

And it’s all perfectly legal.

But the money-transferring maneuver is yet another example of California’s loophole-ridden campaign-finance law, complain the state’s campaign watchdogs.

“It’s obvious that these guys are gaming the system,” said Ned Wigglesworth of Common Cause. “The effect of contribution limits is severely limited by such tactics.”

Under California law, donors can give an Assembly or Senate candidate a maximum of $3,300 per election.

But the law allows those same donors to contribute up to $27,900 per year in so-called “soft money” to a parade of Democratic or Republican Party committees.
That party money can then be given–without limit–directly to candidates.

What’s more: By shifting contributions through party committees, donors face far less stringent disclosure rules–remaining hidden from public view for weeks at a time.

The party-committee wrinkle in the law–which critics decry as a loophole–has turned once-sleepy county parties, like the Monterey Republican ($540,000) and the San Luis Obispo Democratic ($465,000) committees, into major clearinghouses for campaign cash.

The Democratic committees in Stanislaus and San Luis Obispo have combined to spend more than $1 million in 2006–after not spending enough money the last three election cycles to even file paperwork with the secretary of state.

“We’re following the law,” said Steve Maviglio, a spokesman for the efforts of Assembly Democrats, who are using four different county committees for donations. “These are the new rules of engagement under Proposition 34.”

For Democrats, the top recipient of party money in 2006 has been Cathleen Galgiani, a Democrat running to succeed her former boss Assemblywoman Barbara Matthews, D-Tracy, in the Central Valley. Galgiani has received $1.425 million in outsized contributions from various party committees, including $650,000 from San Diego and $625,000 from Sacramento.

The top recipients among Republicans have been Sen. Jeff Denham, R-Merced, who is running for reelection in the Central Valley and Assemblywoman Lynn Daucher, R-Brea, who is running for an Orange County Senate seat.

Each has received $1.3 million in campaign contributions from state and county Republican parties, including $515,000 from the Monterey County for Denham and $250,000 from Orange County for Daucher.

“[The money] certainly plays a big role. In the state Senate there are only two targeted races, so most of the central committees are looking help those two targets,” said Shant Apekian, Denham’s campaign manager. Apekian says Denham himself actively raised money for local county committees, much of which ultimately went to the campaign.

In fact, unlike the Democratic effort, the Republican operation appears more geographically centered, with counties giving primarily to candidates within their own borders. More than 85 percent of Denham’s more than $1 million in county money came from areas he represents, while for several Democrats, such as Assemblywoman Nicole Parra, D-Hanford, who received $780,000 in contributions through county committees, no money came from counties she represents.

In the six most competitive legislative races in California, for four Assembly and two Senate seats, the contributions shuffled through party committees often account for the lion’s share of money in the campaigns.

In San Diego County’s 78th Assembly District, Democratic challenger Maxine Sherard has raised a total of $842,000 this year. But more than $700,000 of that sum came from various party committees.

For GOP Assembly candidate Gerry Machado, more than $1 million of his $1.35 million war chest came via county and state Republican committees. This week alone, the California Republican Party cut Machado a check for $531,000.
Wigglesworth of Common Cause says all the moving money is because Proposition 34, the state’s campaign-finance law, was not a real reform measure.

“Prop. 34 was written to redirect the flow of political contributions through the parties,” he said. “It was a placebo designed to give the illusion of reform.”

Both Democratic and Republican operatives say that if they don’t leverage every aspect of the law, their opponents will, putting them at a financial disadvantage.

“The Republicans made this a work of art in how they do this. They paved the way,” said the Democrats’ Maviglio, pointing to the 2002 election cycle when 21st Century Insurance doled out $1 million to a network of Republican county committees that then passed money on to GOP candidates.

But now, says Matt Rexroad, the Republican consultant who orchestrated the 21st Century donations, the Democrats have followed suit.

“All of those people after the 2002 election cycle had all of these terrible things to say about FPPC complaints and lawbreaking,” he said. “They are all doing exactly the same thing and I don’t hear anything now.”

There’s another benefit to county-party donations: By shifting the money through county committees, donors not only avoid the contribution cap, but also are able to remain undisclosed for weeks at a time.

While direct donations of more than $1,000 to a candidate must be reported within 24 hours, disclosure requirements for donations to party committees are far less stringent.

In fact, for a three-week window that ended last Thursday, county-committee donors remained hidden despite writing five-figure checks that were quickly transferred to legislative candidates.

During that dark period, the state’s prison-guards union gave more than $85,000 to two Democratic committees, while Zenith Insurance, the California Teachers Association, and a union of professional engineers each gave a total of more than $110,000 to four county committees.

The donations don’t just evidence who is trying to influence the Legislature from the outside, but which members are jockeying for leadership posts from within. In the term limits era, fund-raising prowess has proven a critical yardstick for legislators looking to prove their worth.

Every current and would-be member Assembly Speaker Fabian Nunez’s leadership team has give thousands of dollars to county committees, including Assembly members Mark Leno ($114,000), chair of Appropriations, John Laird ($114,000), chair of Budget, Hector De La Torre ($114,000), chair of Rules, Alberto Torrico ($111,600), chair of Governmental Organization, Dave Jones ($100,000), chair of Judiciary, Juan Arambula ($83,700), chair of Jobs and Economic Development, Patty Berg ($55,800), chair of Aging, Karen Bass ($65,800), Assembly floor leader, and Sally Lieber ($39,000), speaker pro tempore, among others.

“Clearly, if you look at who is chairing committees and who is participating, there would be some correlation,” said Leno. “Those that do not participate at all r
eally become nonplayers.”

Incoming Democratic legislators including Mike Eng, Mike Feurer, Fiona Ma, Charles Calderon, Kevin de Leon, and Jim Beall have all gien to county committees, as well.

On the Republican side, Senate and Assembly GOP leaders Dick Ackerman and George Plescia have funneled $362,700 and $334,800, respectively, to various state and county committees.

Leno, the San Francisco Democrat, who is among the year’s biggest donors to county committees, says the entire fund-raising system is broken, He supports publicly financing campaigns and Proposition 89, which is on the November ballot.

“But just because I don’t like the system we are using,” said Leno. “doesn’t mean that I am not going to take part in it.”


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