California Money

By Jim Miller
02/06/2015 11:42 PM

Eureka, on California’s North Coast, is at least a seven-hour drive from Fresno, the northern tip of the Central Valley’s sprawling 14th Senate District. It’s even farther from Santa Ana, the Orange County city at the heart of Southern California’s 34th Senate District.

In political terms, though, the Eureka-based Humboldt County Democratic Central Committee was right in the thick of both campaign battlegrounds last fall.

The Humboldt committee, along with party committees in San Mateo, San Diego and elsewhere, poured millions of dollars into Senate and Assembly contests during the final weeks of the fall campaign – sometimes within days of receiving large contributions from public-employee unions, corporations and other special interests. The Republican candidates in those races received similar help, as GOP committees from San Luis Obispo, San Bernardino and beyond accepted large donations and pumped money into the campaigns.

Fourteen years after voters approved a measure that imposed candidate contribution limits for the first time, the pipeline of money between donors, political party committees and far-flung candidates in competitive races continues to grow. Political parties’ role as money middlemen effectively skirts the limits while making it difficult for voters to figure out which special interests support a candidate.
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California political parties dominated fundraising in more than two dozen Assembly and state Senate races last fall. With Democrats’ two-thirds legislative supermajorities at stake, the parties relayed at least $22 million into candidates’ campaign coffers from Aug. 1 through mid-November, state records show. That is more than a third of the total amount raised by all legislative candidates during that time.

The transactions are complex, sometimes involving multiple committees, yet entirely legal if there is no coordination between donors, committees and candidates. Such cases are difficult to prove and only a relative handful of politicians, consultants or political committees have gotten in trouble for money laundering.

“I guarantee you there’s someone with a huge Excel spreadsheet on one screen and the rules and regulations on the other, and they’re tracking it. It takes time and understanding, but it’s possible,” said Loyola Law School professor Jessica Levinson, who teaches election law. “People are forever becoming smarter about different ways to get money into elections. It can provide a very broad vehicle for people to exert their influence.”

The money-shuffling is a legacy of Proposition 34, the November 2000 measure placed on the ballot by lawmakers of both parties and billed as campaign-finance reform.

Proposition 34, for the first time, restricted the size of campaign contributions to state races in California. But the measure’s text acknowledged another primary purpose – “to strengthen the role of political parties in financing political campaigns” and to allow them to make unlimited contributions to their candidates.

County central committees and other party entities, which had been the domain of activists who busied themselves with local endorsements or volunteering on local campaigns, overnight became potential conduits for big money into races anywhere in the state.

“It was a huge loophole written by party attorneys to allow parties to raise unlimited money,” said Bob Stern, a former general counsel of the California Fair Political Practices Commission.

Individual donors last year were not allowed to give more than $8,200 to a candidate. But donors could give a larger amount – $34,000 last year – to each party organization that, in turn, could be contributed to candidates’ campaigns.

That means a wealthy donor could write a series of $34,000 checks to multiple party committees, which then could each send the money to one candidate in a contested race. As long as there was no coordination, the transaction would be legal.

Certain county committees have emerged as go-to recipients of the money each election cycle.

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