Capitol Alert

The latest on California politics and government

October 24, 2013
FPPC seeks repayment of $15 million in mystery money

Ravel.jpgIn a campaign finance case watched around the country, California's political watchdog has levied a $1 million fine against two non-profit groups for inappropriately laundering money during last year's ballot initiative wars.

The Fair Political Practices Commission announced the settlement with the Center to Protect Patient Rights and Americans for Responsible Leadership, two groups based in Arizona that the FPPC describes as part of a network operated by the conservative Koch brothers.

The groups acknowledge they broke California law by not appropriately reporting two campaign contributions.

The commission also sent letters to two California committees demanding they pay the state general fund more than $15 million they received from groups that didn't properly report the source of their funds.

Actually getting the money, however, will likely be a challenge.

Despite the size of the fine, the settlement brings Californians no closer to knowing the identities of the original individual donors.

Gary Winuk, the FPPC's chief of enforcement, said the case highlights the need to change California law to reflect that political spending is now largely being funneled through nonprofit organizations.

"They are being used to hide donors," he said.

The Arizona groups had not been active in California politics until last fall, when Democrats led by Gov. Jerry Brown were pushing for a tax increase known as Proposition 30, and Republicans were pushing Proposition 32 to limit how labor unions use the dues they collect. A few weeks before the November election, Americans for Responsible Leadership gave $11 million to the Small Business Action Committee, which was working to oppose Proposition 30 and support Proposition 32.

In September, a related group called the American Future Fund gave $4.08 million to something called the California Future Fund, which was also giving money to oppose Proposition 30 and support Proposition 32.

The FPPC and the Attorney General's Office set out to determine who was behind the mysterious donations.

Today's settlement answers part of the question, revealing that the money for the two donations came from the Center to Protect Patient Rights, which acknowledges that it should have reported its contribution last year. But it does not compel the groups to report which individuals gave them the money.

The lawyer representing the Center to Protect Patient Rights said his client's lack of reporting amounted to a mistake.

"This was the first contribution they had ever made in the state of California," Malcolm Segal said, adding that the state's campaign finance laws amount to a "very complicated environment with many, many regulations."

"They believed they were in compliance," Segal said. "But the FPPC believed they were mistaken about their compliance and (under state law) even a mistake is punishable conduct."

The FPPC says the Center to Protect Patient Rights is affiliated with billionaire businessmen Charles and David Koch, who run a network of nonprofit groups around the country that solicit donations and then use the money to support Republican causes. The format allows donors to support political causes without being identified. When donors give directly to a political cause, their identities are reported in campaign finance reports. But when donors give to a nonprofit, the law does not require their identities be disclosed.

Because the groups acknowledge they did not report contributions as they should have, the FPPC can now go after the recipients of the money to pay the funds to the state. The agency sent letters today to Barbara Smeltzer, head of the California Future Fund, and Joel Fox of the the Small Business Action Committee, directing them, respectively, to pay $4.08 million and $11 million to California's general fund.

"It's required under state law," Winuk said. "Just receiving a contribution where the true source is not disclosed means you have to give it up."

But the attorney for the Small Business Action Committee said his group is not required to pay the money, arguing that the California laws governing so-called "disgorgement" apply to political candidates -- not ballot measures.

Furthermore, attorney Steve Churchwell said, his client was not found guilty of any violations and doesn't have $11 million anyway.

"Not one dime of this money is sitting in a bank account," Churchwell said.

"It all was spent on Props 30 and 32."

Here is the stipulation.

Here is the letter to the Small Business Action Committee.

Here is the letter to the California Future Fund.

PHOTO: FPPC Chair Ann Ravel in her office on Tuesday September 17, 2013. The Sacramento Bee/ Renee C. Byer

Editor's note: This post was updated at 2:10 p.m. with a reaction from the Small Business Action Committee.

October 24, 2013
VIDEO: Tim Donnelly, gun control opponents announce recall push


Having failed to persuade Gov. Jerry Brown to reject a wide-ranging package of gun control bills, pro-gun advocates announced on Thursday they will seek to punish Democrats who supported the measures at the ballot box.

"Every single assemblyman and state senator swore an oath to uphold and defend the Constitution," Assemblyman Tim Donnelly, R-Twin Peaks, told reporters before speaking at the conference. "And when they violate that oath by trying to erase the Second Amendment, then I think we have a duty" to "remove that threat."

The recall effort, trumpeted during a press conference on the west steps of the state Capitol building, comes after Second Amendment stalwarts successfully recalled two Colorado legislators last month over their votes for tough new gun control measures. Tim Knight, who launched the Colorado effort, spoke in Sacramento on Thursday about a groundswell of popular anger against California's gun control package, as did Sam Paredes of Gun Owners of California.

"Since the governor's action in signing the bills and vetoing bills, we have been inundated with calls and emails, communications with people all over the state of California asking us, what are we going to do about this?" Paredes said, adding that "the recall is one way to send a message: if you continue to do this, we're going to continue to fight."

Targeting the governor himself would have been prohibitively expensive and required a massive amount of signatures, said Jennifer Kerns, who is working on the recall effort and for Donnelly's gubernatorial campaign.

But she cited a number of vulnerable Democratic lawmakers the recall campaign will focus on: Senators Norma Torres and Ben Hueso, in addition to Assemblywomen Lorena Gonzalez, Sharon Quirk-Silva and Speaker John A. Pérez. That list could grow, Kerns said, brandishing a spreadsheet laying out how lawmakers voted on various gun bills and assessing voter registration splits in their respective districts.

In addition to Donnelly, Kerns said, Republican Assembly members Brian Jones and Shannon Grove have signed on to the recall effort.

October 24, 2013
Jerry Brown: Cutting inmates nothing to 'beat your chest about'

brownjanbudget.jpgGov. Jerry Brown was wrapping up a speech in Washington on Thursday about the merits of California governance when, during a question and answer period, the subject of state prisons arose.

The Brown administration, which is under a court order to reduce California's prison population, has dramatically cut the number of inmates by measures including shifting responsibility in 2011 for certain low-level offenders from the state prison system to counties.

"There's about 42,000 fewer people in the state prison system than there were just five years ago, so that's a big change," Brown said at a policy conference hosted by the Center for American Progress, a liberal think tank. "There's more to be done, and I know there's more to be done because the federal courts have a gun at my head, and if I don't, they're going to throw me in the can."

The Democratic governor is widely expected to run for re-election next year and is by far the favorite to win, but Republicans have hammered him on prisons.

The political difficulty of the issue - if not a shortcoming in Brown's stagecraft - came just as he was about to leave the stage.

"And I want to tell you, reducing the number of felons in prison is not one of those things that you get up and beat your chest about," Brown said. "There are very few people who've run for office saying, 'And if I'm elected, you'll have thousands of felons in your neighborhood.' "

The crowd laughed, and Brown said, "But, it's happening in California."

PHOTO: Gov. Jerry Brown speaks at a news conference at the California state Capitol in Sacramento on Jan. 10, 2013. The Sacramento Bee/Randall Benton.

October 24, 2013
AM Alert: Gov. Jerry Brown trades Sacramento for Washington

GovernorsMeeting.jpgWednesday, we told you about Assembly Speaker John A. Pérez raising his profile by hosting a national event. Today, Gov. Jerry Brown trades Sacramento for Washington, D.C., to rub shoulders with public officials from across the country.

Brown is speaking at a policy conference hosted by the Center for American Progress, the influential liberal think tank, and the governor will add his name to an impressive roster. Filling out the guest list are Secretary of State John Kerry, former Vice President Al Gore, House Minority Leader Nancy Pelosi,, Maryland Gov. Martin O'Malley, and Chicago Mayor Rahm Emanuel.

In keeping with the "California is back!" narrative, Brown is expected to talk in his lunchtime address about how California surmounted its reputation for dysfunction and got its financial house in order.

VIDEO: The state's management of an ancient home for veterans has Dan Walters scratching his head.

FPPC: They're skimping on the details, but the California Fair Political Practices Commission will make an announcement on a major case during a noon press conference. Stay with us for more information as this story develops.

BALLOT INITIATIVES: Big names from all three branches of government will appear on a Public Policy Institute of California panel today discussing the state of direct democracy in California. The panel includes former Assembly Speaker Willie Brown, former Gov. Gray Davis and former chief justice of the California Supreme Court Ronald George, with Los Angeles Times columnist Patt Morrison moderating. Communications pro Donna Lucas, will also be on hand. A recent PPIC report spotlighted recommendations to improve the ballot initiative process. The event is at the Sheraton Grand; registration has already closed.

HEALTH PLANS: We brought you news recently of grumblings from health insurance companies about the lack of health plan quality ratings on the website of Covered California, the state's new health insurance exchange. Board members will vote on how to deploy the quality rating system during a daylong meeting at the Secretary of State's Office today.

CLIMATE CHANGE: The Little Hoover Commission holds a hearing today examining how California will cope with climate change, with witnesses addressing the consequences for the state's major urban hubs: Los Angeles, San Diego, the Bay Area and "Sacramento and the Rest," as the agenda terms it (sorry, SacTown apologists). Starting at 9:30 a.m. in room 437 of the state Capitol building.

PHOTO: California Gov. Jerry Brown speaks with reporters during the National Governors Association winter meeting in Washington, D.C., on Sunday, Feb. 26, 2012. The Associated Press/Jose Luis Magana.

October 24, 2013
Dan Walters Daily: California bungles Napa veterans home

Dan wonders why California continues to maintain an antiquated veterans home rather than converting it into some assets to build a new one.

Have a question you'd like Dan to answer? Post it on our Facebook page.

See other Dan Walters Daily clips here.


Capitol Alert Staff

Jeremy White Jeremy B. White covers California politics and edits Capitol Alert's mobile Insider Edition. Twitter: @capitolalert

Amy Chance Amy Chance is political editor for The Sacramento Bee. Twitter: @Amy_Chance

Dan Smith Dan Smith is Capitol bureau chief for The Sacramento Bee.

Christopher Cadelago Christopher Cadelago covers California politics and health care. Twitter: @ccadelago

Micaela Massimino Micaela Massimino edits Capitol Alert.

Laurel Rosenhall Laurel Rosenhall covers the Legislature, the lobbying community and higher education. Twitter: @LaurelRosenhall

David Siders David Siders covers the Brown administration. Twitter: @davidsiders

Dan Walters Dan Walters is a columnist for The Sacramento Bee. Twitter: @WaltersBee

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