California lawmakers object to “dark money,” a term for campaign contributions used to pay for an election campaign without disclosing the source of the money. But while Democratic lawmakers object to “dark money,” they don’t seem to want to talk about public employee union campaign contributions.

On Aug 13, the Assembly Elections and Redistricting Committee heard testimony on several bills that supposedly would “reform” the campaign money process.

Dark money

SB 27, by state Sen. Lou Correa, D-Santa Ana, and SB-594, by state Sen. Jerry Hill, D-San Mateo, were the two standout bills.

SB 27 would require state ballot measure committees and state candidate committees which raise $1 million or more for an election to maintain an accurate list of the committee’s top 10 contributors, and provide that list to the California Fair Political Practices Commission.

SB 27 was sparked by the now infamous contributions last fall from Phoenix-based Americans for Responsible Leadership, an Arizona nonprofit organization. According to Correa, ARL donated $11 million. Receiving the money were the campaign against Proposition 30, which raised Californians’ taxes $7 million; and the campaign for Proposition 32, which would have prevented labor unions from automatically deducting union dues for political campaigns.

After a court battle with the FPPC, this “dark money” nonprofit group revealed that it was not the original source of the $11 million contribution but merely an intermediary. “They disclosed the true origin of the money was another nonprofit, and another nonprofit,” Correa said at the hearing.

Correa said the purpose of his bill is to require nonprofits to reveal the true sources of campaign contributions. While Correa’s bill is sponsored by the FPPC, other groups stepped up to renounce “dark money.”

The original source of this campaign money is still unknown to the public and the matter is still the subject of an ongoing FPPC investigation, Correa added.

However, ARL lost handily on both counts. Prop. 30, backed with more than $30 million in union money, won 55-44, And Prop. 32, opposed with more than $60 million in union money, lost 57-43.

Who is allowed to lobby?

“I see this as an attempt to silence and crush out dissent,” said Assemblyman Tim Donnelly, R-Twin Peaks. “Government and media demonize opponents’ positions.”

Donnelly asked Correa why, if SB 27 was intended to shed light on the sources of money flowing into campaigns, the educational system was not also being scrutinized for openly lobbying on behalf of Prop. 30? State law prohibits public officials from using their offices to promote initiatives.

Donnelly said teachers and school administrators handed out flyers to students and parents, and talked in classrooms about the need for the parents to vote for Prop. 30. “It’s an illegal use of state resources,” Donnelly said. “But nobody here talked about the illegal use of K-12 grade employees and the university system being used to lobby parents on Prop. 30.”

Zackery Morazzini, counsel for the FPPC, suggested Donnelly file a complaint. Morazzini explained his department was just the enforcement arm of the FPPC and could not do anything without a complaint. But he assured Donnelly that the FPPC has gone after many public entities.

“To hear from thousands of Californians that their schools were using public resources to lobby on behalf of Prop. 30 was deeply disturbing,” Donnelly said. “But when you’re only going after one side, I can’t get behind that. We have a much more corrupt system here than just the ‘dark money.’”

California Common Cause, the League of Women Voters, and the Alliance for Justice, which “represents thousands of legitimate nonprofits,” according to its representative at the hearing, support SB 27.

The California Clean Money Campaign, also in support of SB 27, is more of a mystery. Also a nonprofit, the CCMC appears to be largely staffed with community organizers. And it is unclear where their own funding comes from.

But each of the groups in support of SB 27 was largely mum on campaign funding from public employee unions.

Classroom advocacy

I covered a situation of campaigning and lobbying in the classroom at California State University, Fresno during the 2012 election. Despite receiving a rebuke from school officials, professors and teachers had no intention of stopping.

“State college instructors and professors continue to promote Prop. 30 during class time, according to Daniel Harrison, a student at California State University, Fresno, and president of the Fresno State College Republicans,” I wrote.

“From talking about Prop. 30 during irrelevant class time, to student fees funding campaign materials, to giving an essay exam question mandating students explain the rationale and virtues of Governor Brown’s tax initiative, Fresno State is using taxpayer dollars for illegal political advocacy,” Harrison said during an interview.

During the campaign, one professor even assigned an essay question on a midterm exam, demanding that students “argue for virtues of Proposition 30 by referring to relevant parts of Jean Jacques Rousseau’s political philosophy.” The professor’s instructions included, “You will not earn any credit at all just by saying what Prop 30 is all about. Your goal is to demonstrate that you can use J.J. Rousseau’s ideas and concepts to explain the rationale for Prop. 30.”

“Prop. 30 is the poster child for a campaign that misused public resources,” Donnelly told me after the hearing. “Not only was the use of public school classrooms to campaign for the massive tax increase illegal, but the very idea of using the unlimited resources of government to lobby against the interest of hardworking taxpayer is downright immoral.”

Part 2 tomorrow.

By Chris Reed

There was a triumphal quality to Jerry Brown’s speech Friday at the Moscone Center in San Francisco that went beyond the governor doing some chest-thumping over the success of Proposition 30. In repeatedly mocking the unspecified “declinists” who fight him on many issues in Sacramento, Brown was strutting for the cameras and casting Prop. 30’s failure as a voter ratification of the brilliance of his governance.

This is mind-boggling. Prop. 30 wasn’t sold to voters as a chance to give a boost to our genius geriatric governor and send a signal to Sacramento to treat him as a living deity. Instead, Prop.30 passed because it was successfully marketed as a grim threat to students:

Voters, you must approve a small general sales tax hike and a tax hike on the wealthy, or we will have a lost generation of young Californians!

Brown’s blackmail worked. For the governor to suggest that the success of his craven tactic is tantamount to voters saying, “Hey, Jerry, great job” — well, that’s amazing.

Brown has had some success governing, and I think he deserves more credit for the pension reform that he got through the Legislature in September than some pundits give him. But he hasn’t changed the arc of state government. He’s preserved the broken status quo, which is devoted above all else to preserving state and local government jobs with automatic step raises for time on the job — most especially for teachers. Hip hip hooray.

Nevertheless, the governor obviously thinks he deserves a pat on the back. So Jerry went ahead and administered it himself.

How … Schwarzeneggerian!

By Wayne Lusvardi

A pension reform ballot proposition was passed by the voters in the city of San Diego by a margin of 66.2 percent in favor to 33.8 percent opposed.. A similar pension reform measure in the city of San Jose is leading with 89.8 percent of the vote in favor with 37.7 percent of the vote counted.

But the gnawing question remains: Eill voters end up with the pension reforms they voted for?  Or are these reforms just the proverbial calm before a possible bigger pension storm?

Tentative Results of Pension Reform Measures

Surely, both ballot propositions will be tested in court by public-sector unions.  In San Jose, Democratic Mayor Chuck Reed, who backed pension reform, has vowed to seek a pre-emptive judicial review of his city’s pension reform proposition.

Many public sector unions and labor advocates are convinced their contracted pension and health benefits are guaranteed in the California Constitution.  However, charter cities such as San Diego and San Jose believe they have broad powers to alter pensions that general-law cities do not have.

Pensions Grew Like Cancer During Recession

From 2007 — before the Mortgage Meltdown — to 2012, San Diego’s payments to its pension fund grew 43.7 percent. During that same period, the percentage of city employees dropped by 5.5 percent (see table below).

The percent that pensions payments make up of the total general fund in San Diego grew from 16 percent to 20 percent over the same period. That means that $1 out of every $5 in the city operating budget is going to pensions without pension reform.

In San Jose, pension-fund payments grew by 117 percent over the past five years, while the proportion of city employees dropped 21 percent.  The percentage of the San Jose’s operating budget dedicated to pensions has grown from 16 percent to a whopping 28 percent.  San Jose is nearing $1 out of every $3 of its operating budget going for pensions.

Growing Percent of Pension Obligations in San Diego and San Jose

But San Diego has only cut 412 employees, reflecting 5.5 percent of the total city workforce. Compare that to a reduction of 1,443 employees in San Jose, reflecting a 21 percent cut.

On the other hand, the general-fund budget in San Diego has only grown by half as much (12.3 percent) compared to San Jose’s budget (23.0 percent) over the past five years.

What perhaps is more troubling is that San Jose’s operating budget has been growing 4.24 percent per year on a compound basis over the past 5 years during the economic recession.  San Diego’s operating budget has grown by 2.35 percent per year over the same period.  What if the U.S. economy stalls following the possible collapse of the European Union, bringing another decline in tax revenues?

Many cities have touted cutting the number of employees in their workforces during the past five years. But the paradox is that their total operating budgets kept growing as pensions have gobbled up more of the budget.  If the operating budget of each city had remained unchanged over the past five years, the proportion of their budgets going toward pensions would have jumped to at least 23 percent in San Diego and 34 percent in San Jose.

Let’s consider what would have happened if San Diego and San Jose had cut their 2007 operating budgets by 10 percent during the recession. Pensions would have ballooned to 24 percent for San Diego and 37.8 percent for San Jose of their total operating budgets.  In another five years, pensions would have cancerously consumed more than half of municipal budgets in these cities.

Public Employee Cutbacks Masked Wild Pension Growth

During the past five years, many cities were using cutbacks of employees to mask the out-of-control growth of pensions happening at the same time.  Public employee cutbacks were an illusion of budget cutting, when in reality total general fund budgets were growing to meet mounting pension obligations.

Pension Reform or Double Dip Storm?

It is estimated that about 50 percent of all federal stimulus program monies went to municipal governments for “shovel ready” public works projects since 2009. Without this infusion of funds, the proportion of pension obligations would have quickly overwhelmed most city budgets.

The stimulus program has now expired.  In 2011, there were modest increases in sales, property and income taxes statewide, thought to be a signaling a “recovery.”  But in 2012, state tax revenues have reportedly declined, signaling a possible “double dip” recession.

Despite the passage of pension reforms in San Diego and San Jose, this may not be enough to prevent public pensions from overwhelming city budgets, should the economy continue to sour or the courts overturn pension reforms.  If the courts overturn pension reform, California cities could be looking at another man-made “perfect storm” like the Electricity Crisis of 2000-01.

The Associated Press reported specifics on the reforms in San Jose:

“The ballot measures differ on specifics. San Diego’s imposes a six-year freeze on pay levels used to determine pension benefits unless a two-thirds majority of the City Council votes to override it. It also puts new hires, except for police officers, into 401(k)-style plans.” 

But will such measures be deep enough and fast enough if there is a double dip recession?

Back in March 2011, John Fund accused Gov. Jerry Brown of “shrinking from real pension reforms” when Brown blamed Republicans for the problem. Brown said, “Some Republicans want government to break down. They want to blow it up. They’re radical. They’re not in the mainstream.”

But what happens when even bi-partisan reforms by a Republican mayor in San Diego, with a Democrat-controlled City Council, and a Democrat mayor and council in San Jose aren’t enough to hold back the storm?

The current pension reforms are apparently based on rosy scenarios of gradual economic recovery, coupled with pension contribution cutbacks.  It may take leaders on city councils to enact even more reforms without going to the voters each time for cover.

Such reforms won’t reflect the stinginess of Republicans in San Diego, or “profiles in courage” of local Democratic politicians, but public necessity.  It is not political courage to undo what one co-created in the first place.

John Seiler:

Let the cry go up across the land: Stop Maldonado!

Taxpayer traitor Abel Maldonado now is running for U.S. Congress. It was just two years ago that, as a state senator, he sold taxpayers down the river by proving the key Republican vote for the record $13 billion tax increase of then-Gov. Arnold Schwarzenegger-Shriver-Kennedy. Maldo even had given his solemn word that he never would increase taxes.

As a reward, Arnold appointed Maldo to the vacant seat of lieutenant governor, a job that shouldn’t even exist.

Maldo — the California Benedict Arnold — even has the chutzpah to say: “Washington needs people who are independent and bipartisan and who are fiscally responsible, and I think I’ve demonstrated that.”

In fact: Washington already has too many tax-increase traitors like him. He’s not “independent,” but sold out to become Arnold’s chauffeur. He’s fiscally irresponsible. Which he amply has demonstrated.

Republicans need to make sure they put up someone someone decent — a real fiscal conservative and anti-tax activist — to defeat Maldo in the primary. If Maldo ends up on the November 2012 ballot, then all efforts should be made to re-elect the Democratic incumbent, Lois Capps.

Treason should have a price.

Feb. 26, 2011