Despite requests from more than 20 civic groups that she keep recruiting applicants for the California Citizens Redistricting Commission past the present Aug. 9 deadline, state Auditor Elaine Howle doesn’t appear to believe it is necessary. 

Last week, California Common Cause, the California NAACP and the National Association of Latino Elected and Appointed Officials were among the organizations that asked that the deadline be moved to Sept. 30. They cited statistics showing that whites were heavily overrepresented in the first 7,500 applicants, that Latinos and Asian Americans were heavily underrepresented, and that women were somewhat underrepresented.

“California voters only get one shot every 10 years to draw the lines that shape our future,” their letter to Howle said. “We, the people, want a chance to make a real impact for our families, neighborhood and state.”

Common Cause chief says applicants not diverse enough

Rey Lopez-Calderon, executive director of California Common Cause, told the San Francisco Chronicle that the redistricting commission had gotten a much worse response than in its recruitment efforts before the 2010 census, when there were about 30,000 applicants. That was the first time the commission handled redistricting after being created by Proposition 11, a 2008 ballot measure that put the state auditor’s office in charge of setting up the commission.

“We need differing views on the commission, and not just ethnic views,” Lopez-Calderon said. “[We] need people who know the different parts of the state.”

But in a news release on Tuesday, Howle didn’t address or give any credence to the civic groups’ concerns.

“I am pleased to announce that as of this morning, over 10,300 Californians have stepped forward for a chance to serve on the second 14-member Citizens Redistricting Commission,” Howle’s statement said. “This is great news for direct democracy! As we enter the final days of the initial application period, my staff and I will continue working to encourage even more eligible individuals throughout the state to apply.”

After applications close, Howle’s office expects to come up with a list of 40 finalists by next April. The committee’s 14 members will be chosen by Aug. 15, 2020. Under the rules of Proposition 11, the commission includes five Democrats, five Republicans and four people who are independents, decline to state a party preference or are members of another party. 

U.S. Supreme Court: Partisan gerrymandering allowed

The ballot measure was passed over the bipartisan objections of most of the state’s political establishment at the behest of then-Gov. Arnold Schwarzenegger and good-government groups. They successfully argued that the task should be taken away from the state Legislature because it had long since proven it drew election district boundaries to protect incumbents. In 2004, for example, not a single one of California’s then-51 House seats changed parties.

But the belief that partisan gerrymandering is fundamentally bad and must be avoided took a huge blow from the U.S. Supreme Court in June. On a 5-4 vote, the court’s conservative majority declined to force changes to extreme gerrymanders adopted by Republican lawmakers in North Carolina and by Democratic lawmakers in Maryland.

“We conclude that partisan gerrymandering claims present political questions beyond the reach of the federal courts,” Chief Justice John Roberts wrote. “Federal judges have no license to reallocate political power between the two major political parties, with no plausible grant of authority in the Constitution, and no legal standards to limit and direct their decisions.” 

A new report by California Common Cause shows that elected officials in California accepted hundreds of thousands of dollars worth of gifts in 2012. The gifts to lawmakers, according to the non-partisan citizens’ lobby organization, came primarily from special interest groups that routinely lobby state officials.

“Christmas came early for many of the Capitol’s most powerful,” said Phillip Ung, author of the report and outgoing policy advocate for California Common Cause. “When gifts are exchanged, a feeling of gratitude is natural, but voters should be concerned how policymakers show their gratitude towards powerful interest groups.”

In 2012, state elected officials accepted approximately $216,000 in gifts and travel payments, including $41,000 in hotels and lodging; $30,000 for tickets to entertainment and sporting events; and more than $100,000 for meals and receptions, according to the report.

Top Gift Recipients in 2012

California Democrats may claim a supermajority in both houses of the state legislature, but an Orange County Republican lawmaker topped the list of gift recipients in 2012. State Senator Mimi Walters, R-Laguna Niguel, accepted $15,810.80 worth of gifts in 2012, almost double the amount of the next highest legislator. Rounding out the top five were:

* Speaker of the Assembly John Perez, D-Los Angeles;

* Sen. Ron Calderon, D-Montebello;

* Sen. Alex Padilla, D-Pacoima;

* Assemblyman Luis Alejo, D-Salinas.

To compile its report on overall gifts, Common Cause used publicly available financial disclosure reports that are filed annually with the state. That means the figures are likely to be lower than the actual total. State law does not require gifts under $50 in value to be reported on these Statement of Economic Interest forms.

“At a time when federal investigators are looking for potential illegal actions by California legislators, this report shows that many legal activities raise suspicions about the influence of special interest in the State Capitol,” said Kathay Feng, executive director for California Common Cause.

Gifts to state lawmakers ranged from lavish meals to expensive tickets to entertainment venues, all paid for by powerful special interest groups. Under state law, most gifts are subject to a $420 limit.

Some of the gifts to state lawmakers included a $69.78 breakfast for Assemblyman Reggie Jones-Sawyer, D-Los Angeles, paid for by the California Independent Petroleum Association; $420 worth of Disneyland tickets for Assemblyman Don Wagner, R-Irvine; and a $420 round of golf for Calderon.

“The prolific providers of entertainment and sports tickets were special interest groups with business before the Legislature,” the report stated.

Long-Standing Travel Loophole

Despite the state’s $420 gift limit, Jones-Sawyer, Wagner and Calderon were among those who also accepted thousands of dollars worth of accommodation, meals and airfare as participants at a special interest-funded junket to Maui. The Common Cause report criticized the longstanding travel loophole that allows public officials to be reimbursed for travel expenses if connected to a non-profit conference.

In 2012, 17 California legislators attended such trips to Maui that were funded by special interest groups. According to the Sacramento Bee, the list of legislators that traveled to Maui included:

*Assembly GOP leader Connie Conway, R-Tulare;

* Assemblyman Jeff Gorell, R-Camarillo;

* Sen. Tom Berryhill, R-Oakdale;

* Assemblyman Isadore Hall, D-Compton;

* Assemblyman Paul Fong, D-Cupertino;

* Sen. Steve Knight, R-Palmdale;

* Assemblywoman Bonnie Lowenthal, D-Long Beach;

* Assemblyman Manny Perez, D-Coachella;

* Sen. Rod Wright, D-Inglewood;

* Assemblywoman Susan Bonilla, D-Concord;

* Assemblyman Bob Wieckowski, D-Fremont;

* Assemblywoman Holly Mitchell, D-Los Angeles;

* Sen. Noreen Evans, D-Santa Rosa;

* Sen. Marty Block, D-San Diego.

Campaign Committees Used as Slush Funds

Special interest-funded junkets weren’t the only gift loophole highlighted by Common Cause. The report also identified lawmakers’ use of campaign committees as slush funds.

Assemblyman Adam Gray of Merced and State Sen. Ricardo Lara of Long Beach, both Democrats, used campaign funds to buy gifts for Perez. Assembly Majority Leader Toni Atkins, D-San Diego, also used $231.85 of her campaign funds on meals and dinners for other legislators.

CalWatchdog.com has previously reported on lawmakers’ use of campaign funds for travel expenses. Earlier this year, six state lawmakers used campaign funds for a spring break trip to Cuba organized by a Capitol lobbyist. Legislators using campaign funds on the trip included Atkins, Calderon and Mitchell; as well as Assemblyman Katcho Achadjian, R-San Luis Obispo; Assemblywoman Nancy Skinner, D-Berkeley; and Sen. Cathleen Galgiani, D-Stockton.

$6.7 Million in Behested Payments to Pet Causes

In addition to gifts, Common Cause analyzed contributions made at the request of legislators and statewide officers. These “behested payments” to politicians pet causes totaled $6.7 million in  2013. Ethics experts say these payments offer another form of influence.

“We call it an end run around contributions limits,” Bob Stern of the nonprofit Center for Governmental Studies told the San Francisco Chronicle in 2009.

Gov. Jerry Brown has been the state’s top fundraiser for non-profits. “From 2006 through September of 2013, he has raised a total of $22.5 million through behested payments for his favorite charitable causes,” Capitol Weekly reported earlier this year. “As a point of comparison, the amount is more than half the price-tag of his 2010 gubernatorial campaign, which racked up some $40.5 million in political contributions.”

Common Cause, one of the nation’s most effective grassroots advocacy groups, promotes good government issues and tracks special interest involvement in politics. A copy of the report is available at Gifts, Influence, and Power: A Report on Gifts Given to California’s Elected Officials.

“We see political spending as distorting markets in policy making and creating a skewed playing field,” said Bruce Freed, founder of the Center for Political Accountability, in a recent debate over corporate political speech.

Freed’s organization and other leftist groups have been pressuring corporations to eliminate or at least disclose their political spending. But a recent Common Cause study of $220 million in independent expenditures for candidates in California from 2000 to 2012 shows that unions spend much more than businesses.

“[L]abor unions are the largest source of independent spending, focusing primarily on governor’s races,” the study states.

Some findings:

— Union-backed independent expenditure committees outspent business-backed committees three-to-one: $90 million to $27.7 million.

— Three-quarters of the donations exceeding $1 million came from unions.

— Seven unions are among the top 10 donors.

— Business-backed committees accounted for 12.5 percent of independent expenditures.

— Chevron, the largest corporate contributor to independent expenditure committees, ranked 28th among all donors.

Professors target corporate speech

But a political playing field skewed in favor of unions hasn’t deterred a group of law professors from filing a petition with the Securities and Exchange Commission that has the potential to significantly decrease corporate political spending.

“We ask that the Commission develop rules to require public companies to disclose to shareholders the use of corporate resources for political activities,” the July 2011 petition states.

It makes several assertions:

— Public investors have become increasingly interested in receiving information about corporate political spending.

— In response, a large number of public companies have voluntarily adopted policies requiring disclosure of the company’s spending on politics.

— Disclosure is important for the operation of corporate accountability mechanisms, including those that the courts have relied upon in their analysis of corporate political speech.

Fifty of the 465 shareholder proposals on company proxy statements in 2011 were related to political spending, including one-fourth of the S&P 100, according to the petition.

The petition addresses the pro-corporate speech argument that there are already numerous regulations governing corporate political spending. It states that the information is scattered “among several federal, state and local government agencies, presented in widely varying formats, and is ill-suited to giving shareholders a good picture of a particular corporation’s political spending.”

And much information remains undisclosed, the petition states, including contributions to intermediaries like 501(c)(4) organizations that are not required to disclose their donors. The petition concludes:

“Shareholders in public companies have increasingly expressed strong interest in receiving information about corporate spending on politics, and such spending is likely to become even more important to public investors in the future. Furthermore, shareholders need to receive such information for markets and the procedures of corporate democracy to ensure that such spending is in shareholders’ interest. Still, while many large public companies have begun to provide such information, no existing rule requires disclosure of this information to investors, and corporate political spending remains opaque to investors in most publicly traded companies. The Commission should address this lack of transparency and, drawing on its expertise and experience in designing rules for disclosure of other information that is of interest to investors, should adopt rules concerning disclosure of corporate political spending.”

Not a priority for SEC — so far

The SEC has yet to act on the petition, and may take its time doing so. The petition was recently placed in the long-term action category of the “reg flex” agenda, said SEC general counsel Brian Cartwright at the Society of Corporate Secretaries & Governance Professionals conference.

“If I were advising [SEC Chairman] Mary Jo White, and she decided this is something she was not interested in, I would advise her to put it in the long-term action category rather than take it off the reg flex agenda altogether,” said Cartwright. “Because you would have to take a whole bunch of arrows you don’t need to take if you do that. So I would say for the near term this has been very substantially downgraded for SEC action. This late in the year nothing could impact the 2014 proxy season.”

When the petition does reach the SEC board, at least one commissioner, Daniel M. Gallagher, may be skeptical, judging by his remarks at the SCS&GP conference on July 11. He agreed that there are benefits for investors from more disclosure, but he draws a tighter line on how much needs to be disclosed.

“[T]he disclosure regime was [not] meant to guarantee that investors receive all information known to a public company, much less to eliminate all risk from investing in that company,” said Gallagher. “Instead, the point has always been to ensure that they have access to material investment information.”

‘Regulatory creep’ leads to information overload

He went on to say:

“Arguably, the Commission’s disclosure regime has been subject to the classic Washington scourge of regulatory creep, in spite of the principle that investors should have access to ‘basic facts.’ The beauty of the disclosure regime as created by Congress almost 80 years ago was that it did not require government regulators to judge the merits of a company, its board or management structure, or its business practices –– those judgments were intended to remain in the hands of investors armed with the knowledge provided by the disclosure of material information. Today, however, some of our disclosure rules are being used by special interest groups, who do not necessarily have the best interests of all shareholders in mind, to pressure public companies on certain governance and business practices.”

Gallagher also warned about the potential for information overload:

“As Justice Thurgood Marshall warned almost 40 years ago, disclosure requirements with ‘unnecessarily low’ materiality standards risk ‘simply bur[ying] the shareholders in an avalanche of trivial information — a result that is hardly conducive to informed decision making.’ When investors are inundated with immaterial information, it increases the likelihood that they will miss key disclosures. Even more likely is the possibility that investors, despairing about the voluminous compilations of corporate minutiae contained in company filings, will never even look at disclosure documents. In either case, the result is that investors are left less informed when making investing decisions than they would be if presented with a document that didn’t require a magnifying glass to read and a PhD to understand.”

The quantity and length of the documents needing to be reviewed by shareholders has increased by about 50 percent from 2003 to 2011, he said. As a result, Gallagher pushed for streamlining regulations.

“Given the importance of this issue, it is critical for the Commission to engage with issuers and shareholders to rethink whether the mandatory disclosure rules in their current form are still valuable, and whether in some cases it may be better for investors if there was a lower volume, but an overall higher quality, of disclosure,” he said. “As I’ve noted repeatedly, disclosure is not costless to issuers, and we cannot forget — because far too many policy makers do forget — that it’s the shareholders who ultimately bear the burden of increased costs on issuers.”

Overreach of SEC authority seen

Former SEC Commissioner Paul Atkins is strongly opposed to the disclosure petition. He discussed the issue at a Pacific Research Institute luncheon in San Francisco last year, and wrote a petition response, “Materiality: A Bedrock Principle Protecting Legitimate Shareholder Interests Against Disguised Political Agendas.” It makes several arguments:

— The SEC does not have the authority to require disclosure of information on these sorts of expenditures because such information is immaterial.

— Should the Commission decide to proceed, which would harm rather than protect investors, the Commission would be unable to satisfy its legally mandated cost-benefit analysis because the alleged benefits are outweighed by the significant costs of mandated disclosure.

— It would be inappropriate for the Commission to move forward with a rule-making related to corporate public policy spending at a time when it must address myriad issues related to the financial crisis of 2008, as well as those that are central to the economically important capital-raising functions of the capital markets.

“Ultimately, the SEC is not the appropriate body to address this issue, primarily because SEC does not have the authority to require disclosure of information on these sorts of immaterial expenditures,” wrote Atkins. “Rational shareholders, considering their economic interests and not political interests, do not consider this information material to their investment decision making.

“Even if the SEC were to forge ahead and consider a rule, an impartial economic analysis of the costs and benefits of such a requirement would find that the costs exceed the purported benefits, because the narrow interests of an extremely vocal minority of shareholders (and even non-shareholder activists) could more easily intimidate value-creating corporate behavior, create brand damage to the disclosing companies, and stifle corporate speech, all of which would have a detrimental economic effect on the company and its shareholders.”

One of the disclosure advocates, Freed, suggested that he might not be bothered were the SEC to reject the disclosure petition.

“I think when you’re looking at the work we have done on political disclosure, we are not talking about regulations,” he said. “We are talking about companies adopting policies that govern their political spending practices. This is very, very important. Voluntary disclosure as a result of shareholder engagement has laid a strong foundation for broader disclosure.”

Even if SEC passes, state-level action proceeding

But if the petition is rejected, corporations won’t be able to breathe easy. Disclosure advocates have started lobbying state legislatures.

“At the state level there’s quite a bit of ferment,” said Freed. “Disclosure laws have passed in Iowa and Maryland. There’s strong support for disclosure legislation in Texas and Montana. The Texas legislature passed a very strong disclosure bill that was vetoed. In Montana there was very strong bipartisan support. In New York state, regulations were issued by the attorney general requiring  501(c)(4) disclosure. California is getting very active in this area. So there’s quite a bit of ferment there.”

Between the fomenting from disclosure activists and the regulatory fermenting in state legislatures, free market supporters will need to stay alert lest the already-skewed political playing field be totally forfeited to one team.

By John Hrabe

Last week, two nonpartisan organizations interested in government transparency had a seemingly simple request for California Secretary of State Debra Bowen: share the state’s campaign finance database in a single, accessible file. The request shouldn’t have been too difficult. Bowen’s office already posts the information on its clunky and crash-prone Cal-Access system.

“We write to request that your office make a simple change that would save costs for the Secretary of State’s office while greatly increasing data transparency in the state of California and public accessibility to important campaign finance and lobbying information,” wrote MapLight and Common Cause, the two organizations leading the public disclosure request. “This change would vastly improve the public accessibility of valuable civic information, reaffirming California’s role as a leader in open government, and showing your commitment to shining a light on money in politics.”

CD-ROM

The poorly-designed Cal-Access system requires users to download each campaign report one-by-one rather than as one massive data file. CalWatchdog.com, which routinely spends hours reviewing campaign reports, understands the organizations’ complaints about the current system. The only alternative to individually reviewing reports is to fork over $5 a day for a new CD-ROM.

Bowen says that an alternative to the CD-ROM option would be too difficult and costly.

“It is not clear to me that creating such a ‘filter’ is cost-effective when designing, developing and deploying it would divert limited information technology resources from other high-priority responsibilities,” Bowen wrote in response to the disclosure request. “This cost-benefit analysis would be different if the data was not readily available in another medium, but it is readily available on a CD-ROM.”

Technology experts predict that the CD-ROM will likely be extinct by 2016, due to rapidly increasing broadband connections, which “means most programs can be downloaded in a matter of minutes, or even seconds.” As Suzanne Kantra pointed out in 2011 at Techlicious, “So, why would you want to pay the extra cost of having a DVD printed, boxed and shipped to your home? You wouldn’t. And in five years it won’t even be an option.”

Phillip Ung, a policy advocate for Common Cause, believes it’s time to upgrade the state’s technology. “21st century voters are demanding our ‘dial-up’ government get plugged into the times and ditch the CD-ROMs,” he said.

Bowen took to Twitter late Monday evening to rebut that criticism, arguing that state law differentiates between data posted online and shared on a disk.

“Point is, what happens on paper and what happens on line are not, under CA law, identical,” she tweeted.

She continued, “If you could legally put it on line, you’d need a *secure* server w/ capacity. We lack hardware, software, + ppl to run things.”

When asked why she wasn’t cooperative with the groups disclosure request, Bowen reply tweeted, “What makes you think I’m not? I’ll do my own analysis first, tho. I was a Girl Scout. I like to be prepared.”

FPPC embraces technology

While the Secretary of State’s office has struggled with new technology, another state agency that is responsible for political disclosure has embraced a tech upgrade. Last week, while the Secretary of State was denying the disclosure request, the Fair Political Practices Commission launched a new gift tracking app for legislators and their staff to keep track of gifts.  Under the leadership of Ann Ravel, the FPPC has made technological improvements one of its top priorities.

“We are extremely proud of our latest effort to make the disclosure and reporting rules for officials and employees less burdensome and time-consuming,” said Ravel, who has promised to bring the agency into the digital age. “We believe that the FPPC Gift Tracker will not only assist officials and employees and save their time and resources, but will also help the public to ensure that gift information is disclosed accurately.”

Which raises the question: Why has the FPPC, which operates under the same budget and bureaucratic limits as the Secretary of State’s office, been successful in upgrading its programs?

Bowen, who authored a 1993 bill to make legislative information accessible by computer modem, has repeatedly faced technological failures as Secretary of State. In 2010, the state’s election results website crashed because, in the words of Bowen’s spokeswoman, “The traffic basically blew up the cloud.” This year, the office announced that it was working through a 122-day backlog in processing business filings.  The legislature is now rushing through an additional $2 million in special funding to alleviate the backlog.

2014 candidates pounce on the issue

Several candidates to replace Bowen, who is forced to step down due to term limits, criticized the most recent disclosure denial.

“Memo to the Secretary’s office: tear down this data wall!” said GOP Secretary of State candidate Pete Peterson, executive director of Pepperdine University’s Davenport Institute for Public Engagement and Civic Leadership. “In the midst of an open data revolution, our Secretary of State’s office is still stuck in a closed data world.”

San Francisco state Senator Leland Yee, a Democratic candidate for Secretary of State, echoed Peterson’s criticism of the Secretary of State’s antiquated processes.

“While California has long been a tech leader, its government still lags behind,” said Yee. “We should use all the tools we have available to keep the public informed as to what affects the way California is governed.”

No stranger to technology, Yee authored California’s landmark online voter registration law, which allowed citizens to register to vote via the Internet or a mobile device. As of November 2012, Yee’s office reported that more than a million people had used the system.

Derek Cressman, another rumored Secretary of State candidate, declined to comment because he hasn’t formally announced his campaign. However, Cressman’s views on technology aren’t hard to ascertain. He serves as vice president for state operations of Common Cause, one of the organizations that are pushing for the disclosure.

The office of Democratic State Senator Alex Padilla (another potential candidate for Secretary of State) did not respond to a request for comment.

Commentary

July 24, 2012

By John Seiler

Anyone who observes California politics knows that the government-worker unions dominate the state from top to bottom. They forced union pension spiking on the state a decade ago, leading to the spate of bankruptcies by cities here; and to the effective insolvency of the state government itself. The state simply cannot pay the $500 billion unfunded liability for state pension funds, according to a Stanford study.

Union dominance means that union bosses effectively sit on both sides of the negotiating table: as workers, and as employer — because union clout at the polls means the elections make union hacks like Gov. Jerry Brown the employer.

Proposition 32, on the ballot in November, would curb union power. According to the official ballot summary, it “Restricts union political fundraising by prohibiting use of payroll-deducted funds for political purposes.” Union members still could contribute to political causes. But they wouldn’t have their paychecks directly pilfered for union campaigns.

Not surprisingly, the major leftist organizations in the state oppose it, beginning with Common Cause and the supposedly unbiased League of Women Voters.

“It’s not at all what it seems,” said Trudy Schafer, of the state League of Women Voters, as reported in the Mercury News. “It promises political reform but it’s really designed by its special interest backers to help themselves and harm their opponents.” The backers are anti-union activists in Orange County.

But without this reform, the state really will go bankrupt — if it hasn’t already — because of union looting.

Common Cause

“I’m all for campaign finance reform,” said Derek Cressman, western regional director for Common Cause. “I’ve spent the last 15 years of my life working for campaign finance reform. I know campaign finance reform, and, friends, Prop. 32 is not campaign finance reform.”

Actually, Common Cause has worked to suppress free speech. Back in the 1970s, in the wake of the Watergate scandal, at the national level the group was instrumental in the so-called Watergate reforms that severely restricted campaign contributions. Doing so made elections so complicated that only professionals and rich people could run for office — not just for national office, but in many cases even for local offices.

It was a typical liberal “reform” that had the opposite effect of what was intended. Instead of reducing the power of the rich, it increased it. Before, a candidate for the U.S. Congress, for example, could tap a few rich people for campaign contributions. After the “reforms,” the candidate has to be rich himself to fund much of his campaign; or he has to spend most of his time fundraising small amounts. The result was that a good local candidate with ideas and character finds it almost impossible to run for office.

Political vacuum

Another result was that unions filled the political vacuum once they were given collective bargaining rights, which they were in California in 1977 with the Dills Act. It’s the same old story: The Left empowers itself and calls it “reform.”

Reported the Mercury News, “Still, labor groups view the ballot measure as a deadly threat and have far outpaced supporters in the money chase. Since the most recent finance reports on April 30, they’ve added $3.4 million to the $3.9 million cash they had on hand for a total of $7.3 million. The Yes side has $1.9 million.”

So it’s going to be tough the get this reform passed. A similar reform, Proposition 75, was on the ballot in 2005 as one of four initiatives on Gov. Arnold Schwarzenegger’s reform platform in that year’s November Special Election. The whole reform plank was badly conceived. And Schwarzenegger gave it his usual half-hearted attempt. He only ever campaigned hard for himself. After his reform plank was defeated, Schwarzenegger turned sharply to the left, passing massive new regulations, such as AB 32 and tax increases, that left the state in ruins similar to those on that island at the end of his movie “Commando.”

But the joke is on the unions, unCommon Cause, the League of Liberal Women Voters and their leftist cohorts. There’s no more money. Business and jobs are fleeing the state. California is going to have to cut union pay, perks and pensions — no matter what.

When you strangle the goose it no longer lays Golden State eggs.