California lawmakers accepted $844,000 in gifts in 2013 — the majority of which came from special interest groups that routinely lobby the state Legislature.

According to a new report released by the good-government group California Common Cause, gifts to elected state representatives included $580,000 in travel payments, more than $100,000 in meals and receptions and $65,500 for tickets to entertainment and sporting events.

“With ongoing federal investigations into potential ethics violations by several state lawmakers, this report highlights that there are many legal channels through which special interests exert their influence in Sacramento,” Kathay Feng, executive director of CA Common Cause, said in a press release.

More than 2,700 gifts reported in 2013

Each state lawmakers received, on average, $600 worth of gifts every month. To put that number into perspective, it’s three times the freebies the average recipient of food stamps receives in California. According to the California Department of Social Services, “The average amount of CalFresh benefits received per household is about $200 per month.”

In total, state lawmakers reported more than 2,700 individual gifts in 2013, ranging from a $1.50 bottle of Coke to a $15,782 trip to Armenia. While meals were the most common item, the largest payments were for travel to exotic locations and accommodation in luxury hotels. Among the more unique gifts were:

• $439 in tickets to a Drake concert given by the Oakland-Alameda County Coliseum Authority to Assemblyman Rob Bonta, D-Oakland;
• $216 in nail polish given by the Personal Care Products Association to then-Senator Leland Yee, D-San Francisco, who is facing charges of corruption;
• $160 worth of golf fees and clubs given by the California Foundation on Education and the Environment to state Sen. Anthony Cannella, R-Ceres;
• $130 in spa services given by the California Legislative Black Caucus Policy Institute to state Sen. Holly Mitchell, D-Culver City;
• $115 in seafood given by the Monterey Bay Aquarium Foundation to Assemblyman Reggie Jones-Sawyer, D-Los Angeles.

Gifts increasing in number and value

CA Common Cause says both the number and value of gifts increased dramatically in the past year. According to their report, 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.

“While Californians across the state exchange gifts this month in celebration of the holidays, its worth taking a minute to reflect on the year-round, not-so-secret Santa happening in the state Capitol,” said Sarah Swanbeck, policy and legislative affairs advocate for CA Common Cause. “What we’re seing is a growing trend in both the number of gifts and the total value of those gifts given by powerful special interest groups to state lawmakers.”

To compile its report, the group analyzed publicly available financial disclosure reports, which are filed annually with the Fair Political Practices Commission. 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. Financial disclosure reports for 2014 won’t be available until March 1.

Top Recipients of Gifts in 2013

Legislative leaders topped the list of gift recipients in 2013, with former Speaker of the Assembly John A. Perez, D-Los Angeles, taking home nearly $38,000 in gifts and perks. The Top 10 recipients, according to the report:

1. Assemblyman John A. Perez: $37,823;
2. Sen. Ricardo Lara: $32,492;
3. Sen. Anthony Cannella: $26,644;
4. Assemblyman Steven Bradford: $25,408;
5. Assemblyman Travis Allen: $23,118;
6. Sen. Kevin de Leon: $22,910;
7. Assemblyman Scott Wilk: $21,780;
8. Assemblywoman Connie Conway: $20,675;
9. Assemblywoman Cristina Garcia: $20,600;
10. Assemblywoman Kristin Olsen: $17,603.

All of the state lawmakers listed in the Top 10 of gift recipients utilized the longstanding loophole that allows elected officials to circumvent the state’s $440 gift limit.

Legislators gone wild on junkets

State officials can accept gifts that exceed the state’s gift limit if it is for travel-related expenses in conjunction with a speech or conference. Special interest groups routinely take advantage of this loophole by organizing “conferences” in exotic locales. In 2013, the two biggest donors helped state lawmakers jet off to Scandinavia, Taiwan and Maui, courtesy of this loophole.

The biggest gift-giver to state lawmakers was the California Foundation on the Environment & Economy, which spent $161,893 in travel-related gifts. It was followed by the Independent Voter Project, which spent $38,080 in 2013.

Founded by former Assemblyman Steve Peace, the IVP hosts a notorious annual conference in Maui. Eighteen state lawmakers attended the group’s 2013 conference, held at the luxurious Fairmont Kea Lani, “Hawaii’s only all-suite and villa luxury oceanfront resort.”

The travel gift loophole has been criticized by newspapers and ethics experts.

“Almost all of this largesse came courtesy of people and organizations with business before the Legislature,” the Press-Democrat recently editorialized. “With all the junkets and outings, it’s a wonder they find time for any business.”

Sacramento: Only place there’s still a free lunch

While travel-related gifts accounted for nearly 70 percent of the dollar amount, the most frequent gift given to legislators in 2013 was a free lunch. That’s gifts of meals and drinks; and attendance at receptions, events and hospitality suites.

In the area of free meals, the California Democratic Party donated more than any other group, according to CA Common Cause. The state party spent nearly $10,000 to wine and dine its members.

Top 10 gift-givers

The top 10 gift-givers in 2013 were:

1. California Foundation on the Environment & Economy: $161,893;
2. Independent Voter Project: $38,080;
3. Consulate General of the Republic of Armenia: $25,173;
4. State Legislative Leaders Foundation: $24,027;
5. Pacific Policy Research Foundation: $22,015;
6. Taipai Economic and Cultural Office: $32,533;
7. California Issues Forum: $18,902;
8. The Jewish Federation of Greater Los Angeles: $17,989;
9. American Israel Foundation: $12,737;
10. California Democratic Party: $10,556.

During the June primary campaign, the Democratic candidate for state controller opposed Gov. Jerry Brown’s plan to build a faster rail connection between San Francisco and Los Angeles by the year 2029.

A June 2014 primary questionnaire for the influential Harvey Milk LGBT Democratic Club asked Yee, “Do you support California’s high speed rail plans?”

Despite potential backlash from San Francisco’s largest Democratic club, Yee answered, “No.”

Yee now backs high-speed rail

Just when her rail opposition could pay off politically, Yee has changed her position for her tough general election contest against Republican Ashley Swearengin.

“While always supportive of the concept of high-speed rail, I was initially opposed to the project because of its governance and cost challenges,” said Yee, who barely beat out former Democratic Assembly Speaker John A. Perez for the second spot in the state controller runoff. “Since Gov. Brown directed the cap-and-trade funds to the project, I now support the project as it has the benefit of a funding source consistent with the goal of the project: reducing greenhouse gases.”

In June, state lawmakers acquiesced to the governor’s budget proposal to use $250 million in cap-and-trade program revenue for the state’s $68 billion bullet train. Although providing a short-term revenue boost, the one-time cash infusion is unlikely to solve the plan’s long-term financial problems.

CalWatchdog.com contributor Chris Reed, who has provided the state’s most comprehensive coverage of the high-speed rail project, has taken the California High-Speed Rail Authority to task for blatantly disregarding the “taxpayer protections” demanded by voters.

“Six years ago voters approved a referendum authorizing $9 billion in bonds for high-speed rail construction, including language with stringent ‘taxpayer protections,'” Reed recently wrote.  “A California appellate court has effectively done away with both by ruling that the legal requirements of a bond measure approved by voters for the state’s bullet train are merely ‘guidance.'”

Political Inconvenience: Yee picks losing position in each campaign

Don’t blame Yee’s change of heart on political convenience. If anything, Yee has staked out the worst political position for each election.

In the June primary, Yee’s opposition to the state’s high-speed rail likely hurt her standing with some Democratic primary voters and activists, who largely support the governor’s legacy project. The Harvey Milk LGBT Democratic Club, which supplied the questionnaire, ultimately endorsed Perez.

In the general election, Yee could have used the issue to differentiate herself from Swearengin, who supports the plan. A February Probolsky Research survey showed 54 percent of voters opposed to the plan. GOP gubernatorial nominee Neel Kashkari has made opposition to high-speed rail, which he dubs “Jerry Brown’s crazy train,” a central part of his campaign.

“Republicans remain confident that opposition to high-speed rail is a winning position — one that might shift the momentum in races across the state,” Real Clear Politics’ Adam O’Neal observed in July. “Politicians have ready answers and they tread carefully in this election year when discussing the state of the bullet train.”

Earlier this year, Lt. Governor Gavin Newsom, a Democrat waiting in the wings for the 2018 governor’s race, publicly opposed the plan.

“I am not the only Democrat that feels this way. And I’ve got to tell you, I am one of the few that just said it publicly,” Newsom said in a February appearance on KTTH’s the Ben Shapiro Show. “Most are now saying it privately.”

“We were selling a $32 billion project then, and we were going to get roughly one-third from the federal government and the private sector,” Newsom added. “We’re not even close to the timeline [for the project], we’re not close to the total cost estimates, and the private sector money and the federal dollars are questionable.”

Swearengin supports high-speed rail

Yet, the state’s most ardent rail critics are unlikely to rush to support Yee’s controller opponent. The Republican mayor of Fresno has never changed her position: she’s a high-profile supporter of the state’s union-backed high-speed rail plan.

Her support for high-speed rail includes backing a highly controversial project labor agreement, or PLA, in the first segment of the project’s construction.

In 2013, the Coalition for Fair Employment in Construction obtained documents through a public records request, which show that Swearengin “inexplicably played a pivotal role in seeking approval from the Obama administration for the union Project Labor Agreement on the first segment of California High-Speed Rail.”

“The Mayor of Fresno is orchestrating union control of it, without any oversight and accountability of the public,” Eric Christen, executive director of the Coalition for Fair Employment in Construction, said in a May 2013 press release. “The backroom wheeling and dealing that led to the union monopoly on California High-Speed Rail construction has remained a mystery up to this point. We were looking in the wrong place.”

“It was apparently the Fresno mayor and not the California High-Speed Rail Authority that was engineering this sweetheart deal,” he said.

High-Speed rail’s high-profile problems

Last year, the California High-Speed Rail Authority awarded a billion-dollar design-build contract to a joint venture headed by Tutor Perini Corporation. The contract, valued at approximately $985 million, was initially stalled in court.

In January, Brown asked the California Supreme Court for an expedited review – and reversal – of two lower court rulings that temporarily halted the high-speed rail project. Just three days prior to that request, Brown’s campaign accepted $27,200, the maximum campaign contribution, from Tutor Perini.

A controversial choice for the state’s high-speed rail project, Tutor Perini “had the lowest technical and safety rating of all the bidding companies, and the Authority board changed the rules to give Tutor the winning bid,” according to the Hanford Sentinel.

By John Seiler

Congress and President Obama just worked out a deal for massive tax increases that will slam Californians. The federal tax hikes hit even the middle class, whose payroll taxes will rise 2 percentage points.

The federal wallop comes on top of the $6 billion of Proposition 30 tax increases voters passed two months ago. The tax increases almost certainly will spark a new recession and increase unemployment.

Gov. Jerry Brown campaigned for his tax increase by appealing to envy. He insisted that the rich must “pay their fair share.” That never was defined. Is it half of income? Or 75 percent, as in France? Why not 100 percent?

And he didn’t care that federal taxes likely would go up, as indeed has happened.

Including the Obamacare and other tax increases, the top federal rate personal tax rate rises from 35 percent to 41 percent.

Add the new top California personal tax income tax rate of 13.5 percent, and the combined top rate here now comes in at 54.5 percent.

However, by moving to Nevada, Texas, Washington, Florida or another state with no state income tax, that rate drops to 41 percent (the federal rate alone), or a 25 percent decline. Plus other taxes would be lower. And real estate is a lot cheaper. Of course, California’s balmy climate also would be gone. But as the Rolling Stones scream on their 50th anniversary tour, “You Can’t Always Get What You Want.”

The Obama-Boehner “fiscal cliff” tax increases could sabotage Brown’s budget plans. In a few days the governor will release his new budget for fiscal 2013-14, which begins on July 1. It will project a strong, growing economy that will bring in oodles of new revenue, in particular from Prop. 30.

But tax increases usually bring economic decline.

Clinton’s 1993 tax increase

Before I cite some examples of decline, let me deal with the tax increase Democrats always bring up: Bill Clinton’s from 1993. The recent “fiscal cliff” tax increases were touted by Democrats as bringing back the top 39.6 percent rate Clinton and the Democratic Congress of 1993 imposed, a rise from 35 percent in 1992. That supposedly supplied the oomph in the economic growth for the rest of the 1990s.

President George H.W. Bush’s 1990 tax increase broke his “Read my lips, no new taxes!” solemn pledge he made at the 1988 GOP national convention. It helped get him elected over Michael Dukakis. The tax increase slammed the country into a recession that led to Bush losing to Clinton in 1993.

Tax policy sends messages. In this case, the message was: “All is hopeless. Not just Democrats, but Republicans favor tax increases. There’s no brake on looting the economy. Get out while you can.”

The 1993 Clinton tax increase was different. The key was this: It passed by just one vote in the U.S. Senate and one vote in the House of Representatives. The message was: “Even Democrats are reluctant to raise taxes, so there aren’t going to be any more. Get back to work making money.”

And that’s just what happened. We haven’t had any major federal tax increases until now.

But notice also what happened after the 1993 Clinton tax increase. In 1994, Democrats lost control of Congress. Republicans were in charge of both houses for the first time in 30 years. Message: “No way are taxes going up.”

Then, in 1996, Clinton agreed with the Republican-run Congress on a tax cut, dropping the top capital gains tax rate from 28 percent to 20 percent. That freed more capital to help fuel the dot-com boom of the late 1990s. Message: “Even a Democratic president wants tax cuts and jobs growth.”

Clinton was a master politician (still is). He actually followed his 1992 campaign slogan, “We must have the courage to change.” In his case, he dumped worn-out Democratic obsessions with envy and tax increases, supported tax cuts and was re-elected in 1996, beating Bob “Tax Collector for the Welfare State” Dole.

Tax increases

Now let’s look at the tax increases that have caused recessions.

In 1968, President Lyndon Johnson imposed a 10 percent income surtax to pay for the Vietnam War and his Great Society welfare programs — his “guns and butter” policy. The result: the 1969-70 recession.

In 1971, President Nixon imposed his infamous “Nixon Shock,” which raised taxes and tariffs and took America off the gold standard. The resulting inflation boosted the economy artificially through 1972, helping Nixon run up a 49-state landslide in the 1972 election. Then a deep recession hit in from 1973-75.

This began the the “stagflation” economy of the 1970s: stagnation plus inflation. Robust recovery began only when Ronald Reagan’s tax cuts dug in with full force in 1983. (Although the tax cuts were enacted in 1981, Reagan later admitted he made a mistake by delaying some of the cuts for two years, which also delayed the recovery.)

Reagan did increase some taxes. But overall, he dropped the top income tax rate from 70 percent to 28 percent by 1986, a major accomplishment.

The Reagan Prosperity ended with the 1990 Bush tax increases, discussed earlier in this article. In California, the Bush recession was made worse by Gov. Pete Wilson increasing taxes $7 billion a year in 1991. Doing so, instead of increasing state revenues, actually decreased them by $2 billion to $40 billion a year. Economic recovery here was delayed until the taxes ended in 1995.

The early 2000s recession probably was caused not by direct tax increases, but by the Federal Reserve Board of Alan Greenspan imposing deflation, as Jude Wanniski described it at the time. That didn’t last long, as the Fed under Greenspan inflated the dollar after 9/11.

The 2007 recession and 2008 economic collapse were caused by tax increases only in the sense that the 2001 and 2003 Bush tax cuts were not permanent, causing uncertainty in the late 2000s. Other factors were larger, including new Fed Chairman Ben Bernake continuing Greenspan’s inflationary policies. Those policies included ultra-low interest rates which, along with too-easy lending rules, caused the housing boom-bust.

The ‘message’ of tax increases 2013

Will the new tax increases be different? Will they continue prosperity instead of sparking a new recession?

Let’s return to the important concept of how polices send “messages.” The message now is: “The Republican leadership, and many GOP senators and representatives, think tax increases are OK. The Republicans no longer have the guts to stand up to the demands for tax increases by Obama and other Democrats. So even more tax increases are likely.”

In California, the “message” is: “Voters just passed two tax-increase initiatives and put supermajorities in charge of both houses of the Legislature. There is no brake on taxing and spending except Brown, who pushed through the tax increases. And if he vetoes a tax increase, the supermajority could override him.”

At both the federal and state level, the “message” is that the appeal to envy works. The call for the “rich to pay their fair share” resonated.

But “the rich” are the entrepreneurs and business owners and jobs creators. Take more money from them, and they have less to invest in business and jobs creation. To avoid paying their unfair share — and in many cases just to survive — “the rich” will leave California and even the United States.

Many of “the rich” are family businesses that now could pay the increased death tax. Which means that when the older generation dies, the younger generation will have to sell the company to pay the death tax, destroying the family ownership that is essential to the success of many such companies.

Within the next few months we’ll see how hard the tax increases have sapped the economy. If history is any guide, it’s going to be bad. The reduced economic activity could end up reducing revenues to all levels of government, ironically making the fiscal and debt crises worse.

Feb. 16, 2010

By ANTHONY PIGNATARO

One of John A. Perez’s first acts as a state assemblyman was to introduce AB 9, which partially amended the Political Reform Act of 1974. In fact, the official bill history says Perez introduced it on Dec. 1, 2008, one day before the Los Angeles Democrat, cousin of Antonio Villaraigosa and soon-to-be Speaker of the Assembly first took his oath of office.

AB 9 clarified some language dealing with contributions and expenditures made by state and local government entities, but the really relevant matter here is that Perez wasted absolutely no time once he got to Sacramento in addressing an issue concerning the state Fair Political Practices Commission (FPPC), which enforces the Political Reform Act. This is ironic, to say the least, because in 2003 Perez ran afoul of the FPPC while still a labor leader in Southern California.

Perez was a longtime political director for the UFCW’s Local 324, based in Buena Park. He resigned the post after getting elected to the Assembly in 2008. His record with the FPPC offers a previously unexamined look into the career of the freshman legislator who becomes Assembly Speaker on March 1. Despite being publicly available, I could find no instance of any news organization reporting on the matter, either when it first occurred, when Perez got elected to the Assembly in December 2008 or when he won the speakership last month.

The whole point of the Political Reform Act, according to the FPPC, “is to ensure that receipts and expenditures affecting election campaigns are fully disclosed to the public, so that voters may be better informed, and improper practices may be inhibited.” In other words, so that voters can get some idea of who’s spending what to pass initiatives or elect candidates.

According to Stipulation, Decision and Order No 01/388, signed on July 15, 2003 and approved by the Fair Political Practices Commission during its Aug. 11, 2003 hearing, John A. Perez violated this act — and thus deprived voters of seeing UFCW campaign actions when it might have made a difference in at least two elections — 11 times from 1997 to 2000, during his time as treasurer for United Food and Commercial Workers (UFCW) Issue Education Fund. John Sperry, another UFCW treasurer, violated the act an additional three times, according to the Stipulation, making a total of 14 violations.

“Respondents violated the Political Reform Act by failing to timely file late independent expenditure reports (8 counts), failing to properly report contributions (1 count), failing to properly report miscellaneous receipts (1 county), failing to file supplemental independent expenditure reports (3 counts), and failing to timely file a late contribution report (1 count),” said the FPPC Stipulation, which Perez and Sperry signed on July 15, 2003.

Five of the unfiled late expenditure reports dealt with Proposition 226, an unsuccessful 1998 initiative that would have required employers and union officials from getting an employee’s permission before withholding dues for political purposes. The FPPC Stipulation totals more than $60,000 in expenditures – voter lists, mailers, newspaper ads and postage – that the UFCW fund made against the measure that weren’t reported in a timely manner. The Stipulation also said that the UFCW fund failed to disclose a $75,000-expenditure against Proposition 25, an unsuccessful 2000 campaign finance reform measure.

In addition, the FPPC found that the UFCW fund “failed to properly itemize contributions and miscellaneous receipts on the pre-election campaign statement for the reporting period July 1, 1998 through September 30, 1998.” Most alarming, the union initially reported receiving $32,448 in contributions that were less than $100 each, meaning they did not require the disclosure of any contributor information. But during a subsequent audit, conducted in August 2000, the FPPC found that “all of this amount should have been itemized.”

Perez and the UFCW fund also failed to file late independent expenditure as well as supplemental independent expenditure reports concerning three payments, all donated on Oct. 19, 1998: $10,838 to gubernatorial candidate Gray Davis, $2,710 to Attorney General candidate Bill Lockyer and $2,710 to Superintendent of Public Instruction candidate Delaine Eastin.

Neither the union nor Perez and Sperry had a record with the FPPC before these incidents. Ultimately, the FPPC concluded that Perez and Sperry had been “negligent” in filing expenditure reports with the commission. FPPC auditors found that the union had failed to timely report $78,172 in expenditures, “which is over 8% of the total expenditures made during the 1997-1998 audit period.”

In the end, Perez and Sperry agreed that the union would pay a $23,000 administrative penalty for the 14 violations. This was pretty close to the maximum fine of $2,000 per count, which would have totaled $28,000.

Perez’s office acted at least somewhat cavalierly when I called for comment. “So this is old news, right?” Shannon Murphy, spokeswoman for Perez, asked rhetorically. Though she admitted that she hadn’t heard of the matter – meaning it was at least news to her – and a second call asking for comment, no one from Perez’s office responded to this story.

An FPPC spokesman would not comment for this story beyond what appeared in the July 15, 2003 Stipulation, Decision and Order. Sperry, who retired from the union in 2003 and also spent a year on the California Horse Racing Board, was both more talkative and inscrutable when I called asking what had happened back then.

“Nothing happened,” Sperry said. “As far as I know, nothing happened. I was never interviewed, and as far as I know, neither was John Perez.”

At first, Sperry denied knowledge of the FPPC Stipulation. When I pointed out that he had signed the document on June 25, 2003, he said, “To my knowledge, I didn’t.”

After further discussion, Sperry said he remembered the matter slightly. “A $23,000 fine seems like a serious matter, but to be very honest, I don’t recall what happened, and I don’t have Alzheimer’s. It was nothing illegal that I can remember. There was no intent to do anything illegal.”

PHOTO COURTESY JOHN A. PEREZ’s WEBSITE (http://democrats.assembly.ca.gov/members/a46/default.aspx)