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Money Gushes Despite Rigorous Reporting Laws

California has some of the toughest campaign finance disclosure laws in the country. But when it comes to how much people can donate, there are plenty of loopholes to be exploited by savvy donors.

The number of loopholes, the size of the state and the unlimited funding of ballot measures help to explain why California is top in the nation in campaign spending -- by far.

Investigative Newsource, a journalism nonprofit based at San Diego State University, dug into California’s campaign finance laws and practices and found the good and the bad.


Some highlights:

• The 1974 Political Reform Act has been effective in requiring disclosure of campaign money sources.

• Technology has hastened and improved transparency. Last-minute contributions quickly show up online.

• The Fair Political Practices Commission, (FPPC), the state’s campaign watchdog, gets high marks for making sure laws are followed and complaints are investigated.

• There are few limits on contributions – seen especially in the campaigns of self-funded candidates and ballot initiatives, and many people doubt that tighter limits are possible.


• Contributors can evade disclosure by giving through party committees rather than to a specific candidate; by “astroturfing,” or spreading around donations to create the appearance of grassroots support; and by using independent expenditure committees.

Disclosure is the jewel in California’s political crown.

Dede Alpert, who represented the San Diego region in the state legislature from 1991 to 2004, said over the years, disclosure “got better and better.” She applauded new rules that require faster reporting, particularly after a friend lost re-election to a last-minute smear campaign. “Now you have to do the reporting online, so it’s really instantaneous,” she said.

Robert Stern, the principal co-author of California’s 1974 Political Reform Act, said the disclosure requirements worked better than he’d expected and technology has aided transparency: “The big thing we didn’t anticipate was the Internet …You don’t have to go to Sacramento and look through dusty file cabinets anymore.

But disclosure doesn’t necessarily guarantee transparency.

Alpert said that while the FPPC tracks gifts and financial interests of officeholders and certain state workers, campaign finance is “where there’s the real chance for mischief and politicians making decisions for inappropriate reasons.”, a nonprofit research organization focusing on the influence of money on politics, compares votes on controversial issues and campaign contributions to show whether politicians in Congress and the California and Wisconsin legislatures side with their financial backers. They often do. However, that still doesn’t prove which came first: the money or the opinion.

Disclosure requirements tell voters who’s funding which candidates and initiatives. But it can be tough to determine how influential campaign contributions are. “It’s hard to quantify in some ways,” Alpert explained, “because if you are a Democrat and feel labor unions are an important protection for workers, your philosophy is going to be with them anyway.”

Sizable contributions are common in California, where campaign spending for candidates and ballot measures is the highest in the country: $716.7 million in 2010, with Florida a distant second at $311.2 million, according to the National Institute on Money in State Politics.

Nearly a third of the money in California is aimed at initiative drives – unique among the states -- and the courts have resisted caps on spending for those.

Stern mentioned another reason for the massive spending: “We have rich people who want to be in politics -- Meg Whitman, Steve Westly, Steve Poizner -- and spend enormous amounts of money and then end up losing.” Whitman, the former EBay executive, broke records by spending more than $160 million, much of it her own money, in her unsuccessful run for governor against Jerry Brown in 2010.

Finally, it simply costs a lot to reach voters in a state with the size and population of California.

“This was something I noticed even when I was in the Assembly, where districts are bigger than congressional districts,” said Alpert, “and for the state Senate district, I represented as many people as some of these U.S. Senators do from states like Idaho and Alaska.” Her campaigns cost about $1 million, she said.

Peter Scheer has closely observed attempts to tighten limits on campaign spending as executive director of the First Amendment Coalition, a nonprofit dedicated to advancing free speech, more open and accountable government, and public participation in civic affairs. He said laws and lawsuits have resulted in “a hodgepodge of requirements that don’t fit together and have no real effect in terms of limitations on campaign contributions.”

Campaign finance experts say it’s no accident that certain reforms have failed to close the biggest loopholes.

Derek Cressman is Western Regional Director of State Operations at Common Cause, a nonprofit dedicated to promoting open, honest and accountable government and empowering people to make their voices heard in the political process. He said, “There is a tendency among reform critics to say it’s like squeezing Jell-O or water running downhill; it’s impossible to limit campaign contributions, so we shouldn’t try.”

He described the most popular loopholes: giving through party committees; “astroturfing,” or spreading around donations to create the appearance of grassroots support; and using independent expenditure committees to dodge contribution limits.

Giving to independent committees allows donors to contribute unlimited amounts because they are not giving directly to candidates, and the committees aren’t under the control of the candidates. Those purportedly independent expenditure committees, also known as political action committees or PACs, have played a huge role in Republican primaries this year, for example, underwriting barrages of television commercials.

These loopholes haven’t escaped the FPPC’s notice. In fact, Roman Porter, who stepped down as executive director of the commission this fall, mentioned two more loopholes -- giving to legal defense funds and making payments to a candidate’s favorite nonprofit.

The FPPC is the campaign finance watchdog, but its power is limited.

“They certainly do respond to complaints, but they have also started initiating investigations,” Cressman said. “The problem is the laws themselves are so porous that even if you enforce them to the letter of the law, you’ve got fairly gaping loopholes.”

Experts don’t agree on campaign finance reforms.

Some would like to limit spending, but FPPC chair Ann Ravel said that’s “not practical,” given the expenses of running a campaign in California and the federal court rulings barring limits on spending.

Some states and municipalities have been experimenting with public funding of campaigns, but the U.S. Supreme Court ruled in June (2011) that Arizona couldn’t try to level the field by giving additional money to a publicly financed candidate if a rich candidate spent a fortune.

Since limiting donations isn’t realistic, former FPPC director Porter said he has worked on finding ways “to provide greater voices to people who are not used to giving money -- like text-message contributions.” That tack was used after the earthquake in Haiti, encouraging people to authorize contributions by credit card with a text message. Porter said California became the first state to allow texting campaign donations when the FPPC approved it in October.

Both he and Ravel both expect voters to have more interest in campaigns if they’re donors. “We’re searching for other ways to get people connected so it isn’t just wealthy people going to fancy fund-raisers at $3,000 a plate,” Ravel said.

More disclosure in general is the solution favored by Kim Alexander, president and founder of California Voter Foundation, a nonprofit promoting and applying the responsible use of technology to improve the democratic process. “Accountability in campaign ads is key to voters having the ability to make informed choices. ... It’s a really cruel thing to do to try to trick people into making bad decisions,” she said.

California already has strong disclosure laws for campaign advertising, she noted, such as requiring that ads list the top two donors or sponsors. She’d like those names to be read aloud in television ads, and she would like to see the burden put on government entities to disclose who the main financial backers of initiatives are at key points: when voters are “asked sign a petition, when they open their ballot pamphlet, when they go to the polls.”

Alexander has confidence in informed voters. “Remember, most initiatives get defeated,” she said. “I think voters really are discriminating.”

Also optimistic after four years at the FPPC is Porter. “Some other states are notorious for truly corrupt political practices dealing with money for campaigns, pay-to-play (bribes for procurement contracts) and bribery and things of that nature,” he said, “and for the most part, that does not happen in California.”

Californians will continue to talk about how campaign finance could be better regulated, he said. “I believe in the marketplace of ideas ... at the end of the day, the electorate will be better informed and will be able to make decisions.”