Politicians and their supporters routinely funnel money through county-level political party committees around the state, avoiding strict limits on campaign giving and hiding the source of millions in donations, a California Watch analysis shows.
By using county parties as middlemen both Democrat and Republican donors can contribute far more money than the law typically allows to highly contested races in California where the extra cash could make the difference between winning and losing.
The strategy has been used for years but drew attention recently when the California Fair Political Practices Commission levied a combined $49,000 in fines against Assemblyman Joel Anderson, R-Alpine, and the Fresno County Republican Central Committee following an unusual pattern of donations that was brought to light in October.
The California Watch analysis, which examined state Assembly and Senate races during the last major election cycle in 2007-2008, found a number of previously unreported examples of committees routing large donations into tight races. Some of those contributions raise ethical questions and may circumvent the law, campaign watchdogs say.
In one case, a single donor gave more than $300,000 in one day to 10 Democratic county committees from Humboldt to San Diego counties. Those committees proceeded to make large contributions to high-profile Democratic Assembly and Senate races at different times in the days leading up to the election.
In another case, a Modesto assemblyman made contributions to two Republican committees, which quickly turned around and contributed large amounts to the assemblyman's brother, who was campaigning for a seat in a nearby district.
A number of county committees also have a history of violating disclosure requirements by not revealing many large contributions until after Election Day.
"I'm all for strong political parties, but it ought not to be an opportunity for an end run around the contribution limits that the people thought that they were enacting," said Ross Johnson, chairman of the FPPC and one-time sponsor of Proposition 34, the 2000 ballot measure that established California's modern framework of campaign finance limits.
Large donations to and from county parties are legal as long as donors do not tell the parties where to steer their contributions. But the pattern of money flowing into the party committees before it is quickly dispatched to campaigns makes it appear anything but arbitrary. Critics, including Johnson and others, say the process violates the spirit of campaign finance reforms established by voters when they passed Proposition 34.
"I'd call it money laundering," said Derek Cressman, regional director for Common Cause, a non-partisan advocacy group that supports campaign finance reform. "In addition to evading contribution limits, you are masking the source of the funds."
Long-distance donations can have big impact
Political parties have a vested interest in controlling which candidates receive the most money. Since only a handful of legislative districts are considered competitive between Republicans and Democrats, party leaders want to focus contributions where they matter.
During the last two months of the 2007-2008 election cycle, when campaign giving last reached fever pitch, local parties took in more than $7.1 million and promptly dispensed at least $4.2 million to Assembly and Senate candidates across the state.
More than three-quarters of the money was given by central committees to support candidates outside their local jurisdictions who were fighting contested races, such as Democrat Alyson Huber, now an assemblywoman from El Dorado Hills.
Less than two weeks before Election Day in 2008, Huber was locked in a tight race with former San Joaquin County Supervisor Jack Sieglock. That's when her campaign received help from an unusual source: $63,000 from a Democratic Party committee in tiny Del Norte County, more than 400 miles away, on the Oregon border.
More county parties had also chipped in: $100,000 from Marin County; $62,000 from Sacramento County and $25,000 from Stanislaus County near Modesto. Each had raked in large donations from unions, interest groups or other Democratic boosters just days or weeks before.
With help from the county committees, Huber outspent Sieglock by $175,000 during the last month of the campaign. She eventually won by fewer than 500 votes.
"It hit us like a ton of bricks," said Tim Clark, a Sieglock campaign adviser and veteran Republican consultant.
Circumventing finance limits
Consultants and campaign experts note that county central committees serve much the same purpose as independent expenditure committees in political fundraising: They act as third parties that can accept much higher contributions than candidates, allowing donors to give more money while insulating campaigns against any stigma associated with a donor..
Individual campaign donors face limits on how much money they can give directly to a candidate - as low as $3,900 in legislative races and as much as $25,900 for gubernatorial campaigns.
But state law now allows donors to give $32,400 to party central committees in each of California's 58 counties if that money will be used to directly support a campaign.
The practice also raises concerns about committees being used to hide donations from individuals to campaigns - which is illegal. But regulators say it can be difficult to prove.
In theory, central committees operate autonomously from the state party and other political groups. In practice, they often answer to influential politicians and party operatives - especially those in their districts and party leadership.
Nothing prohibits a donor from contributing the maximum amount to multiple central committees, which in turn can give unlimited amounts of money to candidates. The campaigns must only report that they received money from a party committee - not the donors who originally supplied the cash.
Because of their higher limits, central committees often attract prolific donors with a clear stake in state decision-making - particularly in the weeks immediately before an election, as candidates frantically burn through their war chests.
For example, the Service Employees International Union Local 1000, which represents more than 90,000 state workers, gave $302,000 in one day during October 2008 by routing it through 10 Democratic county central committees.
Union spokesman Jim Zamora declined to comment on the transactions, saying that the union does not discuss its campaign giving.
The Pechanga Band of Mission Indians - prominent casino operators - gave at least $120,000 to committees from both parties during the last election cycle, records show. The California School Employees Association gave Democratic committees $200,000 during the last two weeks of the campaign.
Local committees help keep money flowing
For their part, county central committees serve as conduits, taking money from donors and often writing checks to candidates soon after. Some of the most active central committees are based in the state's least populous counties.
In Humboldt County, for example, Democrats raised $55,200 in one day from the service employees union and other interest groups, then within a week dispensed $50,000 to state Senate candidate Hannah-Beth Jackson more than 600 miles away in Santa Barbara.
In coastal Mendocino County the local Democratic central committee raised $235,000 in October 2008 alone - mostly from unions, insurers and professional groups based in places like Sacramento, Los Angeles and even Washington, D.C.
The party then moved $200,000 into the campaign of San Diego Assemblyman Marty Block and $107,000 to the state election campaign of Assemblywoman Joan Buchanan, D-Alamo.
Republican committees have employed the same strategy. In the last month before the 2008 election, the Riverside County Republican Central Committee gave $285,600 to candidates after receiving more than $200,000 in contributions that month alone.
Groups such as the San Diego Lodging Industry Association PAC, and the California Correctional Peace Officers Association, the powerful union representing prison guards, gave hundreds of thousands of dollars to GOP committees. Republican candidates also used county committees to spread their surplus wealth. Assemblyman Mike Villines, R-Fresno, for example, gave $365,000 to 10 different central committees in 2007 and 2008.
In all, Democratic central committees contributed at least $2.7 million to Assembly and Senate races in the closing months of the 2008 general election. Republican committees gave $1.5 million.
Democratic and Republican Party officials both said the state party does not control how county committees direct contributions. Political consultants, too, said they often have no idea whether or when county parties will weigh in on a race.
Instead, they said, party leaders determine their priority races. Money then finds its way to candidates through an implied understanding of who needs it the most.
"We were so far down the (target race) list that we didn't see much money until the last two weeks. … We didn't know what we'd get," said Andrew Acosta, a Democratic strategist who managed the 2008 campaign for Huber, the Lodi assemblywoman. "The way we'd try to budget would be like 'OK, where are we at today?'"
Local party officials said it is often their willingness to direct the money into tight races that secures their position as players in the big-money pipeline.
"A lot of times, it comes down to who will do a good job when they distribute the money," said Jim Mastin, chairman of the Mendocino County Democratic Central Committee. "It's almost like the United Way."
Potential for impropriety remains
With central committees handing out so much cash, there is a concern that politicians and donors could use the system to illegally hide donations to their campaigns.
The state watchdog FPPC recently fined Assemblyman Joel Anderson, R-Alpine, $20,000 for his role in an exchange that steered more than $45,000 into his campaign, using the Fresno County Republican Central Committee to avoid contribution limits. The San Diego Union-Tribune first detailed the contributions.
Anderson returned the contributions before the fines were levied. The Fresno committee was also fined $29,000.
An order filed by FPPC investigators said that filtering the contributions through a central committee "indicates the potential of intent to conceal the violation and the true source, amount and nature of the contribution."
"Respondents at worst deliberately and at best negligently received contributions in excess of the contribution limits," the order stated.
Several observers, including Common Cause's Cressman, raised questions about another set of contributions turned up by the California Watch analysis.
On Oct. 30, 2008, Assemblyman Tom Berryhill, R-Modesto, donated $20,000 to the Republican Party committee in San Joaquin County. The next day, the committee donated $21,000 to Berryhill's brother, Bill, who would go on to win a close race in the nearby 26th Assembly District.
Tom Berryhill also donated $25,000 to the Stanislaus County Republican Party through two donations on October 27 and 29. The party sent $40,000 to Bill Berryhill's campaign through two donations on October 30 and 31.
Tom Berryhill's chief of staff, Laura Ortega, said the brothers and local parties did not coordinate the contributions.
"Tom raised a lot of money. He gave out money pretty much everywhere," said Ortega, who also worked on Tom Berryhill's campaign. "It didn't start or stop with the fact that his brother was running a target race."
Records show that Tom Berryhill gave widely to Republican candidates and the statewide Republican Party, but he only made significant contributions to three county central committees: Stanislaus and San Joaquin, which contributed to his brother's campaign, and $30,000 to Yolo County, which did not.
The two also shared an association with a political consultant: Carl Fogliani, who ran Bill Berryhill's campaign in 2008 and later worked as his chief of staff. Fogliani said he worked for Tom Berryhill in 2006, and he is now overseeing the campaign for the brothers' cousin, Mike Berryhill, who is running for a seat in Congress.
Fogliani said he was not aware of any coordination between the campaigns.
"It just seems too great a coincidence that it ended up (in Bill Berryhill's account)," Cressman said.
Committee financial disclosures inconsistent
Despite raising millions, many county central committees sometimes fail to disclose the money that they process, leaving voters and opposing campaigns with an incomplete and sometimes inaccurate picture of their activities.
In October, the FPPC warned two Democratic central committees that they had violated reporting requirements in 2006. At least 11 FPPC audits since 2002 have revealed similar problems, records show, and other apparent violations by the parties have not been reported.
For example, the Democratic Party of Sacramento County raised more than $267,000 in the two weeks before the 2008 general election but did not report it until Nov. 5 - the day after Election Day.
State law requires central committees to disclose contributions received during the last two weeks of the election within 24 hours.
Anna Molander, who was elected chairwoman of the Sacramento party after the 2008 election, said a new treasurer who was unfamiliar with reporting requirements might have made the error.
"Regarding the reporting issues you raised … we are looking into it and working diligently to ensure that the (Democratic Party of Sacramento County) is and always will be in full compliance with all campaign reporting requirements," Molander wrote in an e-mail.