Two California Strategies partners fined by FPPC owe back taxes

Published: Sunday, Oct. 6, 2013 - 12:00 am
Last Modified: Sunday, Oct. 6, 2013 - 12:36 am

Two of the three California Strategies partners recently fined by the state Fair Political Practices Commission have liens for outstanding taxes, according to documents on file at the Sacramento County Recorder’s Office.

The IRS has filed liens of more than $840,000 against Jason Kinney for federal income taxes he owes from 2007-2010. The public records show that an additional $207,000 in liens against Kinney have been released in recent years as he paid off state tax debt to the California Franchise Tax Board.

In the FPPC settlement, Kinney admitted to lobbying on behalf of one client: real estate developer Focil-MB, which is involved in a major bayfront project in San Francisco. But most of his work is in communications, Kinney has said. His private-sector clients include the National Football League, AT&T, the California Medical Association and the Auto Club Speedway.

California Strategies’ website touts him using a quote from Capitol Weekly, which said in 2010 that “there is perhaps no better example of the next generation of California political power brokers than Jason Kinney.”

The California Democratic Party pays him $5,000 a month to serve as a political communications consultant to Senate President Pro Tem Darrell Steinberg and the Democratic caucus. Kinney is also a volunteer adviser to Lt. Gov. Gavin Newsom. He got his start in California politics working for former Gov. Gray Davis and former state Sen. Don Perata.

Kinney was involved with a short-lived proposal earlier this year to raise taxes on cigarettes to pay for college scholarships, an effort backed by Newsom and others. He also has worked with Tom Steyer, the hedge fund billionaire who last year backed Proposition 39 to raise taxes on out-of-state corporations and has advocated that California raise taxes on oil companies.

Kinney said he’s working on paying off the debt, but was unable to say how much remains. The amount of a lien reflects taxes owed at one point in time but is not lowered as someone pays down the debt. The lien is released when the back taxes are paid in full.

“This is a dated personal issue that has no impact on my work or the firm and it’s been fixed according to an ironclad installment plan,” Kinney said in an email to The Sacramento Bee. “I take these responsibilities very seriously and, while I was not happy with the underlying situation, I’m proud of the way it’s been responsibly dealt with.”

Rusty Areias, who was also fined by the FPPC for not registering as a lobbyist, also has a record of tax liens that he said were related to the 1998 bankruptcy of his family’s dairy in Merced County. A former state assemblyman and state parks director, Areias faced public scrutiny of his finances during an unsuccessful run for state Senate in 2002.

Several federal and state tax liens against Areias totaling more than $3 million have not been released, according to Sacramento County records. The file also shows that more than $346,000 of tax liens against Areias have been released in recent years.

Areias said he expects he will satisfy his federal and state tax obligations by next June.

“I’m almost done,” he said. “I’ve been paying this under a hardship for many years. I’m proud of the way I’ve conducted myself in meeting those obligations. I have $124,000 in actual federal taxes left to pay.” He said he owes $74,000 in state taxes.

A California Strategies spokesman said the tax problems of two partners is unrelated to the operation of the firm and its audit by the FPPC.

“Their personal finance matters have nothing to do with California Strategies,” partner Michael Bustamante said.

Call Laurel Rosenhall, Bee Capitol Bureau, (916) 321-1083. Follow her on Twitter @LaurelRosenhall.

Read more articles by Laurel Rosenhall

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