To get to the California state Senate, Temecula Republican Jeff Stone survived a $3 million blitz of mailers, TV ads and other campaigning last year by Sacramento-based groups opposing him or supporting his GOP rival, former Assemblywoman Bonnie Garcia.
Stone’s victory, though, rested on red ink. His campaign reported more than a half-million dollars in accrued bills and personal loans at the end of 2014, the most outstanding debt of any lawmaker.
“It’s something he’s working on now,” said Stone consultant Dave Gilliard. “He knows it’s going to take some time.”
November’s election is in the rearview mirror, but many California lawmakers and unsuccessful candidates continue to live with reminders of costly campaigns. Lawmakers reported about $3.7 million in unpaid bills and personal loans, according to state filings reviewed by The Bee.
Sign Up and Save
Get six months of free digital access to The Sacramento Bee
Debt retirement fundraisers around the Capitol have been common in recent weeks. Yet such fundraising has long troubled campaign-finance watchers.
Rather than helping a candidate’s re-election prospects, debt-retirement donations reduce a lawmaker’s potential liability to a campaign vendor or credit-card company. Other money goes into the candidate’s bank account to repay personal loans to their campaigns.
“You’re not giving to them so they run a competitive campaign. You’re not giving to them so they can get their message out,” campaign-law expert Jessica Levinson, vice president of the Los Angeles City Ethics Commission, said of campaign donors. “The purpose is, ‘Help me out. I need to retire my campaign debt.’ It’s much more of a specific goal.”
Robert M. Stern, the former top attorney at the state Fair Political Practices Commission who helped write the Political Reform Act, said donors to lawmakers “don’t really care where the money goes. They just want to have access to the officials.”
“But when you’re raising the money for yourself, it’s going into your own pocket. You’re more grateful to the donor,” he said.
Former Assemblyman Roger Dickinson, D-Sacramento, said it is “too simplistic a view” to link debt-retirement donations to any sense of obligation by a lawmaker. He finished his 2010 Assembly campaign more than $180,000 in debt and raised money to retire it during his two terms in office. Raising money is a regular part of the political process, he noted.
“There were people who gave me money to pay off (2010) debt. There were people who gave me money to run in 2012,” Dickinson said. “I didn’t think of them any differently.”
Campaigns accumulate debt for various reasons. Some candidates loan their campaigns money early on, up to a legal maximum of $100,000, to plump up fundraising totals and establish their campaign’s bona fides. In the closing weeks of a close race, many candidates cannot raise money fast enough and go into the red to stay competitive.
Other candidates and their consultants agree on “win bonuses” in return for lower payments up front; victory means an immediate five- or six-figure obligation. Some campaigns simply manage their money poorly.
After the past three elections cycles, lawmakers reported millions of dollars in debt on the books: $3.2 million after the 2010 election, $4.1 million after the 2012 election, and $3.7 million after November’s election. The higher total in 2012 likely reflected the costs of campaigning in newly drawn districts.
Campaign debt has had a role in only one recent political-ethics investigation despite the millions of dollars in loans and unpaid bills over the years.
In November, Democratic consultant Richie Ross agreed to pay a $5,000 fine for violating California’s lobbying laws. Investigators for the California Fair Political Practices Commission concluded that Ross, who is also a registered lobbyist, did not make adequate efforts to collect on “win bonus” campaign debts owed to him by lawmakers he had advised, giving him “improper influence inherent in the situation where a state legislator owes a large debt to a lobbyist,” the agency’s investigators wrote.
Political consultants are among the reported creditors for some of the 10 state lawmakers who ended 2014 with outstanding debt of nearly $100,000 or more.
Stone, a longtime county supervisor, ran in the redrawn 28th Senate District, a Republican-safe seat that covers much of Riverside County. Senate Republicans, though, preferred Garcia, and Stone raised little money from capital-based donors, according to state records.
Senate Republican leader Bob Huff, who walked precincts on Garcia’s behalf, now is helping to raise money to pay off Stone’s campaign debt. “He’s been very supportive,” said Gilliard, whose firm is one of the lawmaker’s nearly 20 creditors.
To settle it all, Stone would need 120 donors to give the per-election maximum contribution of $4,200.
Other new lawmakers brought along significant debt from past campaigns for local office, for which they can raise money in Sacramento.
Freshman Assemblyman Marc Steinorth, R-Rancho Cucamonga, ended 2014 with $141,000 in debt, almost all of it related to loans by Steinorth to his 2010 campaign for Rancho Cucamonga mayor and 2012 campaign for Rancho Cucamonga City Council.
Unlike the state, Rancho Cucamonga has no contribution limits – meaning Steinorth can accept sizable contributions in excess of state limits as long as the money goes to pay off his personal loans to his local campaigns.
One state political player has already helped him out. In March, the San Manuel Band of Mission Indians gave $5,000 to Steinorth’s 2010 committee. The tribe, partly located in Steinorth’s district, is a major interest in the Capitol and falls under the jurisdiction of the Assembly Governmental Organization Committee, of which Steinorth is a member.
Similar scenarios play out at the local and federal levels. Former lawmaker Juan Vargas, D-San Diego, ran up more than $500,000 in debt during his 2010 run for the state Senate. The debt was down to $278,000 by the end of 2012, just as Vargas prepared to leave for Congress.
By the end of his first term in Congress, his state debt was down to $10,000. Almost 90 percent of the money he received came from business interests, their employees, and unions that lobby Congress or federal agencies, according to the Center for Responsive Politics’ lobbying database.
Donors with a stake in Los Angeles City Hall decisions helped City Councilman Paul Krekorian, a former state assemblyman, pay off personal loans and other debt in his Assembly campaign committee, the Los Angeles Daily News reported last week. The state committee, Friends of Paul Krekorian, had about $39,000 in state debt at the end of 2014, about half of what it was when Krekorian left the Assembly in mid-2010.
Donations to retire state committee debt must comply with state contribution limits, which were $4,100 per election in 2014. Los Angeles rules, though, limit donations from individuals and businesses to $700 for an officeholder account or campaign committee or $1,300 for legal defense funds.
“Going to people who aren’t supposed to contribute at the local level and asking them for money that’s ultimately going into your pocket doesn’t look very good,” political attorney Charles Bell told the newspaper.