Capitol Alert

Labor unions are paying to help California’s lieutenant governor decorate her office

Taxpayers aren’t paying for the lieutenant governor’s new office furniture.

Labor unions are.

California Lt. Gov. Eleni Kounalakis has solicited donations from unions and her family’s business to fill out her lean office budget and cover the costs of her inauguration, according to documents filed with the state Fair Political Practices Commission.

She’s raised the money through so-called behested payments, a common practice among elected officials that allows them to solicit donations to charitable organizations.

Kounalakis has raised more than $300,000 for the Committee to Support the Office of the Lt. Governor, mostly from labor unions. Groups representing service workers, firefighters and police officers are among the biggest contributors. AKT Investments, a company run by Kounalakis’ family, contributed $50,000 to the committee.

The committee, registered with the IRS as a tax-exempt social welfare organization is paying for new furniture, paint and other furnishings for her office, which is in the Capitol. Some of the money will fund stipends for student artists attending public California universities whose art will be featured in the lieutenant governor’s office.

The arrangement lets the lieutenant governor cover those costs without using taxpayer money, said Lloyd Levine, who runs the committee.

The lieutenant governor’s office has a relatively small budget, about $1.5 million this year with seven staff positions. Despite budget constraints, Levine noted, Kounalakis is still expected to host foreign dignitaries in her office, such as the Greek ambassador, with whom she met last week.

“Despite the title of the office, the budget is very small there isn’t money to do things like paint the office or buy furniture for staff,” Levine said. “You do want an office, while not ostentatious, that is appropriate to host foreign guests and dignitaries.”

Gov. Gavin Newsom has given Kounalakis an expanded role in his administration beyond his own tasks when he was lieutenant governor under then-Gov. Jerry Brown. Newsom has made Kounalakis, a former ambassador to Hungary, his top representative on international trade and affairs.

Newsom’s latest budget proposal released earlier this month includes an extra $500,000 more for her office’s budget starting in July.

Since 2010, most behested payments have been reported for “charitable” purposes, such as donations former Gov. Brown secured for Oakland charter schools.

It’s common for elected officials to raise money through behested payments for “governmental” purposes, too, such as to fund their inauguration events. Newsom raised more than $5 million in behested payments for the committee that paid for his gubernatorial inauguration this year.

Unlike campaign donations or gifts, politicians don’t have a limit on how much they can solicit in behested payments. They also don’t have to report behested payments under $5,000, potentially shielding some donations from public view.

Bob Stern, former president of the Center for Governmental Studies, said he represents a “very distinct minority” of people who think politicians should use taxpayer money for government business like governor travel, which is often funded with behested payments. Using behested payments for such activities provides an avenue for special interests to influence elected officials, said Stern, who helped write California’s financial disclosure laws.

It would be better if Kounalakis had used another source of funding like campaign donations to pay for office furniture because those funds are subject to greater disclosure, he said. Although he didn’t write the laws around behested payments, he said the intent was to allow officials to raise money for independent charities, not necessarily to reduce costs for taxpayers.

“Behested payments was more for other charities, not your own – you’re raising money for a school or a United Way or some organization that you don’t control,” he said.

Kounalakis’ use of behested payments to fund her office’s furnishings indicates she’s being responsible with public money, says Kati Phillips of Common Cause, a government watchdog group. Moving forward, it’s important to monitor that those payments don’t lead to special favors for the groups donating the money, she said.

“It’s a good sign that they’re using taxpayer dollars wisely,” Phillips said. “The question is what happens after this.”

Kounalakis is raising money at a faster clip than Newsom did when he was lieutenant governor. He raised $860,000 in behested payments during his eight years in office before he was elected governor, most of which went to charitable organizations such as the 2015 Special Olympics and Free the Children. Less than $200,000 of Newsom’s behested payments went to his inauguration and events fund.

Kounalakis’ inauguration at the Tsakopoulos Library Galleria – a downtown building named after her father, a wealthy Sacramento developer – was attended by more than 700 guests, including House Speaker Nancy Pelosi and labor leader Dolores Huerta. The foundation covered all expenses, including catering and renting a stage, totaling about $50,000, Levine said.

“Constitutional officers are all expected to have a nice inauguration,” Levine said. “The state can’t pay for that.”

Sophia Bollag covers California politics and government. Before joining The Bee, she reported in Sacramento for the Associated Press and the Los Angeles Times. She grew up in California and is a graduate of Northwestern University.
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