Just because Gov. Jerry Brown has already run his last election campaign doesn't mean wealthy contributors can no longer find a way to his heart.
In this year's first three months, donors directed by the governor gave more than $2.73 million in tax-deductible contributions to two charter schools Brown helped launch as Oakland's mayor. That's almost as much as in all of 2014, when Brown vetoed a bill that would have made modest reforms to these "behested payments," so called because they are given at the behest of an elected official.
If Brown, a master of the practice, keeps up this pace, he could triple his payments from 2008, his most lucrative year.
Top donors include a tribal casino; the controversial CEO of a company that owns 17 California hospitals; the state's biggest car insurer and its biggest wine exporter; one of the nation's biggest general contractors; and the nation's biggest biotech company — all with vested interests in how Sacramento sets policy. Of the 14 top behested donors this year, at least eight gave money to Brown's 2014 re-election campaign.
The crush of contributions comes as Brown no longer needs campaign donations: Term limits prevent him from running for governor in 2016, and he still has about $19.6 million left over from last year's re-election campaign.
The governor doesn't personally benefit from these payments, but he clearly appreciates them — and it's that gubernatorial goodwill that wealthy special interests want.
"It is cause for concern," said Bob Stern, a political ethics expert. "The question is: After he's out of office, will he be able to raise this much money? And the answer is no."
Stern, who authored the state's Political Reform Act of 1974 before serving as the Fair Political Practices Commission's first general counsel, said the charitable contributions obviously aren't just altruistic. "The governor will tell you that he is not going to do anything differently, that he won't be affected," he said, "but the contributors feel they'll be able to get their phone calls answered when they have a question about public policy."
Behested payments have been around for a long time but grew tremendously in the past decade, in large part because of Brown. Since becoming governor, he has accounted for three-quarters of all behested payments to statewide officials.
Sometimes a contributor initiates the payment, asking an elected official where money would be most appreciated. Sometimes the politician reaches out to contributors. If the payment is $5,000 or more, the official must report it within 30 days. California is one of only a few states that require any disclosure at all. But unlike campaign contributions, which are limited in each election cycle, there is no cap on how much a special interest can give as a behested payment.
Yet even as California has enacted other reforms to rein in money in politics, "the Legislature as a body by and large is satisfied with business as usual" on behested payments, said Kathay Feng, executive director of the good government nonprofit California Common Cause — even if they "have become such a large loophole that you can drive a truck through it."
Brown declined to say whether he believes contributors give in order to win his approval and attention; whether he feels influenced by these donations; or whether he sees any need to reform the behested-payment system.
"These donations represent an opportunity for foundations, businesses and individuals to invest in their communities and help students succeed," said Evan Westrup, Brown's spokesman. "The governor is very proud of the two schools he founded in Oakland more than a decade ago, which have served thousands of Bay Area students — many the first in their family to go on to college."
This year's biggest contributor so far is Maurice Kanbar of San Francisco, a Republican multimillionaire real estate investor, Skyy vodka creator, inventor and philanthropist who gave $1 million to the Oakland Military Institute in February. Brown declined to describe his relationship with Kanbar, but he attended a San Francisco Film Society event last Monday night at which Kanbar, 86, was honored with an award.
Kanbar, who said he has known Brown for more than 20 years and used to lunch with him often, upped his ante from the $25,000 per year he used to give to the school. But Brown, Kanbar said, never asked for more.
"He's just a very, very wonderful, decent man; we don't always agree but we at least have an interesting conversation," Kanbar said. "And I think the school is terrific."
Brown's other top behested payments this year came from:
–The San Pablo Lytton Casino, an East Bay gaming center that would need the governor's approval to grow. The casino, which gave $100,000, has been among Brown's behested donors to the Oakland charter schools for years.
–Dr. Prem Reddy of Victorville, chairman and CEO of Prime Healthcare Services, who gave $100,000. Prime this year unsuccessfully sought state approval to buy six California hospitals from the struggling Daughters of Charity Health System, based in Los Altos Hills.
–Gilead Sciences, of Foster City, the nation's biggest biotechnology company, which gave $50,000. Gilead regularly lobbies state agencies and the Legislature on medical and budget issues.
–Los Angeles-based Mercury Insurance, the state's largest automobile insurer, which gave $99,520 in behested payments even while lobbying Brown's office, the finance and insurance departments, and lawmakers on pending bills dealing with taxes, emailed insurance notifications and other tweaks to insurance laws.
Representatives of the casino, Prime, Gilead and Mercury didn't respond to requests for comment.
Mercury in particular is no stranger to using its checkbook to influence public policy — the company has made $2.25 million in campaign contributions, while Chairman George Joseph has given $20.9 million over the past decade.
"None of the companies who are giving tens if not hundreds of thousands of dollars to the governor's pet charities can tell you with a straight face that they're doing it for the children," said Consumer Watchdog executive director Carmen Balber. She argued that the magnitude of the contributions underscores that behested payments are all about currying favor with the politically powerful.
Other statewide pols reported behested payments this year, though not in amounts anywhere near Brown's. Among those are Lt. Gov. Gavin Newsom, Attorney General Kamala Harris and Treasurer John Chiang, who reported payments to their inaugural funds, and Secretary of State Alex Padilla, who directed money to the National Association of Latino Elected and Appointed Officials Educational Fund. Padilla is NALEO's president.
A decade ago, all statewide officials' behested payments totaled only $164,000 in 2005.
But after tallying no behested payments during his first few years in office, Schwarzenegger averaged about $2.7 million per year from 2006 to 2010. Most of that went to the After-School All Stars kids' program he founded in 1992; to bankroll summits and conferences he hosted as governor; or to a foundation that paid for much of his travel.
Yet when it comes to behested payments, Brown makes Schwarzenegger look like a girlie man.
Brown averaged $3.1 million per year in behested payments as attorney general from 2007 to 2010, and $3.4 million per year as governor from 2011 through 2014.
That's a big chunk of those charter schools' budgets. Oakland Military Institute — a seven-year college prep school in North Oakland with a spit-and-polish focus on academics, leadership, citizenship and athletics — reported $9.7 million in revenue and $8 million in expenses in the 2012-13 fiscal year. Oakland School for the Arts — housed in uptown Oakland's historic Fox Theater building and offering concentrations not only in theater, music, visual and literary arts but also in figure skating and circus arts — reported $7.8 million in revenue and $8.5 million in expenses that year.
State Sen. Jerry Hill, D-San Mateo, authored a bill last year that would have brought the $5,000 reporting threshold for such payments down to $2,500 and would have barred public officials from behesting payments to charities they or their relatives control. But the lowered threshold was stripped out before the Legislature passed the bill, and Brown vetoed what was left of it in September.
"The activities that are addressed by this bill are already subject to extensive regulation, including robust disclosure requirements," Brown wrote in his veto message. "This bill would add more complexity to the regulations governing elected officials, without reducing undue influence."
Josh Richman covers politics. Follow him at Twitter.com/Josh_Richman. Read the Political Blotter at IBAbuzz.com/politics.