Watchdogs voice worries about insurance appointee;

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The San Jose Mercury News (California)

After two years of working quietly in the bustling corridors of the state Capitol, San Jose lawmaker Joe Coto has been named head of the Assembly Insurance Committee — despite an almost complete lack of legislative experience in insurance issues.

But Coto has one qualification that has typified past chairs of that committee, which regulates some of California’s wealthiest special interests: a prodigious talent for fundraising.

Watchdog groups critical of the appointment suggest that one of the biggest priorities for the insurance committee chair has become raising gobs of money for Democratic causes from the insurance industry. Coto is a former schools superintendent who hadn’t previously served on the committee nor carried insurance legislation, but he has a solid track record for fundraising and shifting donations to the party — facts that further the skepticism of critics.

“It’s been a pattern over the years that the committee has carried water for the industry,” said Carmen Balber, a consumer advocate with the Foundation for Taxpayer and Consumer Rights. “Unfortunately, we’ve seen time and time again that legislators will take large contributions from the industry they’re regulating and their votes will reflect those contributions.”

Coto vows that won’t be the case and, in response to criticism, said he would even consider a self-imposed ban on insurance industry donations.

“It’s something I’m certainly going to take a look at,” he said. “I think it makes sense, because the more independent one is in terms of addressing the issues around insurance, the more effective you’re going to be in addressing and responding to legislation that’s required for the industry, for consumers, clearly.”

The committee recommends and rejects legislation related to personal insurance, including changes to rate structures, and worker’s compensation and unemployment compensation.

Assembly Speaker Fabian Núñez, who appointed Coto, acknowledged that his fundraising was “a plus” but said he selected Coto for his leadership skills and “knowing how to navigate the political terrain.”

Still, it’s no surprise, observers say, that legislators who excel at raising money are appointed to chair the so-called juice committees, such as the insurance committee, that attract the most campaign contributions for the California Democratic Party, and the Assembly’s Democratic Caucus and political campaigns connected to its leadership.

Large campaign fund

Coto has run two successful campaigns in a politically secure Assembly District 23 that includes East San Jose and downtown. With no real political challenge, he has amassed large sums of campaign money.

His campaign fund since mid 2005 has given more than $120,000 to other legislative candidates, or causes connected to them, and the California Democratic Party.

The previous insurance chairman, Juan Vargas, D-San Diego, received hundreds of thousands of dollars from the industry and, using funds from his final Assembly race, in 2004, steered nearly $200,000 to the party and its causes.

Unlike Coto, Vargas served on the committee before he became chair. But he was accused by consumer advocates of siding with insurers on critical legislation and now works as an insurance company executive.

Balber and other consumer advocates worry that Coto, 67, may be headed in a similar direction because industry money is starting to pour into his campaign account.

Coto has raised more than $45,000 from industry contributions since January 2006. More than half that amount came in after insurance lobbyists learned Coto would be named chairman.

Supporters who have known Coto for years say his penchant for standing up for minorities, students and the underprivileged should assuage any fears that he would become a pawn of the deep-pocketed insurance industry.

“Joe’s a strong, fair public official; I don’t think he’s going to be swayed one way or another by contributions,” said Tony Estremera, vice chairman of the Santa Clara Valley Water District’s board of directors and a longtime Coto supporter. “If he doesn’t agree on something, he’s not going to look at his contributions list.”

A one-time councilman in Oakland, where he started his teaching career, Coto became superintendent of San Jose’s East Side Union High School District in 1989, retired in 2003 and came to Sacramento in late 2004.

Former schools chief

“When you’re a school superintendent and you manage a half-billion-dollar organization,” Coto said, “you have to deal with worker’s comp, you have to deal with unemployment insurance, you have to deal with liability insurance, you have to deal with auto insurance for your buses and for your district vehicles, so it’s the same kind of process.”

His agenda for the committee includes promoting home ownership by extending tax breaks for home buyers who purchase mortgage insurance.

His committee also may tackle an issue that went unresolved in the last session — the notion of redefining how auto insurance rates are set. The industry wants to keep its current practice of basing rates on ZIP codes, but consumer advocates are pushing for rates based on a motorist’s driving record.

Coto, who also heads the Latino Legislative Caucus — another position where fundraising is important — said the rates should be based on a driver’s record. “I don’t see how one could determine if you live in East San Jose, you ought to be higher or lower than someone who lives in Los Altos.”

A spokesman for an industry organization said he expects no special favors in return for campaign contributions. Rex Frazier of the Personal Insurance Federation of California said representatives of his member firms merely seek access to personally explain “highly technical” issues to the chairman.

But others have seen this scenario play out before, and the pressures — from special interests and political interests — can test the ethics of lawmakers and color the perception of voters.

“It’s understood if you want to chair one of those committees you have to give a lot of money to the speaker and the caucus and demonstrate your ability to raise money,” said former Assemblyman Joe Canciamilla, a Democrat from Martinez who left the Legislature in December after six years.

“It is an obscene process that, while perhaps not corrupt in a legal sense, it’s certainly corrupt in an ethical and moral sense,” Canciamilla added, “because it really does weaken, if not the reality, the perception that people have of how government works.”

The insurance committee is expected to meet for the first time over the next few weeks.
Contact Edwin Garcia at [email protected] or (916) 441-4651.

Consumer Watchdog
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