State Alleges Not-for-Profit Hid Donors to Group Fighting Prop. 30

On Thursday, the state Fair Political Practices Commission filed a lawsuit to determine whether an Arizona not-for-profit illegally concealed the identity of donors who gave money to a group opposing Proposition 30, the Sacramento Bee’s "Capitol Alert" reports (Yamamura [1], "Capitol Alert," Sacramento Bee, 10/25).

The Phoenix-based not-for-profit group -- Americans for Responsible Leadership -- facilitated the donation of $11 million to the Small Business Action Committee, which opposes Prop. 30. SBAC also supports Proposition 32, a campaign finance measure.

State regulations say that not-for-profits cannot conceal donors' identities if their contributions go toward state campaigns (Megerian, Los Angeles Times, 10/26).

Details on Prop. 30

Prop. 30 is a compromise tax hike plan developed by Gov. Jerry Brown (D) and supporters of the "Millionaires Tax." The measure would:

• Increase the personal income tax by one percentage point for individuals who earn $250,000 annually or couples who earn $500,000 annually and by two percentage points for individuals who earn $300,000 annually or couples who earn $600,000 annually;
• Extend the income tax increases on wealthy residents from five to seven years; and
• Increase the sales tax by a quarter of a cent.

The sales tax hike would expire in four years (California Healthline, 10/4).

Details of Lawsuit

FPPC is asking the Sacramento Superior Court to require ARL to provide communications and transactions data between donors and the not-for-profit. According to FPPC, the agency this week asked ARL to provide the information, but the group did not supply the data.

In the lawsuit filing, FPPC says that hiding donors' identities will "cause great and irreparable harm to the voters of California by potentially denying them vital information regarding the true source of large sums of money being spent to advocate for and against statewide initiatives" (Yamamura [1], "Capitol Alert," Sacramento Bee, 10/25).

A Sacramento Superior Court judge has scheduled a hearing on the suit for Tuesday.

ARL Responds

Bradley Benbrook -- attorney for ARL -- said that FPPC does not have authority to audit the communications until after the election.

He suggested that FPPC has "already decided" that ARL violated state campaign finance laws and could be in breach of confidentiality rules by discussing the case with the media (Yamamura [2], "Capitol Alert," Sacramento Bee, 10/25).

Brown Criticizes SBAC

On Saturday, Brown accused SBAC of illegal money laundering by accepting a donation from a group that concealed the identity of its donors.