John A. Perez - Day 1 photo

Assemblyman Chris Holden (left), D-Pasadena, talks to Speaker John A. Pérez during a legislative session at the state Capitol in Sacramento, Calif. The freshman legislator donated 9,000 to Pérez’s targeted 2012 campaigns, and the speaker chose Holden to be majority whip.Max Whittaker / Prime

In May 2012 and again in June, Speaker John A. Pérez wrote memos to Democrats in the California Assembly. He wanted millions in campaign cash to win a handful of key races.

At stake, Pérez wrote, was their party’s control of the Assembly – and, as it turned out, the perks and power enjoyed by the lawmakers themselves.

“It is critical that we band together to maximize our financial resources,” the burly Los Angeles legislative leader wrote in the memos, copies of which were obtained by the Center for Investigative Reporting.

The lawmakers gave Pérez what he wanted, state campaign finance records show.

Exploiting loopholes in a law enacted to stanch the flow of big money in state politics, the Assembly Democrats pumped $5.8 million into the campaigns Pérez designated, a CIR data analysis shows. The infusion of cash helped the Democrats win a supermajority in the Capitol: two-thirds control of the Legislature for the first time since 1883.

The system also paid off for the speaker’s biggest fundraisers in the Assembly.

According to the data, Pérez gave lawmakers who raised the most money the best assignments in the new Legislature – posts on the speaker’s leadership team and seats on the powerful “juice committees.”

These are seven of the Assembly’s 30 standing policy committees. They control bills affecting the financial bottom line for the Capitol’s wealthiest interest groups: from banks, insurance companies and public utilities to casinos, racetracks and liquor distributors. For lawmakers who serve on them, the committees are a source of political campaign “juice”: abundant donations.

Pérez’s spokesman John Vigna said the speaker makes legislative assignments based on merits, not money.

“There is absolutely no connection, zero connection, between Speaker Pérez’s leadership selections and any political considerations, including fundraising,” he said.

“Speaker Pérez chooses his leadership team based on their ability to serve the people of California” and nothing else, Vigna added.

CIR’s analysis of more than 38,000 contributions to Assembly Democrats in the 2011-12 campaign shows a link between donations to the speaker’s targeted races and a lawmaker’s prospects for important legislative assignments.

Among the findings:

  • The mega-donors to Pérez’s targets – three lawmakers who gave more than $250,000 – obtained positions of power. Each was named to either a leadership post or chairmanship of a juice committee, along with a seat on at least one juice committee. The top donor, Toni Atkins of San Diego, was named Assembly majority floor leader – next to the speaker, the top leadership post.
  • Lawmakers who gave more than $150,000 were likely to get multiple important posts. All 18 got one juice committee seat, and 16 got a leadership post, chairmanship of a juice committee or a seat on a second juice committee.
  • Lawmakers who gave less got less. Donors who contributed less than $150,000 stood a 13 percent chance of heading a juice committee or joining the leadership. No lawmaker who gave less than $40,000 was named chairman of a juice committee.

California’s Assembly speakers, Democrat and Republican alike, long have courted the state’s monied interests, seeking campaign funds to win or maintain power in the Legislature. Despite efforts to break this cycle, most speakers also have given political allies leadership posts, committee assignments and other perks.

Toni Atkins - Day 1 photo

Assemblywoman Toni Atkins, D-San Diego, shown at a hearing this month at the state Capitol, donated 2,000 to 2011-12 races targeted by Speaker John A. Pérez. She was the Assembly’s top donor, and Pérez named her Assembly majority floor leader.Randy Allen / For the Center for Investigative Reporting

The Pérez memos and the pattern of donations that followed them provide new insights into how those dynamics played out in the 2012 campaign.

Phillip Ung, policy advocate for the political reform group California Common Cause, said CIR’s findings are reason for concern.

“This system of campaign finance buying leadership on committees” has nothing to do with good government, he said.

“When voters see someone is chair of a committee, their expectation is that person is there because that person is a policy expert, not because they bought that chair,” Ung said.

Trent Lange, president of the California Clean Money Campaign, described lawmakers as “prisoners” of a process that requires endless political fundraising.

“It costs vast amounts of money to run campaigns, so it is understandable that the ability to raise money might play a role in legislative assignments,” said Lange, whose group favors public financing of campaigns. “What this story tells us is we have to find a better system.”

Pérez, 43, is a former labor union official and cousin of Los Angeles Mayor Antonio Villaraigosa, himself a former Assembly speaker. In 2008, with the mayor’s backing, Pérez won his first elected office – an Assembly seat in a heavily Democratic downtown district. The following year, he was elected speaker. Even in an era of term limits – Pérez must leave the Assembly next year – he has emerged as one of California’s most powerful officials.

As the memos make clear, Pérez as speaker has sought to raise money to maintain control of the Assembly, which Democrats have dominated for more than 16 years.

But raising money is complicated by a campaign finance law aimed at limiting the influence of big money on state elections.

For decades, California had no limits on political donations in state campaigns. In those years, the task of raising money for Assembly races often fell to the speaker, experts say. Willie Brown, speaker from 1981 to 1995, told his biographer that he raised up to $8 million per year, much of it from interest groups with business before the Legislature, and spent the money on Democratic campaigns and causes. Republican leaders did the same thing, he contended.

After recurrent scandals and calls for reform, state voters in 1996 had had enough. They enacted an extraordinarily tough law to blunt the power of special interests in the Capitol: Proposition 208. The measure said a donor could give no more than $250 to a candidate for the Legislature. But the courts called the measure too restrictive, and it never went into effect.

In 2000, then-Gov. Gray Davis and state lawmakers sponsored Proposition 34, a substitute measure that they said also would tamp down the influence of big money in state politics while passing constitutional muster. It had a less-restrictive donation cap, $3,900 in 2012 legislative races, and allowed unlimited donations to state political parties. Voters passed it, too.

Speaker graphic - thumbnail photo

Click to see the full graphic.

 Jaena Rae Cabrera/Center for Investigative Reporting

For a time, Prop. 34 checked the growth of spending in legislative races, experts say.

But as Pérez’s memos show, in 2012, the speaker devised a strategy to sidestep the $3,900 donation cap and direct millions in contributions to key campaigns.

One memo was written before the June primary and the other in anticipation of the general election in November. In the memos, Pérez ticked off exactly what he wanted from the Assembly’s Democrats, who then numbered 52.

For five Assembly candidates facing tough primary campaigns, the speaker wanted each Democrat to give a total of $19,500 – the legal limit of $3,900 per candidate. In the general election, Perez sought $23,400 more from each Democrat. That represented maximum $3,900 donations to candidates in six races Perez targeted.

Pérez said it was critically important to elect the lawmakers to maintain Democratic power in the Assembly.

For the state Democratic Party’s “candidates support fund,” which by law can funnel contributions to targeted campaigns, Pérez asked for $65,000, also split between the primary and general elections.

Finally, the speaker asked for $20,000 to support Proposition 30, Gov. Jerry Brown’s successful tax hike measure, payable to a separate fund set up by the speaker.

Pérez told the lawmakers not to send the money directly to the campaigns. Instead, “for proper tracking,” they were told to deliver the money to an office the speaker maintains near the Capitol.

To comply, each lawmaker faced the challenge of raising more than $127,000 for Pérez – on top of the $630,000 that, on average, he or she would need for his or her own re-election campaign.

In the end, the Democrats gave more money than the speaker had requested. Republicans lost in all the races Pérez targeted, and Democrats wound up with 55 seats in the 80-seat Assembly – one seat more than needed for a two-thirds majority. 

Reaping benefits

Meanwhile, as Pérez doled out legislative assignments between August and January, those who gave the most money reaped larger benefits, CIR’s analysis indicates.

“Giving contributions to earn yourself a chair or a seat on a powerful committee is not how voters would like to see governing taking place,” said Ung, the Common Cause advocate.

Atkins, the Assembly’s top donor, gave $282,000 to the targeted races, records show. In addition to naming her majority leader, Pérez kept Atkins on a juice committee on which she had served in the previous term: the Health Committee, which has jurisdiction over the heavily regulated health care industry. Before going into politics, Atkins worked as clinical director at a women’s health clinic, according to her Assembly website.

With health care finance a dominating issue, records show that health care interests donated $4.8 million to Assembly Democrats in 2012, with more than half going to members of the Health Committee or Pérez’s leadership team.

Henry Perea & Jose Medina Day 1 photo

Assemblyman Henry Perea (right), D-Fresno, talks with Assemblyman Jose Medina, D-Riverside, during a legislative session. Medina’s campaign was one that Speaker John A. Pérez had targeted for donations from other Democratic lawmakers.Max Whittaker/Prime
Mike Gatto - Day 1 photo

Assemblyman Mike Gatto, D-Los Angeles, was the Assembly’s No. 3 donor, giving 8,000 to the targeted races. Gatto was named chairman of the Appropriations Committee, the most powerful juice committee. He also is a member of the Banking and Finance Committee.Max Whittaker/Prime
Roger Hernández - Day 1 photo

Assemblyman Roger Hernández, D-West Covina, donated 5,000 to the targeted races and wound up with seats on three juice committees: Governmental Organization, Utilities and Commerce, and Health.Max Whittaker/Prime
Anthony Rendon - Day 1 photo

Assemblyman Anthony Rendon, D-South Gate, donated 1,000 to Speaker John A. Pérez’s targets while raising money for his first run for legislative office. Pérez named Rendon assistant majority floor leader and appointed him to the Utilities and Commerce Committee.Max Whittaker/Prime

Henry Perea of Fresno, a Pérez loyalist who gave a total of $277,000, was named chairman of the committee that oversees the insurance industry. He retained seats on two other juice committees: the Governmental Organization Committee, with jurisdiction over casino gaming, horse racing and the alcoholic beverage industry; and the Banking and Finance Committee, which oversees financial institutions. Perea is a former Fresno City Council member who previously worked as a congressman’s aide.

Pérez’s No. 3 donor, Mike Gatto of Los Angeles, gave $258,000 to the targeted races. The speaker promoted him to be chairman of the most powerful juice committee, the Appropriations Committee, which has jurisdiction over fiscal bills. Gatto also kept his seat on the Banking and Finance Committee. He is a former congressional aide who later practiced civil law.

Gatto declined to comment, referring a query to the speaker. Atkins and Perea didn’t respond to requests for comment.

CIR’s analysis shows that $150,000 was a cutoff of sorts. Most lawmakers who donated more than $150,000 to the speaker’s targeted races obtained important committee assignments or leadership posts.

Including the three mega-donors, 18 lawmakers broke the $150,000 threshold. Pérez named six of them to head juice committees. Five more got leadership posts, and another five got two or more juice committee assignments.

Nancy Skinner of Berkeley gave $201,000 to the targets. She continues to serve as chairwoman of the Rules Committee, a post that is part of Pérez’s leadership team, and sits on two juice committees: Business, Professions and Consumer Protection, which supervises occupational licensing and state regulatory agencies; and Utilities and Commerce, which regulates energy companies and public utilities. She is a former Berkeley City Council member and environmental activist. Of her fundraising, Skinner wrote in a statement: “I am enthusiastic to support our Caucus efforts to elect great Assemblymembers.”

Roger Hernández of West Covina, who donated $185,000, wound up with seats on three juice committees: Governmental Organization, Utilities and Commerce, and Health. He was Pérez’s majority whip, but the speaker replaced him in December, after a former girlfriend accused Hernández in court of abusing her and using illegal drugs. Hernández didn’t respond to interview requests.

Pérez named two major donors to leadership posts even though they were incoming freshman assemblymen and thus had no Capitol experience.

Former Pasadena City Council member Chris Holden managed to steer $199,000 to Pérez’s targets, even as he was raising money to win what at one point was a five-way contest for an open Assembly seat.

Pérez made him majority whip, replacing Hernández. Holden also was named to two juice committees: Appropriations and Business, Professions and Consumer Protection. In a statement, Holden said he believed he was named whip because of his long service in local government.

Anthony Rendon of South Gate, near Los Angeles, an educator and environmental activist, gave $191,000 to Pérez’s targets while raising money for his first run for legislative office. After Rendon was elected, Pérez named the newcomer assistant majority floor leader and appointed him to the Utilities and Commerce Committee.

In March, Pérez removed Rendon from the leadership team and named him chairman of the Committee on Water, Parks and Wildlife. It’s not considered a juice committee, but it will play an important role in shaping a proposed $11 billion state water bond measure. Rendon spokesman Bill Wong said his boss requested the new assignment because of serious water issues in his district.

Leaner prospects

For lawmakers who steered less than $150,000, prospects were leaner, the analysis shows.

Eighteen lawmakers gave between $40,000 and $150,000. Of those, two were named to leadership positions, and one became chairman of a juice committee. Donations at this lower level didn’t appear to give lawmakers traction with Pérez, according to the analysis.

Prospects were poorest for lawmakers who gave less than $40,000. None of this group of 18 lawmakers was named to head a juice committee, and two were named to leadership posts.

Perhaps because of personal or political considerations, some lawmakers fared better than others – even when they donated roughly the same amount of money to Pérez’s targets.

For example, Bonnie Lowenthal of Long Beach and Das Williams of Santa Barbara were among 18 Democrats who gave more than $150,000 to Perez’s targets.

All the others in that group got a leadership post, a juice committee chairmanship or seats on two juice committees. Lowenthal and Williams got one juice committee. Lowenthal also was reappointed as chairwoman of the Committee on Transportation – not a juice committee. She didn’t respond to interview requests.

In a phone interview, Williams said hard work – not fundraising – is the key to determining who gets good legislative posts.

“The people who work the hardest here often are the people who fundraise a lot and also happen to be the ones who get more assignments,” he said. “It comes down to, ‘Are you a hard worker?’ just as much as anything else.”

Williams said he is satisfied with his own assignments.

“I wanted to be on Utilities and Commerce because I have a passion for alternative energy, not necessarily because it’s a juice committee, but it happens to be one,” he said.

Similarly, Assemblyman Luis A. Alejo of Salinas donated $128,000 to Perez’s targets, while freshman lawmaker Kevin Mullin of San Mateo donated slightly more, $137,000.

Alejo was shut out of leadership slots and juice committees. But Mullin, son of former Assemblyman Gene Mullin, was given both a leadership post – assistant speaker pro tem – and a seat on the Business, Professions and Consumer Protection Committee.

Another exception was newly elected Assemblyman Phil Ting, the former city assessor-recorder of San Francisco. He gave no money to targeted races, but Pérez named him to the leadership post of caucus chairman.

Like many freshmen, Ting couldn’t be blamed for failing to donate in the other races: He spent $1 million to win a tough fight against a well-financed opponent and had  $17,000 left when the race was over. Perhaps more to the point, Ting and Pérez have been friends since they were classmates at UC Berkeley.

Mariko Yamada - Day 1 photo

Assemblywoman Mariko Yamada, D-Davis, gave ,600 to the targeted races, the least of any incumbent Assembly Democrat. She is the chairwoman of the low-profile Committee on Aging and Long-Term Care and does not have a seat on any juice committee.Max Whittaker/Prime

The experience of Assemblywoman Mariko Yamada of Davis was more typical.

Yamada raised $249,000 to win re-election, with significant contributions from unions for state employees and teachers. She donated $9,600 to the targeted races, the least of any incumbent Assembly Democrat. When Pérez parceled out leadership posts and slots on the juice committees, Yamada was passed over.

Instead, the former social worker was reappointed as chairwoman of the Assembly’s low-profile Committee on Aging and Long-Term Care. She didn’t respond to requests for comment.

Pérez’s own donations to the campaigns he targeted were modest. Records show he gave $164,000, less than 17 other Assembly Democrats. But Pérez was a formidable fundraiser for his own re-election, obtaining $2.6 million.

Pérez cruised to re-election in his Los Angeles district, winning more than 82 percent of the vote. He had $1.2 million left over, which by law he can use for a future campaign after he leaves the Assembly. This year, he has raised $103,100 for a campaign for lieutenant governor, records show.

This story was edited by Amy Pyle and copy edited by Nikki Frick and Christine Lee.

Clarification: This story updates to reflect the time frame of the campaign contribution limit. For state legislative races in the 2012 election, the limit was $3,900. On Jan. 1, it was raised to $4,100.

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Lance Williams is a former senior reporter for Reveal, focusing on money and politics. He has twice won journalism’s George Polk Award – for medical reporting while at The Center for Investigative Reporting, and for coverage of the BALCO sports steroid scandal while at the San Francisco Chronicle. With partner Mark Fainaru-Wada, Williams wrote the national bestseller “Game of Shadows: Barry Bonds, BALCO, and the Steroids Scandal that Rocked Professional Sports.” In 2006, the reporting duo was held in contempt of court and threatened with 18 months in federal prison for refusing to testify about their confidential sources on the BALCO investigation. The subpoenas were later withdrawn. Williams’ reporting also has been honored with the White House Correspondents’ Association’s Edgar A. Poe Award; the Gerald Loeb Award for financial reporting; and the Scripps Howard Foundation’s Award for Distinguished Service to the First Amendment. He graduated from Brown University and UC Berkeley. He also worked at the San Francisco Examiner, the Oakland Tribune and the Daily Review in Hayward, California.

Agustin Armendariz

Agustín Armendariz is an investigative reporter specializing in data analysis for The Center for Investigative Reporting. He previously worked at the San Diego Union-Tribune where he was a database specialist on the watchdog reporting team. While there, he delved into city finances, redevelopment projects and foreclosures. He earned his masters in journalism from American University in Washington, D.C. Agustin worked at the Center for Public Integrity and was a contributor to the publication "The Buying of the President" (2004) which was a New York Times bestseller.