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As California Billionaire Dumps a Half-Million Into Senate Race, Republican Party Charges Wrongdoing

Former San Franscisco hedge fund manager has emerged as a major financier of campaigns, bankrolling among other things a California green-energy ballot measure with $32 million of his own money.

Former San Franscisco hedge fund manager has emerged as a major financier of campaigns, bankrolling among other things a California green-energy ballot measure with $32 million of his own money.

OLYMPIA, Oct. 24.—A California billionaire who has emerged as a leading player in a game-changing state Senate race broke Washington-state campaign finance laws when he dumped another $3 million into an unusual campaign fund last week, the state Republican Party charged in a formal complaint Wednesday.

Certainly it came after a state deadline for big contributions; whether it broke any laws is another matter. But it just goes to show that the activities of wealthy Tom Steyer, a former San Francisco hedge-fund manager, are becoming a political issue in the state’s hottest legislative race. Steyer has emerged this election cycle as one of the nation’s largest individual funders of Democratic campaigns, and in this state he has spent nearly a half-million dollars to defend state Sen. Nathan Schlicher, D-Gig Harbor. Schlicher is challenged by state Rep. Jan Angel, R-Port Orchard, in a race that could expand the narrow control of the Republican-leaning majority coalition in the Senate. Steyer’s spending by itself represents one of the largest campaign contributions in state history. But what has raised eyebrows is the fact that Steyer has put a whopping $9.3 million into a curious campaign fund he has registered in Washington state, the NextGen Climate Action Committee.

A little over $5 million of the money in the campaign kitty has gone to – of all things – a governor’s race in Virginia. But Steyer’s plans for the remaining $3.5 million have become one of the most-talked about questions in state political circles. Now a spokesman for the NextGen fund clears up at least part of that mystery, and in an interview with Washington State Wire he presents a credible explanation for what appears at first blush an illegal after-the-deadline campaign contribution. But it is possible that Steyer’s committee may have tripped over another state law – and clearly his big-spending Washington ways will remain an issue long after the election is done.

After the Deadline

In the state's top race this year, state Rep. Jan Angel, R-Port Orchard is challenging Senate appointee Nathan Schlicher, D-Gig Harbor.

In the state’s top race this year, state Rep. Jan Angel, R-Port Orchard is challenging Senate appointee Nathan Schlicher, D-Gig Harbor.

Records show that Steyer’s latest $3 million contribution came in on Oct. 18, four days after Washington law imposed a $5,000 limit on last-minute contributions to political action committees. That is what has Washington Republicans crying foul.

Matt Lewis, spokesman for Steyer’s Center for the Next Generation foundation, says Washington law isn’t the issue. The NextGen Climate Action Committee is a national fund that is governed by Federal Election Commission rules, and it is registered in Washington state only because it made the contribution in the Schlicher race, he said. “We’re on pretty solid turf.”

It may be a plausible explanation. But it doesn’t appear to settle all legal questions. Steyer may have run afoul of another of Washington’s hyper-complex campaign finance laws. This one says political action committees active in Washington state races must have at least 10 contributors who are Washington registered voters, and who put up at least $10 apiece. Those contributions have to be received before expenditures are made. But the reports don’t indicate whether Steyer’s committee has complied with that rule. The $9.3 million raised by the committee comes from Steyer’s own deep pockets, and there isn’t a single Washington contributor on the list. Contributions of less than $25 don’t have to be reported, and there is a notation that miscellaneous small donations totalling $110 have been received. So unless there were actually 10 Washington contributors who ponied up 10 bucks, the entire $455,000 he has dumped into the 26th District Senate race would indeed be illegal. While that isn’t the basis for the Republican complaint, let’s just say it is a matter of time before that point is raised.

Republicans Cry Foul

Steyer’s big spending has been a matter of speculation in this state’s political circles ever since the first few million dollars showed up on Public Disclosure Commission reports in August. It is campaign spending on a scale seldom seen in Washington state in candidate races, and the fact that millions of dollars remain in the NextGen account – some $3.8 million at latest report – has triggered speculation that Steyer is planning another big play in the Evergreen State.

The state Republican Party says last week’s after-the-deadline contribution was a flagrant violation of Washington-state campaign laws, and maintains that Schlicher ought to repudiate the actions of his single biggest supporter. Says communications director Keith Schipper, “When your biggest contributor is acting illegally, there is a reasonable expectation that you should be outraged and you should call on him to not only take back the money that he recently contributed, but you should also condemn him in the media and denounce his antics, or else you are guilty by association. And that is the way it is. If the Koch Brothers had done this, if they had come in and randomly thrown in $3 million at the last minute, you know that the Democrats and FUSE and all of their allies would be doing the same thing, demanding that Jan denounce the contributions. I don’t think this is anything that is unreasonable.

“I think that people deserve to understand what is going on, and they deserve a state senator that is not bought and paid for by a fellow who is willing to play fast and loose with the law.”

Washington campaign finance laws are complex, to be sure, and they make the rules regarding the blue lines in hockey rinks seem downright simple. State law places strict limits on campaign spending during the final three weeks of a political campaign. Contributions to political action committees are limited to $5,000, except when the money is to be spent on a ballot-measure campaign. Republicans say the last-minute contribution of $3 million was clearly illegal – and indeed because of the unusual nature of Steyer’s spending it appears an untested question.

Clears Up Mystery

Lewis could not be reached last week when Steyer’s last big contribution of $2.5 million caused jaws to drop. But when contacted by Washington State Wire Wednesday, he said the flap is much ado about nothing.

Lewis said Steyer’s new contribution of $3 million to the NextGen Climate Action Committee is proper because the committee is acting in accordance with national campaign finance laws. As long as the $3 million is not spent in Washington state, he said no Washington law has been broken. “Washington state’s restrictions on contributions to a committee within 21 days of an election don’t apply to the NextGen Climate Action Committee because none of those funds will be used in the state of Washington,” he said.

Lewis said the NextGen committee filed campaign reports in Washington state covering all its fund-raising and spending because it was required to do so under Washington law. But that doesn’t mean Washington law can restrict what it does in other states. He said attorneys for Steyer’s Center for the Next Generation foundation confirmed their interpretation with the state Public Disclosure Commission. Washington State Wire spoke with Lewis after 5 p.m. Wednesday and was not able to confirm the point with the state campaign-finance watchdog agency.

As for the Republican complaint, he said, “It sounds like they are anxious for some attention.”

Other Questions Remain

If NextGen’s interpretation is correct, that might settle the Republican Party’s immediate complaint. But it doesn’t deal with the other issue raised by Washington-state campaign-finance law – the requirement that political action committees active in this state have contributors who are registered voters in this state. Washington lawmakers passed that law in 2011 in reaction to the notorious Moxie Media case, in which millions of dollars of campaign contributions were shuffled from one political committee to the next in such a way that blocked disclosure of major contributors in campaign advertising.

Indeed, that law has provided the basis for an unrelated lawsuit from progressive interests against the No-on-522 campaign. In a Thurston County court hearing Wednesday, liberal attorney Knoll Lowney argued that the campaign opposing Initiative 522 should be required to return campaign contributions from the Grocery Manufacturers Association because the trade association’s political action committee did not comply with the 10-Washington-contributor requirement. That argument was not settled Wednesday, but if Lowney is successful, it could have implications in this case as well.

That’s because, aside from that odd $110, Steyer’s unusual political action committee is entirely financed by one out-of-state contributor, Steyer himself. It has contributed a total $455,000 to independent campaigns that aim to boost Schlicher and defeat Angel. As always, it is a little complicated following the money. The NextGen committee contributed $250,000 to the She’s Changed PAC, which is overseeing a broader-ranging independent campaign for Schlicher and against Angel. Steyer’s committee also has given $275,000 to the Washington Conservation Voters, which in turn has given $150,000 to the She’s Changed PAC. And it has given $55,000 to the Senate Democrats’ Kennedy fund, which has given more than $200,000 to the She’s Changed PAC.

All told, Steyer’s contributions in the Senate race, direct and indirect, represent a large proportion of the money raised in the biggest-spending race in state history, about one-fifth of the money raised so far.

Becomes Issue in Senate Race

Steyer’s spending in the Senate race is becoming an issue of its own. Angel has scheduled a news conference today regarding the matter. She tells Washington State Wire that Steyer’s out-of-state money is fueling a daily barrage of campaign fliers that are stuffing the mailbox of every voter in the district. “What kind of damage is that money doing to a political process for anybody down the road who wants to run for office? I think is setting a very ugly precedent. If this Tom Steyer can defeat me with $400,000, which I hope to God doesn’t happen, wouldn’t it be logical that he might go to somebody running in a swing district next year and say, ‘look what we did to Jan Angel? If you don’t come around to our way of thinking, we will do this to you.’ I think this is very scary and I think it crosses the line.”

Schlicher said Wednesday that Republicans are trying to connect him with something that really has nothing to do with his campaign. “They’re trying to tie me to it even though it has no connection to us. I’d rather be talking about the issues that are of importance to voters in this race. I don’t know why they keep dragging us into situations that don’t concern us.”


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