Anti-tax group’s support can come with a price

SACRAMENTO — Perhaps the most formidable opponent Gov. Jerry Brown faces in his crusade for tax hikes has been the Howard Jarvis Taxpayers Assn., the group that fought property taxes the first time he was governor and has since become famous as the voice of middle-class Californians beleaguered by costly big government.

But in addition to the group’s battles against taxes of all kinds, the name of 1978’s Proposition 13 author serves a variety of deep-pocketed interests in need of a populist sheen. Far from its humble activist roots, the organization renowned for its quest to protect pocketbooks and foil government waste has turned tax fighting into big business for a handful of political strategists who make their living on its name.

The nonprofit, which claims 200,000 donors and eight full-time employees in a small Sacramento office, has an annual budget of more than $5.7 million, according to 2010 tax records, the most recent available. Critics of the group say its imprimatur is often for sale to the highest bidder.

Chris Bertelli, a Republican education advocate, tangled with the association over a ballot-measure endorsement. “They sent us a letter saying they had not taken a position, but they could if we gave them enough money,” he said.

The Jarvis group said it endorses only issues in line with its fiscal conservatism. But it is also the face of numerous campaigns bankrolled by less popular interests. In 2010 its longtime president, Jon Coupal, was the pitch man for a ballot initiative financed by $10 million from oil companies that would have rolled back key state environmental laws if it had passed.

“The polluters didn’t want to be front and center in the campaign to repeal the state’s clean air standards,” said Steve Maviglio, a Democratic consultant who worked against the measure. “So they hid behind something that tested better in their polling: a ‘tax-fighting’ group.”

Coupal said in an interview that such partnerships are entirely appropriate. “If there’s an issue that fits within our sphere of concern, and it’s also in the sphere of a major donor or interest, that’s fine,” he said. “Politics is all about alliances.”

In 2004, the association backed a ballot measure to remove limits on the number of slot machines at California Indian casinos. The group’s campaign fund was labeled a “project of the Howard Jarvis Taxpayers Assn.,” but it was financed by the Agua Caliente Band of Cahuilla Indians.

The tribe supplied almost all of the fund’s cash — more than $1.8 million, according to campaign records filed with the state. The fund then paid the Jarvis association’s network of consultants and media firms for television and mail ads that featured Coupal’s endorsement.

In 2000, a consultant for the Jarvis group sent a letter to leaders on both sides of the ballot measure Bertelli was advocating, which promoted private-school vouchers. The letter advised that the anti-tax group could go either way on the measure and gave the outlines of a mail campaign; $850,000 would be required of whichever side got the nod.

That turned out to be teachers’ unions, which abhorred the voucher idea, put up the money and won the fight by defeating the measure. The consultant, Bill Lord-Butcher, earned $220,000 in fees that year from mail carrying the Jarvis name, according to campaign finance records

“They supported our position and, yes, there was a cost involved,” said Gale Kaufman, who ran the No campaign for the teachers’ unions.

Jarvis officials said that both groups offered to pay the money — a claim Bertelli denied — but that the endorsement was made strictly on the merits of the issue.

Coupal says the Jarvis group is not directly affiliated with a specific slate of endorsements, though he lends his name and commentary to every issue of the Save Prop. 13 Newsletter, produced by consultant James Lacy, a former director of the association. More than a million copies of the publication, which endorses candidates and causes, are mailed out each election season.

The publication features Howard Jarvis’ picture, fist raised, on its cover. Though it has the appearance of a grass-roots newsletter, candidates and issue campaigns pay a premium to be included.

Lacy’s company this month sued Republican U.S. Senate candidate Elizabeth Emken, accusing her of failing to pay more than half the $110,000 she was charged for one of the newsletter endorsements.

The complaint, filed in Orange County Superior Court, says Lacy’s firm and its partners “gave up opportunities to enter into agreements with other candidates, including other U.S. Senate candidates, whose campaign advertisements could have and would have appeared on Plaintiff’s slate mailer and who would have paid Plaintiff the sums due.”

Lacy did not return calls, and Emken’s campaign declined to comment.

In the last gubernatorial election, in 2010, Coupal appeared in television ads for candidate and Silicon Valley executive Meg Whitman. Her opponent in the Republican primary had once supported a state ballot measure that made it easier for voters to approve local school bonds. Whitman had made a $25,000 contribution to the Jarvis association. Coupal said the money was unrelated to its endorsement.

In the runup to next week’s election, the Jarvis group has teamed with another organization, the Small Business Action Committee, one of whose goals is to raise millions from big donors to defeat Proposition 30, Brown’s tax measure. Most of the money has come from Charles Munger Jr., son of the Berkshire Hathaway executive, who has given the group nearly $35 million, and an Arizona nonprofit that donated $11 million but whose contributors are anonymous.

In the past, the committee has received six-figure donations from tobacco giant Altria and Anheuser-Busch, the maker of Budweiser.

“Calling this a small business group is like calling Godzilla a small reptile,” said Dan Newman, a spokesman for the Yes on 30 campaign.

Beth Miller, a spokeswoman for the committee, said: “The reality is that small businesses live on the edge and just don’t have the resources to fund these campaigns. So we’ve made the decision to reach out to those who are willing to support our agenda for a business-friendly California.”

The tax-fighting operations of Jarvis and the Small Business Action Committee go on year-round. Mail campaigns urge voters to keep pressure on lawmakers to hold the line on spending. Democrats say the influence of the groups over Republicans in the Legislature is one of the main sources of Capitol gridlock.

Coupal finds such criticism good for business.

“When they call me one of the four horsemen of the apocalypse, I just say, ‘Thank you,’ ” he said. “That’s the stuff that motivates our people.”

anthony.york@latimes.com