Panel Goes Easy on Shelley

The showdown in which lawmakers were expected to confront Secretary of State Kevin Shelley fizzled Tuesday, with fellow Democrats declining to question him about his handling of election funds because he now plans to resign.

Instead, state Auditor Elaine M. Howle told lawmakers that Shelley’s office was on the mend, two months after her staff alleged poor management, abuse of state contracting rules, partisan activity by workers and other problems with the expenditure of $46 million in federal elections funds.

“We think they are headed in the right direction. We think they are taking some steps to make improvements,” Howle said. “But it’s very early.”

The state auditor appeared before a legislative committee in which Republicans and Democrats sparred repeatedly over the direction and pace of questioning.

Shelley, one of California’s leading Democrats, announced his resignation Feb. 3 in the face of several inquiries into his political and professional conduct, including a federal investigation into the alleged laundering of campaign contributions.

On Feb. 11, Gov. Arnold Schwarzenegger nominated former state Sen. Bruce McPherson, a Republican from Santa Cruz, to replace Shelley when he steps down March 1. McPherson has yet to be confirmed by the Legislature.

Before he resigned, Shelley had agreed to testify before the Joint Legislative Audit Committee as it looked more deeply into the findings of Howle’s audit. The committee is a bipartisan panel of 14 lawmakers and has subpoena powers.

But Democrats, who dominate the Legislature, have said they no longer see a reason to compel Shelley’s testimony.

“If somebody wanted to get Kevin, they got Kevin,” Senate President Pro Tem Don Perata (D-Oakland) said last week.

Republicans on the committee expressed frustration at the limited scope of the hearings.

They pointed out that Howle’s auditors had scrutinized only 12% of the transactions involving money given to Shelley’s office under the federal Help America Vote Act, and they suggested that the Legislature subpoena remaining documents to guard against loss or tampering.

“Eighty-eight percent of this story is yet untold,” said Sen. Tom McClintock (R-Thousand Oaks).

Democrats showed more interest in making sure that future federal funds for California would not be cut off because of any mishandling.

Federal elections officials launched their own investigation last month of the handling of $181 million received thus far by California.

An additional $170 million is expected in the coming year to help counties replace voting machines, create a statewide voter database and educate election workers and voters.

“While I’m sure we’ll examine what went wrong in the process,” said Assemblywoman Nicole Parra (D-Hanford), the audit committee chairwoman, “it is even more vital that the implementation problems are being completely corrected.”

She also said her committee “must not jeopardize” ongoing criminal and civil investigations into Shelley’s activities.

Atty. Gen. Bill Lockyer said in an interview that he warned the committee against compelling testimony or granting immunity to witnesses because it could jeopardize potential prosecutions.

Lockyer is investigating whether Shelley used his office and staff for political purposes. The attorney general is also investigating a nonprofit group created to build a community center in San Francisco with a grant arranged by Shelley when Shelley served in the Assembly in 2000.

The San Francisco Chronicle first reported last August that some of that state money appeared to come back to Shelley in the form of campaign contributions.

Lockyer said he expected the state investigations to be completed within a couple of months.