A Tradition, but It Smells

Forget the embossed cuff links with the seal of office, the burly security guys with shades and the stretch limo. The latest status symbol of elected office may be the personal foundation, known in less polite company as a slush fund.

Chuck Quackenbush, who quit as insurance commissioner in July, had his--funded by insurers in lieu of the fines they should have paid for stiffing victims of the Northridge earthquake. Quackenbush’s foundations, basically his back-pocket expense account, paid for public-service ads featuring him and helped fund political polling and a football camp that his children attended.

Now comes news that Gov. Gray Davis has been the beneficiary of tax-exempt corporations set up to pay, at arm’s length, for his overseas travel, his private residence in Sacramento and a lavish party at Paramount Studios during last summer’s Democratic National Convention. Companies and individuals with business before the state have so far funneled more than $2 million into these funds. Unlike the apparent strong-arming of donations-for-fines that brought down Quackenbush, gifts to the nonprofits that Davis’ chief fund-raiser created are perfectly legal. Ethically, however, this whole business stinks.

The tax-exempt status acquired by the Davis nonprofits, with the governor’s blessing, is generally reserved for educational or charitable groups. But these funds are hardly charities in the traditional sense.

Gifts to the nonprofits can be made without public disclosure and are eligible for tax write-offs as charity. The donors to Davis’ nonprofits are a who’s who of special pleaders, including insurance firms, labor unions, electric companies, gambling interests, high-tech firms and, until the donation was recently returned, a tobacco company. Donors knew exactly what they were doing. A Chevron Oil official noted that $50,000 his firm gave “is . . . more of a political contribution than a contribution to the United Way.” Donors like Chevron expect only one thing in return: access to the governor and other officials.

Past governors, including Pete Wilson and George Deukmejian, created nonprofits, but none to the extent Davis has. Over time, the practice reveals our governors to have a disturbing sense of entitlement. The party fund in particular was galling; though California products were showcased, so was the governor. Clearly this was politics, not charity.

Perhaps in Sacramento these foundations still look like a win-win: Davis benefits from secret and unrestricted donations while contributors get access, and probably a hefty tax deduction. Everyone wins except, of course, the public, which now has another powerful argument for a campaign finance law with teeth.