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Money floods race for controller

Times Staff Writer

Rich gambling interests and a Silicon Valley software giant are using their wealth to transform an otherwise sleepy statewide campaign into a major partisan battleground.

With separate million-dollar infusions, a group of casino-owning Southern California Indian tribes and the software company Intuit are changing the complexion of the race for California state controller. In the process, they are underscoring the power of the post, which has vast sway over state tax policy.

Using separate campaign accounts that are unfettered by contribution caps, the tribes and Intuit have aligned themselves with Republican Tony Strickland, a former assemblyman from Thousand Oaks who is running against Democrat John Chiang, a lawyer and member of the State Board of Equalization.

“One group in one day can outspend what the candidates themselves have raised in an entire campaign,” Chiang campaign manger Parke Skelton said Wednesday.

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In recent days, Intuit has placed $1 million into a committee called the Alliance for California’s Tomorrow. That group has spent $66,000 on Strickland’s behalf so far.

Tribes, operating through a committee called Team 2006, have spent $958,000 for Strickland, paying for television ads touting the Republicans as fiscally responsible and opposed to taxes.

The same tribes have spent $122,000 boosting Strickland’s wife, Assemblywoman Audra Strickland (R-Thousand Oaks), although she is in a safe GOP district. Both husband and wife have been reliable votes for tribal casino interests.

By law, individual donors cannot give more than $5,600 directly to statewide candidates such as Strickland and Chiang. Indeed, two of the four tribes funding the independent campaign for Strickland have given him a total of $7,600 this year. Intuit has given him $5,600.

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“We’re delighted about anyone who is supporting Tony Strickland’s message of lower taxes and more responsive government,” Strickland campaign consultant Wayne C. Johnson said.

The independent effort for Strickland is erasing a fund-raising advantage Chiang had built. Chiang has raised at least $1.8 million this year, compared with Strickland’s $1.3 million.

State employee unions are leading what is a modest campaign -- by California standards -- on Chiang’s behalf, spending $410,000 to date. A separate group of tribes, the California Tribal Business Alliance, intends to join the unions on Chiang’s behalf.

“What this group is going to do is make sure it is a fair fight,” said David Quintana, political director of the California Tribal Business Alliance, which includes half a dozen tribes that own casinos in Southern and Northern California. “John met with the leaders and made a strong personal relationship.”

Neither Intuit nor the tribes siding with Strickland would discuss their motives. Instead, they issued statements.

Intuit supports “candidates of both parties who are champions of good public policy.” The tribes’ statement said they are “just helping to move California forward by supporting strong leaders -- Democrats and Republicans -- who will move the state in the right direction.”

The tribes and Intuit each have one reason to support the GOP nominee: taxes.

The state controller sits on the Franchise Tax Board, a three-member panel that oversees state income tax policy. But the controller’s influence over tax policy goes beyond that post.

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The controller also serves on the five-member Board of Equalization, which oversees sales and property tax issues. Additionally, the controller votes for that board’s chairman, who also sits on the Franchise Tax Board. Whoever wins the controller’s race Nov. 7 will determine whether Democrats or Republicans control the boards.

Intuit has inserted itself into the controller’s campaign as part of its fight to block the Franchise Tax Board from simplifying the state income tax filing process. From his post on the Board of Equalization, Chiang embraced “ReadyReturn,” a program designed to remove some of the agony of tax season by having the government complete low-income Californians’ tax returns.

The program alarms Intuit. If it were to be fully implemented, ReadyReturn could threaten sales of one of the company’s most successful software programs: TurboTax. Facing a fierce lobbying effort by Intuit, the Legislature this year blocked the state from spending money on ReadyReturn.

“They spent a fortune to kill a pilot program California liked,” said Stanford University law professor Joe Bankman, who helped develop ReadyReturn. “Now they are spending a fortune to make sure they get someone sympathetic elected.”

Tribes are generally not subject to state taxes. But in the past, the Board of Equalization has decided tax issues related to tribes. In 2001, for example, the board ruled that tribes are not required to collect state and local sales taxes on restaurant sales.

By siding with Strickland and against Democrat Chiang, political experts believe, the tribes are taking a backhanded swipe at Assembly Democrats. Gov. Arnold Schwarzenegger, a Republican, negotiated compacts for major expansions of the tribes’ gambling operations. Assembly Democrats blocked the deals in August; Chiang had no role in the action.

“If the intent is to send a message to me, it is a damned weird way of doing it,” Assembly Speaker Fabian Nunez (D-Los Angeles) said Wednesday. “This is a political drive-by shooting. The guy did nothing to hurt them.”

dan.morain@latimes.com

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Times staff writer Evan Halper contributed to this report.


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