Donations 'Requested' by Newsom Exploded as His Emergency Powers Ballooned
Big businesses gave millions to Newsom’s initiatives and were rewarded handsomely.
In 2020, California Gov. Gavin Newsom's office reported that individuals or organizations made $226 million in private donations to organizations at Newsom's request. These "behested payments" were a record-setting haul eclipsing all prior donations on record by nearly $100 million. While most donations supported COVID-19 relief efforts, a closer look suggests Newsom's fundraising was supercharged not just by the pandemic, but also by the broad emergency powers the Democratic governor has assumed because of it.
Behested payments are a unique feature of California politics. State law defines a behested payment as a donation to a government program or charity made "at the request, suggestion, or solicitation of, or made in cooperation, consultation, coordination or concert" with a public official. While payments of $5,000 or more are disclosed to the public, they remain an overlooked portion of politicians' finances, even though contributions often come from businesses with interests in the state government.
Last year, Newsom raised a combined $45 million from insurance giants Blue Shield of California and Kaiser Permanente for Project Homekey, his housing initiative. Newsom had selected Blue Shield CEO Paul Markovich to co-chair California's task force on COVID-19 testing. In January, the governor again tapped Blue Shield, with assistance from Kaiser Permanente, to manage vaccine distribution across the state. That decision has raised eyebrows as the governor's office has remained silent about the particulars of the deal, including why his administration selected Blue Shield and how much the company would be paid.
But Blue Shield and Kaiser Permanente aren't alone. Newsom has committed to spending nearly $4 billion on no-bid contracts to fight the pandemic. A number of companies who lined up for these contracts ended up donating, at Newsom's request, to his various relief efforts.
Since March, Verily Life Sciences has received up to $44 million in three different contracts to help operate COVID-19 testing sites. Verily falls under the same parent company as Google, and in April, Google donated $7 million in ad credits to the governor's COVID-19 ad campaign. That same month, Verily registered to lobby the governor's office. Similarly, AT&T received over $40 million in contracts from the Office of Emergency Services. They donated $310,000 to the governor's office and spent millions more lobbying the state last year. Other donor-contractors include McKinsey & Company and advertising firm Runyon Saltzman.
These types of donations have become a hot-button issue in recent years. In 2019, the Los Angeles City Council debated a measure that would have banned behested payments from city contractors and lobbyists. The Los Angeles Times editorial board endorsed the measure, writing that, "It's no secret that elected officials solicit contributions from companies and individuals with business in the city—or that companies give heavily to local officials," but it's also "safe to assume fewer dollars would flow if donors did not believe that the money helps them get their projects approved or favorable policies adopted."
The pandemic has underscored exactly how true that is. The growth in behested payments has tracked closely with the centralization of political power during the pandemic. While Newsom raised $226 million in 2020, he only raised $12 million the year before. That spike is unique to Newsom. Behested payments to state legislators and other officials were down in 2020. Even if you exclude payments that explicitly mention COVID-19 and related programs, such as Project Homekey, Newsom still raised $8 million more than he did in 2019, a nearly 70 percent increase.
While it's impossible to prove what a behested payment can buy for a company that makes one, it's possible that the benefits exceed government contracts. For instance, critics of California's lockdown orders argue that business restrictions, particularly restrictions on outdoor dining, are hypocritical while the state still allows TV and film production to continue. According to The Intercept's Lee Fang, the entertainment industry's exemption was the result of an aggressive lobbying campaign. Meanwhile, Newsom was courting many of the same companies for his COVID-19 ad blitz. A July press release from Newsom's office announced that "ABC, CBS, NBC, FOX, Univision, Telemundo, Ethnic Media Services, and iHeart Media" each contributed airtime for broadcast and radio PSAs.
By August, Newsom had even coaxed the first-ever behested payment out of Netflix—whose lobbyist hosted Newsom for an apparently maskless birthday dinner at the famed French Laundry restaurant. Netflix, according to Fang, nearly tripled their lobbying spending in California during the pandemic.
Would the entertainment industry have received an exemption to Newsom's COVID-19 rules without ponying up? Maybe, but it sure raises questions about whether they were able to buy their way out of the lockdown.
What's more, the ad campaign provided not just awareness of safety measures, but publicity for Newsom. The initial ad blitz featured a cartoon narrated by Newsom as well as a series featuring his wife, Jennifer Siebel Newsom. The governor's political machine is likely to draw upon that publicity as California's pandemic response becomes crucial to Newsom's upcoming reelection efforts. His handling of the pandemic is already a centerpiece of his response to recall efforts, as he increasingly ditches his COVID-19 webcasts in favor of higher-profile outdoor events.
When asked about their fundraising activities, Newsom's office did not respond to Reason's request for comment. But when city officials in Los Angeles were pressed by ethics officials to restrict behested payments from lobbyists and other entities involved in city business, they cited charity as their defense. One council member even asked, "I'm not quite sure—what's the problem we're trying to solve?"
They were well aware of the problem. In 2018, FBI agents raided the home of Jose Huizar (then a Los Angeles City Council member who has since resigned) as part of an ongoing probe into the city's dealings with real estate developers. According to the Los Angeles Times, Huizar encouraged developers to donate to the high school that employed his wife. Federal prosecutors recently unveiled a 41-count indictment against Huizar which details his alleged corruption, including his coordination of contributions to his wife's school. Even though the cause may have been worthy, the process was inherently political.
Now, the type of sway a powerful city council member holds over a developer has extended into nearly every facet of California's economy, requiring people and firms with money to waste it on courting politicians while less flush parties vie for contracts at a disadvantage.
Yet behested payments may be the only place in the whole state where money in politics seems exempt from scrutiny. Current ethics rules don't even require that behested payments below $5,000 be disclosed. For comparison, California caps campaign contributions at $4,700 in any given year.
Don't they know the smart people just call it charity to wave away scrutiny?