Gov. Gavin Newsom loves to talk trash about other states.
He recently told an interviewer that taxes on low-income residents are higher in Texas and Florida, which have no income tax, than in California. That’s absurd. The California government grabbed 2% of taxable income between $10,756 and $25,499 last year. The bite jumped to 4% on income up to $40,245 and 6% for income up to $55,866, rising to 8% for income up to $70,606.
According to Bankrate’s Housing Affordability Study in April, the minimum salary needed to buy a typical home in California is $213,447. The state tax rate on that income is 9.3%.
Newsom’s figures on comparative state tax burdens may have come from the Institute on Taxation and Economic Policy’s “Who Pays?” report, which adds a calculation of how much tenants effectively pay in property taxes through higher rents. Because property taxes in California have been limited by Proposition 13 since 1978, tenants have a lower property tax burden in California than in Texas or Florida, and certainly lower than in Illinois, which has surpassed New Jersey to claim the title of Nation’s Highest Property Taxes.
Illinois is also famous for having one of the world’s premiere collections of corrupt politicians.
In October, Michael Madigan, the powerful Speaker of the House for more than 30 years and chair of the state Democratic party for more than 20, will begin serving a seven and a half year prison sentence. He was found guilty of “using his official position to corruptly solicit and receive personal financial rewards for himself and his associates,” according to the U.S. Department of Justice.
Madigan also had a private law firm that specialized in property tax appeals. Business was good, and Madigan amassed a net worth of $40 million. Prosecutors said he schemed with a member of the Chicago City Council to steer business to his law firm in exchange for Madigan’s help to get the council member a paid appointment from the governor.
Evidence presented during the four-month trial showed that Madigan conspired with others to cause the utility company Commonwealth Edison to make monetary payments to Madigan’s associates for little or no work. “The true nature of the payments was to influence and reward Madigan in connection with specific legislation ComEd sought in the Illinois General Assembly,” the U.S. Department of Justice said.
It’s a federal crime.
But under state law in California, using a government position “to corruptly solicit and receive personal financial rewards” is basically legal. It’s called a “Behested Payment.” As long as the elected official fills out a Behested Payment Report, Form 803, and files it with the California Fair Political Practices Commission within 30 days of receiving $5,000 or more from a single source, nobody goes to prison.
It’s all public, right out in the open. Just substitute Pacific Gas & Electric for Commonwealth Edison, and the story sounds very familiar.
Since 2014, state elected officials have “asked” PG&E to contribute more than $1.8 million for various purposes labeled as “charitable.” Obviously PG&E is capable of donating to charities without the help of lawmakers, so these “behested payments” are not typical charitable donations. They are payments requested by public officials, who happen to have the power to affect the legal, financial and regulatory conditions that can make or break the company.
In 2021, then-Assemblywoman Laura Friedman asked PG&E for two payments of $5,000 each for the “California Armenian Legislative Caucus,” a 501(c)(3) nonprofit. The “charitable” purpose was described on Form 803 as “Outreach and education within the Armenian community.” Friedman was later elected to Congress in a district with a significant Armenian-American population.
Senator Maria Elena Durazo asked PG&E for $40,000 in 2021 and another $25,000 in 2022 for the “California Latino Legislative Caucus Foundation.” The purpose was listed as “Contribution to CA Non-Profit Public Charitable Corporation.” The foundation is a 501(c)(3) with a stated mission of promoting, supporting and educating the public on “Latino culture, heritage and issues of importance to Latinos in California.”
Then-Assemblyman Rob Bonta, now the Attorney General of California, asked PG&E for $3,500 and $6,500 in 2015 and 2016 to support Literacy Lab, a nonprofit founded by his wife. According to tax returns, in 2018 Literacy Lab paid Mia Bonta a salary of $142,866. She was later elected to the Assembly. In 2022, she asked PG&E to donate $20,000 to Literacy Lab. The utility sent the payment.
Gov. Gavin Newsom has also made frequent use of unlimited behested payments for the benefit of his wife’s organization. Newsom has asked for and collected a total of more than $3.7 million for the “California Partners Project,” founded by Jennifer Siebel-Newsom. According to its 2023 federal tax return, the organization is a 501(c)(4), meaning contributions such as the $500,000 donated by the Federated Indians of Graton Rancheria on April 3, at the governor’s request, are not tax-deductible.
In 2023, the California Partners Project spent $623,210 on its programs, which included producing “a research-backed playbook to run an effective search process to add new talent and perspectives to corporate boards,” and hosting a gender equity summit in Sacramento.
If you’ve been wondering where the money from FireAid ended up, $500,000 of it was donated, at Gov. Newsom’s request, to the Edward Charles Foundation, doing business as LA Rises.
Since 2019, Newsom has “behested” over $5 million from various special interests for the California Protocol Foundation, which does such things as pay for his lavish overseas trips, like the one to China in 2023 and to the Vatican Climate Summit in 2024.
And while it may not be legal for California elected officials to steer business to their own law firms, Madigan-style, it’s perfectly legal for them to “behest” pro bono legal services from major law firms, and they do.
In Illinois, this is called “extortion.” In California, it’s called “charity.”
In fact, it’s a lot of politicians using the power of their office for shakedowns to aggrandize or enrich themselves. If it’s legal, it shouldn’t be.
Write Susan@SusanShelley.com and follow her on X @Susan_Shelley
