Perata Squandered Prop 29 Funds



In January 2009, when ex-state Senator Don Perata launched the cancer-research campaign that would eventually become Proposition 29, it was clear that Big Tobacco would do whatever it could to defeat a new tax on cigarettes. And sure enough, a powerful coalition led by Philip Morris USA and R.J. Reynolds Tobacco Company pumped nearly $41 million into the No on 29 campaign. The resulting advertising barrage changed the outcome of the race. Just a month before the June 5 election, Prop 29 enjoyed an overwhelming lead, but on Election Day the measure lost by a narrow margin. Late last week, the heavily outgunned tobacco-tax supporters finally conceded defeat.

Although disturbing, Big Tobacco’s big spending spree was not surprising. Veteran campaign-watchers predicted it would happen, and noted that the Prop 29 campaign would need to use its limited funds wisely. “Every dollar will be precious in this campaign,” Doug Heller, executive director of Consumer Watchdog, told the Express two years ago.

Yet records show that Perata squandered significant amounts of cash from the campaign account he established in 2009 on expenditures that had no direct link to the passage of the cancer-research initiative. Moreover, Perata’s wasteful spending could have played a role in the razor-thin defeat of the measure — in that the money was not available to help the tobacco-tax initiative pass. As of Monday, Prop 29 was trailing by less than 30,000 votes out of more than 5 million votes cast. In other words, if just 15,000 voters had cast “yes” votes rather than “no” votes, the measure would have won.

According to campaign statements filed with the California Secretary of State’s Office, Perata’s Hope 2012 committee spent $1,111,296.52 after he established it in January 2009, but only $488,500 — in the form of loans — went directly to the official Yes on Prop 29 campaign. Perata spent most of the rest of the money on campaign consultants, with the lion’s share of expenditures coming in 2010, nearly two years before Big Tobacco launched its media blitz.

As the Express reported in 2010, Perata appeared at the time to be spending substantial sums from the cancer-campaign account to help his Oakland mayoral bid. Included in those expenditures was a glossy mailer that highlighted the tobacco-tax initiative but was only sent to Oakland voters. Perata also employed many of the same consultants on both his cancer-research and mayoral campaigns at a time when the tobacco-tax initiative did not appear to very active.

Records show that by the end of 2010, Perata had already spent $1,040,054.04 from the cancer-campaign account, leaving him with limited funds for the actual fight against Big Tobacco in 2012 — a fight in which every dollar would count.

Perata also used his cancer-research account to pay for expensive meals and stays at posh hotels, and to give away money. In 2010, he donated $95,000 from the account to two nonprofits — Avalon Village in Alameda and the Oakland Parents Literacy Project — that were run at the time by his longtime close confidant and former campaign treasurer Jill Cabeceiras. He also paid his close friend, Oakland City Councilman Ignacio De La Fuente, $37,500 for consulting work.

Although we’ll never know for sure whether Prop 29 lost because of Perata’s decision to plow through his cancer-campaign funds well before the actual battle with Big Tobacco had begun, there is no doubt that the official Yes on 29 effort could have used some of the ex-senator’s money this year. Records show that the Yes on 29 campaign was outspent by a margin of more than 5-1 — $41 million to $8 million.

Moreover, Big Tobacco’s expensive TV and radio blitz worked. In early May, Prop 29 had the support of 67 percent of state voters, according to the Public Policy Institute of California, but by June 5, only 49.7 percent of the electorate voted for it.

Perata knew the onslaught of ads was coming — everyone did. And yet he chose not to save his campaign money to combat it. As such, his use of the cancer-campaign account raises questions as to whether he was ever serious about getting Prop 29 passed. Or did he set up the account to assist his run for mayor, give money to his longtime close friends, and help finance his lifestyle?