At the start of 2017, Carl DeMaio, the former San Diego councilman turned talk radio host, turned his attention from the city and county in which he had for years led conservative movements, and decided to assert himself in statewide matters.
He renamed his group Reform California, from Reform San Diego, and started building up its modest bank account.
The group finished 2016 with about $26,000 in the bank. Over the next year, the group and DeMaio would emerge as a statewide leader in California Republicans’ biggest push at the time – an effort to overturn the Legislature’s recent increase to the gas tax.
Reform California is a general purpose political committee, meaning it doesn’t exist simply to oppose or support a single candidate or ballot measure. The group raises and spends money on multiple issues at a time. DeMaio has a knack for guiding it to the issues at the center of the state’s conservative movement.
As the gas tax repeal heated up, and made the ballot as 2018’s Proposition 6, the idea wasn’t just that Republicans could defeat the tax increase, but that doing so would galvanize voters and be the rising tide to lift all the other Republican boats on the ballot.
It didn’t work out like that. Voters shot down the referendum, and Republicans across the state lost once-safe seats. But when the year ended, DeMaio’s group had put itself on strong financial footing. It ended the year with $405,000 in the bank.
Other conservative leaders across the state took notice that despite its leading role in the repeal effort, Reform California left so much money unspent.
“The thing about the gas tax is, it wasn’t just supposed to win, it was supposed to carry people with it,” said Anne Dunsmore, a long-time Republican political operative and a campaign manager for Rescue California, one of the groups leading the effort to recall Gov. Gavin Newsom. “It didn’t win, and we lost a lot of seats. I think that was the beginning of the end of his credibility.”
DeMaio and Reform California have again emerged as high-profile players in a major conservative cause – in this case, ousting Newsom. Up and down the state, conservative operatives are complaining that DeMaio is sucking up resources intended to remove Newsom to promote himself instead.
“You see this pattern over a six-year period where he makes all these promises, and it ends up in the campaign not using all the money, he has a profit and moves on to the next campaign,” said Jim Lacy, a lawyer whose firm focuses on election and nonprofit law focused on political advocacy. He was a California delegate to the Republican National Conventions of both 1976 and 2016. “That was ‘Yes on 6,’ which lost, and the funds he didn’t spend could have been precious help to pass the initiative.”
DeMaio and Reform California’s unofficial involvement in the recall comes fresh off a cycle in which his conservative critics thought they saw that 2018 dynamic play out again.
Last cycle, Democrats were coming together on what would become Proposition 15, the culmination of decades of efforts by teachers unions and others who wanted to reform the 1978 law Proposition 13 that had capped property taxes in California.
DeMaio again positioned Reform California for a central role in the formal opposition to that effort.
This time, DeMaio and the state’s conservatives were successful in defending one of their top priorities in California politics.
But when the year ended, DeMaio’s group’s bank account had only increased. It started 2021 with $650,000 in the bank – just as the recall effort was shaping up.
“Now, here he is reporting $600,000 in receipts, raised on the backs of kind-hearted conservative donors who I think have been misled,” Lacy said. “I’m happy to say misled, because I don’t mean in a legal sense – I mean it in a moral sense. I’m sure most money goes where it’s promised, but more than a margin of error has been held back, and has been diverted to pet projects and issues important to DeMaio.”
As Lacy suggests, Reform California is operating legally. Its official documents make clear that its donors are contributing to any of the causes it adopts, and its website keeps a running tally of the active campaigns in which it is engaged – whether recalling Newsom, recalling a school board member in the La Mesa-Spring Valley school district or pursuing an “election integrity initiative.”
“From a legal compliance standpoint, since its status is to influence multiple candidates and measures, it comes with the territory that they could have money left over that they could use on other races and issues,” said Austin Graham, legal counsel for the Campaign Legal Center. “But I know if I were a donor to this committee and I knew that they hadn’t spent all the money I gave them for the reason I gave it, I’d feel at least dissatisfied, and wouldn’t want to give in the future.”
A spokesman for Reform California said the criticism misunderstands what the group is – its donors recognize that they’re supporting its general issue advocacy. Carrying a healthy reserve allows it to fund any project that comes up, and it can backfill the difference with new funds raised later.
“After reviewing the Voice of San Diego’s own IRS 990 disclosures, it should be noted that Reform California actually follows a prudent reserve policy that is very similar to the Voice of San Diego, and we track and allocate all funds we raise to programs based on direct donor interest and priorities,” said Dave McCulloch, spokesman for Reform California.
This year, for instance, Reform California has reported spending about $100,000 on the recall initiative.
But the chief proponents of the recall initiative, Orrin Heatlie and Mike Netter of Recall Gavin Newsom, said they’ve received very little help from Reform California’s $100,000 in spending.
“We really don’t know what their motivation is, and we don’t know what they’re spending donations on, or the degree of assistance they may feel they’ve given the recall itself,” said Heatlie. “But in reality if that money had come to the RecallGavin2020.com team we could have utilized it to a specific purpose to greatly benefit the recall. My thought is, the money is going to outside organizations or efforts that are not directly involved in the actual recall, that it diverts money away from the campaign into their own personal interest.”
Heatlie and Netter set up the recall initiative in a slightly unusual way. Most initiatives rely on paid workers who collect signatures on oversized petitions before submitting them.
The recall campaign, however, used a normal, letter-sized format for its petition, allowing it to promote the campaign online, with a link to a PDF that voters could print at home, sign and mail to a Sacramento P.O. box controlled by Heatlie and Netter.
Reform California, though, circulated a different PDF – one with its own address at the bottom of the petition, which meant voters would send signatures to the group directly. Since only authorized individuals can submit the petitions, Reform California would then send the petitions it received to Heatlie and Netter.
Netter said they received about 700 signatures from Reform California – 700 signatures they ended up not submitting at all, because they believed the address change on the Reform California petitions would lead the secretary of state to invalidate the signatures.
“Our mailroom still has them,” Heatlie said. “He provided no signatures, officially.”
Who receives the signatures is not a trivial detail, because voters who support the recall often include a donation with their signature. Heatlie and Netter said Rescue California estimated that it received on average $37 with each signature. If Reform California had the same experience, that meant it could have brought in about $26,000 from those 700 signatures that Heatlie and Netter never submitted.
Sarah Garcia, who organized volunteer efforts for the recall in Riverside, and drove around the county to pick up petitions, said she grew frustrated with DeMaio when she saw people congratulating him on Facebook, when Newsom acknowledged that the recall was headed for the ballot. It looked like stolen valor, she said.
“He hadn’t donated anything, or as far as I knew even helped,” Garcia said. “So I went back and said to him: ‘You did nothing, stop taking credit for it.’”
Reform California said that it sent out only one email blast with the altered address, and changed it back to the certified petition once asked. From there, neither it nor anyone else could say how many of the submitted signatures came from Reform California’s overtures, since the petitions were sent directly to the recall’s P.O. box.
Dunsmore said DeMaio has “been bitten by the small-donor fundraising bug,” using causes to grow his database of supporters, so he can raise more money from them on the next cause.
“He’s a taker,” Dunsmore said. “If he wanted to increase his name ID and position himself as a future party participant – fine – no one needs a bully, someone telling them what to do. We don’t need kingmakers. We need team players.”
One of DeMaio’s old colleagues in San Diego – the former strategist for his failed 2012 mayoral campaign – said there’s nothing surprising or new about how Reform California has handled the recall.
“It’s a promote-Carl organization,” said Jason Roe, who this year left California to run the Michigan Republican Party. “It doesn’t go to donors priorities. It goes to Carl’s priorities, or things that promote Carl. It’s hard to say what donors to Reform California outside of San Diego think. The educated donor class in San Diego sees this for what it is: to promote Carl’s priorities, not what’s good for Californians, or what’s good for conservatives.”
After Roe and DeMaio split, Roe became a chief strategist for DeMaio’s former Republican colleague on the City Council, Kevin Faulconer, during his successful campaign to become mayor.
Faulconer is now running in the recall election to unseat Newsom – and Reform California is actively campaigning against him. DeMaio launched the website FaulconerFailures.org to highlight his issues with his former colleague, calling him “weak, liberal and wrong for California.”
That active campaigning against someone many Republicans think is their best chance to win the governor’s mansion is part of the dissatisfaction with Reform California’s efforts.
“Those donors, they gave to ‘Yes on 6,’ did they authorize Reform California to use a portion of their money to do attack ads on Kevin Faulconer, to recall a Carlsbad councilwoman?” Lacy asked.
McCulloch said the political professionals criticizing the group are doing so because they sought work with Reform California but weren’t hired.
“We don’t answer to paid political consultants who have repeatedly demanded our business for years – even as recently as the past few weeks – and now they’re back making ridiculous claims because they didn’t get to line their pockets with their high commissions while delivering no real results,” McCulloch said.
DeMaio said the group exists to oppose the left.
“The left never sleeps in California and neither does Reform California,” he said in a statement provided by McCulloch. “Whether it is through our campaigns, litigation, or issue advocacy projects, our supporters expect us to be ready to go to war at a moment’s notice – and they appreciate that we’ve use every penny of their support to create a permanent, aggressive, and transparent campaign to take back California.”
The crosstown San Diego rivalry, though, is part of how DeMaio and his group rose to prominence statewide. Or, more specifically, the outsize success of San Diego Republicans elevated both DeMaio and Faulconer.
Faulconer’s prominence in the recall campaign stems from his time as the mayor of the largest city represented by a Republican in California. Prior to that, Republicans had not just held on to the mayor’s office in San Diego, they had won a series of political victories there as well. They had won, at least for a time, ballot measures to end pensions for most city employees, to ban mandatory project labor agreements for city projects, to require city officials to let private companies bid to run city services and to halt an attempt to raise the city’s sales tax. DeMaio was, by anyone’s estimation, a key figure in all of those efforts.
“There’s been a conservative vacuum in California for a long time,” Roe said. “And San Diego has been held up to the donor class for several years as a model that works for winning in blue areas. Victory has a thousand fathers, and as much as I despise Carl, I’ll agree that was about him being an asshole and bullying people into forming a coalition between the grassroots and the establishment. The structural model of how we did campaigns — the candidate does their thing, the Lincoln Club, the Chamber and affiliated groups do their thing, party does its thing — for the time we were doing well, we were more effective and efficient than the left. We were snipers, and they had shotguns. That model, when Faulconer started to get buzzed about, it was the San Diego model. There was a reputation that San Diego Republicans were doing something different, and Carl could credibly take credit.”
Credibly taking credit, he said, turned into Reform California.
“Carl figured out a way to monetize it,” Roe said.