CapWeekly broke the news that the California Labor Federation passed a resolution demanding that Assembly Speaker Fabian Nunez give back the $4 millions the CDP transfered to his account back in November 2006.  Those funds have been the source of my derision by myself and other front pagers here at Calitics.  It was a symbol of what was wrong with the current political structure in the Democratic party, giving large chunks of money to one politician, rather than investing in campaigns and or building up the party infrastructure itself.  The Speaker currently has $5.1 million in his personal campaign account.  

The question is now, what will Nunez do with all of that cash?  The Labor Fed is concerned that it will be used to Nunez’s own benefit, perhaps a future political race, rather than benefiting the Assembly Democratic Caucus, which was the stated goal when the CDP transfered the funds in the first place.

“When the speaker asked for the money, it was for one purpose — to help elect Assembly Democratic candidates. It was not for a slush fund for the speaker. If he does the moral thing, he will return the money,” said Robert Balgenorth, president of the State Building and Construction Trades Council, and a member of the Federation’s executive committee.

But haggling over the details of the resolution continued Tuesday. A Nunez spokesman said the language of the resolution directed the speaker to spend the money on behalf of Democratic candidates, and not necessarily return the funds to the party.  But sources at the labor convention said Nunez, subect to campaign restrictions, could not spend the $4 milion as originally promised because of the $3,600 limit per candidate.

This is something that Nunez should have known at the time, same goes for the CDP.  However, these campaign finance restrictions should not have prevented him from making independent expenditures.  That did not happen and the Speaker has only spent $1.4 million out of his account since 2005.  He has been hoarding it, but for for what.

Joe Matthews, formerly of the LAT, now at the New America Foundation has a post defending Nunez.  Matthews’ defense is fatally flawed.  The reasons he lists for Nunez retaining the cash are no longer an issue and in one way or another have been resolved. (check the flip)

Matthews argues that Nunez needs the cash on hand to govern, but forgets one inconvenient fact: Nunez is about to give up both his seat and his Speakership.

Labor is really angry at Nunez because they don’t like the way he’s governed recently — particularly in two policy areas. But the story of those policy areas shows precisely why he needs the cash.

1. Health care. Most of California labor opposed Nunez’s compromise on health care legislation with Gov. Arnold Schwarzenegger. The legislation passed the Assembly but died in Senate committee. But if it had survived, the financing provisions could not have passed the legislature, which requires 2/3 for tax increases, because of the opposition of Republicans. So Nunez would have had to sponsor and campaign for a ballot initiative to establish the financing. That would have required campaign cash.

2. Indian gaming. Nunez supported new compacts for Indian tribes that labor unsuccessfully opposed — via four referenda on the February ballot — because the agreements didn’t include promised protections for union organizing. The Indian tribes took care of supporting Nunez’s position in that case, but it shows again how a speaker needs campaign money to support his governmental decisions. And this year, even the budget may be on the ballot. With Schwarzenegger seeking budget and redistricting reform that will require voter approval as part of his budget push, it’s quite possible that the state budget will be negotiated as part of a legislative package that includes ballot measures that will go to voters in November. Nunez will need campaign money not only for Democratic Assembly candidates but also to defend whatever budget lawmakers negotiate.

The health care proposal is dead and gone.  Nobody is going to run a ballot campaign this year to raise funds and put a new system into place, not when we have a huge budget deficit, teachers are being laid off, and people can’t go to the beach because there aren’t enough lifeguards to keep them safe.

Correct me if I am wrong, but didn’t Californians already vote on the new gaming compacts?  The casinos are already installing their new machines.  This is no longer an issue for Nunez, other than labor has a long memory and they are still smarting from his part in the compacts’ passage.

So what is the Speaker going to spend the cash on?  This is an election year and every legislator in a competitive race should get the maximum he can transfer, same goes for all of the Democratic primary victors in the districts currently held by Republicans.  Then there are always the 2/3rds rules, for both budget passage and tax increases.  That would necessitate large amounts of cash for an initiative battle.  What about going after the corporate half of Prop. 13?  That would bring in some serious revenue.

You get my point.  There are plenty of ways that the Speaker can spend the $5 million sitting in his account.  It was never the CDP’s stated intention to give the Speaker cash to run for another office.  The money should go to bolstering Democratic party interests at large.