California owes $34 million on a voter outreach contract it can’t pay for

California Secretary of State Alex Padilla’s office has received more than $34 million worth of invoices from a consulting firm for a voter outreach campaign that the State Controller’s Office said it doesn’t have the budget authority to pay for.

In August, The Sacramento Bee first reported that Padilla’s office had awarded a contract for a voter outreach campaign called Vote Safe California to public affairs and political consulting firm SKDKnickerbocker.

The firm, which has a history of working for prominent state and national Democrats, touted itself as being on “Team Biden.” On Tuesday, the main banner on the firm’s website was a picture of Joe Biden and Kamala Harris, thanking them for fighting for “the soul of the nation.” Biden for President is listed at the top of the firm’s 2020 clients. Anita Dunn, who represents the “D” in SKDK, is a top adviser to the president-elect, and was recently called the “mastermind” behind Biden’s campaign.

SKDKnickerbocker also lists working for clients in five California congressional races.

The voter outreach campaign was intended to inform California voters about changes to the election in light of the coronavirus pandemic – in particular, the state’s decision to send all active registered voters absentee ballots in the mail. Senate Bill 423, which which updated sections of the election code, called for the Secretary of State to “conduct a statewide voter education and outreach campaign regarding new procedures in place for the November 3, 2020, statewide general election.” The contract for the campaign was awarded through an expedited, emergency bid process, which Padilla’s office said was necessary given the urgency of the election and the coronavirus pandemic.

California Republicans criticized the Secretary of State’s Office for choosing a firm with ties to the Democratic presidential candidate, but officials defended the decision to select SKDKnickerbocker, saying the firm would conduct the information campaign in a non-partisan manner.

But following the execution of the contract, the state Controller’s Office told the Secretary of State’s Office it did not have the authority to spend the funds.

Padilla’s office claimed it was able to pay for the campaign using local assistance funds outlined in the state budget, which included federal dollars allocated through the Coronavirus Aid, Relief and Economic Security Act to protect the 2020 election amid the coronavirus pandemic . But in early October, an official in the State Controller’s Office, which acts as the chief financial officer for the state, sent an email to Deputy Secretary of State, Operations, Lizette Mata, informing her of an absence of authority in the budget items cited by the Secretary of State’s Office.

“Based on the absence of authority in...the identified fund sources on the contract, the (State Controller’s Office) will not approve claims for the SKDKnickerbocker contract,” the Controller’s office said on Oct. 6.

At that point, Padilla’s office had already received six invoices from SKDKnickerbocker worth more than $10 million. The Howard Jarvis Taxpayers Association wrote a letter to Padilla, demanding he halt any further spending immediately in light of the Controller’s refusal to approve claims for the contract.

But the office did not.

Paula Valle, director of communications for the Secretary of State’s Office, said in an Oct. 6 statement that the contract had not been canceled, and the office, “continues to work with partners in the Legislature, Department of Finance, Department of General Services, and the State Controller’s office to finalize the procurement process for this important public education campaign.”

Over the next few weeks, invoices continued to pile up.

SKDKnickerbocker billed the Secretary of State’s Office for hundreds of thousands of dollars worth of media buys and staff hours. Throughout October, a dozen more invoices arrived, each of them labeled “Due on Receipt” at the top. As of Nov. 2, the total unpaid amount was $34,221,672.17, according to public records.

On Nov. 13, Mata, in the Secretary of State’s Office, sent a letter to the Department of Finance, asking for a transfer of spending authority from the local assistance funds to a different portion of the budget, intended for state-level activities related to protecting the 2020 elections from the effects of the coronavirus.

“While we maintain our authority to use local assistance funds for the Secretary of State’s statewide education and outreach campaign, to ensure that our office can comply with its statutorily mandated responsibilities, we request the transfer of expenditure authority identified above,” Mata wrote.

As of Dec. 1, however, no funds had been transferred, according to H.D. Palmer, a spokesman for the Department of Finance. Valle said the Secretary of State’s Office is still working with state agencies to make the payments.

Heather Wilson, managing director and head of SKDKnickerbocker’s California office, said in an email that the firm is “confident that the Secretary of State’s office will make payment to us for the full amount owed under the contract.”

In the meantime, the Howard Jarvis Taxpayers Association has filed a lawsuit against Padilla to stop him from carrying out what the association says is an illegal use of $35 million worth of taxpayer money. Controller Betty Yee was recently added as a defendant as a precaution in the event she decides to issue payment on the contract. Both Padilla and Yee have until Dec. 21 to respond to the lawsuit.

Padilla, who has served as Secretary of State since 2015, is considered a top contender to replace Kamala Harris in the U.S. Senate. Although Gov. Gavin Newsom hasn’t made a decision for the appointment, many in the state are urging him to pick a Latino.

On Thursday, a handful of Congressional Republicans sent a letter to the inspector general for the U.S. Election Assistance Commission, Fox News reported, asking for a review of the “highly questionable” contract.

“Because Secretary Padilla may become a member of the United States Senate in a matter of days or weeks, it is critical that he provide answers about his decision to award a contract to a partisan firm that appears to be both a misuse of taxpayer money and a violation of the law,” the letter read. It was signed by House Oversight Committee Ranking Member James Comer, R-Kentucky., Administration Committee Ranking Member Rodney Davis, R-Illinois, and Rep. Jody Hice, R-Georgia, according to Fox.