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Sacramento Bee
Jun 20, 2004 - 01:00 AM

by Margaret Talev, Bee Capitol Bureau

Governor gets cash at record pace

He ran as an outsider in last year's recall election, promising to change a system he said was corrupted by special-interest groups.

But as Gov. Arnold Schwarzenegger enters his first budget-and-bill-signing season, he has raised more money than any previous California governor this early on, including predecessor Gray Davis.

Since taking office last November, Schwarzenegger has reported accepting more than $12 million in contributions - twice what Davis, a Democrat, raised in his first six months in office and about 10 times the amount fellow Pete Wilson raised.

Schwarzenegger's appearances at fund-raisers for the California Republican Party and some GOP legislative candidates drew close to $5 million more, party officials say. He now counts among his large donors several who were key to Davis early in his tenure.

Voters aren't reacting angrily to Schwarzenegger's acceptance of special-interest money despite his campaign rhetoric. Political analysts say that's probably because they feel the governor is doing a good job getting state finances back on track.

Still, some of his fans express disappointment in what they see as a lapsed promise.

"Voters didn't decide to trade in a boring governor for a celebrity governor; they decided to trade in a career politician for an outsider and reformer," said Republican consultant Dan Schnur. "Once he gets done with the necessary economic triage, I hope he'll get back to the reform agenda that got him elected."

Simply accepting a contribution from a donor with issues before the state is entirely legal, and while in office Schwarzenegger inevitably will take actions that don't please some donors.

Critics note it was Schwarzenegger, however, who built his campaign platform on a pledge to curb special-interest politics. He spent millions of his own dollars to run, which he said showed he couldn't be bought by others.

He refused money from Indian gambling and labor unions, from whom Davis took millions, saying he wouldn't take money from groups engaged in negotiations with the state. And in office he has returned at least two campaign contributions from donors his political team felt wanted something explicit in return.

Still, some see inconsistencies in Schwarzenegger's approach to campaign fund raising and his definition of special-interest contributors.

A law in place before the election limits contributions to a candidate committee to $21,200 each. Schwarzenegger raised most of his money through issue committees not subject to limits, such as his California Recovery Team, which pushed workers' compensation reforms, and a committee that advocated passage of $15 billion in bonds to pay off state debt. Both campaigns featured him as spokesman and helped build his political profile.

Many Schwarzenegger supporters say they give because they respect the 56-year-old, Austrian-born bodybuilder and movie star and his free-market ideals. But many have fortunes that can rise or fall with the bills a California governor signs, with the causes he champions or with the ways his appointees interpret tax, environmental or consumer regulations.

Among former Davis contributors now giving to Schwarzenegger are mortgage lender Ameriquest ($392,400), Univision Chairman Jerry Perenchio ($292,400), supermarket magnate Ron Burkle ($121,200) and San Diego Padres owner John Moores ($92,400), according to reports filed with the California secretary of state's office.

Burkle's Yucaipa Companies invests in retail and manufacturing. Moores is a land developer. So are San Diego Chargers owner Alex Spanos ($592,500) and Dole Food Co. chief David Murdock ($352,000). Homebuilder William Lyon gave $442,400. As team owners, Moores and Spanos also have been involved in stadium-related lawsuits and have an interest in laws affecting redevelopment and traffic fees.

Perenchio owns a real estate company with land in Malibu. He recently got a favorable recommendation from the state Coastal Commission when asking for a retroactive permit for his own golf course, which environmentalists worried was polluting a lagoon. Perenchio promised to put new protections in place and bequeath the land to the state.

Other Schwarzenegger donors, from insurance companies to timber interests and automobile dealers, are pursuing bills, regulatory changes or ballot initiatives the administration could affect.

Ameriquest disclosed spending $67,000 in the first quarter of this year to lobby legislators and the administration on eight bills and on various regulatory matters involving issues such as lending practices.

And it is one of hundreds of businesses, many of which have been sued for deceptive business practices, pushing a November ballot initiative to change state Business and Professions Code section 17200 to limit their legal exposure. Businesses hope Schwarzenegger actively campaigns for the initiative.

The code in question has been abused by some trial lawyers who don't have clients but pressure businesses into settlements. But consumer and environmental advocates say the initiative to stop so-called shakedown lawsuits goes too far the other way and that a legislative compromise would be more responsible.

Car dealers and automakers, fending off deceptive-practices lawsuits, have raised more than $4 million for the cause. They also face legislation that could affect everything from emissions to disclosures to car buyers. Collectively, they've given Schwarzenegger about $1 million.

Other Schwarzenegger contributors with a stake in the lawsuit initiative and regulatory matters include Bank of America and Citigroup, managed health care providers such as Kaiser and Blue Cross, insurance companies and grocery store chains.

While negotiating this spring with lawmakers to bring down the costs of workers' compensation insurance, Schwarzenegger announced a self-imposed ban on taking insurance money.

Still, insurers gave more than $1 million to his committees before and after the blackout. At Schwarzenegger's insistence, the workers' comp deal did not impose rate regulation; he said it would hurt competition.

The administration and lawmakers are now considering two bills worth billions of dollars, affecting the balance of power between utilities and independent energy producers and potentially letting big businesses shop around for discount power. Schwarzenegger also has the power to make appointments to the state Public Utilities Commission, a regulatory body.

Pacific Gas and Electric has given Schwarzenegger $200,000; Edison gave $50,000; Calpine gave $35,000.

Edison spokesman Gil Alexander said the company gave Schwarzenegger money because "we contribute to candidates and elected officials who we believe support sound public policy."

Timber companies also have contributed to the governor. Last month, the administration proposed shrinking regulatory reviews of logging plans if timber companies would pay $10 million more in fees to the state.

Although an industry spokesman complained about the idea of higher fees, consumer and environmental advocates argued the protest was for show - that $10 million up front would be well worth the profits that could be realized from less regulation.

Earlier this month, the administration also announced it would appoint a lumber company representative to a state board that regulates waste.

Marty Wilson, Schwarzenegger's chief fund-raiser, acknowledged many contributors have issues before state government. But he said the governor has made clear that his decisions cannot be influenced by money.

Generally, Wilson said, Schwarzenegger will accept a contribution unless he and his advisers think the donor expects something specific, or unless the money is offered in the heat of policy negotiations.

"We do not tie any kind of policy decisions or direction to campaign contributions," Wilson said. "Those decisions are never decided through the prism of campaign contributors."

Doug Heller of the Foundation for Taxpayer and Consumer Rights says the connection between an administration and its contributors can't always be traced to a specific bill or budget item.

"It's the way money shapes policy," Heller said.

He said Schwarzenegger is raising the money "because people are giving it to him."

"But they're giving it to him because they want something from him," he said. "The big mistake Schwarzenegger is making is not listening to his own advice. What he's doing with all this fund raising is undermining his chief political credential, which is, 'I'm not like those other politicians.' "
The Bee's Margaret Talev can be reached at (916) 326-5540 or

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