Governor Fails to Curb Big Money

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While criticizing the system, Schwarzenegger continues to raise millions to help his political agenda and seeks to lift restrictions.

Los Angeles Times

SACRAMENTO — Gov. Arnold Schwarzenegger ousted a sitting governor and entered elective politics by deploring a system in which “the money comes in and the favors go out.”

But as he promotes his political agenda for 2005, Schwarzenegger has failed to curb big money in politics. Rather, he seeks the freedom to raise unlimited amounts.

A few weeks ago, he compared himself to populist reformer Hiram Johnson — the early 20th century California governor who challenged the power of railroad barons — while he was holding meetings with wealthy donors to raise money for his campaign to transform state government. He is putting on a series of fundraisers around the state in hopes of collecting at least $50 million this year.

Schwarzenegger and his supporters have filed a lawsuit in Sacramento County Superior Court to overturn regulations dictating the size of contributions he can accept as he pursues his agenda.

And in an unusual move, the California Republican Party voted on Feb. 13 to formally endorse Schwarzenegger for reelection so it can raise money — more than a year earlier than it would normally — to promote the governor. The party is not subject to the same contribution limits as Schwarzenegger.

Complaints about the governor’s fundraising, which could reach more than $150 million in three years, are on the rise, highlighting a persistent problem in California politics: Despite repeated efforts by voters to contain fundraising, elected officials continue to benefit from five- and six-figure donations.

Schwarzenegger’s critics say he is raising money with a zeal eclipsing that of the man he unseated, former Gov. Gray Davis. His supporters have organized “Evenings With Governor Schwarzenegger,” with a seat at his dinner table costing $100,000 and the lowest-priced ticket going for $25,000.

“The fundraising activity of Arnold Schwarzenegger since taking office I think speaks volumes to his lack of commitment to political reform,” said Paul S. Ryan, an attorney with the Campaign Legal Center in Washington, D.C.

Campaign finance watchdogs say the special election that Schwarzenegger wants to call this year, at a cost to taxpayers of as much as $70 million, is itself a way to bypass fundraising rules. Under the law, the governor is barred from appearing in TV ads for initiative campaigns if he is running on the same ballot, which he could be in 2006.

In a special election this year, he would not be on the ballot himself. His stated goal is to put his sweeping agenda for change before voters, in the form of initiatives.

The Foundation for Taxpayer and Consumer Rights, one of the governor’s biggest critics, accused Schwarzenegger of setting up a special election “to get around campaign finance laws,” thereby wasting taxpayer dollars.

The governor defended his strategy in a recent news conference, where he acknowledged that a special election could be expensive. “But this could make the difference between having always a state that is almost going into bankruptcy, or a state that is financially healthy,” he said.

And the governor has repeatedly justified his fundraising by saying he is not beholden to anyone because he is wealthy. Individual contributions don’t matter to him, he says, while he lambastes the Legislature for doing favors for special interests.

“The money is not for me. I’m not raising any money for myself,” Schwarzenegger said in a radio interview this month. “It’s all to go out and to be able to have TV spots and to educate the people and to let them know which way to vote and that we together can reform California.”

In two years, Schwarzenegger has formed five committees to pay for various campaigns, not including a nonprofit fund he established to pay for his suites at the Hyatt hotel in Sacramento, where he lives several days a week. He has eight fundraisers planned in coming months in California, Ohio, New York and Washington, D.C.

Since his election, even unsympathetic targets have been hit up for money.

Steven Gourley, former director of the Department of Motor Vehicles, said he was invited last year to an event, “The Governor’s Gala featuring Governor Arnold Schwarzenegger.” A guest who gave $125,000 would be designated “Gala Chairman” and offered head table seating and extra tickets to “VIP tables” that would feature a “celebrity or legislator.”

The event was too pricey for Gourley. But there was another reason he decided not to give: Schwarzenegger had fired him several months earlier. “Scraping up [the money] was the last thing on my mind,” Gourley said.

During his gubernatorial campaign and last year, Schwarzenegger appeared so upset about the influence of money in politics that he proposed public disclosure of campaign contributions within 24 hours and introduced legislation to ban fundraising during state budget negotiations.

The ideas went nowhere; the Democrat-dominated Legislature wasn’t interested in curbing itself, and Schwarzenegger did little to promote his own measures.

This year, said Rob Stutzman, the governor’s communications director, Schwarzenegger is preparing a political reform package that will include some kind of fundraising blackout for elected officials. He said the governor also remains enthusiastic about requiring 24-hour notification of contributions.

As for rivaling Davis’ fund-raising record, Stutzman said: “People understand he is raising this money to fight for reforms against special-interest money that continues to outspend what he can raise.”

Currently at issue is whether Schwarzenegger can control a committee called Citizens to Save California, which is promoting his agenda for the possible special election ballot. He is expected to endorse several initiatives on subjects ranging from an overhaul of the public-employee pension system to merit pay for teachers.

Campaign finance experts say Schwarzenegger’s strategy of using the ballot to advance his proposals puts him in conflict with state regulations. The law prohibits candidates from controlling the expenditures of committees formed in support of ballot initiatives unless the committees abide by strict fundraising limits.

“You have unprecedented fundraising for these ballot committees, so the possibility of circumventing the law is stronger than ever,” said Rick Hasen, an election law expert at Loyola Law School. “In earlier cases, the courts said referenda and ballot initiatives are about issues, not
candidates. That premise is no longer true in California. The two are intertwined.”

The lawsuit, filed against the Fair Political Practices Commission, contends that arbitrary limits — $3,000 for lawmakers and $22,300 for the governor — unfairly hamper Schwarzenegger’s 1st Amendment right to freely advance ballot measures.

Campaign finance watchdogs say Schwarzenegger has already been intimately involved in the committee and should be forced to abide by the fundraising limits. Joel Fox, co-chairman of Citizens to Save California, countered that special interests were “distorting the law and trying to cast a cloud over the actions of this committee.”

Thomas W. Hiltachk, an attorney for Schwarzenegger, said the governor had followed the law and was not challenging fundraising limits approved by voters under Proposition 34. But the FPPC has left a serious ambiguity in the interpretation of the law that needs to be resolved, he said.

The lawsuit contends that the FPPC overstepped its bounds by barring candidates from controlling initiative committees’ spending, and should have asked the Legislature to resolve the issue. “They told the public, ‘Look at us, we solved the problem,’ when they haven’t done that,” Hiltachk said.

The FPPC declined to comment on the lawsuit except to say it would defend its regulations.

There has been an ambiguity to Schwarzenegger’s view on contributions. After a judge said he had illegally lent his campaign $4.5 million, Schwarzenegger declared the ruling “fantastic” — even though he argued the opposing position in court.

He says his power cannot be bought, yet he has refused to take money from public employee unions and Indian tribes. If he can’t be bought, his critics ask, why not take their money?

Schwarzenegger’s answer has been that taking money from those groups makes him uncomfortable because his office negotiates state contracts with them.

State Sen. Sheila Kuehl (D-Santa Monica) said the governor’s argument that he could not be influenced by donations fails to do justice to money’s psychic rewards.

“I would suggest that’ he sees his donors as affirming him personally by supporting him,” Kuehl said. “And that is the same kind of influence whether he maintains he needs money or not. Their love of his agenda is sufficient to gain them access. And that love is demonstrated by their donations.”
Times staff writer Peter Nicholas contributed to this report.

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