Governor sets money-raising record;

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$26.6 million in his first year — most of it from special interests

The San Francisco Chronicle

SACRAMENTO — Gov. Arnold Schwarzenegger, after campaigning as a reformer who would cast special interests out of the Capitol, smashed every fund-raising record in his first year in office with a $26.6 million haul that doubled the amount raised by former Gov. Gray Davis in his first year.

The vast majority of the money came from special interests deeply vested in the outcome of legislative and regulatory decisions in Sacramento, including financial companies, auto dealers and manufacturers and health care concerns. In some cases, the governor, who took office a year ago today, has taken positions that benefited his contributors.

For much of the year, Schwarzenegger used a legal loophole to raise sums greater than a state law’s $21,200 limit. And in recent weeks, as a deadline approached to close that loophole, Schwarzenegger stepped up his acceptance of those donations, raking in individual contributions as high as $500,000.

“He’s taken more money from special interests than anyone in this state ever has,” said David Fink, a policy advocate at the Foundation for Taxpayer and Consumer Rights, which has been a vocal critic of the Schwarzenegger administration. “He hasn’t changed the political culture in Sacramento. It’s the status quo. He made everyone believe in him, that he wasn’t the typical politician, and he’s just like everyone else.”

Marty Wilson, an adviser to Schwarzenegger who oversees his fund-raising efforts, said the governor raised so much money in his first year because he needed to pass a deficit-recovery bond and spending cap on the March ballot and then finance a possible ballot measure on workers’ compensation that helped prod the Legislature into passing a reform package. Wilson said the governor also needed money to campaign against unsuccessful November ballot measures that would have expanded gaming in the state and weakened the state’s “three strikes” criminal-sentencing law.

It was, he said, a “very aggressive fund-raising program.”

By the Schwarzenegger political team’s own records, Schwarzenegger accepted at least $26.6 million in his first year in office. Davis — who was criticized for aggressive fund-raising — accepted $13.2 million.

Schwarzenegger used most of the money he raised to try to sway voter opinion on ballot measures in two elections, while the money Davis stockpiled in his candidate committee was used later in his successful re-election bid.

Most of Schwarzenegger’s contributions passed through ballot-measure committees he controlled as well as an all-purpose committee he created called the “California Recovery Team.”

Though committees for statewide candidates have contribution limits of $21,200 per donor, no such limit applied to committees for ballot measures until the day after the Nov. 2 election, when controls established by the state Fair Political Practices Commission took effect. Schwarzenegger had opposed the controls.

In the weeks before that window closed, Schwarzenegger took in millions through the Recovery Team account. He received $500,000 from Alex Spanos, a Stockton developer and owner of the San Diego Chargers, who has been a zealous donor to Republican causes, including President Bush.

Schwarzenegger also received a pair of donations totaling $500,000 from Ameriquest Capital Corp., a lender to distressed borrowers that is based in Orange. The company has been criticized by consumer advocates for allegedly predatory business practices, such as inducing borrowers into loans on terms they cannot meet.

In reports filed with the secretary of state, Ameriquest disclosed it had lobbied lawmakers on eight separate pieces of legislation as well as five general issues. It also said it had lobbied the governor’s office directly on “California business climate issues, discriminatory application of unfair competition statute as applied to California based companies, and civil liability issues.”

Rob Stutzman, the governor’s communications director, did not respond to a request for comment. Talking with reporters recently, Schwarzenegger said he could not be bought, calling the subject a “character issue.”

He noted that the Walt Disney Co. has been giving him free tickets to Disneyland for years but said he would not do the company any official favors as a result. Schwarzenegger said any attempt to compare him to Davis when it comes to fund-raising and his actions as governor would be a “great comedy.”

Schwarzenegger’s largest industry backers are real estate and development interests, and even critics of the administration are hard-pressed to find evidence that he has done anything in office to benefit that industry. But they point to a handful of others.

The governor accepted more than $1 million from insurance interests, and notably absent from his proposal to fix the system that treats injured workers was any suggestion to regulate premiums charged by insurers.

He also accepted more than $1 million from health care and pharmaceutical companies. Schwarzenegger’s state Department of Managed Care planned to sign off on the merger of Wellpoint Health Networks Inc. and Anthem without holding a hearing on how it would affect patient care. And he vetoed a host of bills that would have helped Californians, and the state government, to purchase cheaper drugs in Canada.

Schwarzenegger’s first act upon entering office was to repeal an increase in the car-registration fee, a top priority of auto dealers. He also vetoed legislation, termed the “Car Buyer’s Bill of Rights,” that would have cracked down on questionable practices in the auto sales industry, and he campaigned for a ballot measure backed by car dealers stripping away consumer groups’ right to sue when dealers break the law. The automotive industry gave Schwarzenegger more than $1 million.

It is unclear whether Schwarzenegger will continue his aggressive fund-raising in the coming year. Observers do not see as many potential campaign issues next year as occurred this year, though there is some talk of Schwarzenegger calling a special election to change the way political districts are drawn in California.

Either way, some observers say the huge sums will always be necessary for Schwarzenegger to employ his chief political skill: meeting throngs of voters and persuading them to support his positions.

“His fund-raising has led to some real big wins for him,” said Bob Stern, president of the Center for Governmental Studies. “That’s where his victories are. He’ll find something.

“I think he enjoys doing it. I think he enjoys making policy by ballot measure. That seems to be his biggest joy, going out and campaigning.”
CHART (1):
Schwarzenegger’s biggest contributors

By industry:
— Real estate and development: $6.2 million
— Financial services: $6 million
— Entertainment: $2.3 million
— Technology: $2 million
— Health care and pharmaceutical: $1.7 million

By individual donor:
— Henry Nicholas (co-founder of chipmaker Broadcom): $1.5 million
— Ameriquest Capital Corp.: $1.2 million
— Alex Spanos (Stockton developer, NFL team owner) and related entities:
$1.1 million
— Jerry Perenchio (Univision television executive) and related entities:
— William A. Robinson (retired DHL delivery service founder): $650,000

Sources: Archives; Foundation for Taxpayer and Consumer Rights

CHART (2):
Governors’ first year of fund raising

Arnold Schwarzenegger: $26.6 million ($72,876 a day)
Gray Davis: $13.2 million ($36,164 a day)
E-mail Christian Berthelsen at [email protected]

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