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Governor collects millions for electionGovernor collects millions for election

Both parties prepare for a costly battle, even though November vote isn't certain

Christian Berthelsen, Chronicle Staff Writer
Friday, April 22, 2005

Sacramento — Weeks before the recall vote, Arnold Schwarzenegger announced his "People's Reform Plan" at the California Railroad Museum, invoking the legacy of Gov. Hiram Johnson's war on railroad barons' political power.

Last month, Schwarzenegger spoke at an event where Union Pacific Railroad donated $25,000 to the political committee backing his agenda.

The donation was just one among hundreds he has raised so far this year for the group, Citizens to Save California, as well as his re-election fund and an all-purpose ballot measure committee called the California Recovery Team. Thus far this year, the three committees have received nearly $10.2 million, according to public filings.

That amount is now set to grow rapidly. Schwarzenegger is armed with a favorable court ruling last month allowing him to raise unlimited funds for ballot measure committees he controls, and the governor has decided to accept funds from groups he previously eschewed. Though state campaign finance regulators say their rule limiting donations will remain in effect pending appeal, Schwarzenegger's team says they will not be bound by it.

Schwarzenegger is ramping up his California Recovery Team — which he used to campaign for and against ballot measures last year, but which he essentially sidelined in favor of Citizens to Save California earlier this year — to begin raising money and taking over the campaign for his agenda to shake up state government in a possible special election later this year.

"When it comes time to put the public face on the campaign, it legitimately should be done by a campaign committee that the governor has operational control over," said Martin Wilson, the executive director of the Recovery Team.

So far, the money has been used to pay for signature-gathering efforts, but once the measures qualify, it will be used for television advertising and political mail if an election is called.

Wilson said Schwarzenegger would also begin accepting donations from single-interest trade groups, dropping a prohibition that he previously imposed on such contributions. Already, Citizens to Save California has accepted donations from single-interest trade groups totaling more than $200, 000, including contributions from the California Retailers Association for $100,000 alone.

Though he once narrowly defined "special interests" as labor unions and Indian tribes, Schwarzenegger acknowledged last month that donors such as drug companies — big contributors to Schwarzenegger — could be construed as special interests as well.

"From the beginning, it was hard to accept the governor's statements that he was interested in reform, when he's pulling in money from the same old cast of characters that's been spending money to dominate the California political process for years," said Ned Wigglesworth, an analyst with, a group that has sued the governor over his involvement with Citizens. "I think most Californians think it's ridiculous that he would even claim the title of reformer, or claim the legacy of Hiram Johnson, when he's taking sizable contributions of the kind and from the very contributor that Hiram Johnson started the initiative process to combat."

050422-01Schwarzenegger's aides say that while the governor accepts large donations from corporations and individuals, the contributions have no bearing on how he runs his administration. The governor himself insists that because he is wealthy, "I can't be bought.''

Schwarzenegger is championing ballot initiatives to give the governor more budget cutting power, make legislative races more competitive by redrawing boundaries and base teacher pay on performance rather than seniority.

In the face of fierce opposition, the governor backed down on a previous proposition to dismantle the defined-benefit public pension system and is now in talks on a compromise on the teacher pay issue. Having knocked out the pension proposal, Democratic opponents in the Legislature are now training their sights on Schwarzenegger's budget proposal.

When questioned by reporters in recent days, the governor has refused to definitively state that he will call a special election on the proposals later this month. Still, despite the setbacks, the governor's political aides are going forward as though an election will be called — and the money continues to pour in, despite the uncertainty.

The governor's aggressive fund raising has set off an arms race of sorts, with all manner of labor groups pouring funds into the Democratic group, Alliance for a Better California, that is opposing the governor's initiatives. So far, the group has raised $5 million, with the California State Teachers Association putting in $1.6 million — including a single donation of $1 million.

Under the regulation that was struck down by the court, the ballot measure committee could not accept unlimited donations if Schwarzenegger exercised control over it. If he did control it, the same $22,300 donation limit that applies to his gubernatorial fund would have applied to his ballot measure committee.

Now, however, all restrictions are off, and in the days since the ruling, Schwarzenegger's political team has begun laying plans to increase its fund- raising and campaigning efforts. The incoming contributions are averaging more than $23,000 each, and in recent weeks it has received $100,000 donations from Citigroup, the California Retailers Association and an Orange County investment firm called Entrepreneurial Capital Corp. Another $50,000 came from ChevronTexaco.

The proceeds have come in from a cross-country fund-raising effort, in which the governor has attended events in Cincinnati, New York and Washington, as well as Sacramento, San Francisco, Los Angeles and San Diego. Roughly $6.6 million has gone to the ballot group, with $2.6 million going into Schwarzenegger's re-election fund and $950,00 million going to the California Recovery Team.

The donations have come in from all manner of special interests, ranging from those who could conceivably benefit from the governor's proposals to those who seemingly have no stake in them — but do have a vested interest in Capitol legislation that lives or dies by the stroke of the governor's pen.

At least $1.28 million of the governor's funding is coming from real estate, property and development interests, at the same time two divisions of the administration are pushing to overhaul state environmental and planning laws. Some proposals thus far would remove hurdles for construction, allowing them to develop property "by right" if their development proposal comports with a master plan adopted by local officials, and limiting legal challenges.

Critics of the changes say they would short-circuit environmental review processes to guard against traffic, pollution and other concerns; advocates say it would provide economic certainty needed to spur development and ease the state's housing crunch. An administration official said the governor had not yet endorsed any specific plan.

The third-largest donor to Schwarzenegger thus far this year has been William Lyons Homes Inc. of Newport Beach, which gave a single $250,000 donation to Citizens to Save California on March 23. Barratt American, another home builder based in Carlsbad (San Diego County), gave $50,000 on April 10. Malin Burnham, a real estate executive, kicked in $50,000 on March 2, and KB homes donated $30,000 the same day.

The single largest donor to Schwarzenegger's causes this year is A. Jerrold Perenchio, the chairman and chief executive of the Spanish-language Univision television network. Perenchio gave a single donation of $1.5 million to Citizens to Save California, tying it for the largest political donation in state history.

Perenchio has been a heavy donor to state and federal politicians in both parties and has given generously to Schwarzenegger before. Yet even the governor's critics are hard-pressed to point to any vested interest Perenchio has before the state.

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