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The Los Angeles Times
Jan 01, 2004 - 01:00 AM

by Dan Morain, Times Staff Writer

Governor Will Raise More Funds;

By creating committees to back ballot measures and to lobby legislators, Schwarzenegger would be extending his power, observers say.
SACRAMENTO -- Gov. Arnold Schwarzenegger, who denounced political fundraising while running
for office, is opening two new campaign accounts that together establish a year-round political operation.

The campaign committees would allow Schwarzenegger to raise unlimited money for ballot measures and lobbying campaigns in the Legislature, as well as finance a possible reelection bid in 2006.

In effect, Gov. Schwarzenegger's California Recovery Team, as one of the committees is called, would allow the governor to act as a lobbying organization that stages rallies and uses other public-relations techniques, such as coordinated letter-writing campaigns to lawmakers.

And since the committee will be considered a ballot-measure account under California campaign law, Schwarzenegger can avoid the state's limits on donations to individual candidates.

"It is very sophisticated," said Robert Stern, president of the nonprofit Center for Governmental Studies in Los Angeles. "He is using every method that he can to raise money. He is being very creative."

Donations to the second committee, a 2006 gubernatorial campaign fund, will be restricted to $21,200 from individual and corporate contributors, as required by the Proposition 34 campaign finance law that voters approved in 2000.

The creation of the gubernatorial campaign committee, which aides expected to file with the secretary of state's office as soon as Friday, does not amount to an announcement that Schwarzenegger is running for reelection, said aides to the governor. Rather, they said, he was compelled under state law to create a campaign committee to pay for officeholder expenses, including travel related to politics and salaries for some political aides.

Gov. Schwarzenegger's California Recovery Team was filed with the secretary of state Monday.

All candidates establish campaign committees for their own races. Most past governors have raised money to support or oppose specific ballot measures. Some have established political action committees to pay for their political efforts. But until Schwarzenegger won election -- and particularly with the creation of a year-round lobbying organization, observers said -- no other California state official has demonstrated such a willingness to bypass lawmakers if his
legislative proposals stall.

"It is another tool for Schwarzenegger to dominate the Legislature," said Douglas Heller of the Foundation for Taxpayer and Consumer Rights in Santa Monica, which tracks the governor's fundraising.

"It is a different kind of power-wielding than we have seen among most politicians... Schwarzenegger is raising money not only to gain power, but to threaten other politicians."

Marty Wilson, one of Schwarzenegger's top political aides, said the committees are legal and effective political tools, and he emphasized Schwarzenegger's policy of not accepting contributions from trade groups that represent a single industry.

Schwarzenegger will be expected to file the same public lobbying reports, detailing actions taken to generate public support for and against legislative proposals, that are required of lobby coalitions established by business and other groups.

"The governor is playing by the same rules applied to everybody -- and is putting additional restrictions on himself," Wilson said.

He described the California Recovery Team as "a grass-roots, ballot-measure and legislative-advocacy organization that will garner public support necessary for the governor as to achieve his agenda."

Most immediately, the committee will be used as the fund-raising vehicle for Schwarzenegger's efforts on behalf of Propositions 57 and 58, the state budget measures that he persuaded the Legislature to place before voters on the March 2 ballot.

Proposition 57 is a $15-billion bond to help the state refinance its deficit.

Proposition 58 is aimed at reining in future state spending by requiring that lawmakers set aside 3% of the state budget's general fund as a reserve.

Campaign aides estimate that Schwarzenegger will need to raise $8 million or more in the next two months for the ballot-measure campaigns.

"We're going to have to raise this money from people who want to see the governor succeed and, more importantly, want to see California succeed," said Wilson, the governor's political aide.

The campaign committee also could be used to raise money for November ballot fights, including a potential initiative to lower the cost of workers' compensation insurance premiums paid by businesses. Schwarzenegger made the overhaul of the $29-billion workers'-compensation system a centerpiece of his gubernatorial campaign.

On Wednesday, Joel Fox, one of Schwarzenegger's political supporters, took the first public step toward placing such an initiative on the November ballot, filing a proposed ballot measure with the state attorney general's office.

Since he ousted Democratic Gov. Gray Davis in the Oct. 7 recall election, Schwarzenegger has raised more than $2.8 million in political funds.

He has raised more than $25 million since announcing his candidacy for governor in August.

The money has come from an array of individuals and corporations, including real estate companies, developers, car dealers, telecommunications interests and others with stakes in the outcome of state legislation.

When he announced his candidacy for governor on "The Tonight Show With Jay Leno," Schwarzenegger, a multimillionaire, said he would raise no money for his campaign.

He soon amended that statement, saying that he would take no money from "special interests."

He defined special interests as public employee unions, Indian tribes that own casinos, and trade groups that represent single interests such as real estate agents, physicians and restaurant owners.

The governor plans to continue adhering to that principle, Wilson said.

In addition to the new campaign committees, Schwarzenegger's aides said thegovernor is considering creating a third fund to help defray his living costs in Sacramento. As it is, he has been paying many of his living costs out of his pocket.

Several past governors have established nonprofit corporations to help defray such expenses.





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