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Contra Costa Times (California)
Jan 28, 2004 - 01:00 AM

by Andrew LaMar; CONTRA COSTA TIMES

Governor now says he never intended to repay loan with campaign

Must quit taking campaign contributions to repay the large loan to his campaign.
SACRAMENTO -- Gov. Arnold Schwarzenegger on Tuesday praised a court's ruling that he broke
the law by using a $4.5 million bank loan to fund his campaign for governor and said the decision is "exactly the way the law ought to be."

Addressing reporters at a Sacramento luncheon, Schwarzenegger said he never meant to use campaign donations to repay the loan from the City National Bank in Beverly Hills.

The ruling, issued Monday by Sacramento County Superior Court Judge Loren McMaster, ordered the governor to refrain from loaning his campaign more than $100,000 and to quit taking campaign contributions to repay the large loan.

The loan violated the $100,000 limit set by Proposition 34, the court said. Schwarzenegger campaign officials said they relied upon the California Fair Political Practices Commission's interpretation of the law, and McMaster said the governor had "acted in good faith."

"I always intended to pay that back myself," Schwarzenegger said of the bank loan. "So it was a great decision. It does exactly what we intended to do."

Nevertheless, the explanation drew fire from one of the governor's chief critics, the Foundation for Taxpayer and Consumer Rights. Jamie Court, the group's president, said Schwarzenegger owes the public an apology.

"It's very disheartening a governor would come to office on a political reform platform and then launder money illegally to his campaign," Court said.

"This is very big backtracking for a governor who is supposed to be cleaning house and reforming campaign finance laws not abusing them and refusing to take responsibility."

The maneuver allowed Schwarzenegger to fund a large part of his campaign without letting voters know who was footing the bill. Since the recall election, Schwarzenegger has raised money at a faster pace than his predecessor, Gray Davis.

In addition, on Tuesday, the governor renewed his vow not to take campaign contributions from single-interest employee unions. The California Teachers Association on Monday endorsed two measures Schwarzenegger is pushing on the March ballot, a $15 billion bond and a balanced-budget requirement.

During his speech and question-and-answer session with reporters, Schwarzenegger said:

He was filmed on the beach Monday for an advertisement promoting California that will be shown around the world. The governor's aides said they did not know when the ad would be produced and aired.

He is working with Sen. Gil Cedillo, D-Los Angeles, to craft a successor to SB60, a measure repealed by the Legislature that would have allowed undocumented immigrants to obtain California driver's licenses. The two have been meeting regularly but have not reached agreement on the legislation.

The Office of the Inspector General, an independent watchdog over the penal system, "has been a waste" and does not deserve to have its funding restored. Schwarzenegger has proposed eliminating the office.

He is pushing lawmakers to hammer out reform to the workers' compensation system and come to an agreement on how to trim the state budget. "You will see some changes in the next month or so. Nothing happens overnight."
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Andrew LaMar covers state government and politics. Reach him at 916-441-2101 or alamar@cctimes.com




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