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The San Francisco Chronicle
Feb 06, 2004 - 01:00 AM

by Christian Berthelsen, Chronicle Staff Writer

Governor goes fund raising despite pledge of reform

SACRAMENTO -- Gov. Arnold Schwarzenegger, in the final weeks before the Oct. 7 recall election, pledged to introduce a "People's Reform Plan" that would bar the governor and members of the Legislature from raising campaign donations while working on the state budget.

But now, nearly a month after the new governor introduced his budget, he continues to jet around the state and the nation, seeking campaign donations of up to $500,000 apiece, becoming the most aggressive fund-raising governor in California's history.

And his reform proposal appears to be languishing.

With two weeks left before the deadline to introduce bills in the Legislature, Schwarzenegger has yet to submit the proposal. The administration has not yet selected a lawmaker to carry the bill. Both Democratic and Republican legislators on the committees with authority over the proposal say they have heard nothing about it from the administration.

Schwarzenegger has held six fund-raisers since he became governor, including one Thursday night at the Four Seasons Hotel in San Francisco that was hosted by Carly Fiorina, the chairwoman and chief executive of Hewlett-Packard. Another is scheduled for tonight in Sacramento, hosted by brothers Joe and Gavin Maloof, owners of the Sacramento Kings basketball team and the Palms hotel and casino in Las Vegas. Still another is scheduled for later this month in New York as the governor raises money for his campaign to persuade voters to approve his $15 billion deficit bond and balanced budget measure on March 2.

In an interview this week, Peter DeMarco, a spokesman for Assembly Minority Leader Kevin McCarthy, R-Bakersfield, said details of the governor's campaign finance legislation were still being worked out and that no legislator has been selected to carry the bill yet.

The chairman of the Assembly Elections Committee, John Longville, D-Rialto (San Bernardino County), said he hasn't seen a proposal from the governor's office.

Administration officials insist the governor is moving forward with the idea but would not discuss details. Representatives for the governor have refused repeated requests for interviews with administration officials who are developing the proposal, and a call to the governor's press office was not returned on Thursday.

Some question whether the governor will go forward with a campaign finance reform proposal, especially in light of his aggressive fund raising since the election and a ruling by a state judge last month that he broke campaign finance laws with an illegal loan to his campaign.

The governor "has sort of forgotten about it," said Jamie Court of the Foundation for Taxpayer and Consumer Rights. "This is not a good beginning to a campaign finance reform movement."

Barbara O'Connor, a professor of political communications at Sacramento State University, said the governor may not even have the authority to carry such a proposal anymore.

"I think you lose some of your moral suasion when you are forced to get money to run a media campaign," she said. "It's easy to make the claim as an outsider looking in."

Campaign finance reform was a centerpiece of Schwarzenegger's challenge during the race to recall Gov. Gray Davis, who came to be viewed as running a pay-to-play administration. At an event larded with symbolism in the final weeks of the race, Schwarzenegger appeared at the Capitol Railroad Museum -- to evoke Gov. Hiram Johnson's reduction of railroad barons' power over government -- to say:

"The people of this state do not trust their government. They feel it is corrupted by dirty money, closed doors and backroom dealing. They see the contributions go in, the favors go out, and they're punished with wasteful spending and high taxes."

Part of Schwarzenegger's "People's Reform Plan" was a pledge to introduce legislation that would ban "all fund-raising by the Legislature and the governor from the day I propose a budget until I sign a budget."

Rob Stutzman, the governor's communications director, has said in the past that Schwarzenegger is following current law but that he will adapt his fund-raising tactics to his proposal if it becomes law.

The New York event carries a minimum entry price of $50,000 per couple and a requested donation of up to $500,000 to become a "co-chairman" of Schwarzenegger's California Recovery Team. Campaign finance experts said they had never before heard of a solicitation for that much money.

The event is being held at the home of Robert Wood Johnson IV, an heir to the fortune of Johnson & Johnson, the giant manufacturer of pharmaceuticals and medical devices.

Johnson serves on the board of trustees for the Robert Wood Johnson Foundation, which owns nearly 83 million shares of Johnson & Johnson. They were valued at more than $4 billion at the end of the third quarter last year.

In addition, Johnson & Johnson has multiple interests pending before state government. According to the secretary of state, the company registered to lobby on nine the current session, as well as on the issues such as Medi-Cal budgeting for medical supplies.

Schwarzenegger launched his gubernatorial campaign saying he did not need campaign donations but went on to raise more than $26 million for his campaign. Since his election, he raised $5.8 million as of Monday, according to California Common Cause, compared with Davis, the most prolific fund-raising governor in California history, who raised $6.1 million in the first six months of his administration.

Schwarzenegger also pledged to "clean house" of special interests in the Capitol, but then narrowly defined that group as public employee labor unions and Indian gaming tribes. Not included in his definition are major corporations or trade groups with business before the government that are directly affected by the governor's decisions.

Jim Knox, the executive director of California Common Cause, closely watches campaign finance reform proposals and says there has been only silence about the governor's reform proposal.

"I haven't heard a thing since the day he proposed it at the Railroad Museum," Knox said.
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E-mail Christian Berthelsen at cberthelsen@sfchronicle.com





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