Governor's Campaign Reports Debt

Despite showing more than $2million owed, Schwarzenegger paid hefty bonuses to senior aides who moonlighted on his reelection bid.

By Peter Nicholas and Nancy Vogel, Times Staff Writers

SACRAMENTO ? Gov. Arnold Schwarzenegger racked up more than $2 million in campaign debt as he strode to victory in last year's election, yet still paid large bonuses to senior aides who moonlighted for his campaign while on the state payroll, records show.

Campaign reports filed with the state Wednesday show that the governor maintained his fund-raising lead over Democratic opponent Phil Angelides through the end of the 2006 governor's race.

Schwarzenegger raised more than $4.3 million from late October through year's end, compared to $1.7 million for Angelides. But the governor also spent more freely, finishing the year with nearly $2.4 million in debt, compared to about $174,000 for Angelides.

For the year, Schwarzenegger's main reelection committee took in more than $43.1 million; Angelides, about $20.2 million.

"It's the intent of the [Schwarzenegger campaign] committee to pay its debts in full," said Julie Soderlund, a spokeswoman for the governor's political team.

The gap reflects the considerable overhead that sustains Schwarzenegger's operation.

After his victory on Nov. 7, and with his campaign facing a debt, the governor paid $273,000 in bonuses to four of his most trusted government aides who doubled as campaign workers. The staff members said they performed the political work on their own time, as state law requires.

Schwarzenegger's campaign committee reported spending $22.2 million last year on television or cable air time and production costs; $2.4 million on fundraising operations, and $391,000 on polling.

A total of $3.6 million went to a battery of campaign consultants. Steve Schmidt, the governor's campaign manager, took in $375,000 over a 10-month span last year.

In some cases, the consultants gave the governor entree into coveted ethnic and racial voting blocs.

In the three months before election day, the governor's campaign paid $20,000 to an influential African American clergyman, Amos Brown of the Third Baptist Church in San Francisco. The governor courted Brown as part of a broader effort to siphon black support from Angelides.

Schwarzenegger also paid $75,000 to a firm owned by Arnoldo Torres, a Democrat, who helped him make inroads with Latino voters ? a preoccupation of his campaign team.

Aides suggested that the governor won't have to struggle to cover his campaign debt. Now that Schwarzenegger is embarked on another four-year term, he can tap businesses and other special interests whose fortunes depend on state action.

That has been his long-standing practice. Schwarzenegger's Wednesday filings show that one of his committees received $250,000 in October from Clean Energy of Seal Beach, a leading provider of natural gas for truck, bus and car fleets. The company stands to benefit from the governor's push for alternative fuels.

In January, Schwarzenegger signed an executive order aimed at boosting consumption of alternative transportation fuels, such as natural gas. The order is aimed at cutting carbon emissions linked to global warming.

Schwarzenegger's payment of bonuses to state aides is rare among large-state governors. At the federal level, executive branch employees are barred from receiving such money.

Under federal conflict of interest law, executive branch employees face criminal penalties for taking money apart from their government salaries.

In the U.S. Senate, something similar applies: Senators may use their own money to provide extra pay, but can't use campaign funds for that purpose, according to the Senate ethics manual.

"At the federal level, it's clear that the statutory prohibition on supplementing an executive branch employee's income is a safeguard to ensure that their primary and sole responsibility is to those who pay them," said Meredith McGehee, policy director at the Campaign Legal Center in Washington, D.C. "When you allow special interests, through their campaign contributions, to supplement the executive branch employees' salary, you are opening the door to divided loyalties.

"And that's not good public policy."

The four aides to get campaign bonuses were chief of staff Susan Kennedy ($100,000); communications director Adam Mendelsohn ($75,000); First Lady Maria Shriver's chief of staff Daniel Zingale ($50,000); and gubernatorial personal assistant Clay Russell ($48,000).

All were deserving, Soderlund said.

"They put in a tremendous amount of hours on the campaign trail before and after work and on weekends, and they were compensated for that time," Soderlund said.

peter.nicholas@latimes.com

nancy.vogel@latimes.com

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.)