Schwarzenegger's Fundraising Questioned

*Termed-out Schwarzenegger still raking it in, critics say

By Kate Folmar

SACRAMENTO - When Arnold Schwarzenegger campaigned for governor, he infamously scoffed at the notion that he would need to accept special interest money.

Almost four years and more than $100 million later, Schwarzenegger is still raising money at a torrid pace, even though he's legally barred from seeking another term as governor. And much of that cash comes from special interests that have business before the state.

Since January, Schwarzenegger has pulled in $3.5 million in three different political committees - an average of $700,000 a month in this non-election year. Additionally, more than 100 private donors - from AT&T to Chevron and Oracle - paid $2.7 million total into a non-profit that paid for the governor's two-day inaugural soiree.

"For someone who didn't believe in fundraising, he's doing a really good job" at it, said Bob Stern, president of the Center for Governmental Studies in Los Angeles. "People out there want to give money so that they can have access to him - as a star and as a governor."

The governor raises so much that people have become "almost inured to it," said Stern, who wrote some of the state's campaign finance laws. "It doesn't shock anybody anymore that he's raising money. It certainly doesn't shock him."

Schwarzenegger's aides say he's retiring a debt from his landslide re-election last year over Democrat Phil Angelides and collecting cash to promote his legislative agenda.

But campaign finance watchdogs wonder if the governor's fundraising appetite can ever be sated. And they consider some of his recent moves unseemly, such as hosting a fundraiser at his West Los Angeles home for deep-pocketed donors. Concerns also persist about who's giving and why.

Schwarzenegger this year has socked away about $1.5 million in his re-election fund, which ended 2006 with a debt of nearly $2.4 million. Legally, he's allowed to keep collecting five-figure checks into his re-election coffers until that debt is settled and fundraising expenses are covered, perhaps within the next month or so.

One recent $10,000 contributor is Dawn Arnall, whose billionaire husband, Roland Arnall, owns the sub-prime lending giant Ameriquest. The Arnalls and Ameriquest have contributed more than $1 million to the governor and his causes over the last several years.

This year, Democratic legislators are considering new laws on high-risk mortgage practices, including sub-prime loans. So far, Ameriquest has not publicly weighed in on those efforts, but some watchdogs worry that donors expect special treatment in return.

Aides maintain that Schwarzenegger is unswayed by political donations.

The governor "makes decisions based on what he believes is in the best interests of the people of California," said political spokeswoman Julie Soderlund. "Those who contribute do so because they believe in his vision."

Schwarzenegger has repeatedly tried to create a fundraising blackout period for himself and legislators to eliminate any appearance of impropriety during budget season. The notion has repeatedly bogged down in the Legislature.

The governor is still committed to that ideal, spokesman Aaron McLear said. And he's "very confident that we will work with the Legislature to create comprehensive political reform that would include a partial ban on fundraising."

In addition, the governor is collecting contributions for his California Recovery Team - an all-purpose committee unfettered by contribution limits. Schwarzenegger has previously used this fund to pay for flying around the state in a private jet while advocating for and against ballot initiatives.

The governor isn't campaigning for any initiatives now - although several policy pushes, including health care and political map drawing, could land on the February, 2008, primary ballot.

The recovery team "exists to support the governor's legislative agenda, which includes health care, redistricting reform, prison reform, water storage, rebuilding California's infrastructure and protecting the environment," Soderlund said. It "makes it possible for the governor to travel through the state talking to Californians about his vision and goals."

Which, apparently, doesn't come cheap. The California Recovery Team has reported contributions of about $2 million this year.

Frequent Schwarzenegger critic Jamie Court, of the Foundation for Taxpayer and Consumer Rights, describes it as a "no-limits, hold 'em slush fund."

"He is a termed-out politician and shouldn't be raising a dime unless he has a ballot initiative," Court said. "And then, he should be raising contributions with a limited value." That last comment alludes to the fact that Schwarzenegger's legal team helped eliminate contribution limits for campaign committees such as the California Recovery Team.

Campaign finance watchdogs were aghast when Schwarzenegger and Shriver last month opened their Brentwood home for a private cocktails reception to recovery team donors who gave between $25,000 and $250,000. Several said $250,000 was the largest "ask" they'd seen in California.

People who gave at least $100,000 are also entitled to sup with the first family on June 6, according to an invitation first reported by the Los Angeles Times. What's more, the invitation says they can join "regular conference calls with the Governor and leading and well-known Californians from the public and private sectors."

The conversations allow the governor to keep supporters abreast of his agenda, Soderlund said, but others lament that it looks like the governor is selling access.

Again, several donors have a stake in state business and a lobbying presence in Sacramento. They include Southern California Edison ($50,000); Intel, State Farm Insurance, Union Pacific Railroad ($25,000 apiece); and Aetna ($10,000).

The question, said Stern of the Center for Governmental Studies, is whether donors expect favorable policy treatment in return. "If he weren't governor, would they be giving? And the answer is: not as much."

The governor's third fundraising venue is his "office-holder" account, which several elected officials have to pay for miscellaneous expenses associated with holding office. The governor pays for Hollywood-style event lighting and sound at public events from these coffers.

Donors have given $55,000 to the office-holder account in 2007, on top of $190,000 raised in the final months of last year.

The office-holder account is a relatively new development. In late September, Schwarzenegger signed a Democratic bill authorizing the creation of such accounts for politicians still in office who aren't running for anything else.

Under the law, the governor can collect up to $200,000, in increments of up to $20,000, in this account annually.

Schwarzenegger's office-holder donors include AT&T, which gained access to California's lucrative cable market thanks to a 2006 bill pushed by Democrats and signed by Schwarzenegger. It gave $10,000.

Beyond raising money for his own needs, the governor is also helping the California Republican Party retire $4.5 million in debt from get-out-the-vote efforts last year. Schwarzenegger is slated to headline a party gala May 22 at the soigne` Beverly Hills Hilton.


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