Initiative Fundraising in High Gear

Five years after California voters put limits on how much money politicians can raise, three of the state’s most powerful officials are accepting six- and seven-figure checks from interests with a stake in their actions.

Restrictions passed in 2000 capped the amounts that officeholders and candidates can take for their election campaigns. But eight statewide ballot measures are the object of politicians’ fights in the Nov. 8 special election, and there are no limits on money raised for or against propositions.

Individuals and entities with business before state government are donating large sums to Republican Gov. Arnold Schwarzenegger’s effort to pass initiatives, or to the battle being waged against them by Democratic Assembly Speaker Fabian Nunez (D-Los Angeles) and Senate President Pro Tem Don Perata (D-Oakland).

The lack of contribution limits on initiative wars “opens the floodgates for special interests to contribute to candidates indirectly, to the candidates’ pet causes and to the candidates’ governing agenda,” said Daniel Smith, a University of Florida political science professor who studies fundraising and government by ballot measure.

“And it opens the question of corruption or the appearance of corruption,” Smith said.

Reports filed with the secretary of state’s office show that Schwarzenegger accepted $350,000 from Wal-Mart heirs for his main initiative fund. Wal-Mart Stores Inc. and its chairman have given an additional $450,000 to the Schwarzenegger-backed campaign for Proposition 77, which would strip the Democratic-controlled Legislature of the power to draw its own districts.

This month, the governor vetoed union-backed legislation opposed by the retail giant.

Nunez took $150,000 from the electrical workers union on Oct. 5, less than a month after helping the union torpedo legislation it opposed. Nunez is raising money primarily to defeat Proposition 77. Perata, also campaigning against Proposition 77, accepted $100,000 on Oct. 7 from Mercury General Corp., an insurance company that has a significant Capitol lobby operation.

California caps single donations to legislative candidates at $3,300 and to gubernatorial candidates at $22,300, under the rules of Proposition 34, passed by 60% of voters.

A Sacramento judge ruled in March that officeholders and candidates can raise unlimited sums for and against ballot propositions.

The United States Supreme Court has upheld laws restricting direct donations to candidates, reasoning that they reduce the appearance and reality of corruption.

The high court also has ruled that propositions are proposed laws over which voters have the final say, and the issues they address cannot be corrupted, so donors can give unlimited sums.

Among elected officials, Schwarzenegger has raised by far the most this year -- more than $35 million -- in support of the initiatives he is promoting. More than 300 of his donations have come in chunks of $25,000 or more; 77 were for $100,000 or more.

Several donors had issues pending before the governor.

Perata and Nunez stepped up their fundraising when the Legislature concluded its session, after sending more than 900 bills to the governor for final action. The Democratic leaders summoned lobbyists to private meetings and urged them to persuade their clients to donate to campaigns against the governor’s package of special election initiatives -- or at least not to support Schwarzenegger’s measures.

“There was nothing unlawful,” said a veteran lobbyist, speaking on the condition of anonymity for fear of damaging clients’ interests. “But I understood the message.... ‘You want to do OK next year? Play ball.’ ”

In addition to Proposition 77, the redistricting measure, the Democrats are trying to defeat three other measures supported by Schwarzenegger: Proposition 74, which would make it harder for teachers to win tenure; Proposition 75, to restrict public employee unions’ collection of money for politics; and Proposition 76, to restrain state spending and give governors more power over budget decisions.

Paul Hefner, a spokesman for the Democrats’ No on 77 campaign, said the fundraising was within the law. “We’ve got to do what we can to be sure that our side is heard,” Hefner said.

The sources of much of the money raised by Perata and Nunez won’t be known until the end of the week when they file campaign finance reports with the secretary of state.

But they have disclosed some donations.

In addition to the $100,000 from Mercury, Perata took $50,000 donations each from Southern California Edison and construction giant Tutor-Saliba Corp.

The money went into a fund being used to help the No on 77 campaign.

Nunez reports six donations of $100,000 or more to his initiative campaign account. Most of it came from public employee unions, including the California Teachers Assn. and the California Correctional Peace Officers Assn., which represents prison guards. The unions depend on lawmakers to approve annual budgets for schools and prisons.

The speaker reported receiving $150,000 from the International Brotherhood of Electrical Workers on Oct. 5. In September, Democrats in the Assembly sided with the union by blocking Schwarzenegger-backed legislation to install solar panels on a million new homes.

Scott Wetch, the electrical workers’ lobbyist, said the donation “absolutely, categorically” had nothing to do with the Democrats’ action. He added that Nunez long has had “a close relationship with the IBEW.”

“We think he is heading the Legislature in the right direction and we continue to support him,” Wetch said.

Schwarzenegger, who unlike Perata and Nunez is publicly disclosing contributions within 24 hours of receiving them, has received numerous donations from corporations that have business before the state.

“We have a clear objective -- to raise money and raise it quickly,” said Marty Wilson, one of Schwarzenegger’s top political aides. “But we had no knowledge about what bills were pending” at the time the money was raised. “Any inference that [Schwarzenegger’s] signing or vetoing of a bill is tied to a contribution is simply untrue.”

Schwarzenegger has acted against the interests of some donors.

For example, he vetoed a bill that would have ensured that sweetened alcohol drinks favored by teenagers continued to be taxed like beer rather than at the higher rate imposed on distilled spirits.

He took the action despite having received six-figure donations from at least three supporters of the bill.

But he sided with donors in vetoing legislation dubbed by its backers as the “Wal-Mart bill.”

Sponsored by the American Federation of State, County and Municipal Employees, the measure would have required the state to publicly disclose the names of companies with 25 or more workers whose employees receive state health benefits through the Medi-Cal, Healthy Families, and Access for Infants and Mothers programs.

On Oct. 7, the day the governor vetoed it, Christy Walton, widow of Wal-Mart heir John Walton, was recorded as giving $250,000 to Schwarzenegger’s California Recovery Team campaign account. Eleven days later, Wal-Mart Chairman Robson Walton gave $250,000 to support Proposition 77.

Wal-Mart spokesman Nate Hurst said the corporation has no control over Walton family donations.

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Times staff writer Jordan Rau contributed to this report.