2005 Political Fundraising at $116 Million

Led by national drug companies that have poured $58.5 million into an initiative fight with national implications, promoters and candidates have raised more than $116 million they can use in campaigns this year and beyond.

In advance of the Nov. 8 special election he called, Gov. Arnold Schwarzenegger, along with such allies as the California Chamber of Commerce, has raised $19.6 million for initiatives he supports. He also collected $2.1 million for a possible 2006 reelection bid, raised in the first half of this year.

Unions representing public school teachers, prison guards and other civil servants are matching Schwarzenegger’s money, raising at least $20 million in the first half of the year as they prepare to battle him over an array of ballot measures, according to reports filed with the state in recent days.

Schwarzenegger had predicted he would raise as much as $50 million for the campaign. Although he still may reach that goal, he fell short in the first half of 2005, the period covered by the filings. Indeed, his main initiative fund had a $1.8-million deficit on June 30; another fund, created by his backers, had a $1.4-million debt.

Schwarzenegger erased the debt in July, his campaign aides said, and has amassed an additional $1 million. But Robin Swanson, spokeswoman for the union-backed opposition, said the initial deficit “speaks volumes; businesses ... don’t support the governor’s agenda. Once again his ego has far surpassed the reality.”

The governor called the special election to push measures to grant governors more power over the state budget, make tenure harder to get for public school teachers and alter the way legislative boundaries are drawn.

The ballot is expected to include as many eight propositions, though the redistricting measure faces a court challenge.

Voters will decide whether to require parents of minor daughters to be notified before the girls could obtain abortions, to reregulate aspects of the electricity market, to cut prescription drug prices and to restrict public employee unions’ ability to fund political activity -- an idea that is generating fierce labor opposition.

The California Teachers Assn., among the Republican governor’s main rivals, has tapped its 335,000 members for an extra $60 a year each for political campaigns -- and already has spent $15 million. Much of that money has gone to television ads airing across the state attacking Schwarzenegger.

CTA President Barbara Kerr vowed to spend “what it takes” to defeat the measures Schwarzenegger has endorsed. “There is nothing on this ballot that will help our schools or our students.”

Several other unions also are spending heavily. The California State Council of Service Employees, which represents state, local and private employees, donated $1.75 million to the Alliance for a Better California, the main group opposing the governor. The alliance reported raising $10.2 million from January through June.

“There is no question that this will be an expensive campaign,” said Schwarzenegger campaign spokesman Todd Harris, predicting that the governor would be “outspent significantly” by labor unions and others.

The campaign reports come as opinion polls show that voters are skeptical of the need for a special election and question the wisdom of the measures on the ballot. But donors appear undeterred, giving an average of more than $540,000 a day to various causes.

“All the inside players view this as a life-or-death battle, but the average person is really sick of it,” said Barbara O’Connor, director of the Institute for the Study of Politics at Cal State Sacramento.

“And they’re tired of relegating government to the election box. They don’t want to have to do this.”

For all the money being spent on the Schwarzenegger-backed initiatives, the costliest fight probably will involve two propositions that are not part of the governor’s agenda: Propositions 78 and 79.

The measures are being marketed as ways to trim the cost of prescription drugs. The similarities end there.

Pharmaceutical companies reported having $29 million in the bank for Proposition 78 as of June 30 -- before raising $22 million more in July. The measure promises to pare drug costs for as many as 5 million Californians in a program to be overseen by the state Department of Health Services.

A handful of drug companies, including Glaxosmithkline and Merck & Co., donated $9.8 million to the Proposition 78 campaign, while several others donated $4 million.

Drug makers are opposing the labor-backed Proposition 79, which offers mandatory cuts in medicine prices for 8 million or more Californians.

“They’re spending all this money because they’re scared by voter anger about unfairly high drug prices,” said Anthony Wright of Health Access, which is promoting Proposition 79.

The Alliance for a Better California is paying costs associated with the measure; details of those expenditures were not reported.

The drug measures are attracting attention as the debate continues in Washington, D.C., over how to lower the cost of medication. Political experts believe drug companies worry that a loss in California could affect the national debate.

“California is obviously a big state. It tends to be a state that is watched,” said Denise Davis, spokeswoman for the pharmaceutical industry’s campaign.

California Indian tribes hold the record for spending on a single initiative campaign: $63 million on Proposition 5, a 1988 initiative to legalize casinos on Indian reservations. Altogether, the campaigns for and against Proposition 5 cost $92 million.

Backers of what could be the most controversial initiative on the November ballot raised $927,000. The money is for Proposition 75, which could make it harder for public employee unions to raise money from their members for political activity. The measure strikes at Democrats’ main source of campaign money.

Schwarzenegger has not decided whether to endorse it. But several of his contributors reported that they had given large sums to support it. Among the donors was Ameriquest Capital Corp., the Orange County-based mortgage lender that has been a target of complaints and lawsuits about its practices.

Ameriquest is one of the state’s biggest campaign spenders, giving $2.1 million in the first half of the year, primarily to Republicans and business-oriented causes. Ameriquest gave $250,000 to the Small Business Action campaign committee, a major backer of Proposition 75.

Dawn Arnall, wife of Ameriquest founder Roland Arnall, gave $250,000 to Schwarzenegger. The Arnalls and Ameriquest have given the governor and his causes $1.54 million since his 2003 election campaign.

In 2005, Schwarzenegger has accepted $2 million from William A. Robinson, founder of the air cargo firm DHL Airways; $1.5 million from A. Jerrold Perenchio, chairman of the Spanish-language television network Univision; and $1 million each from Alex Spanos, the San Diego Chargers owner and Stockton developer, and B. Wayne Hughes, chairman of Public Storage Inc.

Among the measures Schwarzenegger is backing is Proposition 77, to authorize retired judges, rather than the Legislature, to draw voting districts in California. A group called People’s Advocate, sponsor of the initiative, reported raising $360,000 in the first half of the year. The group has spent $827,000 this year and in 2004, and reports a $100,000 debt.

Most of the money was spent gathering signatures to place the measure on the ballot and, more recently, to fend off a suit by Atty. Gen. Bill Lockyer, who is seeking to invalidate it. A state appellate court is deciding whether to permit a vote on the measure.

In other filings, state Treasurer Phil Angelides reported having $16.8 million in the bank in preparation for his 2006 run for governor. Angelides’ main foe in the Democratic primary, Controller Steve Westly, infused his campaign with $15 million of his own money, and reported having $18.2 million in his war chest. Westly, an EBay executive before entering politics, is a multimillionaire.

Lockyer, a Democrat who dropped out of the race for governor, has $9.6 million for his run for California treasurer. That’s more than twice the $4 million that incumbent Treasurer Angelides spent on his 2002 reelection.

Oakland Mayor and former Gov. Jerry Brown, seeking the Democratic nomination for California attorney general, had $2.4 million in the bank, much of it from donations of less than $1,000. His main foe, Los Angeles City Atty. Rocky Delgadillo, had $1.3 million in the bank. Republican candidate state Sen. Chuck Poochigian of Fresno reported having $2 million in the bank.