Gov.’s Tie to Fund Drive Questioned

Gov. Arnold Schwarzenegger is becoming entwined in the campaign fundraising efforts of a group that under state law is required to remain independent of him.

As he travels the state to build support for an agenda that would reshape California government, the governor is sharing the stage with leaders of a fundraising committee that has been formed to support his proposals.

State campaign laws dictate that if such committees are under the control of politicians, then the size of the donations the committees can accept must be restricted. The committee, Citizens to Save California, is accepting donations without limits.

On Thursday, Schwarzenegger and a top aide, legislative secretary Richard Costigan, laid out the governor’s agenda to invited guests at a private luncheon at the Regency Club in Los Angeles. Another speaker was Allan Zaremberg, president of the California Chamber of Commerce and co-chairman of the fundraising committee, who was invited by the governor’s campaign finance team.

The committee has been passing out fundraising literature at similar luncheons. Such events took place in Newport Beach on Wednesday and in San Francisco on Tuesday. More private luncheons are planned next week in Sacramento and San Diego.

An invitation obtained by The Times was printed on Schwarzenegger campaign stationery and describes the lunches as chances for the governor to articulate his “vision for California” and to offer a “briefing on the status of the state’s finances” and an “overview” of the governor’s “reform plans.”

Marty Wilson, the governor’s top fundraising aide, said the events were a prelude to an upcoming push to raise money for the governor’s reelection fund.

Guests need not make a donation. But one person who attended the event in San Francisco, speaking on condition of anonymity, said the message was clear: “You knew before you went there you were expected to give something at some point.”

The luncheons worry some watchdog groups, which contend that the governor is skirting a new state regulation that restricts the sums politicians can raise for initiative campaigns. The governor has said he may take his proposals for change directly to voters in ballot initiatives. The fundraising committee was formed to help him do so.

“Clearly he’s not abiding by the spirit” of the regulations, said Bob Stern, president of the Center for Governmental Studies.

The contribution restrictions, which were approved by the state Fair Political Practices Commission last year, pose tactical difficulties for Schwarzenegger. He wants $50 million to prepare for the possible initiative campaign, when he may ask voters to approve state spending restraints, changes to the pension system for state workers and a new method of determining voting districts.

The money would pay for TV ads and political events, as well as the gathering of signatures for ballot petitions. He probably would face well-financed opposition in such a campaign.

Until last year, Schwarzenegger could raise money for initiative campaigns in unlimited sums -- and he did. Now he can collect no more than $22,300 from any single donor.

But Citizens to Save California said it faced no such constraints and could collect donations of any size. At issue is whether Schwarzenegger controls or significantly influences the committee, which would subject it to the $22,300 limit.

Under state law, a fundraising committee must abide by the stricter campaign finance laws if its expenditures are “controlled directly or indirectly by a candidate” or if a candidate has “significant influence on the actions or decisions of the committee.”

Karen Getman, a former chairwoman of the Fair Political Practices Commission and now an elections attorney, said Schwarzenegger “is clearly coordinating with” Citizens to Save California.

“If you would tell me people aren’t giving money to that committee to curry favor with the governor,” she said, “you would have to be naive.”

Committee leaders said they were following the regulations. The governor wasn’t directing their efforts or telling them how to spend the donations, they said.

“He can help us raise money, but he cannot tell us how to spend the money,” said Joel Fox, a committee co-chairman who worked on Schwarzenegger’s 2003 gubernatorial campaign.

Rob Stutzman, the governor’s communications director, said: “It’s very clear the governor can encourage donors to contribute money. That’s his free speech right to do so. But the governor or his agents cannot control how the funds are spent.... And we’ll take every painstaking precaution to make sure that does not happen.”

Zaremberg, in an interview Thursday, said he made clear in his presentations that the committee was independent and not under Schwarzenegger’s control. He said he had not explicitly asked for money but had told guests “that we have a successful campaign team for collecting signatures, and that there is a recipe for successful campaigns and certainly money” is an ingredient.

Asked why Zaremberg was allowed a speaking role at the governor’s luncheons, fundraising aide Wilson said: “There’s a lot of interest in what his organization is doing. And so it’s necessary for that committee to have its own presence and persona.”

Jon Coupal, a committee board member who is president of the Howard Jarvis Taxpayers Assn., said Citizens to Save California -- not Schwarzenegger -- would determine which initiatives to support. He said the signals Schwarzenegger had sent through the Legislature and in speeches offered guidance about what he wanted.

Coupal also said the committee may disagree with Schwarzenegger on some points.

In the promotional literature that was passed out in San Francisco, the committee described itself as “an independent committee supporting Governor Schwarzenegger’s reform agenda.” The material borrows Schwarzenegger’s message, invoking unspecified “special interests” as a California scourge that must be defeated.

“The special interests have pursued their self-serving agenda at the expense of California families, taxpayers, employees and businesses, and they will aggressively oppose these reforms and spend millions to protect the status quo,” stated the fundraising material obtained by The Times.

The handouts in San Francisco said the committee hoped to raise $13 million in the next eight weeks. Included in the packet was a form that allowed people to make donations by credit card and to send them to the Sacramento law firm of Nielsen, Merksamer, the committee’s legal counsel.

Guests at the San Francisco event included Charles Schwab, president and CEO of the financial services firm of the same name.

According to people in attendance, Schwarzenegger said his efforts would require tens of millions of dollars, adding that he expected his political opponents to collect at least as much. He presented a chart showing that state expenditures were outstripping revenues -- supporting his argument that the state needed a constitutional amendment that would cut spending across the board when the budget fell out of balance.

Schwarzenegger took questions over a lunch that included chicken and chocolate cake. Costigan, the governor’s legislative aide, who attended all three luncheons held to date, is not paid his state salary on the days he appears, said communications director Stutzman.

Listed as hosts for Schwarzenegger’s events are major figures in the corporate world who have been generous donors to his campaigns.

William Lyon, the housing developer who was a co-host at Wednesday’s luncheon at the Pacific Club in Newport Beach, donated $250,000 to Schwarzenegger last year.

Alex Spanos, a developer who is scheduled to host Tuesday’s lunch in Sacramento, gave one of Schwarzenegger’s fundraising committees $750,000 last year.

Don Fisher, the host of this week’s San Francisco event, is chairman of the Gap stores.

He, his wife, Doris, and their family foundation gave a combined $120,000 to Schwarzenegger or his committees last year.

During his gubernatorial campaign, Schwarzenegger called for tighter limits on campaign fundraising, including a ban on donations during budget season.

He has often said he was not influenced by contributions.