Trying to Shore Up Limits on Fundraising

Democratic lawmakers said they want to close a loophole that would allow Gov. Arnold Schwarzenegger to bypass new fundraising limits on money collected for initiative campaigns.

A committee of Schwarzenegger allies is setting out to collect tens of millions of dollars to help underwrite the governor’s possible push for initiatives this year; the new cap bars him from raising unlimited sums himself for such a purpose.

The Schwarzenegger supporters are not subject to the same limits, which took effect after the Nov. 2 election. Allowing the committee to act in Schwarzenegger’s stead violates “the spirit of the campaign finance law,” said state Sen. Jackie Speier (D-Hillsborough).

Assembly Speaker Fabian Nunez (D-Los Angeles) predicted in an interview: “I think you’re going to see more than one piece of legislation to try and close that loophole.” The new limits amount to a handicap for the governor, who has said he may go to the ballot later this year with ambitious plans for keeping the state’s budget balanced and for redrawing California’s voting districts.

In his first year in office, Schwarzenegger raised millions of dollars for a political fund called the California Recovery Team. He used the money to collect signatures on petitions that qualified various initiatives for the ballot, buy TV ads and campaign for measures he wanted voters to pass.

Then the state’s Fair Political Practices Commission adopted a limit of $22,300 on contributions to such efforts. Donations of that size are comparatively small change for a governor whose fundraising efforts pull in six-figure checks.

The new committee formed by Schwarzenegger supporters, called Citizens to Save California, can function as a surrogate for the governor, carrying out his agenda without having to abide by fundraising limits that apply to him, Democrats and campaign finance experts said.

“It seems to me that it’s tantamount to giving the governor that money, and circumventing the law by saying that you’re independent,” said Sen. Sheila Kuehl (D-Santa Monica).

The governor’s communications director, Rob Stutzman, countered that it should be “no surprise that sympathetic third parties” would create an entity that is not bound by fundraising caps. He dismissed the new FPPC regulation as “fuzzy-headed.”

Stutzman said the governor could not afford to remain idle in the fundraising race. Opponents are prepared to raise hefty sums to combat the governor’s agenda, he said. For Schwarzenegger not to pursue an aggressive fundraising strategy would be akin to a “football player going onto a football field while putting shackles on his legs, while the other team has none,” Stutzman said.

Citizens to Save California is led by a board that includes members friendly to Schwarzenegger: Joel Fox, who worked on the governor’s 2003 campaign; Allan Zaremberg, president of the California Chamber of Commerce, whose pro-business agenda dovetails with that of the governor; and William Hauck, president of the California Business Roundtable, whom Schwarzenegger last year appointed to co-chair a panel that reviewed a proposed overhaul of state government. A consultant to the committee, Rick Claussen, helped manage two of the governor’s initiative campaigns last year.

As long as Schwarzenegger and his aides do not exert “direct” or “indirect” control over the committee, Citizens to Save California is free to raise unlimited sums under the FPPC rules.

Schwarzenegger cannot play a role in devising strategy, nor can he tell the committee how to spend its money, according to FPPC regulators. But he is free to appear in TV ads the committee runs, attend its fundraising events and encourage donations.

Some members of the committee have made clear they intend to press for the changes the governor has embraced. Schwarzenegger is calling for sweeping changes this year, including redistricting and new limits on state spending, merit pay for teachers, an overhaul of the state bureaucracy and a 401(k)-style employee retirement system meant to cut California’s pension costs.

Schwarzenegger associates have made clear they would welcome the help.

“There are people involved that have been sympathetic and supportive of the same reform goals that the governor has,” said Stutzman. “And we would hope they would be helpful to accomplishing those reforms.”

Because the committee is so closely tied to the governor, it may serve as a vehicle to help Schwarzenegger bypass the new fundraising limits, some experts and watchdog groups said.

“When I saw the FPPC rule, the first thing I thought is, how can people get around this?” said Elizabeth Garrett, a USC law professor and specialist in campaign finance law. “And it was clear that the way to get around it most easily is to have committees set up full of sympathetic people who can take unlimited donations and spend a lot of money in favor of what the governor wants.”

Ned Wigglesworth, an analyst with TheRestofUs.org, a Sacramento-based group that examines the role of money in politics, concurred. “What Schwarzenegger is doing by having Joel Fox and people that he’s close to create this committee is using the disingenuous distinction that it’s not under his legal control,” Wigglesworth said. “That seems to me to be a slap in the face both of the campaign contribution limits that exists for candidates and also for the FPPC regulations.”

One option, some said, is for the Legislature to pass a law limiting the donations that any political committee can accept, whether or not it is under a politician’s formal control.

Courts have not upheld such restrictions in the past, legal scholars said, though they might be more receptive now that more and more politicians are using the ballot as an integral part of their strategy.