Wealth Buys Access to State Politics

They can pick up the phone and get the political leader of their choice on the line. They can cook up bills or initiatives to boost their interests. They can kill measures that threaten them.

They are the state’s largest campaign donors, and they are a relative few: A Times analysis of 1998 campaign spending records shows that about 330 individuals, corporations and political action committees gave $100,000 or more to state politics last year.

Of those, 48 gave $1 million or more. Eight reached eight-figure status, at $10 million and above.

Wealth is their common denominator. Beyond that, they are a diverse group. The roster of this exclusive club includes Republicans and Democrats, conservatives and liberals, business tycoons, Hollywood glitterati, media moguls, political action committee chiefs and labor leaders like John Hein of the California Teachers Assn., who helped direct how the union spent $21 million on ballot initiatives and candidates last year.

Many are wealthy partisans who have helped elect presidents and governors for decades. But some of the biggest spenders are nouveau riche who only recently began spreading their wealth around the halls of power. Many compound their influence by leaning on friends to give too.

Most donors and politicians say contributions merely buy access to leaders, not their votes. It is illegal for an official to take action based on a donation. Still, most large donors have financial interests that depend on the actions of the governor and Legislature. And already this year, there are indications that some are reaping rewards.

“These are entities that want something done in California,” said Robert Stern, of the nonpartisan Center for Governmental Studies in Los Angeles.

All told, this elite club poured about $300 million into the state political system in 1998. That is 60% of the estimated $500 million spent on campaigns last year.

“The system we have puts an immense amount of power into the hands of a few people,” said Samantha Sanchez, co-director of the nonpartisan National Institute on Money in State Politics in Helena, Mont. And “California, of course, is in a different universe than any other state.”

Six-figure political donations are almost unheard of in most other states, all but 13 of which restrict campaign contributions. In California, however, even back-bench legislators attract $100,000 or more from single sources.

Last year’s $500 million topped the $297 million spent on California elections two years earlier, which topped the $262 million spent in 1994.

Why the exponential growth? Multimillionaires Al Checchi and Jane Harman threw a combined $55 million at their failed runs for governor. Altogether, the governor’s race cost $118 million, almost twice what was spent four years earlier. Flush gambling interests spent $100 million on one high-stakes initiative and various other campaigns.

Campaigners and their managers have voracious appetites for money; the cost of a single Senate race in rural Northern California reached $5 million last year. And with the economy expanding, there’s money to spend.

The spigots opened wide just two years after voters approved Proposition 208, which imposed strict campaign donation and spending limits. A federal judge last year struck down the initiative; the measure’s backers have appealed.

For comparison, consider the federal system, in which demand for campaign cash also is seemingly insatiable, but in which individual donors can give no more than $1,000 to a candidate for federal office, and corporations are barred from giving directly to candidates.

In 1997-1998, the biggest donor to a federal campaign was Philip Morris and its officers. The tobacco giant spent $3.2 million on federal elections, largely in so-called soft money to parties and political action committees.

In California, politics cost Philip Morris $21.9 million, as the New York firm led the tobacco industry’s effort against the successful Proposition 10, which raised cigarette taxes 50 cents a pack.

People involved in the system expect more of the same in the new century. “De-escalation? Are you kidding?” said Hein, of the California Teachers Assn. “The initiative process is not going to go away. It’s going to grow. . . . That is just a hard, cold fact.”

Donors Pursue Business Interests

Roughly half the money spent last year went to initiatives. Interests affected by ballot measures to expand gambling, raise tobacco taxes, regulate electric utilities and weaken the influence of labor unions dominated the airwaves with ads bought by their millions.

But there are scores of other large donors who pursue business interests in the Capitol and generate much less attention. Here are a few:

* The California operation of Corrections Corp. of America, a Tennessee firm, is run by David Myers. He wants legislative approval to house state inmates in the company’s prisons. The company had not been a campaign spender of note in California until 1998, when it spread $210,000 among Democrats and Republicans.

“Other folks are giving. It’s the nature of the beast, I guess,” said Myers, president of the company’s western regional operation.

Myers’ rival is Don Novey, president of the California Correctional Peace Officers Assn., the union that represents state prison workers and opposes private prisons. Novey helped direct the $4.1 million that the union gave to state politics last year, including $2.3 million to help elect Gov. Gray Davis and $335,000 to Senate President Pro Tem John Burton (D-San Francisco). Among their successes, Novey and union lobbyists have fended off the expansion of private prisons.

“They [Corrections Corp.] aren’t used to being taken on by blue-collar workers,” Novey said.

* Maxxam Corp., based in Houston, is run by Charles Hurwitz. His company spent $321,000 on California politics in 1998, twice the sum it spent here in a single year before. Much of the money went to legislators who supported spending $230 million to help buy Headwaters Forest, the largest remaining private stand of redwoods, from Maxxam’s subsidiary, Pacific Lumber Co. Davis and Hurwitz consummated the deal a month ago.

“Obviously, the Headwaters issue was on the front burner,” said Hurwitz spokesman Bob Irelan. “But I stress we have a long-standing pattern of contributing to officeholders . . . who have an interest in business issues and hopefully share our views.”

* Martin L. Andreas is part of the family that controls Archer Daniels Midland, one of the world’s largest agriculture concerns, and oversees its political giving. ADM wasn’t a major campaign donor in California until last year, when the Illinois-based firm gave $135,000 to Davis’ campaign and $25,000 to Senate leader Burton.

Archer Daniels produces ethanol for use as a gasoline additive. Ethanol is a potential replacement for the additive MTBE, now that Davis has directed that the use of MTBE be phased out because of concerns that it is polluting water. Davis has requested a study of the health effects of ethanol.

* Oil companies, always major donors, have a variety of interests. Arco, for one, spent $780,000 on state politics last year, including $102,500 to Davis.

Arco had defended the use of MTBE, a key ingredient of its gasoline. In the days before Davis acted, Arco escorted one of Davis’ top aides to its Carson refinery. To further ensure that Davis understood the implications of the impending decision, Arco chief executive Mike R. Bowlin phoned the governor.

Although Davis directed that the additive be removed from gasoline, he allowed oil companies four years to phase it out, rather than the faster time-frame that some environmentalists had hoped for. That was a partial victory for Arco.

“The most important thing is we want to be able to discuss these issues, and get our views on the table,” said Thomas Markin, manager of Arco’s lobbying and public affairs.

* Stanley Zax is chairman of Zenith Insurance Co., among the state’s largest providers of workers’ compensation insurance, a heavily regulated segment of the industry. His Woodland Hills company is a perennial six-figure donor. Zenith gave $678,000 last year, including $100,000 each to Davis, Insurance Commissioner Chuck Quackenbush and state Assembly Speaker Antonio Villaraigosa (D-Los Angeles).

For added measure, Zax asked a wealthy friend, Carl Lindner, to give to Burton. Lindner, who controls an insurance company and Chiquita Brands International from his base in Cincinnati, gave Burton $50,000. Burton was the only Democrat who got money from Lindner. Long a top donor to federal campaigns, Lindner gave $525,000 last year to Republican candidates and causes in California.

At the top of his agenda is legislation he believes will correct what he calls an inefficient workers’ compensation bureaucracy that costs insurance companies money. He has discussed it with Burton and others.

Zax is also a state Senate appointee to the Little Hoover Commission, a watchdog agency that investigates state operations. One of the panel’s recent targets is the foster care system. Zax says he is especially troubled by the system because it bounces children from home to home. He has spoken his mind about its failings to lawmakers and Davis administration officials.

His entree has been his money. That is how he has come to know the state’s political leaders. “If I didn’t know the people, they wouldn’t listen to me. It’s nothing more complicated than that,” Zax said.

11 Individuals Gave $1 Million or More

Not all big donors in California are corporations or political action committees. Eleven individuals gave $1 million or more in 1998. Dozens more gave six-figure sums.

They range from actor and director Rob Reiner and his family, who sponsored a hike in cigarette taxes to pay for their vision of how to improve early childhood education, to Howard Ahmanson, a conservative Christian savings and loan heir who has funded social conservatives for the past decade.

Here’s a closer look at five of the largest:

* Reed Hastings was never politically involved until last year. He made up for it, spending $3.3 million of the wealth he made as a software developer in an effort to place a charter schools initiative on the ballot. It was more than any individual spent on politics in 1998, other than Checchi and former Rep. Harman and her husband, Sidney, on their campaigns.

As Hastings was about to submit the signatures to place the measure on the November ballot, the Legislature struck a compromise that gave Hastings most of what he wanted, and he withdrew the initiative.

Hastings, of Santa Cruz, is among the few large donors who discusses why he gave. A former high school teacher, Hastings has no financial stake in charter public schools. He, like many large donors, got involved because he believes education is the nation’s most pressing problem.

“We’ve all succeeded because of our education, and we want to make sure that all Americans at least have a fair shot at that education,” Hastings said.

He is considering an alliance with the California Teachers Assn. for another school-related initiative for the 2000 ballot, to make it easier for school districts to win voter approval of school construction bonds.

Hastings said he gives money to candidates “70% based on relationship and 30% on policy.” He is a Democrat but gave $50,000 to Republican Dan Lungren’s gubernatorial campaign.

“He was very helpful with the charter schools initiative,” Hastings said of Lungren, who was then state attorney general.

* A. Jerrold Perenchio is the reclusive billionaire owner of Univision, the nation’s largest Spanish-language television network, including KMEX in Los Angeles.

A former Hollywood producer and partner of Norman Lear, Perenchio bought Univision in 1992 with partners from Mexico and Venezuela. Forbes magazine estimates his fortune at $2.1 billion. Last year, Perenchio contributed $3.06 million to state politics.

A Republican with an office in Century City, land in Malibu and a home in Bel-Air, Perenchio gave $200,000 to Lungren. He gave even more to Davis: $235,000. He also gave $100,000 to Assembly Speaker Antonio Villaraigosa (D-Los Angeles).

Perenchio’s biggest expenditure was $1.5 million to defeat Proposition 227, the anti-bilingual initiative overwhelmingly approved by voters.

Perenchio declined to discuss his political giving.

* Ron Burkle is known for tossing lavish fund-raisers at Greenacres, his Beverly Hills estate once owned by silent film star Harold Lloyd. Burkle made his billion by buying supermarkets, including Ralphs Grocery/Food 4 Less Supermarkets.

Burkle and his corporate entities spent $1.8 million on state politics last year. He gave $750,000 to Proposition 10, the cigarette tax hike.

Burkle is close to Davis. He employed Davis’ wife, Sharon, to help run his charitable foundation. Burkle and his corporate entities gave Davis’ campaign $355,000, and $225,000 to the California Democratic Party, state records show.

Supermarket mergers are subject to antitrust review by the state. Some of Burkle’s stores are in urban redevelopment areas, regulated by the state. But associates and politicians say Burkle is like many top donors: He simply wants to share his views on issues of the day with political leaders.

“He loves the esoteric discussion of where government should go,” said Darius Anderson, a former Burkle aide and now a Sacramento lobbyist.

* New York billionaire and takeover mogul Ronald Perelman is a Friend of Bill’s; he’s also apparently a Friend of Gray’s. Perelman-controlled entities gave Davis’ campaign $375,000, and the state Democratic Party $225,000.

Among his first acts as governor, Davis appointed a former top Perelman aide, Demetri Boutris, as his legal affairs secretary. Davis and Boutris have been friends for years.

Perelman’s worth is estimated by Forbes at $6 billion. His MacAndrews & Forbes Holdings Inc. controls a variety of firms, among them Revlon Inc. Perelman also controls California Federal Savings & Loan, the nation’s second largest savings and loan, and Consolidated Cigar Corp., the nation’s largest cigar manufacturer. Perelman’s banking and tobacco holdings could be affected by state action.

Davis, who maintained during the campaign that he refused tobacco money, did not take donations directly from the cigar company.

Unions Get a Seat at the Table

Critics take a skeptical view of six-figure giving, saying that such huge donations make politicians too indebted to their benefactors.

“It is almost like a scandal waiting to happen,” said Paul Hendrie, communications director for the Center for Responsive Politics in Washington.

Some donors already have reaped benefits.

Two of Davis’ first nominees to the University of California Board of Regents are San Diego Padres owner John Moores and Judith Hopkinson, an executive at Ameriquest Capital Corp. of Orange.

Moores gave Davis donations worth $166,000 in money and use of his private plane for campaigning. Hopkinson gave Davis $50,000. Ameriquest gave $181,000.

Do donations help land plum jobs?

“Absolutely not,” said Davis spokesman Michael Bustamante.

No block of supporters was more instrumental to Davis’ election than organized labor. Unions gave Davis roughly $9 million in money and campaign help.

Labor’s total spending is difficult to quantify, given the vast number of political action committees controlled by the many unions and their locals. However, unions’ overall contribution exceeded $50 million, according to state records. That was second only to the $99 million California and Nevada gambling interests spent last year on state politics.

Labor led the successful $20 million effort to defeat Proposition 226, the June ballot measure backed by former Gov. Pete Wilson that would have limited labor’s ability to raise money from union members for political causes.

That effort, political analysts believe, helped energize union voters and Democrats generally for the Davis-led sweep in November.

Davis has placed labor leaders in key spots in his administration. Labor leaders also count on Davis to take pro-labor steps related to wages and to boost spending on roads, bridges, schools and other public projects that provide work for union members.

“What we wanted was to be invited to the table,” said Art Pulaski, head of the California Labor Federation, AFL-CIO.

Pulaski has been to the governor’s office--something that never happened when Republican Wilson was governor--has traveled to Mexico with Davis and speaks to Davis by phone about gubernatorial appointees.

Labor’s big foot is the California Teachers Assn. It doled out $17 million to oppose three ballot measures and to pass one, the November bond for school construction. Teachers gave $3.9 million more to candidates in the form of cash and campaign work, including $1.2 million to Davis.

The teachers opposed aspects of Davis’ education plan. However, the test of Davis’ relationship with the union will occur in coming months and years over issues such as school funding, starting pay for teachers, improved teacher training, building new schools and making existing ones cleaner and safer.

State workers, having endured four years without a raise during Wilson’s second term, also provided Davis substantial backing. The California State Employees Assn., representing about half the state workers, gave him $1.08 million in cash and campaign help through its two political action committees.

The Davis administration agreed to grant state workers 5.5% pay hikes effective this month, at a cost of $71 million for the final three months of the fiscal year. The raises are expected to be followed by another one this summer.

“We gave and gave,” said Perry Kenny, president of the California State Employees Assn., Local 1000, and a member of Davis’ transition team. “We definitely knew it was time for a change in leadership in government.”

Plans Being Made for Next Campaign

As the $500 million spent on campaigns last year fades into memory, the large donors are making plans for the next campaign.

At least one gambling measure will be on the ballot in March 2000. The California Teachers Assn. is considering an initiative that would make it easier for school districts to win voter approval of school construction bonds. Others are considering an initiative--certain to be opposed by teachers--that would allow tax-funded vouchers for private schools.

Ron Unz, the Silicon Valley activist who spent more than $700,000 placing Proposition 227 on the ballot last year, is pondering an initiative to overhaul the political system, from fund-raising to reapportionment. He is allied in that effort with former acting Secretary of State Tony Miller, one of the sponsors of Proposition 208’s contribution limits.

Legislative efforts at campaign finance reform appear to have little chance of success. Davis says he has given little thought to the topic. The new governor assumes that the federal appellate court will reinstate at least part of Proposition 208. Unless it is reinstated, odds are that new spending records will be set in 2000.

“These lawmakers are kids in the candy store when it comes to campaign cash,” Miller said. “If it’s there for the taking, they’ll take it.”

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Business Weighs In

MAJOR Contributions by industry*

Industry: Gambling

Amount: $99.2 million

Selected top donors: San Manuel Indians, $29 million; Morongo Indians, $13 million; Viejas Indians, $13 million.

*

Industry: Organized labor

Amount: $50 million

Selected top donors: California Teachers Assn., $21 million; Service Employees, $4 million; California Correctional Peace Officers Assn., $4.1 million.

*

Industry: Utilities

Amount: $42.5 million

Selected top donors: Edison International, $20 million; PG&E;, $18 million; Sempra Energy, $4 million.

*

Industry: Tobacco

Amount: $30.4 million

Selected top donors: Philip Morris, $22 million; Brown & Williamson, $5 million; Lorillard, $3 million.

*

Industry: Development / real estate/construction

Amount: $11.1 million

Selected top donors: Alex Spanos, $2 million; California Real Estate PAC, $1 million; Pardee Construction, $1 million; Angelo Tsakopulous, $850,525; Irvine Co., $804,977.

*

Industry: Insurance

Amount: $6.7 million

Selected top donors: Assn. of California Insurance Companies, $725,582; Fremont Compensation, $697,857; Mercury General Corp., $696,397.

*

Industry: Trial lawyers

Amount: $5.5 million

Selected top donors: Consumer Attorneys PAC, $1 million; Milberg, Weiss & Bill Lerach, $713,390; Mark Robinson, Robinson, Phillips & Calcagnie, $401,750.

*

Industry: Health care

Amount: $4.9 million

Selected top donors: California Medical Assn., $1 million; Optometrists PAC, $403,857; Californians Allied for Patient Protection, $329,568.

*

Industry: Entertainment**

Amount: $2.6 million

Selected top donors: Walt Disney Co., $776,370; Haim Saban, $547,382; Steven Spielberg, $256,833.

*

Industry: Agriculture

Amount: $2.4 million

Selected top donors: E&J; Gallo, $1 million; California Farm Bureau, $310,000

* Industry numbers are based on donors who gave $100,000 or more. Some industries, such as agriculture, had many individual and corporate donors who gave less than $100,000, thus totals are under-estimates.

**Excludes money donated by Rob Reiner and his family in support of Proposition 10.

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California Campaign Cash

Top 10 corporate and political action committee donors in 1998

Name: San Manuel Band of Mission Indians, Highland

Business: Gambling

Issue: Yes on Prop. 5

Party Leaning: Mixed

Amount: $29 million

*

Name: Philip Morris Cos., New York

Business: Tobacco, food, beer

Issue: No on Prop. 10

Party Leaning: Heavily GOP

Amount: $22 million

*

Name: California Teachers Assn., Burlingame

Business: Labor union

Issue: No on Prop. 226

Party Leaning: Democratic

Amount: $21 million

*

Name: Edison International, Rosemead

Business: Utility

Issue: No on Prop. 9

Party Leaning: Mixed

Amount: $20 million

*

Name: Pacific Gas & Electric, San Francisco

Business: Electrical utility

Issue: No on Prop. 9

Party Leaning: Mixed

Amount: $18 million

*

Name: Morongo Band of Mission Indians, Banning

Business: Gambling

Issue: Yes on Prop. 5

Party Leaning: Mixed

Amount: $13 million

*

Name: Viejas Band of Kumeyaay Indians, Alpine

Business: Gambling

Issue: Yes on Prop. 5

Party Leaning: Mixed

Amount: $13 million

*

Name: Mirage Resorts, Las Vegas

Business: Gambling

Issue: No on Prop. 5

Party Leaning: Mixed

Amount: $10 million

*

Name: Hilton Hotels/Baron Hilton, Beverly Hills

Business: Gambling

Issue: No on Prop. 5

Party Leaning: Mixed

Amount: $7 million

*

Name: Circus Circus Enterprises, Las Vegas

Business: Gambling

Issue: No on Prop. 5

Party Leaning: Mixed

Party Leaning: $7 million

Top 20 individual donors

Name: Reed Hastings, Santa Cruz

Business: High-tech

Issue: Education

Party Leaning: Mixed

Amount: $3.35 million

*

Name: A. Jerrold Perenchio, Century City

Business: Television

Issue: No on Prop. 227

Party Leaning: Mixed

Amount: $3.06 million

*

Name: Ron Burkle and business entities, Beverly Hills

Business: Supermarkets

Issue: Yes on Prop. 10

Party Leaning: Mixed

Amount: $1.86 million

Name: Alex Spanos, Stockton

Business: Developer

Issue: Partisan

Party Leaning: GOP

Amount: $1.60 million

*

Name: Howard Ahmanson, Irvine

Business: Inheritance

Issue: Partisan

Party Leaning: GOP

Amount: $1.57 million

*

Name: Robert and Michele Reiner, Beverly Hills

Business: Entertainment

Issue: Yes on Prop. 10

Party Leaning: Democratic

Amount: $1.55 million

*

Name: Ernest Gallo, E&J; Gallo, Modesto

Business: Winemaking

Issue: Regulation

Party Leaning: Mixed

Amount: $1.47 million

*

Name: John and Ann Doerr, Woodside

Business: Venture capital

Issue: Education

Party Leaning: Mixed

Amount: $1.17 million

*

Name: Rob Hurtt and Container Corp., Garden Grove

Business: Manufacturing

Issue: Partisan

Issue: GOP

Amount: $1.13 million

*

Name: Carl and Estelle Reiner, Beverly Hills

Business: Entertainment

Issue: Yes on Prop. 10

Party Leaning: *

Amount: $1.04 million

*

Name: John Walton, National City

Business: Wal-Mart/inheritance

Issue: Education

Party Leaning: GOP

Amount: $1.03 million

*

Name: Angelo Tsakopulous and family, Sacramento

Business: Developer

Issue: Partisan

Party Leaning: Democratic

Amount: $850,525

*

Name: Bill Lerach and Milberg, Weiss law firm, San Diego

Business: Trial lawyer

Issue: Right to sue

Party Leaning: Democratic

Amount: $713,390

*

Name: Walter Hellman, San Francisco

Business: Finance

Issue: Partisan

Party Leaning: Democratic

Amount: $647,089

*

Name: Edward Allred and business entities, Long Beach

Business: Horse racing

Issue: Gambling

Party Leaning: GOP

Amount: $611,173

*

Name: Rupert Murdoch and business entities, New York

Business: Media

Issue: Regulation

Party Leaning: GOP

Amount: $610,000

*

Name: Carl Lindner, Cincinnati

Business: Insurance, Chiquita bananas

Issue: Regulation

Party Leaning: Mixed

Amount: $575,000

*

Name: Thomas Jordan, Healdsburg

Business: Winemaking

Issue: Partisan

Party Leaning: GOP

Amount: $561,913

*

Name: Haim Saban, Beverly Hills

Business: Entertainment

Issue: Partisan

Party Leaning: Democratic

Amount: $547,382

*

Name: Edward Atsinger, Camarillo

Business: Radio network

Issue: Partisan

Party Leaning: GOP

Amount: $528,010

*Did not give to either Democrats or Republicans.