Davis Raising Money to Beat Donation Curbs

Gov. Gray Davis, who in his first year of office has been the principal beneficiary of California’s no-limit campaign laws, has quietly raised hundreds of thousands of dollars to oppose Proposition 25, which would severely restrict fund-raising.

Publicly Davis, who last year collected a record $13.2 million for his own political treasury, has said only that he opposes the Proposition 25 reforms because they favor wealthy candidates and would require some public financing of campaigns.

But behind the scenes, the governor has mounted an aggressive telephone effort to raise money to defeat the March 7 ballot measure, warning business contributors that it would make it easier for public interest groups to launch initiative campaigns against their industries.

The no-on-25 campaign reported collecting more than $1.3 million in the last month, most of which insiders attributed to the governor’s fund-raising efforts. Proposition 25 is a wide-ranging campaign finance measure that was put on the ballot by millionaire businessman Ron Unz and consumer advocate Tony Miller.

It would limit contributions, restrict periods when funds could be raised, prohibit corporate contributions, require overnight disclosure of donations, and provide taxpayer-financed media credits for campaigns that agreed to spending limits.

And for a governor who has spent more time in the early part of his term raising money for future elections than any previous California chief executive, Proposition 25 would stop the prodigious flow of money.

“He [Davis] was asked to raise money by a number of sources, both business and labor,” said Garry South, the governor’s political strategist. “I think the campaign has been short of its budget because there are so many competing demands on the ballots with other initiatives.”

He said the governor has limited his initiative fund-raising activities to those issues he considers most important. He said Davis has also been raising money for Propositions 12 and 13, two measures proposed by the Legislature that would provide bond money for parks and water projects.

Scott Macdonald, a spokesman for the “no” campaign, said opponents of Proposition 25 are grateful for the governor’s help but think their effort is woefully underfinanced. “We’ve been shaking the trees . . .,” he said. “We have a very small budget even now.”

Unz, who has financed the campaign to pass Proposition 25 mostly with personal loans, predicted that the governor’s heavy involvement in the “no” campaign will ultimately have political consequences for Davis and the Democratic Party. He said the popularity of Republican presidential candidate John McCain, a supporter of Proposition 25, has demonstrated that campaign finance reform strikes a chord with voters.

“It’s very unfortunate that Gov. Davis has set himself up as the leading opponent of campaign finance reform in California,” said Unz. “Apparently he feels he must do whatever he can to keep the $100,000 and $200,000 contributions flowing into his campaign coffers. As the leading Democratic official in the state and the chairman of [Vice President] Al Gore’s California presidential campaign, he’s painting the Democratic Party of California as anti-reform.”

South said Davis supports campaign finance reform but not in the form proposed by Unz. He said Davis strongly objects to the use of taxpayer money--under the terms of Proposition 25, about $55 million a year--to help finance political campaigns. In addition, he noted that the measure does nothing to limit what wealthy candidates can spend on their own campaigns.

He scoffed at Unz’s contention that Davis’ actions could backfire.

“Americans have been suspicious of money and politics since the days of Thomas Jefferson and Alexander Hamilton, and to suggest somehow there is more alarm about it now is just not borne out,” South said. “It may not be a pretty picture, but anyone who suggests somehow it is a defining issue . . . is shining you on.”

Unz said the amount of public financing in the proposal is minuscule: $1 per taxpayer. He said Proposition 25 does not restrict people’s contributions to their own campaigns because such limits have been ruled unconstitutional by the U.S Supreme Court.

South said Davis made his pitch for donations in telephone calls to individuals as well as conference calls with business groups.

One conference hookup featured an appeal to a group of insurance companies, banks and utilities. The insurance industry ultimately contributed $239,500 to the “no” campaign; utilities gave $65,000 and banking interests $10,000.

In his plea for donations, business groups said, the governor warned that Proposition 25’s public financing provisions would make them more vulnerable to initiatives that opposed their interests. They said he told them he opposes the proposal because of its use of taxpayer funds, and he would rather see that money spent on education.

Davis also appealed to organized labor, which donated $614,000 to the “no” side.

Mark Webb, vice president for state affairs for the Washington, D.C.-based American Insurance Assn., participated in one of the conference calls but said his group had already decided to contribute when he got the appeal from the governor.

“While I always take a phone call from Gov. Davis, it really was a commitment we had already made,” he said. “I was glad to say, while the other people on the call were clearing their throats, ‘Yes, I’m there for you.’ ” The association, which represents property and casualty insurers, gave $15,000.

He said the group’s opposition to Proposition 25 stems from the part of the measure that would provide some public financing of initiatives. He said Proposition 25 would only make it easy to put measures on ballots that were already loaded with too many complex initiatives.

While Davis sought donations to proposition campaigns, he continued to collect funds for his own political treasury. Under state law, those contributions will not be disclosed until next year.