Governors’ Group Reaps Record Sum

With Gray Davis as its chairman, the Democratic Governors’ Assn. raised a record $4.2 million in the first half of this year, in part by tapping donations from power generators and tobacco companies whose money Davis refuses for his own campaigns in California, the association’s campaign finance report shows.

The $4.2 million represents a 69% increase from the $2.45 million raised by the Washington-based group in the first half of 1999, the last off-year for elections. The Republican Governors Assn. does not issue itemized fund-raising reports, though a GOP spokeswoman said Republican governors raised $8.5 million in the first half of this year.

“This is a record for us in an off-year,” said Dan Pfeiffer, the Democratic group’s spokesman. “A significant portion comes from Gray Davis.”

That money, in turn, is used to help Democratic gubernatorial candidates across the country. Davis is by far the group’s most prominent member, as the governor of the largest state in the nation at a time when Republicans hold most of the big-state governors’ offices.

Although they attract relatively little attention, governors’ associations for both parties will probably play significant roles in gubernatorial campaigns nationwide this year and next. The committees for both parties will identify close races or those in which their contributions might be particularly significant, and will pour contributions into those campaigns.

In some cases, the committees make possible contributions that otherwise would be barred by various state laws. New Jersey, for instance, limits individual contributions and prohibits donations by corporations that have casinos or are seeking gambling licenses in the state. Other states curb insurance company donations.

There are no such restrictions on the governors’ associations. Gambling interests donated $311,000 to the Democratic Governors’ Assn., while insurance companies gave $189,000.

In 1998, the Democratic governors’ group spent $900,000 on Davis’ campaign for governor. The association has yet to begin doling out money for the 2002 races, but Davis could receive money in the coming election should he need it.

The associations represent an avenue by which gubernatorial candidates such as Davis, who faces reelection next year, can take money that otherwise might taint their efforts.

Davis, for instance, has long refused tobacco company donations. But the Democratic governors’ group accepted $108,000 from tobacco companies in the first half of 2001, including $65,000 from Philip Morris, the world’s largest cigarette manufacturer. The National Rifle Assn. donated $50,000 to the Democratic governors, even though the NRA will oppose Davis’ reelection.

Those are not the largest of all donors, but they are among them.

Unions, including several that represent state and local workers, accounted for $717,000. Drug companies made up the next largest source of money, at $330,000. States, which run health care programs for the poor, are among pharmaceutical companies’ biggest customers.

On the Republican side, contributions are harder to track because the GOP refuses to identify its donors. Rather, money earmarked for Republican gubernatorial campaigns flows to the Republican National Committee, which then disburses it as it sees fit.

“No governor feels that he or she has the prerogative to deny contributions into the DGA simply because they don’t take it,” said Garry South, Davis’ chief campaign strategist, describing the governors’ association as “more of a group or committee operation than a one-man show.”

Energy Companies on the Donor List

Throughout the energy crisis, Davis has made a point of turning down contributions from independent power generators. But companies and trade organizations that advocate preserving electricity deregulation donated $180,000 to the Democratic governors’ group in the first half of the year.

Among the donors was Duke Energy of North Carolina, which gave $20,000. Earlier this year Davis singled out Duke for charging record prices as the energy situation seemed to spin out of control.

The Davis administration recently signed contracts with at least four power generators and marketers that donated to the Democratic governors. The four companies--Constellation, Morgan Stanley, Calpine and Williams--gave a combined $45,500 to the association.

Calpine executive Joe Ronan said that his firm had donated to the Republican governors in past years and that he urged Calpine to do the same for Democrats this year. With the donations, he noted, firms get invited to the associations’ functions.

“The chance to chat with a governor in an informal setting is valuable,” Ronan said. “It is visibility and name recognition.”

Although Pfeiffer and executives at several energy companies said Davis did not solicit money from them, Santa Monica consumer activist Harvey Rosenfield, a vocal critic of the governor’s handling of the electricity crisis, said Davis “is doing indirectly what he said he wouldn’t do directly.”

“It is a bit distressing that these companies are greasing the palms of Democratic governors who should consider this to be blood money sucked out of the pockets of consumers in California,” Rosenfield said.

In his first 30 months in office, Davis raised more than $30 million for his 2002 reelection campaign. Other Democratic governors, seeing the Californian’s fund-raising prowess, urged that he become chairman. He will hold the post this year, then pass it on.

With Davis as chairman, the Democratic governors for the first time raised more than $1 million at the group’s main dinner, held in February in Washington, Pfeiffer said. All governors are expected to raise money for the association. But many of its donors are from Davis’ stable of contributors.

The Morongo Band of Mission Indians, which operates a casino off Interstate 10 near Palm Springs, gave $100,000 to the Democratic governors’ group. The Morongos have contributed $70,000 to Davis since he took office.

Bank Is Major Donor to Davis, Democrats

The Cabazon band, which also owns a casino off Interstate 10, donated $50,000 to the association and has given $56,000 to Davis’ reelection committee.

Another major donor to Davis and the Democratic governors is Providian Bancorp Services of San Francisco.

Providian gave $25,000 to the association this year; it has donated $109,000 to Davis since he took office in 1999.

Several donors to the Democratic governors have issues pending in state capitals around the country. Lawmakers in Sacramento and elsewhere are pushing to limit high-interest loans to people with poor credit. Providian and Citibank oppose the Sacramento legislation.

Other donors, including high-tech firms Microsoft and Oracle and the lottery vendor GTECH Corp., have contracts with several states including California. GTECH and Microsoft gave $50,000 each to the Democratic group, while Oracle gave $7,500.

Another firm, Maximus, contributed $21,000 to the Democratic governors.

Maximus gave similar sums to the Republican governors. The Virginia-based company, which has donated $3,000 to Davis since he took office, has a $182-million contract to help oversee California’s managed health-care program for the poor.

The company has contracts with most states.

Maximus spokeswoman Rachael Rowland said the donations do not indicate that there is a pay-to-play system in California or other states.

“We’re members of those organizations to be actively involved in public policy issues,” Rowland said of the governors’ associations.

“In terms of our political contributions, we support candidates and officials who are for the same good government objectives as are we.”