GOP Donors Slide Over to Davis Camp

From agriculture to the timber industry, some of California’s biggest Republican donors have switched their financial allegiance this election to Democratic Gov. Gray Davis, effectively betting millions of dollars on his return to office.

In the process, corporate interests that might normally support a business-friendly, small-government candidate like Bill Simon Jr. are shunning the Republican gubernatorial nominee--or at least taking a skeptical look at his candidacy.

That, in turn, has helped Davis build a commanding lead in fund-raising and further lengthened the steep odds that Simon faces trying to become the first challenger in 60 years to deny a sitting California governor a second term.

“I don’t think any of us want to throw money away on a campaign without being convinced it can win,” John J. Coffey, general manager of government relations for ChevronTexaco Corp., said of the struggling Simon. “Maybe at some point you get there, but not yet.”

Davis was elected governor thanks in good part to the support of organized labor. But from the time he took office in January 1999, the Democrat has courted the state’s business community, including industries that lavishly supported his last Republican opponent, former Atty. Gen. Dan Lungren.

Davis has been one of the business community’s better friends in Sacramento, especially given his veto power over the more liberal Democrats who control the state Legislature.

And his outreach to business has been richly rewarded.

The California Real Estate Assn.’s political action committee has given Davis more than $100,000 this year, including the cost of holding a fund-raiser, according to a Times analysis of the governor’s fund-raising receipts.

Timber interests, which heavily funded Lungren’s campaign, have donated more than $450,000 to Davis. The agricultural industry, long one of the most reliable sources of Republican campaign cash, has given roughly $1.5 million.

“He hasn’t made everyone happy,” said Bill Pauli, president of the California Farm Bureau, which has yet to formally endorse a candidate in the governor’s race. “But he hasn’t made everyone angry. Nobody gets everything they want, by any measure.”

Critics, led by Simon, say there is more at work than just a moderate approach to governing. They say Davis has fostered a “pay-to-play” atmosphere in Sacramento, requiring businesses and industry lobbyists to give to Davis just to get a fair hearing on policy and political appointments.

“Davis is using every instrument that he has to employ a campaign of terror and threats and extortion against the business community,” said Shawn Steel, chairman of the California Republican Party. “He’s made it abundantly clear to supporters that those who give money to Simon will pay a price if he gets reelected.”

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Donors Called Fearful

Steel and other Republicans say that, with a spiteful governor watching, many potential donors are too frightened to give to Simon, even if his free-market, anti-regulatory philosophy is more in line with their beliefs.

“A lot of people have told me they’ll be ‘crucified’ ... the word I’ve probably heard most often,” said Kristin Hueter, a San Francisco-based GOP fund-raiser who works for Simon. “People say to me, ‘We don’t want to endure the governor’s wrath.’ ”

Davis and his spokesmen vehemently deny any connection between the contributions he receives and his actions as governor. But the perception that Davis is closely watching who gives what to whom is firmly fixed in the minds of many who do business in Sacramento, which can have the same intimidating effect.

“I call it the fear factor,” said Bob Stern, president of the Center for Governmental Studies, a nonprofit organization in Los Angeles that studies campaign finance matters. “If you don’t give, what’s he going to do?”

The Davis campaign is hardly bashful about its aggressive fund-raising tactics.

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Strategist’s Warning

In September, Davis’ chief political strategist, Garry South, sent a memo to the governor’s political supporters warning that any campaign contributions given to his Republican rival, Richard Riordan, would be “instantly transparent” under new public disclosure laws.

At the time, Riordan seemed to pose the most serious political threat to Davis, who ultimately helped dispatch the former Los Angeles mayor in the GOP primary with a $10-million negative ad campaign.

Davis and Riordan shared many of the same centrist political friends and supporters, South said in an interview, and the memo was intended to say, “Look, folks, this is war. This is not about giving $500 to United Way and then giving $500 to the Red Cross....Part of our message to them was, people who claim they’re very close personal friends of Gov. Davis don’t give $50,000 to someone who’s beating our brains out.”

South insisted “there was no threat, either implied or suggested.” But, he later added, “If the memo stopped money from going to Riordan, more power to me.”

Davis has done more, however, than just scare potential donors away from his opponents.

While wooing business interests, Davis also has managed to stay in the good graces of most of his traditional Democratic allies. Foremost among them is organized labor. His largest single source of money is labor unions, which have given Davis more than $4 million so far this year, or nearly 30% of what he has raised.

The governor’s handling of workers’ compensation legislation illustrates how Davis has sought to straddle competing interests, keeping both sides contented and willing to contribute to his reelection.

For three years, Davis vetoed bills to increase the benefits paid to workers injured on the job. Business representatives fiercely opposed the increase, saying it would kill jobs and cost employers billions in added expenses.

Davis finally signed a version of the legislation in February, just as he formally kicked off his reelection drive at the state Democratic Party convention. While some business lobbyists grumbled, Davis’ signature headed off a threatened labor-supported ballot measure that could have cost employers even more.

In all, the governor has raised more than $50 million toward his reelection. Simon, a Los Angeles investment banker making his first try for public office, has collected $22 million, including $5 million he loaned his campaign and hundreds of thousands more from his brother and sisters. Davis had $31.6 million in cash on hand as of June 30, the close of the most recent reporting period, while Simon had roughly $5 million in the bank.

Simon has received hundreds of thousands of dollars in contributions from many of the state’s most faithful Republican givers, among them businessmen Alex Spanos and David Murdock. But a listing of Simon’s donations is most noteworthy for what is not there.

Four years ago, many donors gave roughly equal amounts to Davis and Lungren. E&J; Gallo, for one, gave $104,000 to the state attorney general and $100,000 to Davis. This time out, the huge winery and agricultural concern has given no money to Simon and donated $215,000 to Davis.

The Irvine Co.--traditionally a major GOP giver--donated $300,000 to Lungren, while Chevron (which completed a merger with Texaco last year) donated $207,000 to the Republican during the 1998 campaign.

Since Davis took office, Irvine Co. has donated $73,152 to him and held at least one Davis fund-raiser. ChevronTexaco has given Davis $216,000. Neither has donated to Simon.

“Gray Davis has not been a bad governor,” said Coffey of ChevronTexaco. “He has not been a particular friend to us. But we don’t have a relationship with Simon, either....I don’t see us spending that much money on the governor’s race.”

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Series of Missteps

The Republican’s continuing series of missteps--from staff upheavals to controversies over his taxes to last week’s $78-million fraud judgment--have hardly been helpful to Simon’s fund-raising efforts.

While business interests are looking for a friend in the governor’s seat, “they’re also going to evaluate the likelihood of who’s going to occupy the governor’s office after November,” said Allan Zaremberg, president of the California Chamber of Commerce. “That will have an influence on their contributions.”

Some Republicans think would-be Simon donors are simply holding back, waiting for the end of the crucial bill-signing period Sept. 30, five weeks before election day.

“When you have no balance in government, when one party totally controls, if they want to reward or punish you they’re in a position to do that,” said Senate Republican Leader Jim Brulte of Rancho Cucamonga. “Gov. Davis’ chief spokesman made it clear: You contribute against the governor at your own risk.”

The Farm Bureau’s Pauli said the Republican-leaning organization won’t make its endorsement until next month. The bureau is battling legislation by Senate President Pro Tem John Burton (D-San Francisco) that would grant farm workers the right to binding arbitration in labor disputes. How Davis acts--whether he signs or vetoes the bill--will be a “defining” moment, Pauli said.

As for the governor’s GOP rival, “Are you really going to write a six-figure check when you’re waiting for Simon to show some clear vision?” Pauli said. “It is easy to criticize Davis. But Mr. Simon, give us a view on some of these issues.”