Fund-Raising Is Frenzied in Compressed Campaign

At the end of a long and lucrative day, Arnold Schwarzenegger stood on a venture capitalist’s rooftop Wednesday night in San Francisco, surrounded by high-end donors who smoked cigars and took in majestic views of the bay and bridges.

On Friday, Lt. Gov. Cruz Bustamante traveled to Chicago, where he raised money from Democrats, spoke to a Latino political group and visited the stock exchange. An aide said the campaign expected to take in about $150,000 there.

For both candidates, who are seeking to replace Gov. Gray Davis if voters remove him from office in the Oct. 7 special election, the stops were two among many in a behind-the-scenes race for money made frantic by the tightly compressed recall campaign.

Fund-raising has become a major issue for California voters, many of whom say Davis’ relentless pursuit of donations over the years helped fuel their anger toward him. A Los Angeles Times Poll found this week that nearly eight in 10 likely voters who support the recall say the governor spends too much time raising money.

This week, Schwarzenegger and Bustamante have mingled with donors as often as three times a day -- at gatherings almost always held behind closed doors and left off the candidates’ public schedules.

Since last Saturday, the two have reported donations exceeding $2.7 million, pushing their combined take to nearly $16 million. With little time, and the need to make media buys for commercials by the end of this month, Schwarzenegger and Bustamante have gone directly to the likeliest donors, skipping the wooing that typically begins as much as two years before an election.

“Raising money requires a relationship. Before someone parts with their $21,200, or even their $1,000, they want to know the person it’s going to,” said Darry Sragow, a longtime Democratic consultant. “But in this recall, there is no time for prolonged courtship. You’re out there asking someone to sleep with you on the first date.”

The vast majority of funds taken in are used to buy television ads. According to one strategist who tracks media purchases in the state, Davis and those seeking to replace him already have spent at least $14 million.

Bustamante has paid $7 million to $8 million for ads that will begin Monday, a combination of campaign commercials and anti-Proposition 54 spots that will feature the lieutenant governor, the strategist said. In addition, Bustamante had purchased $500,000 on Spanish-language TV, but then moved $150,000 of it back to English channels.

Schwarzenegger’s advertising buys are expected to increase appreciably starting next week. Since Aug. 19, the Republican has spent $1.5 million to $2 million a week, the strategist said. By contrast, state Sen. Tom McClintock (R-Thousand Oaks), the only other candidate registering at least 10% in polls, has spent $40,000 on television ads in San Diego, Yuma, Bakersfield and Monterey, and $110,000 on radio.

The money hunt “is at a frenzied, frenetic pace,” said San Jose State political scientist Larry Gerston. “It shouldn’t be a surprise. Everything is compressed and you have to go much faster.... And every single one of the people giving money is contributing for one reason: the hope of having access upon election.”

Last weekend in San Jose, Bustamante spoke of his up-from-nothing beginnings to some 300 supporters, who for $100 a head sampled a buffet of gorditas, chips, salsa and carnitas, and listened to live harp music. Today, he has a fund-raiser in Riverside.

Schwarzenegger, who has a fund-raising lunch scheduled later this month in New York City, has two local events scheduled Sunday, a $1,000-a-person garden party in Santa Monica and a $5,000-per-couple reception in Los Angeles.

California law limits the amount individuals or businesses can give election campaigns to $21,200. Candidates, however, can spend unlimited sums of their own money. And there are no limits on the amount they can collect through committees that target issues, such as pro- or anti-recall efforts, although that money cannot be used to urge people to vote for them. Davis is exempt from the limits because he is the subject of the recall.

Bustamante and Schwarzenegger have had to explain aspects of their fund-raising efforts. Schwarzenegger, a multimillionaire who at first said he would not solicit contributions, has accepted millions in donations, but not from groups he calls “special interests.” He has taken money from real estate developers, farmers and other groups with business before the state, but not unions or Indian tribes.

Bustamante, in turn, has been criticized for accepting millions of dollars from California Indian tribes, money that went to a pre-existing committee that is exempt from new fund-raising limits. The seven-figure contributions alienated some of his supporters, such as San Francisco computer programmer Paul Rasmussen, who gave Bustamante $100 in August.

“I don’t usually give to political campaigns, but I had heard he didn’t have a lot of money, so I thought I’d help him out,” Rasmussen said. “That was before I heard about casinos.”

Bustamante has transferred most of those funds into a new committee that he says will be used to fight Proposition 54, an initiative to prohibit the gathering of many forms of racial data.

Bustamante has raised $7.3 million in three committees, and Indian tribes with casinos have given him nearly half that sum -- about $3.27 million. Organized labor is his next largest donor at $1.64 million, campaign finance reports filed through Friday show. These filings include only donations above $1,000.

Indian tribes and labor unions are by far the biggest donors to Bustamante’s campaign. They make up the vast majority of his large contributors and are in a class by themselves. He also has received donations from trial lawyers, utilities and cement companies.

Schwarzenegger has raised more than $8.5 million so far. Since last Saturday, Schwarzenegger’s campaign has held 12 fund-raising events, at least three of which the candidate did not attend. He has given his committees $4 million. He also has tapped real estate and business interests, including a total of $121,200 from San Diego Chargers owner Alex G. Spanos, and $100,000 each from Orange County home builder William Lyons and the mortgage firm American Sterling Corp.

Schwarzenegger’s largest donors -- those giving $10,000 or more to his campaign -- mostly come from the ranks of real estate developers, corporate executives, investors, auto dealers, venture capitalists, contractors and winemakers.

“You’re raising money at the very end of the campaign so you can turn it around and put it into television,” said Sragow, who noted that in a state the size of California it is critical for contenders for statewide office to have a televised media campaign weeks before election day in order to capture absentee voters who make up more than a quarter of votes cast in each election.

Bustamante and Schwarzenegger have spent tens of thousands of dollars on paid professionals to help raise money

“The objective has always been to defeat Gray Davis,” said Kristin Hueter, a Bay Area fund-raiser who worked for Republican candidates for 20 years. “The third time’s the charm.” She joined the campaign “the day after Leno,” when Schwarzenegger surprised nearly everyone by announcing his candidacy Aug. 6 on the “Tonight Show.”

Hueter said she is organizing about 20 events in the Bay Area, and had inquiries about even more. In most cases, she said, the volunteer hosts do much of the tree-shaking themselves, drawing on their own networks of politically engaged friends.

On Wednesday alone, Hueter arranged three events -- a $500-per-person lunch the candidate did not attend, a $1,000 reception and $5,000 dinner with the candidate at a car museum, and the rooftop affair with canapes and cake on San Francisco’s Russian Hill. She called the fund-raising campaign “wild and unbelievable, but it’s working.”

Outside the rooftop gathering, Schwarzenegger, who has said he dislikes asking for money, told a reporter: “I think the fund-raisers like this are pretty much all the same.”

Bustamante’s backers have mobilized as well, keeping him busy at multiple events nearly every day. Santa Clara County Supervisor Blanca Alvarado helped put together Saturday’s $100-a-head fund-raiser.

“We rallied within a matter of three weeks to prepare a rally and

At 11 a.m. that same day, about 50 Latino lawyers and political leaders attended an intimate Fairmont Hotel gathering that started at $250 per person. In Fresno on Sunday, with a CD of the Gipsy Kings playing in the background, Bustamante attended a $1,000-a-head cocktail party at the trendy 609 Grille. Robert Wilkinson, a partner in the Fresno law firm of Baker, Manock & Jensen, said the 150-person event was a chance for Bustamante’s longtime supporters to get together socially.

But the candidates are spending the money nearly as fast as they bring it in. Richie Ross, Bustamante’s campaign strategist, said he arrived to work Thursday to find only $1,000 in the Bustamante for Governor account, which contains the funds he can use to campaign directly for office. “I would say [Bustamante’s fund-raising] is going just OK,” Ross said. “I would not say it’s going well. I would not say it is going badly. Every day is a scramble.”

Times staff writers Dan Morain, Mark Z. Barabak, Joel Rubin and Allison Hoffman, and Chicago Tribune staff writer John McCormick contributed to this report.

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(BEGIN TEXT OF INFOBOX)

Contributions race

These contributions were reported by major candidates on the Oct. 7 ballot who have received at least $100,000 for their gubernatorial campaigns. Totals are for all contributions through Aug. 23 and for contributions of $1,000 or more through Friday. Donations of $1,000 or more must be reported within 24 hours of receipt.

*--* Contributions Candidate or committee Total reported Reported in 24 hours ending Friday Cruz Bustamante $1,746,092 $213,600 320 contributions 38 contributions

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- The California Federation of Teachers and the Teamsters union each gave the maximum $21,200* contribution to the lieutenant governor. Trial lawyer Joseph W. Carcione of Menlo Park contributed the same sum. So did the Sterling Financial Group of Companies in Boca Raton, Fla. The Morongo Band of Mission Indians, which operates a casino in Cabazon, donated $20,000. Loretta Lynch, an appointee of Gov. Gray Davis to the State Public Utilities Commission, provided $2,000.

Bustamante controls three other committees: Californians for Stability, an anti-recall fund that has raised $412,500; the Cruz Bustamante Committee Against Prop. 54, which has collected more than $4.3 million. Most of that money was transferred from the Lt. Gov. Bustamante 2002 Committee, an old relection campaign fund. That committee reported raising more than $882,435, excluding the transfers.

*--* Arianna Huffington $556,552 $7,000 2,301 contributions 3 contributions

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- Huffington received $5,000 from David Copley, president of The Copley Press Inc. of La Jolla, publisher of the San Diego Union-Tribune and other daily and weekly newspapers in California, Illinois and Ohio.

*--* Tom McClintock $831,572 $21,000 1,206 contributions 7 contributions

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- McClintock’s largest contribution in the latest 24-hour reporting period -- $10,000 -- came from Sierra Toyota in Lancaster. C.W. Construction Inc. in Rancho Cucamonga gave $5,000.

*--* Arnold $7,519,389 $121,400 Schwarzenegger 872 contributions 27 contributions

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- Investor John Hurley of Cavalry Asset Management in San Francisco donated $21,200. Sierra Linda Development of Encinitas provided $10,000. Developer Douglas Allred of San Diego gave $10,000, as did John Baumgardner, CEO of Ace Parking in San Diego. Actor Tom Arnold, who appeared with the candidate in “True Lies,” contributed $1,500. Former President George H. W. Bush sent $1,000.

Schwarzenegger also controls Arnold Schwarzenegger’s Total Recall, a pro-recall committee, which has raised more than $1 million.

*--* California Against $4,730,348 $106,890 the Costly Recall 297 contributions 7 contributions of the Governor

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Gov. Gray Davis controls this anti-recall committee.

The Assn. of California School Administrators, based in Burlingame, gave $50,000. The Morongo Band of Mission Indians, who also gave to Bustamante, sent $21,200. Director Rob Reiner of Beverly Hills sent $10,000.

Davis also continues to raise money through his former reelection committee, the Gov. Gray Davis Committee, which has transferred more than $886,000 to Californians Against the Costly Recall.

A third committee, Taxpayers Against the Governor’s Recall, has reported more than $2.7 million in contributions.

*Contributions to candidates from each outside source are limited to $21,200. There is no cap on the amount candidates can give their own campaigns, or on donations to noncandidacy committees.

Reported by Times staff writer Jeffrey L. Rabin and Times researcher Maloy Moore.

Source: Campaign reports filed with the California secretary of state.

Los Angeles Times