Gov. Sets Restrictions on His Fundraising Sources

Facing persistent criticism over his fundraising practices, Gov. Arnold Schwarzenegger is imposing new limits on how he collects campaign money, pledging to turn away donations from workers’ compensation insurers, energy companies and Indian gambling interests.

Schwarzenegger’s political team this week returned a $25,000 contribution that came in last month from Liberty Mutual, citing a guideline under which the governor will refuse contributions from insurers that underwrite workers’ compensation policies.

One of Schwarzenegger’s main priorities has been overhauling the workers’ compensation system in a bid to curb costs. Schwarzenegger, though, will not give back earlier donations that he received from workers’ compensation insurers, including a $100,000 contribution that he received in January from Zenith Insurance.

“Liberty Mutual contributed to an event we had two weeks ago, and the governor’s office asked us to return it because ... they were not comfortable with us taking the money,” Martin Wilson, an outside political aide who oversees the governor’s fundraising efforts, said Thursday.

Only last week, as he attended the Republican National Convention in New York City, Schwarzenegger defended his fundraising methods and gave no indication that any change was needed. He said he didn’t even know the names of his donors. And he described himself as someone who “cannot be bought,” meaning the source of his campaign money should not be a concern to voters.

“I have nothing against them contributing money,” Schwarzenegger said. “What I campaigned for, is that special interests should not have an influence on our Capitol. And they should not buy their way in. And the politicians should not be that weak that [donors] give money in return for favors. You can accept money, but don’t return favors for that. And don’t have someone say, ‘Look, I’ll give you this amount of money. There’s a bill coming up, you’ve got to help me.’ So those are the things that I’m against.”

But the governor’s office is alert to perceptions that his fundraising is overly zealous. Privately, Schwarzenegger’s camp has polled voters to see whether they perceive him as too close to the same “special interests” he often mocks.

Schwarzenegger’s fundraising methods are subject to continual refinement and reevaluation. He takes money from some donors but not others, while reserving the right to change direction at any moment.

He accepts contributions from real estate interests but not public employee unions; from phone companies but not the California Medical Assn. Styling himself as a reformer, he needs to raise enough money to pay for an ambitious political agenda while avoiding charges that he has been co-opted by entrenched interests.

Watchdog groups said Thursday that the governor’s new self-imposed restrictions are a welcome step. Since taking office, Schwarzenegger has raised money at a record clip, outpacing even his predecessor, Gray Davis, who was widely perceived as being consumed with fundraising.

Schwarzenegger raised nearly $13 million in his first nine months in office. And he is now in the middle of a fundraising blitz whose goal is to raise an average of $818,000 a week through the Nov. 2 election. The contributions are largely intended to help wage the governor’s campaigns for or against various voter initiatives.

“It shows some sensitivity on his part to the criticism he’s been getting, and I applaud him for taking these actions,” said Robert Stern, president of the Center for Governmental Studies, a nonprofit group that monitors campaign financing. “It’s a great start. Now he should continue to scour his contributors and make sure he’s not receiving funds from people who have business” before the state.

Energy interests are closely watching the governor as he develops a new energy policy and considers whether to sign or veto legislation that will influence the fortunes of power companies.

In the future, Wilson said, Schwarzenegger will turn down donations from PG&E;, Southern California Edison Co. and San Diego Gas & Electric, along with independent power producers such as Calpine Corp. of San Jose.

Between December and February, Schwarzenegger took in $335,000 from those entities or their parent companies. Schwarzenegger will not return that money, Wilson said.

“Circumstances change on what kind of money we’ll accept or won’t,” Wilson said. “If things are front-burner issues in the governor’s office, we’ll be instructed to not solicit money.”

After Schwarzenegger signed agreements in June under which a handful of Indian tribes will kick in more gambling revenue to state coffers, aides considered accepting campaign donations from Indians. That would have amounted to a major reversal. Schwarzenegger had demonized the tribes during the recall campaign, citing them as an example of “special interests.”

Ultimately, Schwarzenegger concluded that taking the Indian money would send a confusing message to voters.

“Politically, it’s the right decision,” Wilson said. “Voters are sufficiently skeptical after several iterations of gaming wars in this state as to who’s behind these campaigns. The governor feels very strongly it would dilute his message if we let gaming money into our campaign.”