Interest Groups Retain Advisor to Governor

Although Gov. Arnold Schwarzenegger shuns campaign money from some interests to demonstrate that they cannot influence him, at least two of those groups are paying one of his closest advisors to promote their agendas.

The governor declines contributions from Indian tribes that own casinos. But a newly formed alliance of such tribes paid Schwarzenegger consultant Mike Murphy a six-figure commission to create image-bolstering ads.

Murphy and his lobbying and consulting firm, Washington D.C.-based D.C. Navigators, also represent two of the state’s largest electricity producers. Schwarzenegger has said he would refuse campaign donations from them while he weighs legislation affecting them and his aides work to devise a state energy policy.

“We’re hired on the merits,” Murphy said, adding that he never lobbies the governor and does not trade on his relationship with Schwarzenegger to win clients.

Some clients said they hired him partly because of his relationship with Schwarzenegger. The governor’s smiling image decorates the lobby of Murphy’s Sacramento office in a floor-to-ceiling photo, and a back wall features another larger-than-life Schwarzenegger picture.

Murphy opened the office after last year’s recall election, in which he had a lead role helping Schwarzenegger oust Gov. Gray Davis. He remains one of the governor’s closest political advisors, conferring regularly with him and meeting once a week or so with his political team. A nationally prominent consultant and regular guest on television news talk shows, Murphy represents several other politicians as well, including Florida’s Republican governor, Jeb Bush, and U.S. Sen. John McCain (R-Ariz.).

In Sacramento, Murphy’s operation follows a long tradition by which consultants, friends and other associates of people in power gain clients whose interests may be furthered by those relationships, said San Jose State political scientist Larry Gerston.

“It is a very difficult problem when you have someone so well connected with someone high up in office, who represents clients whose bills come before the guy you helped get into office.... How cozy,” he said.

The effects of such relationships can be subtle. “There is an entire network of communication and influence that goes on beneath the surface that is almost impossible to quantify and regulate,” Gerston said.

Schwarzenegger does not pay Murphy a retainer. But Navigators has received at least $110,000 from Schwarzenegger’s campaigns. Those include the recall and Propositions 57 and 58 on the ballot last March, pushed by the governor as a way to solve the state’s budget problems.

Consultants such as Murphy take additional payments based on a percentage of a campaign’s television spots. Schwarzenegger has spent more than $17 million on TV, including the recall and the March propositions.

In the current campaign, Navigators is a main consultant for Schwarzenegger’s effort to defeat two gambling measures on the Nov. 2 ballot.

“When there is a major campaign, the governor expects Mike to be there,” said Marty Wilson, another Schwarzenegger advisor. “He trusts Mike and he wants to hire the best.”

The California Tribal Business Alliance, a new alliance of some of the richest Indian tribes in the state, enlisted Murphy to produce television ads airing throughout California.

The spots extol compacts that Schwarzenegger signed with five California tribes that own casinos, authorizing them to have an unlimited number of slot machines. In exchange, the tribes agreed to pay the state $1 billion this year and make combined payments of as much as $150 million a year in the future.

Invoking the governor’s name, the spots say: “These fair-share compacts are strongly supported by Gov. Schwarzenegger.”

Additionally, Navigators was retained in July by a Sacramento attorney who represents three of those tribes to lobby on Indian gambling issues in Washington. The lawyer, Howard Dickstein, led talks with the Schwarzenegger administration that brought about the new gambling deals.

Dan Schnur, who represents the alliance, said the group hired Murphy to produce the ads because he is “the best in the business.”

Murphy would not reveal his fee for the alliance ad. Consultants’ pay generally is 15% of the amount spent to broadcast ads. The coalition plans to spend more than $1 million on the ad campaign. After he pays others involved, Murphy’s cut likely would top $100,000.

In addition to working for the alliance, Murphy works for a Schwarzenegger-controlled committee opposing Propositions 68 and 70 on the Nov. 2 ballot. Tribes represented by Murphy also oppose Proposition 68, which could end Indians’ exclusive right to operate slot machines by allowing them in card rooms and at horse tracks. They are neutral on Proposition 70, which would permit unlimited casino expansion on tribal land.

Murphy’s Washington office is registered as a lobbying firm. But in Sacramento, Murphy said, Navigators conducts no lobbying; it does not contact administration officials or legislators to influence them on behalf of its clients.

Navigators in California focuses on public affairs and political consulting to shape public perceptions. Registered lobbyists must disclose clients and payments received, but consulting firms are under no obligation to enumerate their clients (Navigators lists many on its website).

“I have nothing to do with any state gaming policy,” Murphy said, adding that he recuses himself whenever the conversation turns to matters involving his clients. “I have no influence. I don’t try to have influence. We don’t lobby anybody on it.”

Rob Stutzman, Schwarzenegger’s communications director, noted that the governor’s outside consultants are free to work for others. “They have not taken a vow to become paupers,” he said.

Murphy said he works exclusively for clients that support Schwarzenegger’s positions. One is Calpine Corp., a major California energy producer.

Joe Ronan, a senior vice president for Calpine, said in an interview that Murphy’s relationship with the governor “certainly didn’t hurt, but it wasn’t the only factor” when the firm considered whether to retain Navigators.

“They had a very recent and successful track record in California,” Ronan said.

Murphy’s firm has helped Calpine mount a public campaign against legislation backed by the rival Southern California Edison Co. related to electricity generation. To build opposition to the bill, a Calpine-led coalition ran newspaper ads featuring large photos of the governor and declaring: “Schwarzenegger is putting an end to politics as usual. Now he is taking on energy reform.”

Schwarzenegger vetoed the Edison-backed bill Saturday.

Several of Navigators’ clients are donors to Schwarzenegger, though Murphy said he does not solicit contributions from clients. Clients disclosed by Navigators have given a combined $418,000 to Schwarzenegger and his various campaign accounts starting with last year’s recall.

Pacific Gas & Electric Corp. donated $200,000 to a Schwarzenegger fund in February, before the governor’s aides refined the policy to exclude money from energy producers. Navigators represents the San Francisco-based company as a lobby client in Washington. Calpine gave another $35,000 earlier this year.

Although the governor said through an aide that he would not take money from Indian tribes or electricity producers while gambling and electricity regulation remain contentious, his aides said he has no plans to return past donations from energy producers.