Monday, May 12, 2008

Governor may face donor fatigue

SACRAMENTO — Kicking his fundraising machine into high gear this spring, Gov. Arnold Schwarzenegger has tapped donors for just enough cash to position his redistricting initiative for the November ballot.

He has raised $5.5 million through the first four months of the year, largely on the backs of 17 six-figure donors — those who have given $100,000 or more — including New York Mayor Michael Bloomberg, who gave $250,000 to the Schwarzenegger-led California Voters First ballot measure.

But does Schwarzenegger still have the Midas Touch? Or, after raising more than $120 million since entering office in late 2003, is the governor up against donor fatigue as he heads into lame-duck status?

The real test will be when he tries to hit up his supporters for more to fund a ballot initiative that will, in all likelihood, face opposition throughout the fall from the state Democratic party and its heavy-hitting allies.

Some observers wonder if Schwarzenegger can pull it off. After failing to consummate health care reform, he has been plagued by budget problems, an inability to push his legislative agenda, and falling approval ratings. Donors might be reluctant to board a ship they see as faltering.

"In the spring and summer of 2005, when they were gearing up for the special election, there seemed to be unlimited possibilities for this governor," said Dan Schnur, a Republican political consultant. "Now, he's into the Advertisementlast couple years of his last term, and it might be harder to rev up a campaign from a donor base that's already looking to the next election."

In 2005, Schwarzenegger raised more than $50 million for a special election containing four ballot measures designed to revamp state government. There were 64 six-figure donors who aided the cause, including 23 who gave more than $200,000, nine more than $500,000 and four more than $ 1 million — not including the nearly $8 million Schwarzenegger poured into the campaign from his fortune.

After a humiliating defeat — all four went down at the polls — critics said Schwarzenegger had overreached with a nakedly partisan push. He rehabilitated his image by his 2006 re-election with a more Democratic-friendly agenda, such as improving the state's infrastructure and landmark carbon emissions legislation. But donors could be hesitant to return to another measure that has been criticized by some as a Republican power grab, the same language that scared off voters in 2005.

His poll numbers aren't helping. In a recent Public Policy Institute of California survey, only 41 percent of the public approved of his performance — down from 57 percent four months ago.

"The height of his power has already been eclipsed," said a Republican political strategist who asked not to be identified. "For donors, it makes it less compelling. When you've had your last election and you're on the backside of your second term, and are having difficulties delivering on your policy objectives, it means it will be tougher to raise money."

When Schwarzenegger was at his "zenith," the strategist continued, "people wanted to be a part of it. Donors liked what he was hoping to do as the leader of a revolution. Now, they perceive there's less value to supporting him ... and the psychology is, 'I don't need to be a part of this.'"

A top campaign official bristled at the notion that Schwarzenegger's fundraising machine is slowing down, saying there is no comparison between 2005 and now.

"In 2005, he called for a special election and completely turned the political process on its head," said Adam Mendelsohn, Schwarzenegger's former communications director who now serves as a key political consultant. "It rivals only his re-election in terms of political time and energy.

"Donors are very excited about this campaign and not leery at all," Mendelsohn said. "The donors, like everyone else, understand that you cannot compare this to 2005."

Bob Hagerty, the CEO and head of Pleasanton-based Polycom, a company that makes communication equipment, has bought into Schwarzenegger's campaign to change the way political boundaries are drawn. He contributed $15,000 to the governor's general purpose campaign account, the California Dream Team, fully aware the money would be transferred to the redistricting campaign, California Voters First.

"I said, 'Put it where you think it's most needed,'" Hagerty said. "The big problem we have in Sacramento is getting people to compromise. It's a greater-good issue. This (ballot drive) looks like a good fundamental change that will keep our state viable."

Having nearly depleted his California Dream Team reserve — down to $697,000 by the end of 2007 — Schwarzenegger had to move quickly to replenish it in time to purchase signature gathering for the redistricting initiative. In a matter of four months, he has taken just less rthan $4 million for the Dream Team coffers, and an additional $1.5 million for the California Voters First committee.

He has transferred $2.1 million from the Dream Team account to California Voters First, which has spent most of it on signature gathering and political consultants.

He has turned to reliable sources: Ten of the 17 who have given more than $100,000 this year are among the top 20 donors all-time to Schwarzenegger.

Some are more notorious than others. T. Boone Pickens, a billionaire oilman who has given $100,000 to the redistricting ballot drive, is mostly known for helping bankroll the Swift Boat Veterans for Truth campaign assault on Democratic nominee John Kerry in the 2004 presidential election. Pickens and his companies have given $920,000 to Schwarznegger.

Henry Nicholas, an Orange County billionaire who gave $150,000 to the Dream Team last month and has contributed $1.3 million overall to the governor, was named last month as a potential unindicted co-conspirator in a federal investigation of the company he co-founded, Broadcom, a computer chip maker. The company is accused of illegally backdating stock options. He has denied involvement and has since checked into the Betty Ford Center to spend a month in an alcohol rehabilitation program.

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