Wednesday, August 24, 2005

Governor Schwarzenegger's nonprofit groups

The LA Times has an article showing how Gov. Schwarzenegger is using nonprofit groups to accept large, undisclosed donations from corporate (and other) groups to help him pay for certain expenses.
Other elected officials also raise money through nonprofit groups. But Schwarzenegger campaigned on creating an open government answerable to the public. His use of the nonprofit groups has the opposite effect, ethics watchdogs said.

State and federal laws allow groups performing a broadly defined "public benefit" to operate tax exempt. But the lack of disclosure requirements means potential conflicts of interests between the governor and his contributors remain hidden, allowing powerful donors to curry favor with Schwarzenegger behind the scenes, they said.
The reporters investigated the nonprofit groups, and were able to obtain lists of donors from three of the five nonprofits Schwarzenegger is using; these donations had not been made public before this article was published.
One of the organizations, the California Commission on Jobs and Economic Growth, has raised $1 million from corporate donors and staged events in California and abroad featuring Schwarzenegger as a way to boost economic development. ...

The $1 million came from a variety of firms affected by state actions. Wells Fargo Bank, which regularly lobbies the government on mortgage issues, student lending and identity theft, gave $100,000. This year, Wells Fargo is pushing for or actively opposing two dozen bills in the Legislature, state records show.


In another case, last September, Schwarzenegger's aides said the governor would not accept contributions from Pacific Gas & Electric and other utilities -- to avoid any appearance of conflict as he drafted a state energy policy. But the jobs commission took a $100,000 donation from PG&E a month later. The commission also received $100,000 from Southern California Edison.
The article states that Gov. Davis raised "at least $2 million" in this fashion, while Gov. Deukmejian and Gov. Wilson also benefited from nonprofits. The problem with these contributions to Schwarzenegger's nonprofits is that Gov. Schwarzenegger campaigned, at least partially, on the basis that he wouldn't be beholden to large corporate donors and special interests*. However, now that he's governor we see that Schwarzenegger has redefined special interest groups to mean nurses, teachers, and public safety employees (see this article), and is now accepting millions of dollars in donations from the very corporations and special interest groups to which he promised not to be indebted.

* See, for instance, this article on Schwarzenegger's inauguration (full speech here), where he says, "I enter this office beholden to no one except you, my fellow citizens. I pledge my governorship to your interests, not to special interests" and "I did not seek this office to do things the way they've always been done. What I care about is restoring your confidence in your government."

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