Wal-Mart's Rising Political Payouts

(page 2 of 2)

BATTLEGROUND STATES—FOR WAL-MART

As for the states, Wal-Mart has become one of the most active givers, though it still ranks well behind telecom companies such as AT&T (T) and tobacco companies like R.J. Reynolds (RAI).

Wal-Mart's contributions vary greatly by state, in part because the rules governing such donations are widely divergent. Twenty-one states prohibit corporate contributions altogether, and two dozen other states impose limits. For example, a corporation can give a maximum of $22,300 to a gubernatorial candidate in California, while New York limits corporate contributions to $5,000 per year. Five states—Illinois, New Mexico, Oregon, Utah, and Virginia—have no giving limits.

The states have become an increasingly crucial battleground for Wal-Mart, as the federal government has declined to get involved in initiatives to boost the minimum wage or mandate higher health-care benefits. Politicians in at least 20 states have sponsored pieces of legislation (many of them dubbed "Wal-Mart bills") that aim to force the Bentonville (Ark.)-based company to pay higher wages and offer workers more generous health benefits. Many cities—from Belfast, Me., and Bennington, Vt., to Ashland, Ore., and Bozeman, Mont.—have passed ordinances banning large stores like Wal-Mart's behemoth supercenters, and others have enacted ordinances to force Wal-Mart to pay higher wages.

GOLDEN STATE FOCUS

As state and local politicians consider legislation on everything from pay and health packages to expansion plans, the financial implications for Wal-Mart can be huge. When Maryland passed a law that would have required the company to boost health-care coverage for its workers in the state, the costs would have run into the millions. In July, a federal judge overturned the law (see BusinessWeek.com, 7/19/06, "Rollback Ruling Favors Wal-Mart").

In New York, Spitzer broke with top Democratic lawmakers and several powerful unions over similar legislation. Three months after receiving a Wal-Mart contribution, he came out against a measure that would tax businesses such as Wal-Mart that don't provide health benefits to all employees. A Spitzer campaign spokeswoman said the retailer's contribution had no bearing in his decision, but rather "the bill was about complex issues that would be better addressed through comprehensive health-care reform."

California may be the most contentious state for Wal-Mart. Many locals oppose the retailer, for a variety of reasons. And several towns and districts such as Oakland, Antioch, Inglewood, and Turlock have passed rules that don't allow Wal-Mart's supercenter stores, which typically are 100,000 square feet or greater in size and include a grocery, pharmacy, salon, and bank all under one roof. Wal-Mart is trying to make up lost ground and has an aggressive goal to expand its number of California supercenters, from just seven at the beginning of 2006 to 40 by next year. The company gave the state Republican Party $300,000 in the first six months of 2006, according to data from California Secretary of State Bruce McPherson.

LOCK-IN LOCATIONS

Governor Schwarzenegger has been a huge beneficiary. This year's $22,300 contribution came on top of last year's $100,000 to Citizens to Save California, a committee created by Schwarzenegger's business supporters. And Wal-Mart contributed another $100,000 to Proposition 77, a redistricting attempt that was the governor's pet measure, which was defeated. In the past two years, Schwarzenegger has vetoed bills that Wal-Mart opposed. Schwarzenegger campaign press secretary Julie Soderlund denies any link with the company's donations and says the governor "always makes decisions based upon what's best for the people of California."

One of the California bills the governor vetoed would have prohibited employers from locking workers into stores while they work. The other bill would've forced the disclosure of corporations that have employees who rely on taxpayer-funded health care. The bills arose out of a huge furor over Wal-Mart's practice of locking in janitors in some of its stores at night and information that many Wal-Mart employees and their children were receiving state-funded health care. Wal-Mart says it opposed the latter bill because it had several flaws, one of which was that it didn't require data from public sector employees.

Wal-Mart still locks in employees at night despite incidents reported in Texas and Colorado where medical attention for injured or sick employees was delayed due to the policy. Says spokesman Simley: "It is only in some locations that we lock in associates at night and it is done for the protection of the associates, the safety of the store, and to guard against internal theft that may occur, and managers who have the key will let them out in case of an emergency."

NEW CHALLENGES

Today, Schwarzenegger has at least two more bills sitting on his desk that are targeted at Wal-Mart. One of the bills would require big-box retailers to conduct an economic impact report before opening large stores. Another would force large retailers to pay the legal fees of communities that win cases challenging zoning ordinances in court. Wal-Mart has sued towns with such ordinances in the past—Fresno and Turlock have won their cases and other towns have lost. But the huge legal bills that piled up during the court fights have scared other municipalities.

"The question now is: Will the governor succumb to the financial influence that Wal-Mart and the Walton family are trying to exert over his administration with their multimillion-dollar donations, and neglect a cry for help from small cities, small businesses, and workers?" asks California state Senator Richard Alarcon, who authored the latest bills.

For more on Wal-Mart's contributions to politicians, click here for the slide show.

Gogoi is a contributing writer for BusinessWeek.com.