Bloomberg News

Brown Gets Cash From Facebook to Flynt in Race for Governor (1)

January 31, 2014

California Governor Jerry Brown has amassed $17 million from a well of donors including Exxon Mobil Corp. (XOM:US), Facebook Inc. (FB:US), Microsoft Corp. (MSFT:US) and even porn mogul Larry Flynt for a re-election campaign without saying he plans to run.

Campaign finance records show the 75-year-old Democrat’s stockpile already amounts to more than New Jersey Governor Chris Christie spent to win office in 2009. Brown still has nine months for fundraising, while facing Republicans with a fraction of his cash including former U.S. Treasury official Neel Kashkari, who managed the banking rescue known as the Troubled Asset Relief Program.

California campaigns for governor can be pricey. Brown and his opponents in 2010 spent a record $246.5 million, a fifth of what was raised for three dozen gubernatorial elections that year, according to the National Institute on Money in State Politics. Meg Whitman, a billionaire and now chief executive officer of Hewlett-Packard Co. (HPQ:US), poured $141.6 million of her own money into her unsuccessful run against Brown that year.

“When you’ve been through the experience like Jerry Brown went through with Meg Whitman, your gut tells you that you better go out and raise as much money as you can because there might be some millionaire or billionaire lurking in the shadows that will try to spend you out of office,” said Garry South, who was chief political adviser to former Governor Gray Davis, a Democrat unseated by Republican Arnold Schwarzenegger.

Record Approval

Brown, who enjoys a record-high approval rating, has collected money from about a third of the companies in the Dow Jones Industrial (INDU) index. His backers include corporations that are the world’s biggest in their fields: Philip Morris International Inc. (PM:US), the top publicly traded tobacco company; Exxon, leading oil producer by market value; Facebook, operator of the social-networking service; retailer Wal-Mart Stores Inc. (WMT:US); software maker Microsoft, and planemaker Boeing Co. (BA:US)

The governor has also been showered with donations from unions, American Indian tribes and some of the biggest names in Hollywood, including Steven Spielberg, director of “Jaws,” “Raiders of the Lost Ark” and “E.T. the Extra-Terrestrial.”

“Thousands of Californians -- businesses, unions, individuals and others -- have made contributions, large and small, to Governor Brown over the years,” spokesman Evan Westrup said in a statement. “The governor’s focus is doing what’s best for California. That’s what informs his decisions.”

Campaign Limits

When he ran for president in 1992, Brown said he would only accept individual campaign donations of $100 or less, according to his official biography.

“Things have changed, I guess,” South said. “He’s taking money from people Gray Davis wouldn’t even take money from, like tobacco companies.”

Campaign records show donations to Brown from companies such as Nike Inc. (NKE:US), Occidental Petroleum Corp. (OXY:US), EBay Inc. (EBAY:US), Walt Disney Co. (DIS:US), Sony Pictures Entertainment, Comcast Corp. (CMCSA:US), PG&E Corp. (PCG:US), Abbott Laboratories (ABT:US), Pfizer Inc. (PFE:US), Anheuser-Busch InBev NV (ABI), Google Inc. (GOOG:US), and Gap Inc. (GPS:US), where his wife Anne Gust Brown was chief administrative officer.

A poll by the nonpartisan Public Policy Institute of California (85265MF:US), released Jan. 29, showed that 60 percent of likely voters approve of the job Brown is doing, up from 49 percent in December.

Aside from the state Democratic Party, which funneled $3 million to Brown since December 2012, Brown’s biggest contributors are unions, such as those for prison guards, teachers and nurses. They poured $6 million into his political war chest from 2006 through 2012, a 10th of the money he raised during that time, according to public records and the Institute on Money in State Politics.

Primary Race

When Brown ran for governor in 2010, he had no significant opponents for the primary election in June. That allowed him to hoard the $23 million he collected until the general election in November, where he spent a total of $44.3 million.

California election law has changed and this time around, Brown must compete with every other candidate for governor, regardless of party, in a so-called open primary. The top two vote-getters in June advance to the November general election.

One challenger is state Assemblyman Tim Donnelly of Twin Peaks, about 60 miles east of Los Angeles. A Tea Party favorite, he raised about $374,000 last year, mostly from individual donors and local businesses. He spent all but $54,299 as of Dec. 31, public records show.

Minuteman Founder

Donnelly, 47, was a founding member of a California chapter of the Minuteman Project, a group dedicated to stopping immigrants from illegally crossing the U.S border with Mexico. In 2012, he was cited for carrying a loaded handgun in his luggage at an airport in Ontario, California. He has said it was a mistake.

“When you have the power of the grassroots, as Donnelly does, you don’t need to spend as much as Jerry Brown will,” said his spokeswoman, Jennifer Kerns. “We estimate that we’ll need to spend only about 10 percent of what Jerry Brown does to get our message out.”

Kashkari, the other Republican challenger, has yet to file any campaign disclosure documents. The 40-year-old former federal official who managed the $700 billion rescue of the U.S. banking system has said he met with 700 potential donors from around the country last year. He announced his bid Jan. 21.

Kashkari, though his spokesman Aaron McLear, declined to comment on fundraising for this story.

Kashkari Trails

“In California, you never know when a Wall Street candidate with no experience but tons of money will suddenly run for governor, so, as Sutter Brown always says, it’s wise to keep a few bones buried in the yard in case they’re needed,” Brown campaign adviser Dan Newman said by e-mail, referring to the governor’s dog, Sutter.

At his state of the state speech, Brown’s aides handed out playing cards with a picture of the corgi and fiscal mottos such as “Always keep a bone buried in the back yard” and “Bark if you hate deficits!”

A Field Poll in December found that 52 percent of registered voters would back Brown in a June primary, while 9 percent would vote for Donnelly. Kashkari received support from 3 percent, with 25 percent undecided.

The Public Policy poll released Jan. 29 found 53 percent of likely voters would favor Brown and 17 percent for Donnelly, with 28 percent unsure. Voters were asked only about Donnelly, as most of the polling was done before Kashkari’s formal campaign announcement.

The poll had a margin of error for likely voters of plus or minus 4.6 percentage points.

Contribution Limits

California, like many states, restricts contributions that candidates can accept from a single source. Those running for governor are limited to $27,200 each for the primary and general elections; there is no limit for contributions from parties or for contributions in ballot measure campaigns.

Occidental Petroleum, the largest oil producer in the contiguous U.S. donated $27,200 to his re-election campaign last year, after contributing $500,000 to Brown’s tax initiative in 2012, public records show. California is the third-largest oil producing state and is reviewing limits on the oil and gas drilling technique known as hydraulic fracturing, or fracking.

Brown took two checks in January for $27,200 each from GEO Group Inc. (GEO:US), the second-largest U.S. prison operator. The donations come after GEO, based in Boca Raton, Florida, last year won a five-year contract worth as much as $150 million to house 1,400 of California’s inmates at two of the company’s jails in the state.

Prison Companies

Corrections Corp. of America (CXW:US), the largest private prison company, gave $50,000 in 2012 to Brown’s voter initiative to temporarily raise income and sales taxes and another $10,000 to his re-election campaign, records show. The Brown administration has proposed putting about 1,000 state inmates at one of the company’s private jails in the Mojave Desert.

Brown is under a federal court order to reduce overcrowding in state prisons. Both prison companies gave money in 2010 to Brown and Whitman, public records show.

“The company has participated in political giving since its beginning,” said Rob Stutzman, owner of a Sacramento public affairs firm hired by Geo Group. “They gave to Schwarzenegger a decade ago. Last cycle, they gave to both candidates. When the seat is open, you want to give to both candidates, especially when there is a competitive race.”

Bullet Train

Tutor Perini Corp. (TPC:US), a California construction company and part of a joint venture that in August won a $1 billion contract to build the first leg of a high-speed rail line to connect San Francisco with Los Angeles, gave Brown a $27,500 check earlier this month. Jorge Casado, director of investor relations, didn’t respond to a message seeking comment on the gift.

Brown has championed the project despite polls showing it has lost support with the public. Brown’s Republican opponents both oppose the $68 billion project.

The governor’s Hollywood support extends to actor Kirk Douglas and Jeffrey Katzenberg, chief executive officer of DreamWorks Animation SKG Inc. (DWA:US), and Hustler magazine publisher Flynt’s Flynt Management Group, which contributed two checks for a total of $54,400 in November.

“We’ve created a system where there is no other alternative to raising large amounts of money,” said Todd Dipaola, chairman of California Common Cause, a government watchdog group. “It becomes an arms race in terms of raising money.”

To contact the reporter on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net


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