Governor Takes Funds From Workers' Comp Insurer

By Dion Nissenbaum, Times Sacramento Bureau

SACRAMENTO - Despite pledging to reject money from insurance companies while negotiating a workers' compensation reform plan, Gov. Arnold Schwarzenegger has cashed a six-figure industry donation to fund his back-up ballot measure.

While Schwarzenegger returned a smaller industry donation, his campaign team collected a $100,000 check -- the largest it has received in the past two months -- from workers' compensation insurer American Financial Group.

The decision violates the governor's stated policy of rebuffing insurance donations received after the March 2 election.

On Thursday, Schwarzenegger fund-raiser Marty Wilson said the governor's campaign committee would not return the donation because the company pledged the money before March 2, even though state records show it was cashed two days after the election.

"We're keeping it and we're spending it," said Wilson.

The move represents the latest shift for Schwarzenegger, who has created an ever-changing set of campaign finance rules.

At first, Schwarzenegger pledged last month to return industry donations his campaign received after March 2.

"If I get a campaign contribution from an insurance company that deals with workers' compensation," he said, "I will send it back because I don't want to be beholden to an insurance company that deals with workers' compensation because I know I need to negotiate with them."

Toward that end, the governor's California Recovery Team returned a $50,000 donation from the Zurich American Insurance Company in mid-March.

Schwarzenegger then said he would also rebuff insurance industry donations received before the election.

"We don't put a date on it -- March 2 or before or after or anything like that," he said. "We just want to make sure that we are dealing with people that are not contributing and then I'm sitting down at a negotiating table."

But Wilson said the campaign committee, with the governor's OK, had decided to keep insurance industry donations received before March 2.

Wilson argued that insurance money received before March 2 was given to support Propositions 57 and 58, the governor's successful budget and bond ballot measures.

American Financial's subsidiary, Republic Indemnity, is one of the largest private workers' compensation insurers in California and wrote nearly $250 million in premiums last year.

Its contribution has been used to fuel the massive initiative drive to collect more than 900,000 signatures by next Friday for an industry-backed workers' compensation reform package.

The Republican governor is using the threat of a ballot initiative as leverage to push workers' compensation reform through the Democrat-controlled Legislature. Schwarzenegger is working to finalize a deal, but he has vowed to take his industry-backed measure to voters if lawmakers don't compromise by mid-April.

Negotiators in the Capitol are trying to draft a complex compromise to be debated by the Legislature next week. If talks break down, the governor and his allies are threatening to submit the signatures on or around April 16th -- taking the matter out of the Legislature's hands.


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