Governor Arnold Schwarzenegger apparently hasn’t shied away from a practice that drew criticism earlier this year: paying consulting fees to staffers whose full-time job is funded by the taxpayers.

Today’s campaign finance reports, which cover the final months of 2005, show pretty hefty checks being written from the governor’s campaign checkbook to both his former and current chiefs of staff, his former communications director, and his current legislative affairs secretary.

Former chief of staff Pat Clarey was paid $75,590 in campaign consulting fees. Current chief of staff Susan Kennedy was paid $25,000 (her first day on the state payroll, according to a news release, was January 1). Former communications director Rob Stutzman was paid $60,028 in campaign funds. And legislative secretary Richard Costigan was paid $20,000 from the campaign accounts.

Two important footnotes: first, in some cases these payments were made out of both the 2006 re-election campaign and the governor’s California Recovery Team. And second, these figures reflect only recent payments… they do not presumably include the payments to Clarey, Stutzman, and Costigan that drew media attention several months ago.

Speaking of spin… expect a lot of back and forth about the following numbers:

Californians For Schwarzenegger 2006: about $2.53 million raised in 2005, some $3.1 million spent, about $147,000 cash on hand.

Westly For Governor: $25.75 million raised in 2005 (about $20 million of his own money), about $2 million spent, a little more than $24 million on hand.

Angelides 2006: about $9 million raised last year, about $5.5 million spent, and close to an even $17 million in the bank as of December 31st.

It should be noted that these are not the only campaign accounts for any of these three candidates, and not everyone was focused on raising money for gubernatorial politics in 2005.

But these are the main accounts set up for the 2006 race for governor. And this year, new contribution limits kick in that will ban large six-figure single contributions of years past.

Let the spin begin.

The old saying may be that “numbers don’t lie”, but expect an awful lot of political spinning over the meaning of 2005 year-end campaign finance reports that are supposed to be filed by the end of today.

Hundreds of pages of documents show how much money any given candidate or campaign either raised, spent, or has left in the bank. And not surprisingly, the most dizzying spin is coming from candidates trying to get some publicity for their 2006 campaigns by showing off the size of their existing war chest.

But before we get to 2006, first the numbers from 2005… in particular, the special election that saw voters reject all 8 ballot initiatives:

(Keep in mind the total contributions and expenditures aren’t always equal, as some campaigns had money in the bank before 2005 and others still owe money spent last year)

* The Main Players: It seems fitting to begin with Governor Arnold Schwarzenegger, the driving force behind the special election. The governor’s main operation, his California Recovery Team, reports raising some $44.1 million last year, and spending approximately $45.5 million. The CRT had just over a half million bucks left in the bank as of New Year’s Eve.

Of course, that was only part of what was raised and spent in support of the governor’s efforts. Other committees were also involved, including the pro-business Citizens To Save California (almost $12 million raised, about the same amount spent); and separate committees to help fund the ill-fated “yes” campaigns for the union dues measure Proposition 75 ($4.5 million raised, $4.6 million spent) and the redistricting initiative Proposition 77 ($8.5 million raised, $9.2 million spent).

On the other side, two campaign reports stand out. The consortium of unions battling the governor, known as the Alliance For A Better California, reports raising almost $35.3 million and spending $39.8 million in 2005. And the biggest numbers come from the California Teachers Association. The CTA’s main campaign committee raised almost $62.3 million and spent almost $58.5 million.

* The Biggest Spender?: It may too soon to make an official declaration, but the single campaign that seems to have raised and spent the most in the 2005 special election appears to be the Pharmaceutical Research and Manufacturers of America (PhRMA), the industry group that failed to convince voters to approve the drug discount measure Proposition 78, but likely walked away happy that voters at least rejected the consumer group’s version of cheaper drugs, Proposition 79.

Drug companies belonging to PhRMA handed over a whopping $80.35 million for the prescription drug campaign, and PhRMA’s political campaign ended up costing some $83.6 million.

* Party Time: And last but not least, for the two major political parties it was also an expensive year. The California Republican Party raised more money than the California Democratic Party, but it spent more, too.

The GOP raised $14.4 million in 2005 and spent $15 million, while Democrats raised about $10.7 million and report spending about $8.7 million. The most important numbers for the parties, heading into a major election year, may be what’s left in the bank: $6 million for Democrats, and only about $918,000 for Republicans.

It was only a procedural movement, but an important one… as the Assembly today approved legislation to create a system of public financing for political campaigns.

AB 583, from Assemblymember Loni Hancock (D-Berkeley), would provide public funds to candidates for statewide office and the Legislature as long as they also collected a nunber of small dollar contributions. The amounts of public money vary by campaign (primary vs. general), by office sought, and by grassroots contributions received.

The lowest amount of taxpayer funds to be given out would be $100,000 for a primary campaign in the Assembly; the highest amount would be $10 million for a general election in a gubernatorial race. It also requires candidates who spend their own money to declare an amount when they register to run.

The bill passed on a vote of 46-24, with many legislators saying their “yes” vote was to keep the bill alive for more discussion in the Senate, and ultimately a conference committee of the two chambers. The bill faced a Tuesday deadline to get out of the Assembly.

Some of the GOP lawmakers who voted against the bill said they prefer more transparency of who contributes what, and some also suggested that impartial drawing of district lines would be the real solution to the problems in politics.

But several Democrats argued it’s a discussion whose time has come. “I think the voters would be more supportive of this legislative body,” said Assembly Speaker Fabian Nunez (D-LA), ” if we made an effort to take money out of politics.”

The legislation received a boost in recent weeks when it was endorsed by the California Nurses Association, fresh off their special election victory against the agenda of Governor Schwarzenegger. And the bill is similar in some respects to public financing laws already on the books in both Arizona and Maine.

Look for a busy week to come in the ongoing saga of voting systems that can, or can’t, be used by California’s 58 counties in June.

On Monday, Assemblymember Loni Hancock (D-Berkeley) is expected to introduce legislation to allow Alameda County to conduct the June 6 primary by mail. Alameda officials say they’re in a pinch… because the maker of the county’s 4,000 touchscreen machines is not planning to modify them to comply with the new state law requiring a voter-verified paper record of each ballot cast.

Hancock will reportedly insert the “mail ballot” language into an existing bill that’s in the Senate, thereby avoiding Tuesday’s deadline for bills to make it out of their house of origin. But Capitol watchers say the bill faces a very tough battle. As an urgency measure, it needs bipartisan support. And in the past, some GOP lawmakers have opposed all mail elections over concerns about voter fraud.

Meantime, Tuesday is the deadline set by Secretary of State Bruce McPherson for voting system manufacturers to submit those systems for state certification. But that means those machines would have to already have met all federal requirements.

As of now, the Secretary’s office says only one system appears in real danger of not being ready for June… a machine made by Election Systems & Software (ES&S) and last used in Merced County.

But the real headlines are likely to be the status of machines made by Diebold Elections Systems, a company that has been at the center of controversy over voting machine security issues. 17 counties have plans to use Diebold machines in June, but state officials have demanded the company get new federal approval of some of the internal components of those machines. And as of now, no one seems to have a definitive timeline on that process.

The entire caucus of Assembly Republicans has signed onto a proposal to essentially squirrel away money for public works projects each year from the state General Fund… a “pay as you go” proposal that, if approved by voters, would be placed into the state Constitution.

ACA 27 was placed across the desk today, authored by Assembly GOP Leader Kevin McCarthy (R-Bakersfield). While it’s unlikely to replace any specific amount of the $68 billion in bonds that Governor Schwarzenegger wants to float over the next 10 years, it’s symbolic of Republican desires to use more existing money– and less borrowed money– for infrastructure needs.

The main parts of ACA 27 include:

* Beginning in the 2007-08 fiscal year, the state would set aside a “dedicated percentage” of General Fund revenues for “capital outlay” projects. How much money? In the first year, it would be 1% of the General Fund. Under current estimates for 2007-08, that would be around $960 million.

* If General Fund revenues keep increasing (by at least $5 billion per fiscal year) then so, too, would the pot of money being earmarked for capital projects. Each year, the increase to the base level of funding would be either another 1/2% of the General Fund or $750 million, whichever is less.

* The places the money could be spent would be limited to construction on UC or CSU campuses; projects in the pipeline of the State Transportation Improvement Program (STIP); or water storage/flood/levy projects.

ACA 27 may very well be a work in progress, but it represents a significant demand from Republicans in the infrastructure debate this winter and spring.

It also raises some questions that could prove thorny for the proposal as currently drafted: because the spending program, as written, could not be suspended by the Legislature– even in bad fiscal times– might some opponents see it as yet another expensive “budget firewall” that ultimately threatens social services programs? In addition, will there be a debate about the list of projects that the money can be spent on? GOP estimates are that the fund will add up to almost $36 billion over the next 10 years.

And most interestingly, will all 32 Assembly Republicans hold fast on their demand that a “pay as you go” proposal– this one or a modified version– be part of any final deal? After all, 6 GOP votes in the Assembly will be needed to get any of the governor’s proposals on their way.

One of the most freewheeling discussions that reporters have with any governor is the annual January luncheon of the Sacramento Press Club. And today, Governor Arnold Schwarzenegger continued that tradition… with a half-hour of Q&A on subjects ranging from the war in Iraq to euthanasia, and beyond.

You can catch the entire event broadcast tonight at 9:00 p.m. on KQED– 88.5 FM in the Bay Area, 89.3 FM in Sacramento, and online here.

(The headline, lest I leave you wondering, refers to today’s entree choices)

The governor, accompanied for the first time to one of these luncheons by First Lady Maria Shriver, delivered prepared remarks focused mainly on his $222 billion public works proposal. He made a point of saying that large projects require patience, pointing out the many years it took for the state to get UC Merced open for business.

But after that, it was a pretty free-form discussion, with the following highlights:

* Wheeling & Dealing: The governor gave signs that at least some of the details of his “Strategic Growth Plan” are negotiable, and that some Democratic modifications are also on the table. “There is nothing that we are saying, ‘well, this is a deal-breaker’,” he said. “We are ready to talk about any of those issues.”

* The Year of Reform: To date, Schwarzenegger has had to navigate a path between those who faulted his proposals in 2005, and those who mainly faulted the way he presented those proposals. Today, he indicated he believes more in the latter. “There was no mistake made on policy, because the polices were right on the money,” the governor said. He also said he will convene a special committee to examine the state’s pension issues– an issue derailed last year by somewhat ambiguous wording in his proposed ballot initiative.

* Illegal Immigration: Schwarzenegger told the audience, when asked about efforts to deal with the flow of undocumented immigrants across the U.S. border, that the pressure is on the feds. “Up until now,” the governor said, “the federal government has lived in denial, as if the problem didn’t exist.” He did not, however, weigh in on any specific proposal. And he reiterated his intent to veto any bill to provide drivers licenses to illegal immigrants until federal rules are in place. His message to Latino voters who may think he is not on their side in general: “They should not confuse just the driver’s license issue with all these other issues that are very important.”

* He Thinks He’ll Keep Her: In the strongest language to date, Schwarzenegger rejected all demands by conservative Republicans to fire his Democratic chief of staff, Susan Kennedy. “I will keep Susan Kennedy exactly where she is,” he said.

And on the subject of Kennedy taking “vacation time” to do campaign work and possible ethical conflicts, he tried to link her solely to one of his largest contributors– himself. “My wife and I, we contribute enough money to our campaigns, that you should consider this money coming out of our share,” he said.

* Assisted Suicide: Schwarzenegger said the issue should be put to the people in a ballot initiative, not in legislation at the Capitol. He also said his own personal stance on the issue is “irrelevant.”

* Fallen Heroes: When asked about California soldiers killed in Iraq, the governor said, “Every single time we lose a soldier, it hits my heart.” He did not, however, respond to a reporter asking his opinion on the Bush administration’s handling of the matter.

* And In Conclusion: The governor also said he would soon release his tax returns… he said his economic team is looking at the state’s tax structure… he reiterated his opposition to tax hikes… and he split the difference on the universal preschool initiative spearheaded by actor/director Rob Reiner for the June ballot, saying “the idea is fantastic” but that such a program should not be paid for with a tax hike on the most wealthy, as the initiative proposes.

Less than three weeks after Governor Arnold Schwarzenegger made a massive public works proposal the centerpiece of his 2006 State of the State speech, the debate over specific parts of the proposal begins tomorrow.

The governor’s $222 billion “Strategic Growth Plan” hinges on a $68 billion package of bond proposals. Those bond proposals will be one of the key issues examined in the weeks to come by various legislative committees.

A long list of the governor’s proposals will get their first hearing tomorrow in the Capitol. That list includes SB 1163 (Ackerman), the governor’s proposal on infrastructure and courts; SB 1165 (Dutton), the governor’s proposal on transportation; and SB 1166 (Aanestad), the governor’s proposal on water and flood protection. Meantime, the Assembly Committee on Water, Parks, & Wildlife is scheduled to take up the issue of bonds for flood management needs.

According to schedules distributed by the leadership of both chambers, the hearings will continue this week, next week, and likely beyond that. It’s important to note that many of the proposals are going to policy committees first, and then on to a special conference committee being convened on these issues.

The major questions to be answered are somewhat obvious: on what needs will the bonds focus (some Democrats want, for example, to include the issue of affordable housing)? What additional policy issues will be attached to the package (many Republicans want policy changes related to issues like how projects are designed and built, and changes to the landmark California Environmental Quality Act)? And how fast can all of this be done? The deadline for bond proposals on the June 6 ballot now appears to be near the middle of March.

The attempt in Congress to reduce the federal government’s massive deficit could cost California $3.1 billion, through a combination of reduced federal funds and extra state costs.

That’s the early assessment out today from the nonpartisan Legislative Analyst’s Office. You can read the report here.

The LAO zeroes in on how S.1932, the Deficit Reduction Act of 2005, would impact health, human services, and education programs.

The bottom line: the LAO estimates about $1.7 billion in reduced federal funds over the next 4 years, with most of that being less money from loan programs for higher education.

Added on to that, the plan to cut federal spending could end up shifting more spending to the state… in other words, an extra $1.4 billion in state costs through 2010.

The largest portion of that $1.4 billion in extra state costs, the LAO says, would come from penalties incurred by the state for failing to meet certain guidelines for federal welfare assistance payments. Those “out of compliance” penalties would add up to more than $1 billion… a problem the LAO says the Legislature should address ASAP.

With rapid speed, the Legislature this morning sent Governor Schwarzenegger a bill to step in and provide some temporary help for low-income and elderly Californians stuck in the Medicare reorganization quagmire.

The bill, AB 132, allocates up to $150 million to pay for prescription drugs that are supposed to be paid for by the federal Medicare program… but haven’t been in the last three weeks since a new reform program took effect. The snafu has affected about a million patients in California.

AB 132 sailed through both the Assembly and Senate by lunchtime, and was on its way to the governor– who, not coincidentally, was meeting in the state Capitol with U.S. Health and Human Services Secretary Michael Leavitt, who came to town to talk about the very same issue.