California governor's race to set spending record

California Republican Gubernatorial candidate and former eBay chief executive Meg Whitman is applauded at the conclusion of her speech before the opening of her campaign's Orange County headquarters in Costa Mesa, California February 22, 2010.

SAN FRANCISCO (Reuters) - The California governor's race is on track to be the most expensive nonpresidential election in U.S. history, sparking a debate over money and influence that could become the campaign's defining issue.

Republican front-runner Meg Whitman, the billionaire former CEO of online auction house eBay Inc, will likely face off in November against Democrat Jerry Brown, a former governor and career politician backed by labor unions with many millions of dollars in potential contributions at their disposal.

The race so far pales in comparison to the $1 billion 2008 presidential contest. But Whitman has said she is prepared to spend $150 million, enough to top the $148 million spent eight years ago in the New York gubernatorial election won by incumbent Republican George Pataki.

The National Institute on Money in State Politics ranks the 2002 New York race as the most expensive state-level U.S. contest yet, and no congressional campaign comes close.

Whitman's benchmark would also eclipse billionaire New York Mayor Michael Bloomberg's 2009 $108 million self-funded campaign.

"This is going to be a record. There is no question about that," said Bob Stern, president of the Center for Governmental Studies, who sees voters' anti-incumbent sentiment in California playing out against a historical state bias against wealthy candidates. The current governor, Republican Arnold Schwarzenneger, is barred by term limits from re-election.

Whitman has already poured $39 million of her own funds into her campaign, while state Insurance Commissioner Steve Poizner, her rival for the Republican nomination, has sunk $19 million of his personal wealth into the race.

Voters are still making up their minds. A television advertising blitz by Whitman has helped propel her to a 49-percentage point lead over Poizner and turned her double-digit deficit against Brown into a 3-percentage point lead in the latest Field Polls.

Brown, who was California governor from 1975 to 1983 and is now state attorney general, has about $14 million cash on hand. That would seem to put him a distinct disadvantage, lacking the deep pockets of his Republican foes and limited by state caps on the amount he can raise from individual donors.

But California campaign finance laws allow unlimited contributions to independent committees, giving Democratic Party stalwarts, such as unions concerned about possible pension fund overhauls under a Republican governor, plenty of room to spend.

Two unions top a list of 15 organizations, including energy companies, casino-operating Indian tribes and business groups that together spent $1 billion on ballot initiative campaigns, candidate support and lobbying in the past 10 years, according to the state's Fair Political Practices Commission.

"At the end of the day, even with contributions and the amount of money Meg will be able to raise, the resources will be about even," said Whitman spokesman Tucker Bounds, a contention the Brown campaign rejects.

MONEY MESSAGES

The money has already become part of the message. Whitman emphasizes her success in business and said she would not take a salary as governor. Brown says he needs the salary after devoting himself to a lifetime of public service.

Those narratives feed into what some analysts see as the thematic choice being presented to voters -- an outsider with fresh ideas versus a maverick insider with the experience to carry out much-needed government reforms.

Questions surrounding the use, abuse and raising of funds are shaping negative campaign ads.

Whitman's campaign accuses Brown of ceding control to organized labor and circumventing campaign finance law by relying on union dollars and activism to bolster his campaign. At a recent union gathering, he was videotaped declaring: "We're going to attack whenever we can, but I'd rather have you attack. I'd rather be the nice guy in this race."

That, says Whitman's camp, is illegal coordination. "You have the candidate telling third-party groups to fund other third-party groups on his behalf," Bounds said.

Brown's spokesman, Sterling Clifford, called such accusations of campaign finance transgressions ridiculous -- and turned the focus to Whitman's money.

"She'll say anything in her attempt to crown herself nominee and then buy the general election," he said.

(Reporting by Peter Henderson; Editing by Peter Cooney)