Calif. Gov.'s Contracts Raise Talk of Limiting Outside Income

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Should public officials be allowed to hold down jobs on the side? Following the disclosure that Gov. Arnold Schwarzenegger (search) had a multimillion-dollar contract with bodybuilding magazines, some lawmakers and clean-government activists are talking about making California the first state to prohibit legislators and statewide officeholders from earning outside income.

The issue is something many politicians wrestle with, from small-town mayors and part-time legislators to wealthy senators and Vice President Dick Cheney (search), who quit his job running Halliburton Co. (search) but still gets criticized because a subsidiary is the largest U.S. contractor in Iraq.

While vice presidents, governors, some big-city mayors and other top officeholders are generally expected to work full-time in the people's interest, most other elected officials get a free pass on such outside income, as long as they disclose the earnings and do not violate conflict-of-interest rules.

After all, most state legislatures meet only part-time, so lawmakers need other sources of income to make ends meet, said Bill Allison of the Washington-based Center for Public Integrity.

Schwarzenegger had previously disclosed that he was earning income from American Media Inc., but it was not known how much until this month, when the publisher filed its annual financial statement with the Securities and Exchange Commission showing that the contract called for the millionaire movie star and former bodybuilder to receive at least $1 million a year for five years.

Critics pounced, not only because the amount was unprecedented for a California governor, but because last September, Schwarzenegger vetoed legislation to regulate the sale of the nutritional supplements that account for the lion's share of ad revenue for the magazines.

After a storm of protest, Schwarzenegger gave up his consulting contract as well as his sponsorship of his annual bodybuilding extravaganza in Ohio.

Complaints have been filed with the state's watchdog agency. While some argue that the Republican governor's magazine deal violated the spirit of the state's conflict-of-interest laws, experts say it was probably legal, since he did not directly provide services to the supplement manufacturers.

Some California Democrats are now talking with the group Common Cause about the possibility of a ban on all earned outside income — not just for the governor but for legislators and the state's other constitutional officers. It would the first such restriction in the nation, said Bob Stern, president of the Center for Governmental Studies in Los Angeles.

"It's really a dilemma," said Jon Goldin-Dubois, director of state program development at Common Cause. "You want to be sensitive to the fact that most of these people have to have outside jobs and that brings a certain richness to the Legislature that people have experience outside of government."

But Golden-Dubois said that in states like California, where the Legislature is considered full-time and its members get paid accordingly, "I think there's a very strong case to made that they should be prohibited from earning outside income."

California legislators receive a base salary of $99,000. That will increase to $110,880 in December. The governor earns $175,000 (Schwarzenegger has declined to accept it) and other top state officials make about $130,000 to about $150,000.

California lawmakers report earning income — some as much as $100,000 — from a variety of outside activities. Included on the list is Assemblyman Joe Canciamilla, co-owner of a funeral chapel; Assemblyman Alan Nakanishi, who still sees patients as an eye doctor; and Sen. Sam Aanestad, who performs oral surgery several times a month.

Schwarzenegger's aides said he would consider signing a ban as long as it applied to every elected state official.

A similar issue was raised in Minnesota five years ago when Gov. Jesse Ventura (search) was found to be earning hundreds of thousands of dollars as a TV football analyst. Legislation to ban outside income for the governor and proposed new disclosure rules died after Ventura decided not to seek re-election.

Steve Maviglio, spokesman for California Assembly Speaker Fabian Nunez, a Democrat, said of an outside-income ban: "We're looking at it. We are talking to the good government groups to see how it might look. But it's a thorny issue."

Assemblywoman Cindy Montanez, a Democrat who has been working with Common Cause on the idea, said the ban should be limited to just the constitutional officers — who include the governor, lieutenant governor, secretary of state and attorney general — because legislators already can abstain from voting on issues that pose conflicts of interest.

She pointed out that the governor, in contrast, cannot withdraw from his duty to either sign or veto legislation.

No bill has been introduced yet. For such legislation to work in California, taxpayers may have to give state officeholders a raise. Stern said legislators should be paid about $150,000 to reduce the need for outside income.