July 22 (Bloomberg) -- Virginia Republican gubernatorial candidate Ken Cuccinelli has less than half as much cash as Democratic opponent Terry McAuliffe, with a prominent list of Republican donors sitting out this year’s most competitive U.S. political contest -- and in some cases switching sides.
The financial disadvantage four months before the election illustrates the difficulties confronting an attorney general who is campaigning on an economic growth plan yet is best known for his opposition to gay marriage and abortion.
“Mr. Cuccinelli’s very hard stance on some of the social issues is a concern for me,” said Virginia Beach developer Bruce L. Thompson, chief executive officer of Gold Key/PHR Hotels and Resorts, a financial backer of current Republican Governor Bob McDonnell who in May gave McAuliffe $25,000.
“I believe personally in a woman’s right to choose, but I also think from an economic development standpoint, we’re trying to attract businesses from other areas of the country, and we’re telling women that we’re going to regulate the way that they run their life? I just don’t think we can be exclusionary when it comes to women” and gay, lesbian, bisexual and transgender individuals, Thompson said.
Cuccinelli, 44, had $2.7 million in cash as of the end of June, compared with $6 million for McAuliffe, 56, the former national Democratic Party chairman and fundraiser. While McAuliffe had been expected to out-raise Cuccinelli, the Republican is lagging behind where McDonnell was at this point in his 2009 race, when he had $4.9 million in cash on hand.
Of McDonnell’s top 25 individual donors, only 10 so far have contributed to Cuccinelli -- leaving three-fifths either on the sidelines or actively working against Cuccinelli, financial disclosures posted by the Virginia Public Access Project show.
Donors who gave to McDonnell and haven’t provided funds to Cuccinelli include R. Ted Weschler, the Berkshire Hathaway Inc. investment manager who switched allegiances and contributed $25,000 to McAuliffe in December 2012.
McDonnell backers who have yet to write a check in the race include billionaire investor Paul Tudor Jones II, founder and president of the $13 billion Greenwich, Connecticut hedge fund Tudor Investment Corp.; Paul E. Singer, founder of New York-based Elliott Management, overseeing assets of $21.6 billion; and Terrence D. Daniels, the chairman of Charlottesville, Virginia-based Quad-C Management Inc.
Cuccinelli is “perceived as more of a culture warrior than McDonnell was by the time he ran for governor, and much of the large business community that funds campaigns would probably prefer to see social issues go away,” said Bob Holsworth, a Richmond, Virginia-based political analyst who added that the business community was particularly troubled when the attorney general tried to derail a $6 billion transportation package backed by the governor.
Cuccinelli worked to defend himself against charges his social issues stances would be bad for the state’s economy during his first debate with McAuliffe on July 20.
“You’ve made this same attack throughout the race,” the Republican told McAuliffe at the Homestead Resort in Hot Springs, Virginia. “Your notion that this somehow chases business out of Virginia would be laughable if it weren’t so offensive.”
Cuccinelli’s campaign team says there is time to close the gap with McAuliffe, and that the candidate’s fundraising base has always differed some from that of McDonnell. He’s also been out-raised before, and still won election.
“We always knew that in this particular race, D.C. insider and professional Democrat fundraiser Terry McAuliffe would cash in all his IOU’s -- the majority of his money, funneled to him from out-of-state donors and labor unions, is just the tip of the iceberg,” said Chris LaCivita, a Cuccinelli adviser.
According to disclosure reports, 26 percent of McAuliffe’s receipts, or $3 million, have come from Virginia, while 74 percent, about $8.6 million, are from out-of-state. Cuccinelli has raised about the same amount from within Virginia, representing about 47 percent of his receipts. About 53 percent, or $3.4 million, of his donations came from out of state.
“We are confident Ken will have the resources to communicate his pro-growth, pro-jobs message that reduces taxes on the middle class and small business,” said LaCivita.
Virginia’s economic health declined by 0.6 percent over the past year, according to the Bloomberg Economic Evaluation of States, yet on some fronts it is doing better than the nation as a whole. Virginia’s unemployment rate was 5.5 percent in June, compared with 7.6 percent nationwide, and its median household income last year was $61,882 compared with $50,054 nationally.
The state has been hit hardest by furloughs of civilian defense workers -- 72,000 affected, according to a May Pentagon report -- that resulted from across-the-board federal spending cuts imposed earlier this year to shave the U.S. deficit.
McAuliffe said during the debate that while Cuccinelli is campaigning on jobs, his candidacy is a “Trojan horse” for a governorship that would be preoccupied with social issues. His team says the Republican’s positions are pushing donors away.
“Ken Cuccinelli’s opposition to the mainstream transportation compromise and his career-long focus on an extreme social agenda have really created a rift with the business community that he hasn’t been able to mend,” said Josh Schwerin, the Democrat’s spokesman.
Polls show a tight contest in the state, which voted for President Barack Obama in 2012 and 2008 yet elected McDonnell in 2009. A Quinnipiac University poll conducted July 11-15 found McAuliffe ahead of Cuccinelli, 43 percent to 39 percent. McAuliffe was boosted by a 10-point advantage with women in the survey, which had a 3.1 percentage point error margin.
The survey reflected a fluid race, as 16 percent of respondents remain undecided and large proportions -- half for McAuliffe and 36 percent for Cuccinelli -- say they had yet to form an opinion of the candidates.
Another financial disadvantage for Cuccinelli stems from U.S. Securities and Exchange Commission anti-“pay-to-play” rules adopted in 2010 that bar investors in a state’s pension funds from contributing to statewide officeholders.
One prominent Republican donor who contributed to McDonnell and had funded Cuccinelli, speaking on condition of anonymity because he isn’t authorized by his firm to describe the situation, said the SEC rules have kept him from contributing.
“People take the restrictions very seriously, because the consequences can be so grave,” said Elliot S. Berke, the partner who is co-chairman of the Political Law Group at McGuireWoods LLP in Washington.
Some influential leaders within Virginia’s business community, particularly technology executives situated in the state’s ethnically diverse northern part, say they are wary of Cuccinelli because of his record as attorney general.
“I’m an employer in Virginia, and Cuccinelli terrifies me,” said Gary Shapiro, the president and CEO of the Consumer Electronics Association in Arlington, which represents 2,000 technology companies.
“To attract the best employees, you don’t want to have the most backward policies in the country,” Shapiro said, referring to Cuccinelli’s stands on issues including abortion and gay rights.
Shapiro, an independent who confronted Cuccinelli at a February meeting of the Republican Governors Association executive council to vent his concerns, said his peers in the business world share his perspective.
“I don’t know anyone who’s going to give him money,” he said. “I said it to Cuccinelli’s face: He’s anti-business, anti-woman, anti-employer, and he’s not going to get the support of business leaders.”
Bobbie Kilberg, a Republican fundraiser and donor who heads the Northern Virginia Technology Council, said many business leaders are holding back because it isn’t clear which candidate will be best for Virginia’s “pro-business climate.”
McDonnell “ran in the middle, he governed in the middle as a center-right, pro-business governor, and I really think business leaders are waiting to see which candidate will most adhere to that approach,” Kilberg said.
Other McDonnell supporters remain angered by Cuccinelli’s position on the transportation package the governor negotiated with state lawmakers to ease traffic problems, even though the attorney general has since said he would leave it in place.
“He was against it, and vocally against it, and that really touched a nerve,” said David Guernsey, CEO of Guernsey Office Products, who headed the Northern Virginia Transportation Alliance. “It’s just hard to swallow, and while he says now that he would leave well enough alone, there’s not a lot of trust there.”
Cuccinelli’s campaign has maintained some of McDonnell’s backers, including Wyoming investor Foster Friess and billionaire energy executive David Koch, and attracted some new ones.
Sean Fieler, fund manager at New York’s Equinox Partners LP and a financial backer of the traditional-marriage group the Institute for American Values, kicked in $70,000 for Cuccinelli and another $75,000 to Women Speak Out-Virginia, a Republican-aligned political action committee that ran radio ads criticizing McAuliffe for failing to support tougher restrictions on abortion clinics.
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