Schwarzenegger hires former Gray Davis aide Susan Kennedy as chief of staff

Republican Gov. Arnold Schwarzenegger has hired Susan Kennedy, a top aide to former Gov. Gray Davis, as his new chief of staff, Capitol sources in both major parties said. The chief of staff’s position is considered the most powerful administrative position in state government, with broad authority over policy-making and the sprawling bureaucracy.

The decision was made following two days of intense, closed-door meetings that included negotiating sessions across the street from the Capitol in the Hyatt Regency Hotel, where Schwarzenegger maintains a private suite while in Sacramento. Kennedy’s hiring was the culmination of a five-hour meeting, sources said, at which Kennedy demanded–and got–sole authority over hiring and firing the executive staff. That provision spread anger among Republican insiders, who said they feared a major purge of GOP staffers among the governor’s inner circle.

One source familiar with the negotiations said that Kennedy also sought–and received–a promise from Schwarzenegger that he would not go around her to seek outside advice on issues concerning her job responsibilities. Schwarzenegger’s penchant for seeking outside counsel has been a divisive issue within the executive staff for more than a year, and partly figured in the departure of the current chief of staff, Patricia Clarey.

Republicans said Kennedy’s hiring had been pushed by Democrats close to the governor–including his wife, Maria Shriver, and advisers Bonnie Reiss and Daniel Zingale. Democrats, meanwhile, said Schwarzenegger’s decision was based more on his personal nonpartisan nature, rather than from succumbing to persuasive Democrats.

Whatever the reason, the governor’s choice is the most dramatic in the Capitol since former Gov. Jerry Brown, a Democrat, chose the late B.T. Collins, a maimed Republican Vietnam war veteran, as his chief of staff.

Kennedy’s hiring signals a dramatic shakeup in the inner circle around Gov. Schwarzenegger, who suffered a major political defeat on Nov. 8, when his attempts to overhaul government–including spending limits and the creation of a retired judges’ panel to supervise reapportionment–were rejected by voters.

Kennedy had been approached earlier by the governor recently in Los Angeles to take the job–but turned it down.

But she changed her mind after Schwarzenegger agreed to her demand to be given broad authority over the staff. Schwarzenegger also had approached others to take the post, including former Assembly Speaker Bob Hertzberg, who turned him down.

Clarey, who joined Schwarzenegger early in his administration, was scheduled to leave by the end of year. In an email to the executive staff, Clarey said she was stepping down on Jan. 1, and that her “decision has been a long time coming.”

“I look forward to transitioning with Susan during the month of December and am confident it will be a seamless transition,” she added.

Also leaving was Rob Stutzman, the governor’s communications director, who was leaving to handle the governor’s re-election campaign next year. Stutzman’s departure was not officially announced, nor was his replacement. But one Capitol source familiar with Stutzman’s situation said flatly: “He left to join the campaign. He left voluntarily.”

The selection of Kennedy angered many Republicans–and some Democrats. Both sides noted that she had served Davis–who Schwarzenegger booted from office in the 2003 historic recall–as Cabinet Secretary. How could Schwarzenegger, who publicly criticized Davis as an incompetent governor, hire one of Davis’ key players?

“It’s unreal. She served the governor that voters kicked out. She was executive director of the Democratic Party. She’s a Democrat through and through. What is he (Schwarzenegger) thinking?” one Republican said.

“Republicans spent years battling Susan Kennedy when she worked for the recalled Gov. Davis. It’s unfathomable that one of the central figures of the Davis administration and Oracle scandal would be put back in charge of the governor’s office,” said another Republican, referring to the state’s signing of a flawed, $95 million software contract that roiled Davis’ tenure.

Democrats were equally nonplussed.

“She negotiated workers’ comp. She was the executive director of the Democratic Party. She is everything he (Schwarzenegger) isn’t. What’s going on here?” a Democrat said.