SACRAMENTO – Richard Katz, one of Gov. Gray Davis' top advisers, has earned hundreds of thousands of dollars in consulting fees the past two years from clients who have had business before the governor's office on issues that Katz handles, state records show.

Clients of Richard Katz Consulting, a one-man firm based in Sherman Oaks, include two of Sacramento's best-connected lobbying firms, Platinum Advisors and Planning Company Associates; the subprime lender Ameriquest; and one of the nation's biggest public relations firms, Fleishman-Hillard, according to Katz's most recent disclosure form filed with the state.

A Democratic former assemblyman from Los Angeles, Katz was appointed to the California Water Resources Control Board by Davis in February 2001 and a few months later became Davis' top adviser on water and energy issues.

In 2002, when Katz reported having consulting relationships with five companies, state records show four of the firms disclosed lobbying the governor's office on a variety of issues, including energy and water.

For 2001 and 2002, Katz reported earning more than $100,000 in consulting fees each year. He makes $114,191 as a member of the water board but receives no extra pay for his work for Davis.

Katz, 52, said he never used his public office to enhance his private interests and that he ended all but one of his contracts at the beginning of the year. He said he never gave advice or counsel to anyone on energy or water issues.

As a top Davis adviser, with an office inside the governor's offices, Katz has access to administration deliberations on a wide array of issues and actively participates in issues of vital interest to his clients. Political ethics experts say such an arrangement is probably not illegal, but troubling nonetheless.

"This is a dream come true to a lobbyist. . . . He's sitting on the board that makes these decisions as well as influencing the governor," Larry Makinson, a senior fellow at the Center for Responsive Politics in Washington, D.C. "This is beyond belief."

Robert Allison, managing director of the Washington-based Center for Public Integrity, called Katz's arrangement a conflict of interest. "I don't see how it can't be a conflict unless he recuses himself from any issue involving water use. If he's doing that, then what are the taxpayers paying for?"

Katz, however, called his conduct above reproach.

"I can't account for everything that might go off in someone's mind. I can account for my actions," Katz said Wednesday. "I have a 16-year record that is unblemished of how I conduct my business."

An Associated Press review of 83 economic disclosure statements filed by other high-ranking Davis appointees found no others with business relationships with lobbyists who work at the Capitol. But any implications that Katz has done anything improper, said Steve Maviglio, Davis' spokesman, are "reckless allegations of character assassination of someone who has had an impeccable record for nearly two decades in Sacramento."

While Katz has reported his clients on the statements of economic interest filed with the state's Fair Political Practices Commission, his lobbyist employers have not disclosed the relationship.

Payments made by a lobbying firm to any elected, legislative or agency official must be reported as part of regular quarterly disclosures made to the state, an FPPC spokeswoman said. Neither Platinum Advisors nor Planning Company Associates have reported their payments to Katz.

Darius Anderson, head of Platinum, said he didn't think the payments to Katz had to be reported. David Grannis, president of Planning Company Associates, did not return repeated calls seeking comment.

In papers filed with the state, Katz values his company at between $100,000 and $1 million, with his annual gross income from the company at more than $100,000.