Questions of Finance Dog Bustamante

Even as he struggles to end a political controversy over his fund-raising tactics, Lt. Gov. Cruz Bustamante could be running afoul of the California law governing how he spends the money, political rivals and some attorneys said Monday.

Bustamante had used a loophole in the law to raise millions in unrestricted donations, intending to use the cash in his gubernatorial campaign -- for which contributions are capped. But, facing criticism from other candidates and a lawsuit by a state senator, he announced over the weekend that he instead would spend more than $4 million in donations on television spots denouncing Proposition 54, which will share the Oct. 7 ballot with the recall measure.

On Monday, he reported transferring $3.8 million from an old, unrestricted committee to a newly created committee to oppose the initiative.

Republicans and other critics say Bustamante is violating an untested campaign finance rule that bars a candidate from spending contributions of more than $25,000 on ballot measures in which they are directly involved.

The recall election is the first statewide test of voter-approved Proposition 34, giving rise to different interpretations of the complex law’s many provisions.

Four tribes that own casinos have spent a combined $3.6 million directly and indirectly on the Democratic lieutenant governor, who long has advocated tribes’ right to govern their own affairs and has criticized Gov. Gray Davis’ proposal to levy $680 million in fees against tribes that want to expand their casinos. Bustamante has received direct donations from tribes ranging from $500,000 to $1.5 million, among the largest donations ever given to a candidate for office in California.

On Monday, the Santa Rosa Rancheria Tachi-Yokut, a band of Indians that owns the Palace Bingo and Casino near Lemoore, gave $478,800 to Bustamante’s campaign against the initiative and $21,200 to his gubernatorial effort. And the Viejas Band of Kumeyaay Indians of San Diego County followed through on a promise by spending $382,000 on an independent ad campaign urging voters to support Bustamante on Oct. 7. The group previously gave Bustamante $1.5 million.

The blocks of money are far in excess of the $21,200 cap imposed by Proposition 34 on donations to candidates for governor. Bustamante is accepting the money through the old committee, which he established to run for reelection as lieutenant governor and is not covered by Proposition 34.

The Oct. 7 ballot measure that Bustamante is opposing is Proposition 54, which would restrict government’s ability to gather some racial and ethnic data. Its main proponent is Ward Connerly, who promoted Proposition 209, the voter-approved 1996 initiative to limit affirmative action. Bustamante and other Democrats believe the new initiative could mobilize minorities to vote.

An attorney for the California Republican Party and state Sen. Ross Johnson (R-Irvine), who sued Bustamante last week, contend that an untested provision of the new state campaign finance law precludes him from using more than $25,000 from each donor for his anti-Proposition 54 effort.

Johnson and others say that by appearing in television ads denouncing the proposition, Bustamante is blurring the line between advocating his position on the initiative and running for governor. The ads were taped at a Bustamante-for-governor campaign rally in Fresno on Sunday.

Sacramento attorney Thomas W. Hiltachk, whose firm represents the California Republican Party, said Bustamante “can spend $3.8 million to oppose Proposition 54, but he can’t be in the TV commercials.”

“Cruz Bustamante,” Hiltachk added, “cannot make or request a ballot measure committee to air television commercials that feature him unless it uses funds subject to a $25,000 [limit].”

Johnson called on the Fair Political Practices Commission to block Bustamante from airing the television spots, saying in a prepared statement: “In reality, he’s campaigning for governor in a slightly different way.”

Richie Ross, Bustamante’s chief campaign strategist, said Bustamante’s attorneys, including one who helped write Proposition 34, say he is within his rights to spend his millions on anti-Proposition 54 television commercials in which he stars. Ross maintained last week that Bustamante was within the law to spend the money on his own candidacy as well.

“This is an area of the law that has been settled for a long time,” Ross said, dismissing criticism by Bustamante’s Republican foes who “don’t want to see Proposition 54 defeated and want to see Bustamante lose.”

“They’re angry; I understand that. It is politics,” Ross said.

But Daniel Lowenstein, a UCLA law professor who helped write the Political Reform Act of 1974 and was the first chairman of the Fair Political Practices Commission, said the law is unclear. In his view, Bustamante’s latest maneuver raises a “tricky question,” one that apparently has not been addressed by the courts.

The 1st Amendment guarantees that people, including candidates, can raise and spend unlimited sums to advocate for and against ballot measures, Lowenstein noted. But he added that courts have held that if a candidate controls a committee, including one established to take sides on a ballot measure, “what that committee does is attributable to your candidacy.”

“This is an in-between case; he is in the ads,” Lowenstein said. “It is hard to see that he is not promoting his candidacy in some general sense. It is a tricky question.”

Karen Getman, who recently resigned as chairwoman of the political practices commission, said she believes Bustamante may be acting within the law. The committee he established to oppose Proposition 54, she said, is similar to committees set up to support and oppose the recall. The commission has ruled that candidates can raise and spend unlimited sums through their recall committees.

Getman also said the provision cited by Johnson and Hiltachk is of “questionable constitutionality.”

In a news conference Sunday, Bustamante vowed to continue raising money in unlimited sums through his old reelection committee, noting that his foes include at least two millionaires, including actor Arnold Schwarzenegger.

“We will do whatever the rules allow us to do,” Bustamante said. “I have to compete with people who have almost unlimited access to resources.”

Sacramento lawyer Howard Dickstein, whose clients include the Pala Band of Mission Indians in San Diego County and several tribes in Northern California, said his clients “are extremely concerned about the long-term implications of political contributions at these unprecedented levels.”

“They feed a stereotype of tribes with unlimited funds that are wielding too much influence over state politics,” Dickstein said. “They don’t represent the views or resources of the vast majority of tribes in this state.”

Four of the tribes he represents own major gambling operations. He said they will probably contribute to Davis’ committees against the recall, but in “rational” amounts.

Nikki Symington, spokeswoman for the Viejas, who have spent $2 million directly and indirectly on Bustamante, brushed aside Dickstein’s comments: “If we thought that it would hurt tribal governments, would we have done such a thing, or have held a news conference to announce it?”

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Times staff writer Matea Gold contributed to this report.